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What changed in Protagonist Therapeutics, Inc's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Protagonist Therapeutics, Inc's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+535 added−526 removedSource: 10-K (2024-02-27) vs 10-K (2023-03-15)

Top changes in Protagonist Therapeutics, Inc's 2023 10-K

535 paragraphs added · 526 removed · 405 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

172 edited+62 added−44 removed125 unchanged
Biggest changeWe completed enrollment of patients in the first quarter of 2022 with a target of approximately 50 patients to be enrolled through the end of the randomization portion of the trial, which was completed during the first quarter of 2023, and will continue in open label extension. ​ ● PACIFIC, another Phase 2 trial for rusfertide patients diagnosed with PV and with routinely elevated hematocrit levels (>48%), was initiated during the first quarter of 2021 and completion of the 52-week trial is expected during the second quarter of 2023. ​ 3 ​ Table of Contents At the June 2022 American Society of Clinical Oncology (“ASCO”) Annual Meeting, we presented updated interim results for REVIVE and PACIFIC demonstrating the effects of dosing interruption and resumption.
Biggest changeWe completed enrollment of patients in the first quarter of 2022 and 70 patients were enrolled through the 3 Table of Contents end of the randomized withdrawal portion of the trial, which was completed during the first quarter of 2023 and is continuing in an ongoing open-label extension (“OLE”); ​ ● THRIVE, a Phase 2 long-term extension trial for REVIVE patients on years three through five of treatment; and ​ ● PACIFIC, another Phase 2 trial for rusfertide for patients diagnosed with PV and with routinely elevated hematocrit levels (>48%), was initiated during the first quarter of 2021, and the 52-week trial was completed during the second quarter of 2023. ​ In March 2023, we announced positive topline results from the blinded, placebo-controlled, randomized withdrawal portion of the REVIVE trial.
Marketing Approval ​ Following successful completion of the required clinical testing, the results of the pre-clinical and clinical studies, together with detailed information relating to the product’s chemistry, manufacture, controls and proposed labeling, among other information, are submitted to the FDA as part of an NDA requesting approval to market the product for one or more indications.
Marketing Approval ​ Following successful completion of the required clinical testing and the results of the pre-clinical and clinical studies, together with detailed information relating to the product’s chemistry, manufacture, controls and proposed labeling, among other information, are submitted to the FDA as part of an NDA requesting approval to market the product for one or more indications.
This review typically takes twelve months from the date the NDA is submitted to FDA.
This review typically takes twelve months from the date the NDA is submitted to the FDA.
The laws that may affect our ability to operate include the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), as amended by the Health Information Technology for Economic and Clinical Health Act, which governs the conduct of certain electronic health care transactions and protects the security and privacy of protected health information; the criminal health care fraud statutes under HIPAA also prohibits persons and entities from knowingly and willfully executing a scheme to defraud any health care benefit program, including private payors, or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for health care benefits, items or services; the Anti-Kickback Statute, which prohibits persons from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual for, or the purchase, order or recommendation of, any good or service for which payment may be made under federal health care programs such as the Medicare and Medicaid programs; federal false claims laws and civil monetary penalties laws that prohibit any person or entity from knowingly presenting, or causing to be presented, a false claim for payment to the federal government, or knowingly making, or causing to be made, a false statement to have a false claim paid; and the Physician Payments Sunshine Act, which requires certain manufacturers of drugs, devices, biologics, and medical supplies for which payment is available under Medicare, Medicaid, or Children’s Health Insurance Program to report annually to the HHS information related to 24 ​ Table of Contents payments and other transfers of value made to various healthcare professionals including physicians, physician assistants, nurse practitioners and teaching hospitals, and ownership and investment interests held by physicians and their immediate family members.
The laws that may affect our ability to operate include the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), as amended by the Health Information Technology for Economic and Clinical Health Act, which governs the conduct of certain electronic health care transactions and protects the security and privacy of protected health information; the criminal health care fraud statutes under HIPAA also prohibit persons and entities from knowingly and willfully executing a scheme to defraud any health care benefit program, including private payors, or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for health care benefits, items or services; the Anti-Kickback Statute, which prohibits persons from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual for, or the purchase, order or recommendation of, any good or service for which payment may be made under federal health care programs such as the Medicare and Medicaid programs; federal false claims laws and civil monetary penalties laws that prohibit any person or entity from knowingly presenting, or causing to be presented, a false claim for payment to the federal government, or knowingly making, or causing to be made, a false statement to have a false claim paid; and the Physician Payments Sunshine Act, which requires certain manufacturers of drugs, devices, biologics, and medical supplies for which payment is available under Medicare, Medicaid, or Children’s Health Insurance Program to report annually to the HHS information related to payments and other transfers of value made to various healthcare professionals including physicians, physician assistants, nurse practitioners and teaching hospitals, and ownership and investment interests held by physicians and their immediate family members.
Secondary outcomes included pharmacokinetics measurements of peak concentration and area under the curve. The Phase 1 study was completed in September 2021. Results of the Phase 1 study demonstrated that administration of JNJ-2113 was well-tolerated. No serious adverse events or dose-limiting toxicities were observed. The pharmacokinetic and pharmacodynamic parameters of JNJ-2113 were consistent with those predicted by pre-clinical studies.
Secondary outcomes included pharmacokinetics measurements of peak concentration and area under the curve. This Phase 1 study was completed in September 2021. Results of the Phase 1 study demonstrated that administration of JNJ-2113 was well-tolerated. No serious adverse events or dose-limiting toxicities were observed. The pharmacokinetic and pharmacodynamic parameters of JNJ-2113 were consistent with those predicted by pre-clinical studies.
Later discovery of previously unknown problems with a product, including adverse side effects of unanticipated severity or frequency, problems with manufacturing processes, or failure to comply with regulatory requirements, may result in mandatory revisions to the approved labeling to add new safety information, imposition of post-market studies or clinical trials to assess new safety risks, or imposition of distribution or other restrictions under an REMS program.
Later discovery of previously unknown problems with a product, including adverse side effects of unanticipated severity or frequency, problems with manufacturing processes, or failure to comply with regulatory requirements may result in mandatory revisions to the approved labeling to add new safety information, imposition of post-market studies or clinical trials to assess new safety risks, or imposition of distribution or other restrictions under a REMS program.
More subjects receiving rusfertide during the blinded randomized withdrawal portion of the REVIVE trial were responders compared with placebo (69.2% versus 18.5%, p=0.0003). A study subject was defined as a responder if the subject completed 12 weeks of double-blind treatment while maintaining hematocrit control without phlebotomy eligibility and without phlebotomy.
More subjects receiving rusfertide during the blinded randomized withdrawal portion of the REVIVE trial were responders compared with placebo (69.2% versus 18.5%, p=0.0003). A trial subject was defined as a responder if the subject completed 12 weeks of double-blind treatment while maintaining hematocrit control without phlebotomy eligibility and without phlebotomy.
The centralized procedure is compulsory for specific medicinal products, including for medicines developed by means of certain biotechnological processes, products designated as orphan medicinal products, advanced therapy medicinal products (“ATMP”) and medicinal products with a new active substance indicated for the treatment of certain diseases (AIDS, cancer, neurodegenerative disorders, diabetes, autoimmune and viral diseases).
The centralized procedure is compulsory for specific medicinal products, including for medicines developed by means of certain biotechnological processes, products designated as orphan medicinal products, advanced therapy medicinal products and medicinal products with a new active substance indicated for the treatment of certain diseases (AIDS, cancer, neurodegenerative disorders, diabetes, autoimmune and viral diseases).
Subjects receiving rusfertide achieved statistically significant improvements versus placebo in the trial’s primary endpoint. ​ The double-blind, placebo-controlled, 12-week randomized withdrawal portion was included as Part 2 of the REVIVE trial study to evaluate rusfertide in PV patients with frequent phlebotomy requirements.
Subjects receiving rusfertide achieved statistically significant improvements versus placebo in the trial’s primary endpoint. The double-blind, placebo-controlled, 12-week randomized withdrawal portion was included as Part 2 of the REVIVE trial to evaluate rusfertide in PV patients with frequent phlebotomy requirements.
Subjects receiving rusfertide achieved statistically significant improvements versus placebo in the trial’s primary endpoint. The double-blind, placebo-controlled, 12-week randomized withdrawal portion was included as Part 2 of the REVIVE trial study to evaluate rusfertide in PV patients with frequent phlebotomy requirements.
Subjects receiving rusfertide achieved statistically significant improvements versus placebo in the trial’s primary endpoint. The double-blind, placebo-controlled, 12-week randomized withdrawal portion was included as Part 2 of the REVIVE trial to evaluate rusfertide in PV patients with frequent phlebotomy requirements.
The CHMP will provide a positive opinion regarding the application only if it meets certain quality, safety and efficacy requirements. This opinion is then transmitted to the EC, which has the ultimate authority for granting MA within 67 days after receipt of the CHMP opinion.
The CHMP will provide a positive opinion regarding the application only if it meets certain quality, safety and efficacy requirements. This opinion is then transmitted to the EC, which has the ultimate authority for granting an MA within 67 days after receipt of the CHMP opinion.
Government Regulation ​ In the United States, the FDA regulates drugs under the Federal Food, Drug, and Cosmetic Act (“FDCA”) and its implementing regulations. The process of obtaining regulatory approvals and the compliance with applicable federal, state, local and foreign statutes and regulations requires the expenditure of substantial time and financial resources.
Government Regulation ​ In the United States, the FDA regulates drugs under the Federal Food, Drug, and Cosmetic Act and its implementing regulations. The process of obtaining regulatory approvals and the compliance with applicable federal, state, local and foreign statutes and regulations requires the expenditure of substantial time and financial resources.
In the REVIVE trial, subjects were initially enrolled in the 28-week open label dose-titration and efficacy evaluation Part 1 of the study, followed by 1:1 randomization of 53 subjects to placebo versus rusfertide therapy for a subsequent duration of 12 weeks.
In the REVIVE trial, subjects were initially enrolled in the 28-week open label dose-titration and efficacy evaluation Part 1 of the trial, followed by 1:1 randomization of 53 subjects to placebo versus rusfertide therapy for a subsequent duration of 12 weeks.
“Management’s Discussion and Analysis – Contractual Obligations and Other Commitments” and Note 7 and Note 11 to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for additional information. ​ Intellectual Property We strive to protect and enhance the proprietary technology, inventions, and improvements that are commercially important to the development of our business, including seeking, maintaining, and defending patent rights, whether developed internally or licensed from third parties.
“Management’s Discussion and Analysis – Contractual Obligations and Other Commitments” and Note 7 and Note 9 to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for additional information. ​ Intellectual Property We strive to protect and enhance the proprietary technology, inventions, and improvements that are commercially important to the development of our business, including seeking, maintaining, and defending patent rights, whether developed internally or licensed from third parties.
The CTR also aims to streamline and simplify the rules on safety reporting, and introduces enhanced transparency requirements such as mandatory submission of a summary of the clinical trial results to the EU Database.
The CTR also aims to streamline and simplify the rules on safety reporting and introduces enhanced transparency requirements such as mandatory submission of a summary of the clinical trial results to the EU Database (“CTIS”).
The process required by the FDA before a drug may be marketed in the United States generally involves the following: ● completion of pre-clinical laboratory tests, animal studies and formulation studies in compliance with the FDA’s good laboratory practices regulations; ● submission to the FDA of an IND application, which must become effective before human clinical trials may begin; ● approval by an independent institutional review board (“IRB”) at each clinical site before each trial may be initiated; ● performance of adequate and well-controlled human clinical trials in accordance with good clinical practice (“GCP”) requirements to establish the safety and efficacy of the proposed drug product for each indication; ● submission to the FDA of an NDA (or Biologics License Application (“BLA”) for a biologic product); ● satisfactory completion of an FDA advisory committee review, if applicable; ● satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the product is produced to assess compliance with current good manufacturing practices (“cGMP”) requirements and to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity; ● satisfactory completion of an FDA inspection of one or more clinical trial sites to assure compliance with GCP requirements and the clinical protocol; and 18 ​ Table of Contents ● FDA review and approval of the NDA.
The process required by the FDA before a drug may be marketed in the United States generally involves the following: ● completion of pre-clinical laboratory tests, animal studies and formulation studies in compliance with the FDA’s good laboratory practices (“GLP”) regulations; ● submission to the FDA of an IND application, which must become effective before human clinical trials may begin; ● approval by an independent institutional review board (“IRB”) at each clinical site before each trial may be initiated; ● performance of adequate and well-controlled human clinical trials in accordance with good clinical practice (“GCP”) requirements to establish the safety and efficacy of the proposed drug product for each indication; ● submission to the FDA of an NDA (or Biologics License Application (“BLA”) for a biologic product); ● satisfactory completion of an FDA advisory committee review, if applicable; ● satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the product is produced to assess compliance with current good manufacturing practices (“cGMP”) requirements and to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity; ● satisfactory completion of an FDA inspection of one or more clinical trial sites to assure compliance with GCP requirements and the clinical protocol; and ● FDA review and approval of the NDA.
Information about certain clinical trials must be submitted within specific time frames to the National Institutes of Health (“NIH”) for public dissemination on www.clinicaltrials.gov.
Information about certain clinical trials must be submitted within specific time frames to the National Institutes of Health for public dissemination on www.clinicaltrials.gov.
Subjects have been under treatment for a median of 1.5 years with the majority of subjects remaining essentially phlebotomy-free. Rusfertide demonstrated similar efficacy in all categories of patients, independent of the PV patient risk category or concurrent therapy with hydroxyurea, interferon or ruxolitinib. Study participation was halted in one patient due to asymptomatic thrombocytosis.
Subjects have been under treatment for a median of 1.5 years with the majority of subjects remaining essentially phlebotomy-free. Rusfertide demonstrated similar efficacy in all categories of patients, independent of the PV patient risk category or concurrent therapy with hydroxyurea, interferon or ruxolitinib. Trial participation was halted in one patient due to asymptomatic thrombocytosis.
In addition, under the Pediatric Research Equity Act of 2003 (“PREA”) certain NDAs or supplements to an NDA must contain data that are adequate to assess the safety and effectiveness of the drug for the claimed indications in all relevant pediatric subpopulations, and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective.
In addition, under the Pediatric Research Equity Act of 2003, certain NDAs or supplements to an NDA must contain data that is adequate to assess the safety and effectiveness of the drug for the claimed indications in all relevant pediatric subpopulations, and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective.
The REVIVE study was expected to enroll approximately 60 patients and consisted of a 16-week open-label dose finding stage every 4 weeks from 10 mg to 80 mg and a 12-week maintenance period at doses which generate desired hematocrit levels, followed by a 12-week randomized and blinded withdrawal stage.
The REVIVE trial was expected to enroll approximately 60 patients and consisted of a 16-week open-label dose finding stage every 4 weeks from 10 mg to 80 mg and a 12-week maintenance period at doses which generate desired hematocrit levels, followed by a 12-week randomized and blinded withdrawal stage.
Specific patents and patent applications are directed to compositions of α 4 β7 integrin peptides, IL-23R antagonist peptides, and hepcidin and enkephalin mimetics peptides, as well as methods of synthesizing and using these peptides to treat inflammatory disorders. Applications are currently pending in the United States and other major jurisdictions, including Australia, Canada, China, Japan, and Europe.
Specific patents and patent applications are directed to compositions of α 4 β7 integrin peptides, IL-23R antagonist peptides, and hepcidin mimetics peptides, as well as methods of synthesizing and using these peptides to treat disorders. Applications are currently pending in the United States and other major jurisdictions, including Australia, Canada, China, Japan, and Europe.
The high rates of clinical response and remission are both higher than the response and remission rates of patients treated with guselkumab alone (74.6%; 21.1%) and golimumab alone (61.1%; 22.2%). Hence, the IL-23 inhibition mechanism is a potentially paradigm shifting combination strategy to improve remission rates in UC.
The high rates of clinical response and remission are both higher than the response and remission rates of patients treated with guselkumab alone (74.6%; 21.1%) and golimumab alone (61.1%; 22.2%). Hence, we believe the IL-23 inhibition mechanism is a potentially paradigm shifting combination strategy to improve remission rates in UC.
In IBD, competition will come from companies with injectable agents in the anti-integrin class (Entyvio®, Takeda®, approved) and the anti-IL-12/23 class that may be approved in the next several years, including Janssen’s Stelara® (approved in UC and CD), Abbvie’s risankizumab (Skyrizi®) (UC and CD Phase 3), Janssen’s guselkumab (Tremfya®) (UC and CD); and Eli Lilly’s mirikizumab (UC and CD).
In IBD, competition will come from companies with injectable agents in the anti-integrin class (Entyvio®, Takeda, approved) and the anti-IL-12/23 class that may be approved in the next several years, including JNJ’s Stelara® (approved in UC and CD), Abbvie’s risankizumab (Skyrizi®) (UC and CD Phase 3), JNJ’s guselkumab (Tremfya®) (UC and CD); and Eli Lilly’s mirikizumab (UC and CD).
For example, on July 24, 2020 and September 13, 2020, the Trump administration announced several executive orders related to prescription drug pricing that attempt to implement several of the administration’s proposals The FDA also released a final rule, effective November 30, 2020, implementing a portion of the importation executive order providing guidance for states to build and submit importation plans for drugs from Canada.
For example, on July 24, 2020 and September 13, 2020, the Trump administration announced several executive orders related to prescription drug pricing that attempt to implement several of the administration’s proposals The FDA also released a final rule, effective November 30, 2020, implementing a portion of the importation executive order providing guidance for states to build and submit importation plans for drugs from 25 Table of Contents Canada.
The pan-JAK inhibitor Xeljanz® was approved in UC but not CD in 2018. The label contains black box warnings for “an increased risk of serious heart-related events such as heart attack or stroke, cancer, blood clots, and death”. The more selective JAK1/3 inhibitor Rinvoq® was approved in 2022 for UC and CD. The label carries the same black box warnings.
The pan-JAK inhibitor Xeljanz® was approved in UC (but not CD) in 2018. The label contains black box warnings for “an increased risk of serious heart-related events such as heart attack or stroke, cancer, blood clots, and death.” The more selective JAK1/3 inhibitor Rinvoq® was approved in 2022 for UC and CD. The label carries the same black box warnings.
In addition to the above, we have established expertise and development capabilities focused in the areas of pre-clinical research and development, manufacturing and manufacturing process scale-up, quality control, quality assurance, regulatory affairs and clinical trial design and implementation. We believe that our focus and expertise will help us develop products based on our proprietary intellectual property.
In addition to the above, we have established expertise and development capabilities focused in the areas of pre-clinical research and development, manufacturing and manufacturing process scale-up, quality control, quality 18 Table of Contents assurance, regulatory affairs and clinical trial design and implementation. We believe that our focus and expertise will help us develop products based on our proprietary intellectual property.
All new MAAs must include a Risk Management Plan (“RMP”), describing the risk management system that the company will put in place and documenting measures to prevent or minimize the risks associated with the product. 26 ​ Table of Contents RMPs are continually modified and updated throughout the lifetime of the medicine as new information becomes available.
All new MAAs must include a Risk Management Plan (“RMP”), describing the risk management system that the company will put in place and documenting measures to prevent or minimize the risks associated with the product. RMPs are continually modified and updated throughout the lifetime of the medicine as new information becomes available.
These preliminary results indicated that 84% of treatment-emergent adverse events (“TEAEs”) were Grade 2 or below. 16% of patients experienced Grade 3 TEAEs and there were no Grade 4 TEAEs. ​ On March 15, 2023, we announced positive topline results from the blinded, placebo-controlled, randomized withdrawal portion of the REVIVE trial.
These preliminary results indicated that 84% of treatment-emergent adverse events (“TEAEs”) were Grade 2 or below. 16% of patients experienced Grade 3 TEAEs and there were no Grade 4 TEAEs. ​ In March 2023, we announced positive topline results from the blinded, placebo-controlled, randomized withdrawal portion of the REVIVE trial.
In addition, certain states and local jurisdictions require the registration of pharmaceutical sales representatives. Because of the breadth of these laws and the narrowness of available statutory and regulatory exceptions, it is possible that some of our business activities could be subject to challenge under one or more of such laws.
In addition, certain states and local jurisdictions require the registration of pharmaceutical sales representatives. 26 Table of Contents Because of the breadth of these laws and the narrowness of available statutory and regulatory exceptions, it is possible that some of our business activities could be subject to challenge under one or more of such laws.
Clinical Development of Rusfertide in PV ​ In the fourth quarter of 2019, we initiated REVIVE, a Phase 2 study of rusfertide in PV designed to evaluate safety and preliminary efficacy in patients requiring phlebotomy (Figure 2).
Clinical Development of Rusfertide in PV ​ In the fourth quarter of 2019, we initiated REVIVE, a Phase 2 trial of rusfertide in PV designed to evaluate safety and preliminary efficacy in patients requiring phlebotomy (Figure 2).
The FDA may prevent or limit further marketing of a product based on the results of post-marketing studies or surveillance programs. After approval, some types of 20 ​ Table of Contents alterations, such as adding new indications, manufacturing changes and additional labeling claims, are subject to further testing requirements and FDA review and approval.
The FDA may prevent or limit further marketing of a product based on the results of post-marketing studies or surveillance programs. After approval, some types of alterations, such as adding new indications, manufacturing changes and additional labeling claims, are subject to further testing requirements and FDA review and approval.
The Bipartisan Budget Act of 2018 amends the ACA to close the coverage gap in most Medicare drug plans, commonly referred to as the “donut hole”, and increase from 50% to 70% the point-of-sale discount that is owed by pharmaceutical manufacturers who participate in the Medicare Part D program.
The Bipartisan Budget Act of 2018 amends the ACA to close the coverage gap in most Medicare drug plans, commonly referred to as the “donut hole,” and increase from 50% to 70% the point-of-sale discount that is owed by pharmaceutical manufacturers who participate in the Medicare Part D program.
These regulations include requirements relating to recordkeeping, periodic reporting, product sampling and distribution, advertising and promotion and reporting of adverse experiences with the product. After approval, most changes to the approved product, such as adding new indications or other labeling claims, are subject to FDA review and approval.
These regulations include requirements relating to recordkeeping, periodic reporting, product sampling and 23 Table of Contents distribution, advertising and promotion and reporting of adverse experiences with the product. After approval, most changes to the approved product, such as adding new indications or other labeling claims, are subject to FDA review and approval.
Additionally, the IRA provides a new “inflation rebate” covering Medicare patients to take effect in 2023 to prevent rapid and arbitrary price increases in prescription drugs. These and any other legislation or healthcare reform measures of the Biden administration may impact the ACA and our business.
Additionally, the IRA provides a new “inflation rebate” covering Medicare patients beginning in 2023 to prevent rapid and arbitrary price increases in prescription drugs. These and any other legislation or healthcare reform measures of the Biden administration may impact the ACA and our business.
In most cases, the submission of an NDA is subject to an application user fee. Under the 19 ​ Table of Contents Prescription Drug User Fee Act (“PDUFA”) guidelines, the FDA has a target of ten months from the date of “filing” of a standard NDA for a new molecular entity to review and act on the submission.
In most cases, the submission of an NDA is subject to an application user fee. Under the Prescription Drug User Fee Act (“PDUFA”) guidelines, the FDA has a target of ten months from the date of “filing” of a standard NDA for a new molecular entity to review and act on the submission.
The GDPR imposes strict requirements on the processing of personal data, including the legal basis for the processing, the information that has to be provided to individuals before their data is processed, notification obligations to national data protection authorities, and the technical and organization measures to ensure the security and confidentiality of the personal data.
The GDPR imposes strict requirements on 28 Table of Contents the processing of personal data, including the legal basis for the processing, the information that has to be provided to individuals before their data is processed, notification obligations to national data protection authorities, and the technical and organization measures to ensure the security and confidentiality of the personal data.
Management’s Discussion and Analysis – Overview” and Note 3 to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for additional information. Janssen is an experienced innovator in therapeutics targeting the IL-23 pathway. Stelara® is a monoclonal antibody targeting IL-12 and IL-23 through their common p40 subunit is approved in psoriasis, psoriatic arthritis, CD and UC.
“Management’s Discussion and Analysis – Overview” and Note 3 to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for additional information. JNJ is an experienced innovator in therapeutics targeting the IL-23 pathway. Stelara® is a monoclonal antibody targeting IL-12 and IL-23 through their common p40 subunit is approved in psoriasis, psoriatic arthritis, CD and UC.
For more information, please see Item 1A. “Risk Factors—Risks Related to Our Intellectual Property.” We own or co-own 15 issued U.S. patents, over 60 granted ex-U.S. patents, and numerous U.S. and ex-U.S. patent applications related to our clinical assets. We possess substantial know-how and trade secrets relating to the discovery, development and commercialization of peptide based therapeutic products.
For more information, please see Item 1A, “Risk Factors—Risks Related to Our Intellectual Property.” We own or co-own 26 issued U.S. patents, over 62 granted ex-U.S. patents, and numerous U.S. and ex-U.S. patent applications related to our clinical assets. We possess substantial know-how and trade secrets relating to the discovery, development and commercialization of peptide based therapeutic products.
One notable exception is that the JAK inhibitors, Xeljanz® and Rinvoq®, are approved in PsA without the respective label in psoriasis. ​ Inflammatory Bowel Disease (“IBD”) ​ IBD is a group of chronic autoimmune and inflammatory conditions of the colon and small intestine, consisting primarily of UC and CD.
One notable exception is that the JAK inhibitors, Xeljanz® and Rinvoq®, are approved in psoriatic arthritis without the respective label in psoriasis. ​ Inflammatory Bowel Disease (“IBD”) ​ IBD is a group of chronic autoimmune and inflammatory conditions of the colon and small intestine, consisting primarily of UC and CD.
Material Agreements Janssen License and Collaboration Agreement On July 27, 2021, we entered into an amended and restated License and Collaboration Agreement (the “Restated Agreement”) with Janssen, which amended and restated the License and Collaboration Agreement effective July 13, 2017, by and between us and Janssen (the “Original Agreement”), as amended by the First Amendment thereto, effective May 7, 2019 (the “First Amendment”).
Material Agreements JNJ License and Collaboration Agreement On July 27, 2021, we entered into an Amended and Restated License and Collaboration Agreement (the “Restated Agreement”) with JNJ, which amended and restated the License and Collaboration Agreement, effective July 13, 2017, by and between us and JNJ (the “Original Agreement”), as amended by the first amendment, effective May 7, 2019 (the “First Amendment”).
Failure to comply with the applicable U.S. requirements at any time during the product development process, approval process or after approval, may subject an applicant to a variety of administrative or judicial sanctions, such as the FDA’s refusal to approve pending new drug applications (“NDAs”), withdrawal of an approval, imposition of a clinical hold, issuance of warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement or civil or criminal penalties.
Failure to comply with the applicable U.S. requirements at any time during the product development process, approval process or after approval may subject an applicant to a variety of administrative or judicial sanctions, such as the FDA’s refusal to approve pending NDAs, withdrawal of an approval, imposition of a clinical hold, issuance of warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement or civil or criminal penalties.
More subjects receiving rusfertide during the blinded randomized withdrawal portion of the REVIVE trial were responders compared with placebo (69.2% versus 18.5%, p=0.0003). A study subject was defined as a responder if the subject completed 12 weeks of double-blind treatment while maintaining hematocrit control without phlebotomy eligibility and without phlebotomy.
More subjects receiving rusfertide during the blinded randomized withdrawal portion of the REVIVE trial were responders compared with placebo (69.2% versus 18.5%, p=0.0003). A trial subject was defined as a responder if the subject completed 12 weeks of double-blind treatment while maintaining hematocrit control 9 Table of Contents without phlebotomy eligibility and without phlebotomy.
We expect third-party manufacturers to be capable of providing supplies needed for our product candidates to meet anticipated full-scale 17 ​ Table of Contents commercial demands, and we have selected CMOs that can manufacture our product candidates for our ongoing and planned clinical trials as well as commercial supplies.
We expect third-party manufacturers to be capable of providing supplies needed for our product candidates to meet anticipated full-scale commercial demands, and we have selected CMOs that can manufacture our product candidates for our ongoing and planned clinical trials as well as commercial supplies.
Drugs designated as breakthrough therapies are also eligible for accelerated 21 ​ Table of Contents approval and priority review. The FDA must take certain actions, such as holding timely meetings and providing advice, intended to expedite the development and review of an application for approval of a breakthrough therapy.
Drugs designated as breakthrough therapies are also eligible for accelerated approval and priority review. The FDA must take certain actions, such as holding timely meetings and providing advice, intended to expedite the development and review of an application for approval of a breakthrough therapy.
The agreement with Janssen was amended in May 2019 to expand the collaboration by supporting efforts towards second-generation IL-23R antagonists; and in July 2021 to, among other things, enable Janssen to independently research and develop collaboration compounds for multiple indications in the IL-23 pathway and further align our financial interests. See Part II, “Item 7.
The agreement with JNJ was amended in May 2019 to expand the collaboration by supporting efforts towards second-generation IL-23R antagonists; and in July 2021 to, among other things, enable JNJ to independently research and develop collaboration compounds for multiple indications in the IL-23 pathway and further align our financial interests. See Part II, Item 7.
Next-generation antibody drugs, such as Tremfya® and Skyrizi®, target the p19 subunit of the IL-23 ligand and are specific inhibitors of the IL-23 pathway, which is believed to be the critical driver of local tissue pathology. Tremfya® and Skyrizi® are approved in psoriasis and psoriatic arthritis (“PsA”) and are in Phase 3 clinical trials in UC and CD.
Next-generation antibody drugs, such as Tremfya® and Skyrizi®, target the p19 subunit of the IL-23 ligand and are specific inhibitors of the IL-23 pathway, which is believed to be the critical driver of local tissue pathology. Tremfya® is approved in psoriasis and psoriatic arthritis and has completed successful Phase 3 clinical trials in UC and CD.
The regulatory authorities may also impose specific obligations as a condition of the MA. Marketing Authorizations have an initial duration of five years. After these five years, the authorization may subsequently be renewed on the basis of a reevaluation of the risk-benefit balance.
The regulatory authorities may also impose specific obligations as a condition of the MA. MAs have an initial duration of five years. After these five years, the authorization may subsequently be renewed on the basis of a reevaluation of the risk-benefit balance.
Rusfertide mimics the effect of the natural hormone hepcidin, but with greater potency, solubility and stability. Data from our rusfertide Phase 2 clinical trials presented at medical conferences in 2021 and 2022 provided evidence regarding the potential of rusfertide for managing hematocrit, reducing thrombotic risk and improving iron deficiency symptoms.
Rusfertide mimics the effect of the natural hormone hepcidin, but with greater potency, solubility and stability. Data from our rusfertide Phase 2 clinical trials presented at medical conferences from 2021 through 2023 provided evidence regarding the potential of rusfertide for managing hematocrit, reducing thrombotic risk and improving iron deficiency symptoms.
An IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA raises concerns or questions related to one or more proposed clinical trials and places the trial on a clinical hold. In such case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin.
An IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA raises concerns or 20 Table of Contents questions related to one or more proposed clinical trials and places the trial on a clinical hold. In such case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin.
For medicinal products containing a new active substance not yet authorized in the EEA before May 20, 2004 and indicated for the treatment of other diseases, medicinal products that constitute significant therapeutic, scientific or technical innovations or for which the grant of a MA through the centralized procedure would be in the interest of public health at EU level, an applicant may voluntarily submit an application for a marketing authorization through the centralized procedure.
For medicinal products containing a new active substance not yet authorized in the EEA before May 20, 2004 27 Table of Contents and indicated for the treatment of other diseases, medicinal products that constitute significant therapeutic, scientific or technical innovations or for which the grant of an MA through the centralized procedure would be in the interest of public health at EU level, an applicant may voluntarily submit an application for an MA through the centralized procedure.
Following the brief clinical hold, over 92% of patients in the REVIVE trial provided reconsent and returned to rusfertide treatment after dosing interruption and re-initiation. ​ We enrolled 63 patients in the ongoing REVIVE Phase 2 clinical trial of rusfertide in PV prior to the clinical hold and we enrolled seven additional patients to target approximately 50 patients to complete the randomized withdrawal part of the study.
Following this brief clinical hold, over 90% of patients in the REVIVE trial provided reconsent and returned to rusfertide treatment after dosing interruption and re-initiation. ​ We enrolled 63 patients in the ongoing REVIVE Phase 2 clinical trial of rusfertide in PV prior to the clinical hold and we enrolled seven additional patients to target approximately 50 patients to complete the randomized withdrawal part of the trial.
Meaningful comparison of symptoms assessments in Part 2 are not possible since a majority of subjects randomized to placebo discontinued prior to the 12-week assessment of MPN-SAF symptoms. Rusfertide continued to be generally well tolerated in the REVIVE trial, with localized injection site reactions comprising the majority of reported adverse events.
Meaningful comparison of symptoms assessments in Part 2 are not possible since a majority of subjects randomized to placebo discontinued prior to the 12-week assessment of MPN-SAF symptoms. Rusfertide continued to be generally well tolerated in the REVIVE trial, with localized ISRs comprising the majority of reported adverse events.
It is notable that Stelara® loses patent exclusivity in 2023 with biosimilar competition expected. JNJ-2113 (formerly known as PN-235), an orally delivered IL-23R specific antagonist for the potential treatment of psoriasis, psoriatic arthritis and IBD indications, was discovered through our peptide technology platform.
It is notable that Stelara® lost patent exclusivity in 2023 with biosimilar competition expected. 13 Table of Contents JNJ-2113 (formerly known as PN-235), an orally delivered IL-23R specific antagonist for the potential treatment of psoriasis, psoriatic arthritis and IBD indications, was discovered through our peptide technology platform.
There may also be 23 ​ Table of Contents further challenges to the ACA, and new laws may also result in additional reductions in Medicare and other health care funding. Further, there has been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products.
There may also be further challenges to the ACA, and new laws may also result in additional reductions in Medicare and other health care funding. Further, there has been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products.
We make available, free of charge on our corporate website, copies of our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statements, and all amendments to these reports, as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission (“SEC”) pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (“Exchange Act”). 28 ​ Table of Contents
We make available, free of charge on our corporate website, copies of our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statements, and all amendments to these reports, as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (“Exchange Act”).
The IRA, enacted August 16, 2022, aims to control prescription drug prices in the upcoming years. The IRA will allow the Centers for Medicare & Medicaid Services (“CMS”) to cap out-of-pocket costs in 2025 and to negotiate prescription drug prices in 2026 for the first time.
The Inflation Reduction Act (“IRA”), enacted August 16, 2022, aims to control prescription drug prices in the upcoming years. The IRA will allow the Centers for Medicare & Medicaid Services (“CMS”) to cap out-of-pocket costs in 2025 and to negotiate prescription drug prices in 2026 for the first time.
In the Phase 2a proof-of-concept trial, investigators found 83.1% of patients in the treatment group achieved a clinical response and 36.6% of patients treated with the combination therapy achieved clinical remission.
In the Phase 2a POC trial, investigators found 83.1% of patients in the treatment group achieved a clinical response and 36.6% of patients treated with the combination therapy achieved clinical remission.
One patient developed acute myelogenous leukemia (“AML”), which was deemed not to be related to 8 ​ Table of Contents rusfertide. Significant adverse events included syncope, peripheral artery aneurysm, gastroenteritis, chest pain, AML, squamous cell carcinoma (skin), melanoma & basal cell carcinoma.
One patient developed acute myelogenous leukemia (“AML”), which was deemed not to be related to rusfertide. Significant adverse events included syncope, peripheral artery aneurysm, gastroenteritis, chest pain, AML, squamous cell carcinoma (skin), melanoma & basal cell carcinoma.
Coverage determination can be a time-consuming and costly process that may require us to provide scientific and clinical support for the use of our products to each payor separately, with no assurance that coverage and adequate reimbursement will be obtained or applied consistently.
Therefore, coverage and reimbursement for drug products can differ significantly from payor to payor. Coverage determination can be a time-consuming and costly process that may require us to provide scientific and clinical support for the use of our products to each payor separately, with no assurance that coverage and adequate reimbursement will be obtained or applied consistently.
In the future we may tackle other GI and blood disorders and expand our technology platform to provide potential opportunities to pursue a wider variety of diseases that may include topical and systemic approaches.
In the future we may tackle other I&I, metabolic and blood disorders and expand our technology platform to provide potential opportunities to pursue a wider variety of diseases that may include oral, topical and systemic approaches.
A product will fill an unmet medical need if it will provide a therapy where none exists or provide a therapy that may be potentially superior to existing therapy based on efficacy or safety.
A product will fill an unmet medical need if it will provide a therapy where none exists or provide a therapy that may be potentially superior to existing therapy based on efficacy or 22 Table of Contents safety.
FRONTIER1 was a randomized, multicenter, double-blind, placebo-controlled study that evaluated three once-daily dosages and two twice-daily dosages of JNJ-2113 taken orally. The primary endpoint of the study is the proportion of patients achieving PASI-75 (a 75% improvement in skin lesions as measured by the Psoriasis Area and Severity Index) at 16 weeks.
FRONTIER 1 was a randomized, multicenter, double-blind, placebo-controlled trial that evaluated three once-daily dosages and two twice-daily dosages of JNJ-2113 taken orally. The primary endpoint of the trial was the proportion of patients achieving PASI-75 (a 75% improvement in skin lesions as measured by the Psoriasis Area and Severity Index (“PASI”)) at 16 weeks.
Rusfertide has a unique mechanism of action in the potential treatment of the blood disorder polycythemia vera (“PV”), which may enable it to specifically decrease and maintain hematocrit levels within the range of recommended clinical guidelines without causing the iron deficiency that can occur with frequent phlebotomy.
Rusfertide has a unique mechanism of action in the potential treatment of PV, which may enable it to specifically decrease and maintain hematocrit levels within the range of recommended clinical guidelines without causing the iron deficiency that can occur with frequent phlebotomy.
Finally, various biomarkers are also developed to correlate exposure with efficacy to guide candidate selection, dose selection and provide preliminary proof-of-concept of target engagement in clinical trials. Discovery and Preclinical Activities We believe we have built a versatile, well-validated and unique discovery platform.
Finally, various biomarkers are also developed to correlate exposure with efficacy to guide candidate selection, dose selection and provide preliminary POC of target engagement in clinical trials. 15 Table of Contents Discovery and Preclinical Activities We believe we have built a versatile, well-validated and unique discovery platform.
JNJ-2113: AN ORALLY DELIVERED IL-23R ANTAGONIST Janssen License and Collaboration Agreement We have a worldwide license and collaboration agreement with Janssen to research, develop and co-detail our IL-23 receptor (“IL-23R”) antagonist compounds for all indications, including IBD.
JNJ-2113: AN ORAL IL-23 RECEPTOR ANTAGONIST JNJ License and Collaboration Agreement We have a worldwide license and collaboration agreement with JNJ to research, develop and co-detail our IL-23 receptor (“IL-23R”) antagonist compounds for all indications, including IBD.
Examples of this approach are our pre-clinical stage program to identify an orally active hepcidin mimetic, as was reported at the American Society for Hematology’s virtual annual meeting in December 2020, and the discovery and development of JNJ-2113, our IL-23R antagonist in collaboration with Janssen.
Examples of this approach are our pre-clinical stage program to identify an orally active hepcidin mimetic, as was reported at the American Society for Hematology’s virtual annual meeting in December 2020, the discovery and development of JNJ-2113, our IL-23R antagonist in collaboration with JNJ, and our recently announced IL-17 peptide antagonist program as described above.
Pre-clinical Studies ​ Pre-clinical studies include laboratory evaluation of product chemistry, toxicity and formulation, as well as animal studies to assess potential safety and efficacy. These pre-clinical studies must comply with good laboratory practices (“GLP”).
Pre-clinical Studies ​ Pre-clinical studies include laboratory evaluation of product chemistry, toxicity and formulation, as well as animal studies to assess potential safety and efficacy. These pre-clinical studies must comply with GLP.
Johnson & Johnson global sales of Stelara® (approved for psoriasis, psoriatic arthritis, moderate-to-severe CD and UC) exceeded $9.2 billion in 2021. Three anti-IL-23 mAbs are in Phase 3 studies or beyond in IBD: Tremfya®, Skyrizi® and Ely Lilly and Company’s mirikizumab. The development of oral medicine has been an unmet need and priority in IBD.
Johnson & Johnson global sales of Stelara® (approved for psoriasis, psoriatic arthritis, moderate-to-severe CD and UC) were $10.9 billion in 2023. Three anti-IL-23 mAbs are in Phase 3 trials or beyond in IBD: Tremfya®, Skyrizi® and Ely Lilly and Company’s mirikizumab. The development of oral medicine has been an unmet need and priority in IBD.
Item 1. Business Overview We are a biopharmaceutical company with peptide-based new chemical entities rusfertide and JNJ-2113 (formerly known as PN-235) in different stages of development, all derived from our proprietary discovery technology platform. Our clinical programs fall into two broad categories of diseases; (i) hematology and blood disorders, and (ii) inflammatory and immunomodulatory diseases.
Item 1. Business OVERVIEW We are a biopharmaceutical company with peptide-based new chemical entities rusfertide and JNJ-2113 (formerly PN-235) in advanced stages of development, both derived from our proprietary peptide technology platform. Our clinical programs fall into two broad categories of diseases: (i) hematology and blood disorders, and (ii) inflammatory and immunomodulatory (“I&I”) diseases.
To the extent that our consultants, contractors or collaborators use intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions. For more information, please see Item 1A.
To the extent that our consultants, contractors or collaborators use intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions.
Figure 1: Our Product Pipeline Rusfertide ​ Our most advanced clinical asset, rusfertide (generic name for PTG-300), is an injectable hepcidin mimetic in development for the potential treatment of erythrocytosis, iron overload and other blood disorders and is wholly owned. Hepcidin is a key hormone in regulating iron equilibrium and is critical to the proper development of red blood cells.
Figure 1: Our Product Pipeline Rusfertide ​ Our most advanced clinical asset, rusfertide (generic name for PTG-300), is an injectable hepcidin mimetic in development for the potential treatment of polycythemia vera (“PV”) and other blood disorders. Hepcidin is a key hormone in regulating iron equilibrium and is critical to the proper development of red blood cells (“RBCs”).
A JNJ-2113 Phase 1 trial was completed in the fourth quarter of 2021. ​ In February 2022, Janssen initiated FRONTIER1, a 255-patient Phase 2b clinical trial of JNJ-2113 in moderate-to-severe plaque psoriasis, which was completed in December 2022. FRONTIER1 was a randomized, multicenter, double-blind, placebo-controlled study that evaluated three once-daily dosages and two twice-daily dosages of JNJ-2113 taken orally.
In February 2022, JNJ initiated FRONTIER 1, a 255-patient Phase 2b clinical trial of JNJ-2113 in moderate-to-severe plaque psoriasis, which was completed in December 2022. FRONTIER 1 was a randomized, multicenter, double-blind, placebo-controlled trial that evaluated three once-daily dosages and two twice-daily dosages of JNJ-2113 taken orally.
The global market forecast for 2030 anticipates $25.3 billion, with U.S. market sales of $20.9 billion. Identification of the IL-23/IL-17 axis as the key pathway driving psoriatic inflammation has led to the development of more effective and safer systemic therapies that inhibit IL-17 (e.g., Taltz®, Cosentyx®) and IL-23 (e.g., Tremfya®, 10 ​ Table of Contents Skyrizi®).
The global market forecast for 2030 anticipates sales of $30.0 billion, with U.S. market sales of $20.7 billion. Identification of the IL-23/IL-17 axis as the key pathway driving psoriatic inflammation has led to the development of more effective and safer systemic therapies that inhibit IL-17 (e.g., Taltz®, Cosentyx®) and IL-23 (e.g., Tremfya®, Skyrizi®).
During the fourth quarter of 2021, a portfolio decision was made by Janssen to advance development of our IL-R antagonist JNJ-2113.
During the fourth quarter of 2021, a decision was made by JNJ to advance development of our IL-23R antagonist JNJ-2113.
In a structure-based approach, our proprietary molecular design software and structural database of several thousand constrained peptides, termed Vectrix™, are screened to identify suitable scaffolds. The scaffolds identified form the basis of designing and constructing the first set of phage or chemical libraries.
In a structure-based approach, our proprietary molecular design software and structural database of several thousand constrained peptides, termed Vectrix™, are screened to identify suitable scaffolds. The scaffolds identified form the basis of designing and constructing the first set of phage or chemical libraries. The initial hits are identified by either panning or screening such libraries, respectively.
“Risk Factors—Risks Related to Our Intellectual Property.” Manufacturing ​ We contract with third parties for the manufacturing of our product candidates for pre-clinical and clinical studies and eventually for commercial supplies and intend to continue to do so in the future.
For more information, please see Item 1A, “Risk Factors—Risks Related to Our Intellectual Property.” Manufacturing ​ We contract with third parties for the manufacturing of our product candidates for pre-clinical studies and clinical trials and eventually for commercial supplies and intend to continue to do so in the future.
The S1P1 modulator class of oral small molecules has also demonstrated efficacy in IBD, with Zeposia® approved in UC (but not CD) in 2021, and etrasimod completing a successful Phase 3 program in UC. The S1P1 class is associated with immunosuppression, cardiac, pulmonary and ocular toxicities.
The S1P1 modulator class of oral small molecules has also demonstrated efficacy in IBD, with Zeposia® approved in UC (but not CD) in 2021, and etrasimod approved in UC in 2023. The S1P1 class is associated with immunosuppression, cardiac, pulmonary and ocular toxicities.
For JNJ-2113, 12 ​ Table of Contents Janssen is primarily responsible for the conduct of all further development, and we were primarily responsible for the discovery, IND-enabling studies and the initial Phase 1 study. ​ C linical Development of JNJ-2113 A Phase 1 study was initiated for JNJ-2113 in December 2020.
For JNJ-2113, JNJ is primarily responsible for the conduct of all further development, and we were primarily responsible for the discovery, IND-enabling studies and the initial Phase 1 study. ​ Clinical Development of JNJ-2113 A Phase 1 study was initiated for JNJ-2113 in December 2020.
The study has an open-label extension for up to three years to monitor long term safety and benefits of the drug. The endpoints of this clinical POC study include measurement of blood parameters (hematocrit and hemoglobin levels), reductions or delay in phlebotomy requirements, and improvements in quality-of-life symptoms. 7 ​ Table of Contents ​ Figure 2.
The trial has an OLE for up to three years to monitor long term safety and benefits of the drug. The endpoints of this clinical POC study include measurement of blood parameters (hematocrit and hemoglobin levels), reductions or delay in phlebotomy requirements, and improvements in quality-of-life symptoms.
Several factors, such as surface area covered and symptom burden, impact whether one’s psoriasis is considered mild, moderate, or severe. Typically, 3-10% of affected body surface area is considered moderate psoriasis, and more than 10% is considered severe psoriasis. Global market sales for psoriasis therapies in 2020 was $13.2 billion, with U.S. market sales of $10.8 billion.
Several factors, such as surface area covered and symptom burden, impact whether one’s psoriasis is considered mild, moderate, or severe. Typically, 3-10% of affected body surface area is considered moderate psoriasis, and more than 10% is considered severe psoriasis. Global market sales for psoriasis therapies in 2022 were $23.1 billion, with U.S. market sales of $16.3 billion.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWith respect to our product candidates, we may choose to partner with third parties that have direct sales forces and established distribution systems, either to augment our own sales force and distribution systems or in lieu of our own sales force and distribution systems, and in the case of the Restated Agreement with Janssen, we may elect to exercise our Co-Detailing Option (allows us to elect to provide up to 30% of the selling effort in the United States for any IL-23R antagonist compounds approved for commercial sale), which would require us to establish a U.S. sales team.
Biggest changeAs we have done with Takeda with respect to rusfertide, we may choose to partner with third parties that have direct sales forces and established distribution systems, either to augment our own sales force and distribution systems or in lieu of our own sales force and distribution systems.
In addition, even if we were to obtain regulatory approval, regulatory authorities may approve our product candidates for fewer or more limited indications than what we requested approval for, may include safety warnings or other restrictions that may negatively impact the commercial viability of our product candidates, including the potential for a favorable price or reimbursement at a level that we would otherwise intend to charge for our products.
In addition, even if we were to obtain regulatory approval, regulatory authorities may approve our product candidates for fewer or more limited indications than what we requested approval for or may include safety warnings or other restrictions that may negatively impact the commercial viability of our product candidates, including the potential for a favorable price or reimbursement at a level that we would otherwise intend to charge for our products.
In the event of successful development of any of our product candidates, we may elect to build a targeted specialty sales force which will be expensive and time consuming. Any failure or delay in the development of our internal sales, marketing and distribution capabilities would adversely impact the commercialization of these products.
In the event of the successful development of any of our product candidates, we may elect to build a targeted specialty sales force which will be expensive and time-consuming. Any failure or delay in the development of our internal sales, marketing and distribution capabilities would adversely impact the commercialization of these products.
We expect that our financial condition and operating results will fluctuate significantly from period to period due to a variety of factors, many of which are beyond our control, including the success of our programs, decisions by regulatory bodies, actions taken by competitors or current or future licensees or collaborative partners, market conditions and other factors identified in these risk factors.
We expect that our financial condition and operating results will fluctuate significantly from period to period due to a variety of factors, many of which are beyond our control, including the success of our programs, decisions by regulatory bodies, actions taken by competitors or current or future licensees or collaborative partners, market and macroeconomic conditions and other factors identified in these risk factors.
Patent and Trademark Office (the “PTO”), this increase can be reduced or eliminated based on certain delays caused by the patent applicant during patent prosecution. If we encounter delays in our clinical trials or in gaining regulatory approval, the period of time during which we could market any of our product candidates under patent protection, if approved, would be reduced.
Patent and Trademark Office, this increase can be reduced or eliminated based on certain delays caused by the patent applicant during patent prosecution. If we encounter delays in our clinical trials or in gaining regulatory approval, the period of time during which we could market any of our product candidates under patent protection, if approved, would be reduced.
Failure to become and remain profitable may adversely affect the market price of our common stock and our ability to raise capital and continue operations. We expect to require substantial additional funding, which may not be available to us on acceptable terms, or at all. Our operations have consumed substantial amounts of cash since inception.
Failure to become and remain profitable may adversely affect the market price of our common stock and our ability to raise capital and continue operations. We may require additional funding, which may not be available to us on acceptable terms, or at all. Our operations have consumed substantial amounts of cash since inception.
The following examples are illustrative: ● others may be able to make compounds or formulations that are similar to our product candidates, but that are not covered by the claims of any patents that we own, license or control; ● we or any strategic partners might not have been the first to make the inventions covered by the issued patents or pending patent applications that we own; ● we may not have been the first to file patent applications covering certain of our inventions; ● others may independently develop the same, similar, or alternative technologies without infringing, misappropriating or violating our intellectual property rights; ● it is possible that our pending patent applications will not lead to issued patents; 48 ​ Table of Contents ● issued patents may not provide us with any competitive advantages, or may be narrowed or held invalid or unenforceable, including as a result of legal challenges; ● our competitors might conduct research and development activities in the United States and other countries that provide a safe harbor from patent infringement claims for certain research and development activities, as well as in countries where we do not have patent rights, and may then use the information learned from such activities to develop competitive products for sale in our major commercial markets; ● we may choose not to file a patent in order to maintain certain trade secrets or know-how, and a third party may subsequently file a patent covering such trade secrets or know-how; and ● the patents of others may have an adverse effect on our business.
The following examples are illustrative: ● others may be able to make compounds or formulations that are similar to our product candidates, but that are not covered by the claims of any patents that we own, license or control; ● we or any strategic partners might not have been the first to make the inventions covered by the issued patents or pending patent applications that we own; ● we may not have been the first to file patent applications covering certain of our inventions; ● others may independently develop the same, similar, or alternative technologies without infringing, misappropriating or violating our intellectual property rights; ● it is possible that our pending patent applications will not lead to issued patents; ● issued patents may not provide us with any competitive advantages, or may be narrowed or held invalid or unenforceable, including as a result of legal challenges; ● our competitors might conduct research and development activities in the United States and other countries that provide a safe harbor from patent infringement claims for certain research and development activities, as well as in countries where we do not have patent rights, and may then use the information learned from such activities to develop competitive products for sale in our major commercial markets; ● we may choose not to file a patent in order to maintain certain trade secrets or know-how, and a third party may subsequently file a patent covering such trade secrets or know-how; and ● the patents of others may have an adverse effect on our business.
Under the terms of the Restated Agreement with Janssen, Janssen may terminate the agreement for convenience and without cause on written notice of a certain period. In addition, prior to any termination of the agreement, Janssen will generally have control over the further clinical development of JNJ-2113 and any other licensed compounds.
Under the terms of the Restated Agreement with JNJ, JNJ may terminate the agreement for convenience and without cause on written notice of a certain period. In addition, prior to any termination of the agreement, JNJ will generally have control over the further clinical development of JNJ-2113 and any other licensed compounds.
We have had in the past, and we may also have in the future, ownership disputes arising, for example, from conflicting obligations of consultants or others who are involved in developing our product candidates and technologies. Litigation may be necessary to defend against these and other claims.
We have had in the past, and we may have in the future, ownership disputes arising, for example, from conflicting obligations of consultants or others who are involved in developing our product candidates and technologies. Litigation may be necessary to defend against these and other claims.
The degree of market acceptance of any of our product candidates, if approved for commercial sale, will depend on a number of factors, including but not limited to: ​ ● the safety and efficacy of the product in clinical trials, and potential advantages over competing treatments; ● the publication of unfavorable safety or efficacy data concerning our product by third parties; ● the prevalence and severity of any side effects, including any limitations or warnings contained in a product’s approved labeling; ● the clinical indications for which approval is granted; ● recognition and acceptance of our product candidates over our competitors’ products; ● prevalence of the disease or condition for which the product is approved; ● the cost of treatment, particularly in relation to competing treatments; ● the willingness of the target patient population to try our therapies and of physicians to prescribe these therapies; ● the strength of marketing and distribution support and timing of market introduction of competitive products; ● the extent to which the product is approved for inclusion on formularies of hospitals and managed care organizations; ● publicity concerning our products or competing products and treatments; ● the extent to which third-party payors provide coverage and adequate reimbursement for the product candidate, or any other product candidates we may pursue, if approved; ● our ability to maintain compliance with regulatory requirements; and ● labeling or naming imposed by FDA or other regulatory agencies.
The degree of market acceptance of any of our product candidates, if approved for commercial sale, will depend on a number of factors, including but not limited to: ​ ● the safety and efficacy of the product in clinical trials, and potential advantages over competing treatments; ● the publication of unfavorable safety or efficacy data concerning our product by third parties; ● the prevalence and severity of any side effects, including any limitations or warnings contained in a product’s approved labeling; ● the clinical indications for which approval is granted; ● recognition and acceptance of our product candidates over our competitors’ products; 39 Table of Contents ● prevalence of the disease or condition for which the product is approved; ● the cost of treatment, particularly in relation to competing treatments; ● the willingness of the target patient population to try our therapies and of physicians to prescribe these therapies; ● the strength of marketing and distribution support and timing of market introduction of competitive products; ● the extent to which the product is approved for inclusion on formularies of hospitals and managed care organizations; ● publicity concerning our products or competing products and treatments; ● the extent to which third-party payors provide coverage and adequate reimbursement for the product candidate, or any other product candidates we may pursue, if approved; ● our ability to maintain compliance with regulatory requirements; and ● labeling or naming imposed by FDA or other regulatory agencies.
Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, if a corporation undergoes an “ownership change”, generally defined as a greater than fifty percentage point change (by value) in its equity ownership by certain stockholders over a three-year period, the corporation’s ability to use its pre-change net operating loss carryforwards, or NOLs, and other pre-change tax attributes (such as research and development tax credits) to offset its post-change taxable income or tax liability may be limited.
Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, if a corporation undergoes an “ownership change,” generally defined as a greater than fifty percentage point change (by value) in its equity ownership by certain stockholders over a three-year period, the corporation’s ability to use its pre-change net operating loss carryforwards, or NOLs, and other pre-change tax attributes (such as research and development tax credits) to offset its post-change taxable income or tax liability may be limited.
Our product candidates could fail to receive regulatory approval for many reasons, including the following: ● the FDA or comparable foreign regulatory authorities may disagree with the design or implementation of our clinical trials, or our interpretation of the data submitted in support of regulatory approval: ● we may be unable to demonstrate to the satisfaction of the FDA or comparable foreign regulatory authorities that a product candidate is safe and effective for its proposed indication or that a product candidate’s clinical and other benefits outweigh its safety risks; ● the results of clinical trials may fail to achieve the level of statistical significance required by the FDA or comparable foreign regulatory authorities for approval; ● the data collected from pre-clinical studies and clinical trials of our product candidates may not be sufficient to support the submission of an NDA, supplemental NDA, or other regulatory submissions necessary to obtain regulatory approval; ● we or our contractors may not meet the GMP and other applicable requirements for manufacturing processes, procedures, documentation and facilities necessary for approval by the FDA or comparable foreign regulatory authorities; and 35 ​ Table of Contents ● changes to the approval policies or regulations of the FDA or comparable foreign regulatory authorities with respect to our product candidates may result in our clinical data becoming insufficient for approval.
Our product candidates could fail to receive regulatory approval for many reasons, including the following: ● the FDA or comparable foreign regulatory authorities may disagree with the design or implementation of our clinical trials, or our interpretation of the data submitted in support of regulatory approval; ● we may be unable to demonstrate to the satisfaction of the FDA or comparable foreign regulatory authorities that a product candidate is safe and effective for its proposed indication or that a product candidate’s clinical and other benefits outweigh its safety risks; ● the results of clinical trials may fail to achieve the level of statistical significance required by the FDA or comparable foreign regulatory authorities for approval; ● the data collected from pre-clinical studies and clinical trials of our product candidates may not be sufficient to support the submission of an NDA, supplemental NDA, or other regulatory submissions necessary to obtain regulatory approval; ● we or our contractors may not meet the GMP and other applicable requirements for manufacturing processes, procedures, documentation and facilities necessary for approval by the FDA or comparable foreign regulatory authorities; and ● changes to the approval policies or regulations of the FDA or comparable foreign regulatory authorities with respect to our product candidates may result in our clinical data becoming insufficient for approval.
We are subject to the risk of possible disagreements with Janssen regarding the development of JNJ-2113 or other matters under the Restated Agreement with Janssen, such as the interpretation of the agreement or ownership of proprietary rights.
We are subject to the risk of possible disagreements with JNJ regarding the development of JNJ-2113 or other matters under the Restated Agreement with JNJ, such as the interpretation of the agreement or ownership of proprietary rights.
Additionally, other companies targeting the same patient populations as our clinical trials for such medicines may make it more difficult for us to complete enrollment in our clinical trials.
Other companies targeting the same patient populations as our clinical trials for such medicines may make it more difficult for us to complete enrollment in our clinical trials.
The size and complexity of our internal computer systems and those of our CROs, contract manufacturers, collaboration partner, and other third parties on which we rely may make them potentially vulnerable to breakdown, telecommunications and electrical failures, malicious intrusion such as ransomware and computer viruses that may result in the impairment of key business processes.
The size and complexity of our internal computer systems and those of our CROs, contract manufacturers, collaboration partners, and other third parties on which we rely may make them potentially vulnerable to breakdown, telecommunications and electrical failures, malicious intrusion such as ransomware and computer viruses that may result in the impairment of key business processes.
If we issue common stock or securities convertible into common stock, our common stockholders would experience additional dilution and, as a result, our stock price may decline. Risks Related to our Reliance on Third Parties If Janssen does not elect to continue the development of JNJ-2113, our business and business prospects would be adversely affected.
If we issue common stock or securities convertible into common stock, our common stockholders will experience additional dilution and, as a result, our stock price may decline. Risks Related to our Reliance on Third Parties If JNJ does not elect to continue the development of JNJ-2113, our business and business prospects would be adversely affected.
Also, because the period of collaborative development under the agreement has ended, Janssen has sole decision-making authority for product candidates resulting from the collaboration, which could lead to disputes with Janssen. Disagreements with Janssen could lead to litigation or arbitration, which would be expensive and would be time-consuming for our management and employees.
Also, because the period of collaborative development under the agreement has ended, JNJ has sole decision-making authority for product candidates resulting from the collaboration, which could lead to disputes with JNJ. Disagreements with JNJ could lead to litigation or arbitration, which would be expensive and would be time-consuming for our management and employees.
In order to commercialize any of our product candidates that receive marketing approval, we will have to build marketing, sales, distribution, managerial and other non-technical capabilities or make arrangements with third parties to perform these services, and we may not be successful in doing so.
In order to commercialize or co-commercialize any of our product candidates that receive marketing approval, we will have to build adequate marketing, sales, distribution, managerial and other non-technical capabilities or make arrangements with third parties to perform these services. We may not be successful in doing so.
If we fail to commercialize any of our product candidates, our business, financial condition, results of operations and prospects may be materially and adversely affected. ​ 37 ​ Table of Contents The commercial success of any current or future product candidate will depend upon the degree of market acceptance by physicians, patients, third-party payors and others in the medical community. ​ We or our collaboration partners in any potential commercial launch of our product candidates may not be successful in achieving widespread patient or physician awareness or acceptance of such product candidate.
If we fail to commercialize any of our product candidates, our business, financial condition, results of operations and prospects may be materially and adversely affected. ​ The commercial success of any current or future product candidate will depend upon the degree of market acceptance by physicians, patients, third-party payors and others in the medical community. ​ We or our collaboration partners in any potential commercial launch of our product candidates may not be successful in achieving widespread patient or physician awareness or acceptance of such product candidate.
Our amended and restated certificate of incorporation (“Certificate of Incorporation”) provides that the Court of Chancery of the State of Delaware will be the exclusive forum for certain actions and proceedings. Furthermore, Section 22 of the Securities Act of 1933, as amended, creates concurrent jurisdiction for federal and state courts over all Securities Act actions.
Our amended and restated certificate of incorporation (“Certificate of Incorporation”) provides that the Court of Chancery of the State of Delaware will be the exclusive forum for certain actions and proceedings. Furthermore, Section 22 of the Securities Act of 1933, as amended (“Securities Act”), creates concurrent jurisdiction for federal and state courts over all Securities Act actions.
For example, in 2022 we closed down Clinical trial sites in Russia and Ukraine at which a limited number of subjects were enrolled in our PN-943 Phase 2 IDEAL trial. ​ If we experience material delays in the completion of any clinical trial, the reduction in remaining patent term would harm the commercial prospects for that product candidate and our ability to generate product revenue from any of these product candidates will be delayed.
For example, in 2022 we closed down clinical trial sites in Russia and Ukraine at which a limited number of subjects were enrolled in our PN-943 Phase 2 IDEAL trial. ​ If we experience material delays in the completion of any clinical trial, the reduction in remaining patent term would harm the commercial prospects for that product candidate and our ability to generate product revenue from any of 32 Table of Contents these product candidates will be delayed.
We and some of the third-party service providers on which we depend for various support functions are vulnerable to damage from catastrophic events, such as power loss, natural disasters, terrorism, pandemics and similar unforeseen events beyond our control.
We and some of the third-party service providers on which we depend for various support functions are vulnerable to damage from catastrophic events, such as power loss, natural disasters, extreme weather, terrorism, pandemics and similar unforeseen events beyond our control.
Misconduct by these parties could include intentional, reckless and/or negligent conduct or disclosure of unauthorized activities to us that violates: (i) FDA laws and regulations or those of comparable foreign regulatory authorities, (ii) manufacturing standards, (iii) federal and state data privacy, security, fraud and abuse and other healthcare laws and regulations established and enforced by comparable foreign regulatory authorities, or (iv) laws that require the true, complete and accurate reporting of financial information or data.
Misconduct by these parties could include intentional, reckless and/or negligent conduct or disclosure of unauthorized activities to us that violates: (i) FDA laws 44 Table of Contents and regulations or those of comparable foreign regulatory authorities, (ii) manufacturing standards, (iii) federal and state data privacy, security, fraud and abuse and other healthcare laws and regulations established and enforced by comparable foreign regulatory authorities, or (iv) laws that require the true, complete and accurate reporting of financial information or data.
We are required, pursuant to Section 404 of the Sarbanes-Oxley Act (Section 404), to furnish a report by management on the effectiveness of our internal control over financial reporting. This assessment needs to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting.
We are required, pursuant to Section 404 of the Sarbanes-Oxley Act (“Section 404”), to furnish a report by management on the effectiveness of our internal control over financial reporting. This assessment needs to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting.
Although we generally do not begin a clinical trial unless we believe we have a sufficient supply of a product candidate to complete the clinical trial, any significant delay in the supply of a product candidate, or the raw material components thereof, for an ongoing clinical trial due to the need to replace a contract manufacturer or other third-party manufacturer could considerably delay completion of our clinical trials, product testing and potential regulatory approval of our product candidates.
Although we generally do not begin a clinical trial unless we believe we have a sufficient supply of a product candidate to complete the clinical trial, any significant delay in the supply of a product candidate, or the raw material components thereof, for an ongoing clinical trial due to the need to replace a contract manufacturer or other 36 Table of Contents third-party manufacturer could considerably delay completion of our clinical trials, product testing and potential regulatory approval of our product candidates.
An adverse outcome in a patent dispute could have a material adverse effect on our business by: ● causing us to lose patent rights in the relevant jurisdiction(s); ● subjecting Janssen or us to litigation, or otherwise preventing the commercialization of product candidates in the relevant jurisdiction(s); or ● requiring Janssen or us to obtain licenses to the disputed patents, cease using the disputed technology or develop or obtain alternative technologies.
An adverse outcome in a patent dispute could have a material adverse effect on our business by: ● causing us to lose patent rights in the relevant jurisdiction(s); ● subjecting our collaboration partners or us to litigation, or otherwise preventing the commercialization of product candidates in the relevant jurisdiction(s); or ● requiring our collaboration partners or us to obtain licenses to the disputed patents, cease using the disputed technology or develop or obtain alternative technologies.
Because we have limited financial and managerial resources, we have historically focused on research programs and product candidates mainly on the development of rusfertide, the product candidates subject to our Janssen collaboration and, through early 2022, PN-943.
Because we have limited financial and managerial resources, we have historically focused on research programs and product candidates mainly on the development of rusfertide, the product candidates subject to our JNJ collaboration and, through early 2022, PN-943.
In many countries, particularly the countries of the EU, pricing negotiations with governmental authorities can take considerable time after the receipt of marketing approval for a product. To obtain reimbursement or pricing approval in some countries, we may be required to conduct a clinical trial that compares the cost-effectiveness of our product candidates to other available therapies.
In many countries, particularly the countries of the European Union, pricing negotiations with governmental authorities can take considerable time after the receipt of marketing approval for a product. To obtain reimbursement or pricing approval in some countries, we may be required to conduct a clinical trial that compares the cost-effectiveness of our product candidates to other available therapies.
As our industry expands and more patents are issued, the risk increases that our product candidates or technologies may give rise to claims of infringement of the patent rights of others. Parties making claims against us may obtain injunctive or other equitable relief, which could effectively block our ability to commercialize our product candidates.
As our industry expands and more patents are issued, the risk increases that our product candidates or technologies may give rise to claims of infringement of the patent rights of others. 48 Table of Contents Parties making claims against us may obtain injunctive or other equitable relief, which could effectively block our ability to commercialize our product candidates.
We may have disagreements with Janssen during the term of the Janssen License and Collaboration Agreement, and if they are not settled amicably or in the favor of Protagonist, the result may harm our business.
We may have disagreements with JNJ during the term of the JNJ License and Collaboration Agreement, and if they are not settled amicably or in the favor of Protagonist, the result may harm our business.
Furthermore, any negative results we may report in clinical trials of our product candidate may make it difficult or impossible to recruit and retain patients in other ongoing or subsequent clinical trials of that same product candidate. Delays or failures in planned patient enrollment or retention 30 ​ Table of Contents may result in increased costs, program delays or both.
Furthermore, any negative results we may report in clinical trials of our product candidate may make it difficult or impossible to recruit and retain patients in other ongoing or subsequent clinical trials of that same product candidate. Delays or failures in planned patient enrollment or retention may result in increased costs, program delays or both.
If approved, our product candidates are expected to face competition from commercially available drugs as well as drugs that are in the development pipelines of our competitors. Pharmaceutical companies may invest heavily to accelerate discovery and development of novel compounds or to in-license novel compounds that could make our product candidates less competitive.
If approved, our product candidates are expected to face competition from commercially available drugs as well as drugs that are in the development pipelines of our competitors. 40 Table of Contents Pharmaceutical companies may invest heavily to accelerate discovery and development of novel compounds or to in-license novel compounds that could make our product candidates less competitive.
There can be no assurance that further deterioration in credit and financial markets and confidence in economic conditions will not occur. A future recession or market correction or other significant geopolitical events could materially affect our business and the value of our common stock.
There can be no assurance that further deterioration in credit and financial markets and confidence in economic conditions will not occur. A future recession or market correction or other significant geopolitical events could 41 Table of Contents materially affect our business and the value of our common stock.
Going forward, we have no plans to devote further resources to PN-943 as part of our ongoing commitment to optimize and focus resources toward our rusfertide program in PV. In addition, in keeping with our organizational prioritization of rusfertide in PV, plans to initiate trials of rusfertide in additional disease indications have been paused.
Going forward, we have no plans to devote further resources to PN-943 as part of our ongoing commitment to optimize and focus resources toward our rusfertide program in PV. In addition, in keeping with 33 Table of Contents our organizational prioritization of rusfertide in PV, plans to initiate trials of rusfertide in additional disease indications have been paused.
In addition, if a collaboration is terminated, it may result in a need for additional capital to pursue further development or commercialization of the applicable product candidates. We rely on third parties to conduct our pre-clinical studies and clinical trials.
In addition, if a collaboration is terminated, it may result in a need for additional capital to pursue further development or commercialization of the applicable product candidates. 35 Table of Contents We rely on third parties to conduct our pre-clinical studies and clinical trials.
We cannot be sure whether additional legislative changes will be enacted, or whether the FDA regulations, guidance or interpretations will be changed, or what the impact of such changes on the marketing approvals of our product candidates, if any, may be. In addition, increased scrutiny by the U.S.
We cannot be sure whether additional legislative changes will be enacted, or whether the FDA regulations, guidance or interpretations will be changed, or what the impact of such 38 Table of Contents changes on the marketing approvals of our product candidates, if any, may be. In addition, increased scrutiny by the U.S.
We may not be able to protect our intellectual property rights throughout the world. Filing, prosecuting and defending patents on all of our product candidates throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outside the United States may be less extensive than those in the United States.
We may not be able to protect our intellectual property rights throughout the world. Filing, prosecuting and defending patents on all of our product candidates throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outside the United States may be less extensive than those in the United 46 Table of Contents States.
Further we cannot be certain that we plan to advance any other product candidates into clinical trials. Moreover, any delay or setback in the 29 ​ Table of Contents development of any product candidate would be expected to adversely affect our business and cause our stock price to fall.
Further we cannot be certain that we plan to advance any other product candidates into clinical trials. Moreover, any delay or setback in the development of any product candidate would be expected to adversely affect our business and cause our stock price to fall.
If any of these risks occur, our business, results of operations or financial condition could suffer, and the market price of our common stock could decline. Risks Related to Clinical Development We are a biopharmaceutical company with no approved products and no historical commercial revenue, which makes it difficult to assess our future prospects and financial results.
If any of these risks or uncertainties occur, our business, results of operations or financial condition could suffer, and the market price of our common stock could decline. 30 Table of Contents Risks Related to Clinical Development We are a biopharmaceutical company with no approved products and no historical commercial revenue, which makes it difficult to assess our future prospects and financial results.
Any or all of these factors may limit our ability to continue to attract and retain high quality personnel, which could negatively affect our ability to successfully develop and commercialize product candidates and to grow our business and operations as currently contemplated.
Any or all of these factors may limit our ability to continue to attract and retain 43 Table of Contents high quality personnel, which could negatively affect our ability to successfully develop and commercialize product candidates and to grow our business and operations as currently contemplated.
On October 8, 2021, the FDA lifted the full clinical hold and dosing in all clinical studies of rusfertide could be resumed after we provided the FDA with all requested information as the basis for a Complete Response and subsequent removal of the clinical hold.
On October 8, 2021, the FDA lifted the full clinical hold and dosing in all clinical studies of rusfertide was resumed after we provided the FDA with all requested information as the basis for a Complete Response and subsequent removal of the clinical hold.
Developing pharmaceutical product candidates, including conducting pre-clinical studies and clinical trials, is expensive. We expect to require substantial additional future capital in order to complete clinical development and, if we are successful, to commercialize any of our current product candidates.
Developing pharmaceutical product candidates, including conducting pre-clinical studies and clinical trials, is expensive. We may require additional future capital in order to complete clinical development and, if we are successful, to commercialize any of our current product candidates.
The loss of the services of any of our executive officers or other key employees and our inability to find suitable replacements would harm our research and 41 ​ Table of Contents development efforts, our collaboration efforts, as well as our business, financial condition and prospects.
The loss of the services of any of our executive officers or other key employees and our inability to find suitable replacements would harm our research and development efforts, our collaboration efforts, as well as our business, financial condition and prospects.
We cannot offer any assurances about which, if any, of our patent applications will issue, the breadth of any such issued patent, or whether any issued patents will be found invalid and unenforceable or will be 44 ​ Table of Contents threatened by third parties.
We cannot offer any assurances about which, if any, of our patent applications will issue, the breadth of any such issued patent, or whether any issued patents will be found invalid and unenforceable or will be threatened by third parties.
In addition, significant portions of the clinical studies for our product candidates are expected to be conducted outside of the United States, which will make it more difficult for us to monitor CROs and perform visits of our clinical trial sites (particularly during the ongoing pandemic) and will force us to rely heavily on CROs to ensure the proper and timely conduct of our clinical trials and compliance with applicable regulations, including GCPs.
In addition, significant portions of the clinical studies for our product candidates are expected to be conducted outside of the United States, which will make it more difficult for us to monitor CROs and perform visits of our clinical trial sites and will force us to rely heavily on CROs for the proper and timely conduct of our clinical trials and compliance with applicable regulations, including GCPs.
If any of our product candidates fail in clinical trials or do not gain regulatory approval or fail to achieve market acceptance, we may never become profitable. Revenue we generate from our collaboration with Janssen, and any future collaboration arrangements may not be sufficient to sustain our operations.
If any of our product candidates fail in clinical trials or do not gain regulatory approval or fail to achieve market acceptance, we may never become profitable. Revenue we generate from our collaborations with JNJ, Takeda, and any future collaboration arrangements may not be sufficient to sustain our operations.
Our systems are potentially vulnerable to data security breaches, by employees or others, that may expose sensitive data to unauthorized persons.
Our systems are potentially vulnerable to data security breaches, by employees or others, which may expose sensitive data to unauthorized persons.
We seek to protect our proprietary technology in part by entering into confidentiality agreements and, if applicable, material transfer agreements, consulting agreements or other similar agreements with our advisors, employees, third-party contractors and consultants prior to beginning research or disclosing proprietary information.
We seek to protect our proprietary technology in part by entering into confidentiality agreements and, if applicable, material transfer agreements, consulting agreements or other similar agreements with our advisors, employees, third-party contractors and consultants prior to beginning research or 49 Table of Contents disclosing proprietary information.
JNJ-2113 (formerly known as PN-235), the product candidate in development pursuant to our Janssen collaboration, may prove to have undesirable or unintended side effects or other characteristics adversely affecting its safety, efficacy or cost effectiveness that could prevent or limit its approval for marketing and successful commercial use, or that could delay or prevent the commencement and/or completion of clinical trials.
JNJ-2113, the product candidate in development pursuant to our JNJ collaboration, may prove to have undesirable or unintended side effects or other characteristics adversely affecting its safety, efficacy or cost effectiveness that could prevent or limit its approval for marketing and successful commercial use, or that could delay or prevent the commencement and/or completion of clinical trials.
If the Restated Agreement with Janssen is terminated early, or if Janssen’s development activities are terminated early or suspended for an extended period of time, or are otherwise unsuccessful, our business and business prospects would be materially and adversely affected.
If the Restated Agreement with JNJ is terminated early, or if JNJ’s development activities are terminated early or suspended for an extended period of time, or are otherwise unsuccessful, our business and business prospects would be materially and adversely affected.
In addition, the issuance of additional equity securities by us, or the possibility of such issuance, may cause the market price of our common stock to decline.
In addition, the issuance of additional equity securities by us, or the possibility of such issuance, 34 Table of Contents may cause the market price of our common stock to decline.
These provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors, who are responsible for appointing the members of our management.
These 51 Table of Contents provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our Board, who are responsible for appointing the members of our management.
Absent the funding support obtained under the Restated Agreement, our further development of the collaboration product candidates would require significant additional capital from us, or the establishment of alternative collaborations with third parties, which may not be possible. As of December 31, 2022, we had cash, cash equivalents and marketable securities of $237.4 million.
Absent the funding support obtained under the Restated Agreement or the Takeda Collaboration Agreement, our further development of the collaboration product candidates would require significant additional capital from us, or the establishment of alternative collaborations with third parties, which may not be possible. As of December 31, 2023, we had cash, cash equivalents and marketable securities of $341.6 million.
For example, in keeping with our organizational prioritization of rusfertide in PV, plans to initiate trials of rusfertide in additional disease indications have been paused.
For example, in keeping with our organizational prioritization of rusfertide in PV, plans to initiate trials of rusfertide in other indications have been paused.
Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations and prospects. Any issued patents covering our product candidates, including any patent that may issue as a result of our pending or future patent applications, could be found invalid or unenforceable if challenged in court in the United States or abroad.
Any such adverse result or determination could have a material adverse effect on our business, financial condition and results of operations. 47 Table of Contents Any issued patents covering our product candidates, including any patent that may issue as a result of our pending or future patent applications, could be found invalid or unenforceable if challenged in court in the United States or abroad.
We have incurred significant operating losses every year since inception and expect to continue to incur operating losses for the foreseeable future. As of December 31, 2022, we had an accumulated deficit of $536.8 million. We expect to continue to incur significant research, development and other expenses related to our ongoing operations and product development.
We have incurred significant operating losses every year since inception and expect to continue to incur operating losses for the foreseeable future. As of December 31, 2023, we had an accumulated deficit of $615.7 million. We expect to continue to incur significant research, development and other expenses related to our ongoing operations and product development.
If our strategic collaborations do not result in the successful development and commercialization of product candidates or if one of our collaborators fails to act under the collaboration agreement or terminates its agreement with us, we may not receive any future research funding or milestone or royalty payments under the applicable collaboration agreement.
If our strategic collaborations do not result in the successful development and commercialization of product candidates or if one of our collaborators fails to fulfill its obligations under the collaboration agreement or terminates its agreement with us, we may not receive any future milestone, royalty or other payments under the applicable collaboration agreement.
Failure to obtain or maintain adequate coverage and reimbursement for our product candidates could limit our ability to generate revenue. The availability and extent of reimbursement by governmental and private payors is essential for most patients to be able to afford medications and therapies.
The insurance coverage and reimbursement status of newly approved products is uncertain. Failure to obtain or maintain adequate coverage and reimbursement for our product candidates could limit our ability to generate revenue. The availability and extent of reimbursement by governmental and private payors is essential for most patients to be able to afford medications and therapies.
We cannot be sure that, if our clinical trials for any of our product candidates are successfully completed, we will be able to submit an NDA to the FDA or that any NDA we submit will be approved by the FDA in a timely manner, if at all.
We may fail or elect not to commercialize our product candidates, even if approved. ​ We cannot be sure that, if our clinical trials for any of our product candidates are successfully completed, we will be able to submit an NDA to the FDA or that any NDA we submit will be approved by the FDA in a timely manner, if at all.
Further, in the event that the Restated Agreement with Janssen is terminated, we may not receive any additional fees or milestone payments under that agreement.
Further, in the event that the Restated Agreement with JNJ or the Takeda Collaboration Agreement is terminated, we may not receive any additional fees or milestone payments under that agreement.
The laws that may affect our ability to operate include, but are not limited to: ● the federal Anti-Kickback Statute; ● the federal false claims laws, including the False Claims Act; 40 ​ Table of Contents ● the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”); ● HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act and their implementing regulations, which also imposes obligations, including mandatory contractual terms, on HIPAA-covered entities, their business associates as well as their covered subcontractors with respect to safeguarding the privacy, security and transmission of individually identifiable health information; ● the federal civil monetary penalties statute; ● the federal Physician Payments Sunshine Act; and ● analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws.
The laws that may affect our ability to operate include, but are not limited to: ● the federal Anti-Kickback Statute; ● the federal false claims laws, including the False Claims Act; ● the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”); ● HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act and their implementing regulations, which also imposes obligations, including mandatory contractual terms, on HIPAA-covered entities, their business associates as well as their covered subcontractors with respect to safeguarding the privacy, security and transmission of individually identifiable health information; ● the federal civil monetary penalties statute; ● the federal Physician Payments Sunshine Act; and ● analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws. 42 Table of Contents Further, the ACA, among other things, amended the intent requirements of the federal Anti-Kickback Statute and certain criminal statutes governing healthcare fraud.
We will rely on our internal process research and development efforts and those of contract manufacturers to develop the good manufacturing processes (“GMPs”) required for cost-effective, large-scale production.
We will rely on our internal process research and development efforts and those of contract manufacturers to develop the GMPs required for cost-effective, large-scale production.
If, and to the extent that, Janssen or we are unable to comply with these regulations, our ability to earn potential royalties from worldwide net sales of Janssen collaboration product candidates would be materially and adversely impacted.
If, and to the extent that, we or our collaboration partners are unable to comply with these regulations, our ability to earn potential royalties from sales of product candidates under our collaboration agreements would be materially and adversely impacted.
It is difficult to predict what CMS will decide with respect to reimbursement for novel products such as ours since there is no body of established practices and precedents for these new products.
Coverage and reimbursement can differ significantly from payor to payor. It is difficult to predict what CMS will decide with respect to reimbursement for novel products such as ours since there is no body of established practices and precedents for these new products.
Likewise, regulatory authorities may grant approval contingent on the performance of costly post-marketing clinical trials or the conduct of an expensive risk-evaluation and mitigation system, which could significantly reduce the potential for commercial success or viability of our product candidates. Any of the foregoing possibilities could materially harm the prospects for our product candidates and business and operations.
Likewise, regulatory authorities may grant approval contingent on the performance of costly post-marketing clinical trials or the conduct of an expensive risk-evaluation and mitigation system, which could significantly reduce the potential for commercial success or viability of our product candidates.
If we were to experience an unexpected loss of supply for any reason, whether as a result of 34 ​ Table of Contents manufacturing, supply or storage issues, natural disasters, the COVID-19 pandemic or otherwise, we could experience delays, disruptions, suspensions or termination of our clinical trial and planned development program, or be required to restart or repeat, any ongoing clinical trials.
If we were to experience an unexpected loss of supply for any reason, whether as a result of manufacturing, supply or storage issues, natural disasters, geopolitical conflict, outbreaks of disease, epidemics and pandemics, such as the COVID-19 pandemic, or otherwise, we could experience delays, disruptions, suspensions or termination of our clinical trial and planned development program, or be required to restart or repeat, any ongoing clinical trials.
The imposition of any of these penalties or other commercial limitations could negatively impact our collaboration with Janssen or cause Janssen to terminate the Restated Agreement with Janssen, either of which would materially and adversely affect our business, financial condition and results of operations.
The imposition of any of these penalties or other commercial limitations could negatively impact our collaboration arrangements, or cause our collaboration partners to terminate the related license and collaboration agreement, either of which would materially and adversely affect our business, financial condition and results of operations.
We expect that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare therapies, which could result in reduced demand for us.
We expect that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare therapies, which could result in reduced demand for us. See Item 1, “Business – Government Regulation” for additional information.
Should any of these events occur, they could have a material adverse impact on our business and financial condition. Risks Related to Ownership of our Common Stock Our stock price has been and will likely continue to be volatile and may decline regardless of our operating performance. Volatility in our share price could subject us to securities class action litigation.
Should any of these events occur, they could have a material adverse impact on our business and financial condition. Risks Related to Ownership of our Common Stock Our stock price has been and will likely continue to be volatile and may decline regardless of our operating performance.
Janssen’s decisions with respect to such development will affect the timing and availability of potential future payments under the agreement, if any. For example, during the fourth quarter of 2021, following a pre-specified interim analysis criteria, a portfolio decision was made by Janssen to stop further development of both PTG-200 and PN-232 in favor of JNJ-2113.
JNJ’s decisions with respect to such development will affect the timing and availability of potential future payments under the agreement, if any. For example, during the fourth quarter of 2021, a decision was made by JNJ to stop further development of both PTG-200 and PN-232 in favor of JNJ-2113.
Item 1A. Risk Factors We have identified the following risks and uncertainties that may have a material adverse effect on our business, financial condition or results of operations. Investors should carefully consider the risks described below before making an investment decision. Our business faces significant risks and the risks described below may not be the only risks we face.
Item 1A. Risk Factor s We have identified the following risks and uncertainties that may have a material adverse effect on our business, financial condition or results of operations. Investors should carefully consider the risks described below before making an investment decision.
We are not permitted to market any product candidate in the United States until after approval of a new drug application (“NDA”) from the FDA, or in any foreign countries until approval by corresponding regulatory authorities.
We are not permitted to market any product candidate in the United States until after approval of an NDA from the FDA, or in any foreign countries until approval by corresponding regulatory authorities.
Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, we may be adversely affected in the future due to domestic and global monetary and fiscal policy, supply chain constraints, consequences associated with COVID-19 and the ongoing conflict between Russia and Ukraine, and such factors may lead to increases in the cost of manufacturing our product candidates and delays in initiating trials.
Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, our financial position or results of operations may be adversely affected in the future due to numerous factors, including macroeconomic and market conditions, domestic and global monetary and fiscal policy, supply chain constraints, and the ongoing conflicts between Russia and Ukraine and in Israel and surrounding areas, and other factors, and such factors may lead to increases in the cost of manufacturing our product candidates and delays in initiating trials.
Our stock price has fluctuated in the past and is likely to be volatile in the future. From January 1, 2022 through December 31, 2022, the reported sale price of our common stock has fluctuated between $6.91 and $37.05 per share.
Our stock price has fluctuated in the past and is likely to be volatile in the future. From January 1, 2023 through December 31, 2023, the reported sale price of our common stock has fluctuated between $10.62 and $30.10 per share.
Also, in April 2022, the FDA indicated that it intended to rescind Breakthrough Therapy Designation for rusfertide in PV.
Also, in April 2022, the FDA indicated that it intended to rescind Breakthrough Therapy Designation for rusfertide in PV, and we voluntarily withdrew our request.
In addition, there is a risk that one or more of our current service providers, manufacturers and other partners may not survive these difficult economic times, which could directly affect our ability to attain our operating goals.
In addition, there is a risk that one or more of our current service providers, manufacturers and other partners may not survive these difficult economic times, which could directly affect our ability to attain our operating goals. We maintain our cash at financial institutions, often in balances that exceed federally-insured limits.
As a result, the amount of the NOLs and tax credit carryforwards presented in our financial statements could be limited and may expire unused. Any such material limitation or expiration of our NOLs may harm our future operating results by effectively increasing our future tax obligations. 50 ​ Table of Contents We may have additional tax liabilities.
As a result, the amount of the NOLs and tax credit carryforwards presented in our financial statements could be limited and may expire unused. Any such material limitation or expiration of our NOLs may harm our future operating results by effectively increasing our future tax obligations. Item 1B. Unresolved Staff Comments None.
Our commercial success depends in part on our ability to develop, manufacture, market and sell our drug candidates and use our proprietary technologies without infringing or otherwise violating the patents and proprietary rights of third parties.
Third party claims of intellectual property infringement may prevent or delay our drug discovery and development efforts. Our commercial success depends in part on our ability to develop, manufacture, market and sell our drug candidates and use our proprietary technologies without infringing or otherwise violating the patents and proprietary rights of third parties.
As has been widely reported, we are currently operating in a period of economic uncertainty and capital markets disruption, which has been significantly impacted by domestic and global monetary and fiscal policy, geopolitical instability, including an ongoing military conflict between Russia and Ukraine, the rising tensions between China and Taiwan, and historically high domestic and global inflation.
As has been widely reported, we are currently operating in a period of macroeconomic uncertainty and capital markets disruption, which has been significantly impacted by domestic and global monetary and fiscal policy, geopolitical instability, including ongoing military conflicts between Russia and Ukraine and in Israel and surrounding areas, rising tensions between China and Taiwan, high interest rates, a recessionary environment, banking and other financial institution instability and historically high domestic and global inflation.
Our business is increasingly dependent on critical, complex and interdependent information technology systems, including Internet-based systems, to support business processes as well as internal and external communications.
Significant disruptions of information technology systems or breaches of data security could adversely affect our business. Our business is increasingly dependent on critical, complex and interdependent information technology systems, including internet-based systems, to support business processes as well as internal and external communications.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties We lease approximately 57,900 square feet of office and laboratory space in Newark, California under a lease agreement, as amended, that expires in May 2024. We believe that our existing facilities are adequate to meet our current business needs. We anticipate that additional space will be available on commercially reasonable terms, if required.
Biggest changeItem 2. Properties We lease approximately 57,900 square feet of office and laboratory space in Newark, California under a lease agreement, as amended, that expires in May 2024. We believe that our existing facilities are adequate to meet our current business needs.
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We are in discussions with our current landlord regarding a new lease agreement for office and laboratory space when our current lease agreement expires and anticipate that additional space will be available on commercially reasonable terms.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeRefer to Note 11 to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for additional information on our historical legal proceedings. Item 4. Mine Safety Disclosures Not applicable. ​ 51 ​ Table of Contents PART II
Biggest changeRefer to Note 9 to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for additional information on our historical legal proceedings. Item 4. Mine Safety Disclosures Not applicable. ​ 53 Table of Contents PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. ​ Mine Safety Disclosures ​ 51 ​ ​ ​ ​ ​ PART II ​ ​ ​ ​ ​ ​ ​ ​ ​ Item 5. ​ Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ​ 52
Biggest changeItem 4. ​ Mine Safety Disclosures ​ 53 ​ ​ ​ ​ ​ PART II ​ ​ ​ ​ ​ ​ ​ ​ ​ Item 5. ​ Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ​ 54

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe graph compares the performance of a $100 investment in our common stock and in each index (assuming reinvestment of all dividends) from December 31, 2017 to December 31, 2022. Sale of Unregistered Securities None. Issuer Purchases of Equity Securities None. 53 ​ Table of Contents Item 6. Reserved ​
Biggest changeThe graph compares the performance of a $100 investment in our common stock and in each index (assuming reinvestment of all dividends) from December 31, 2018 to December 31, 2023. Recent Sales of Unregistered Securities None. Issuer Purchases of Equity Securities None. Item 6. Reserved ​ 55 Table of Contents
We currently expect to retain all future earnings, if any, for use in the operation and expansion of our business, and therefore do not anticipate paying any cash dividends in the foreseeable future. 52 ​ Table of Contents Performance Graph The following is not deemed “filed” with the Securities and Exchange Commission and shall not be incorporated by reference into any filing we make under the Securities and Exchange Act of 1934, as amended, or the Securities Act of 1933, as amended, whether made before or after the date hereof and irrespective of any general incorporation by reference language in such filing.
We currently expect to retain all future earnings, if any, for use in the operation and expansion of our business, and therefore do not anticipate paying any cash dividends in the foreseeable future. 54 Table of Contents Performance Graph The following is not deemed “filed” with the Securities and Exchange Commission and shall not be incorporated by reference into any filing we make under the Exchange Act or the Securities Act of 1933, as amended, whether made before or after the date hereof and irrespective of any general incorporation by reference language in such filing.
The graph below shows the cumulative total stockholder return assuming an investment on December 31, 2017 in each of our common stock, the Nasdaq Composite Index, the Nasdaq Biotechnology Index, and the Nasdaq Pharmaceutical Index.
The graph below shows the cumulative total stockholder return assuming an investment on December 31, 2018 in each of our common stock, the Nasdaq Composite Index and the Nasdaq Biotechnology Index.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock trades on The Nasdaq Stock Market, LLC under the symbol “PTGX.” Stockholders As of the close of business on March 2, 2023, there were two stockholders of record of our common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock trades on The Nasdaq Stock Market, LLC under the symbol “PTGX.” Stockholders As of the close of business on February 22, 2024, there were two stockholders of record of our common stock.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeItem 6. ​ Reserved ​ 54 Item 7. ​ Management’s Discussion and Analysis of Financial Condition and Results of Operations ​ 54 Item 7A. ​ Quantitative and Qualitative Disclosures about Market Risk ​ 72 Item 8. ​ Financial Statements and Supplementary Data ​ 73
Biggest changeItem 6. ​ Reserved ​ 55 Item 7. ​ Management’s Discussion and Analysis of Financial Condition and Results of Operations ​ 56 Item 7A. ​ Quantitative and Qualitative Disclosures about Market Risk ​ 72 Item 8. ​ Financial Statements and Supplementary Data ​ 73

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe Prior Sales Agreement was terminated in connection with and replaced by the Sales Agreement in August 2022. ​ We have received a total of $112.5 million in non-refundable payments from Janssen since the inception of the Janssen License and Collaboration Agreement in 2017 through December 31, 2022, as follows: ​ ● Upon effectiveness of the Original Agreement, we received a non-refundable, upfront cash payment of $50.0 million from Janssen; ● Upon effectiveness of the First Amendment, we became eligible to receive a $25.0 million payment from Janssen, which was received during the second quarter of 2019; 67 ​ Table of Contents ● In December 2019, we became eligible to receive a $5.0 million payment triggered by the successful nomination of a second-generation development compound, which was received during the first quarter of 2020; ● In October 2021, we became eligible to receive $7.5 million milestone payment from Janssen triggered by completion of the data collection for JNJ-2113 (formerly known as PN-235) Phase 1 activities, which was received during the fourth quarter of 2021; and ● In March 2022, we became eligible to receive a $25.0 million milestone payment in connection with the dosing of the third patient in the Phase 2b clinical trial of JNJ-2113 in moderate-to-severe plaque psoriasis during the first quarter of 2022, which was received during the second quarter of 2022.
Biggest changeAs of December 31, 2023, none of the Pre-Funded Warrants have been exercised. 67 Table of Contents Receipt of Payments Under Collaboration Agreements ​ We have earned $172.5 million in non-refundable payments from JNJ since the inception of the Restated Agreement in 2017 through the date of this Annual Report on Form 10-K as follows: ​ ● Upon effectiveness of the Original Agreement, we received a non-refundable, upfront cash payment of $50.0 million from JNJ in 2017; ● Upon effectiveness of the First Amendment, we became eligible to receive a $25.0 million payment from JNJ, which was received during the second quarter of 2019; ● In December 2019, we became eligible to receive a $5.0 million payment triggered by the successful nomination of a second-generation development compound, which was received during the first quarter of 2020; ● In October 2021, we became eligible to receive a $7.5 million milestone payment triggered by completion of the data collection for JNJ-2113 (formerly PN-235) Phase 1 activities, which was received during the fourth quarter of 2021; ● In March 2022, we became eligible to receive a $25.0 million milestone payment in connection with the dosing of the third patient in the Phase 2b clinical trial of JNJ-2113 in moderate-to-severe plaque psoriasis, which was received during the second quarter of 2022; ● In October 2023, we became eligible to receive a $50.0 million milestone payment in connection with the dosing of the third patient in the ICONIC-TOTAL Phase 3 clinical trial of JNJ-2113 in moderate-to-severe plaque psoriasis, which was received in December 2023; and ● In December 2023, we became eligible to receive a $10.0 million milestone payment in connection with the dosing of the third patient in the ANTHEM Phase 2b clinical trial of JNJ-2113 in ulcerative colitis, which was received in January 2024.
Changes in these estimates that result in material changes to our accruals could materially affect our results of operations. Recent Accounting Pronouncements Information regarding recent accounting pronouncements applicable to us is included in Note 2 to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.
Changes in these estimates that result in material changes to our accruals could materially affect the results of our operations. Recent Accounting Pronouncements Information regarding recent accounting pronouncements applicable to us is included in Note 2 to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.
We expect to enter into additional clinical development, contract research, clinical and commercial manufacturing, supplier agreements and collaborative research agreements in the future, which may require upfront payments and long-term commitments of capital resources. ​ Our contractual obligations include minimum lease payments under our operating lease obligations.
We expect to enter into additional clinical development, contract research, clinical and commercial manufacturing, supplier and collaborative research agreements in the future, which may require upfront payments and long-term commitments of capital resources. ​ Our contractual obligations include minimum lease payments under our operating lease obligations.
In particular, the conflict in Ukraine has exacerbated market disruptions, including significant volatility in commodity prices, as well as supply chain interruptions, and has contributed to record inflation globally. The U.S. Federal Reserve and other central banks may be unable to contain inflation through more restrictive monetary policy and inflation may increase or continue for a prolonged period of time.
The conflict in Ukraine has exacerbated market disruptions, including significant volatility in commodity prices, as well as supply chain interruptions, and has contributed to record inflation globally. The U.S. Federal Reserve and other central banks may be unable to contain inflation through more restrictive monetary policy and inflation may increase or continue for a prolonged period of time.
Subjects receiving rusfertide achieved statistically significant improvements versus placebo in the trial’s primary endpoint. ​ The double-blind, placebo-controlled, 12-week randomized withdrawal portion was included as Part 2 of the REVIVE trial study to evaluate rusfertide in PV patients with frequent phlebotomy requirements.
Subjects receiving rusfertide achieved statistically significant improvements versus placebo in the trial’s primary endpoint. The double-blind, placebo-controlled, 12-week randomized withdrawal portion was included as Part 2 of the REVIVE trial to evaluate rusfertide in PV patients with frequent phlebotomy requirements.
Estimates related to revenue recognition include actual costs incurred versus total estimated costs of our deliverables to determine percentage of completion in addition to the application and estimates of potential revenue constraints in the determination of the transaction price under its license and collaboration agreements.
Estimates related to revenue recognition include actual costs incurred versus total estimated costs of our deliverables to determine percentage of completion in addition to the application and estimates of potential revenue constraints in the determination of the transaction price under our license and collaboration agreements.
Hepcidin is a key hormone in regulating iron equilibrium and is critical to the proper development of red blood cells. Rusfertide mimics the effect of the natural hormone hepcidin, but with greater potency, solubility and stability.
Hepcidin is a key hormone in regulating iron equilibrium and is critical to the proper development of red blood cells (“RBCs”). Rusfertide mimics the effect of the natural hormone hepcidin, but with greater potency, solubility and stability.
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.
These estimates may change as new events occur, circumstances change, and additional information is obtained. Actual results could differ materially from these estimates under different assumptions or conditions.
We have taken into consideration any known impacts in our accounting estimates to date and are not aware of any additional specific events or circumstances that would require any additional updates to our estimates or judgments or a revision of the carrying value of our assets or liabilities as of the date of the filing of this Annual Report on Form 10-K.
We have taken into consideration any known impacts of these factors in our accounting estimates to date and are not aware of any additional specific events or circumstances that would require any additional updates to our estimates or judgments or a revision of the carrying value of our assets or liabilities as of the date of the filing of this Annual Report on Form 10-K.
We expect to continue to incur expenses supporting 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.
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.
Cash Provided by (Used in) Investing Activities Cash provided by investing activities for the year ended December 31, 2022, was $91.5 million, consisting of proceeds from maturities of marketable securities of $307.1 million, partially offset by purchases of marketable securities of $214.9 million and purchases of property and equipment of $0.8 million.
Cash provided by investing activities for the year ended December 31, 2022 was $91.5 million, consisting of proceeds from maturities of marketable securities of $307.1 million, partially offset by purchases of marketable securities of $214.9 million and purchases of property and equipment of $0.8 million.
We evaluate the measure of proportional performance each reporting period and, if necessary, adjust the measure of performance and related revenue recognition.
We evaluate the measure of proportional performance for each reporting period and, if necessary, adjust the measure of performance and related revenue recognition.
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 generate revenue from the commercialization and sale of any of our product candidates.
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 product candidates.
Upon the effectiveness of the First Amendment, we received a $25.0 million payment from Janssen in 2019. In the first quarter of 2020, we received a $5.0 million payment triggered by the successful nomination of a second-generation IL-23R antagonist development compound.
Upon the effectiveness of the First Amendment, we received a $25.0 million payment from JNJ in 2019. In the first quarter of 2020, we received a $5.0 million payment triggered by the successful nomination of a second-generation IL-23R antagonist development compound.
The $0.3 million increase in cash flow used in operating activities during the year ended December 31, 2022, as compared to the year ended December 31, 2021, was primarily due to a $1.8 million increase in our net loss, a $4.5 million net change in net operating assets and liabilities, and a $1.8 million net change in other non-cash items, partially offset by a $7.8 million increase in stock-based compensation expense.
The $0.3 million increase in cash used in operating activities for the year ended December 31, 2022, as compared to the year ended December 31, 2021, was primarily due to a $1.8 million increase in our net loss, a $4.5 million net change in net operating assets and liabilities and a $1.8 million net change in other non-cash items, partially offset by a $7.8 million increase in stock-based compensation expense.
On July 2, 2021, we entered into a second amendment to our facility lease agreement dated as of March 2017, to lease approximately 15,000 square feet of additional office space in Newark, California.
In July 2021, we entered into a second amendment to our facility lease agreement dated as of March 2017 to lease approximately 15,000 square feet of additional office space in Newark, California.
Revenue Recognition Under Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (“ASC 606”), we recognize revenue when our customer obtains control of promised goods or services, in an amount that reflects the 58 ​ Table of Contents consideration which we expect to receive in exchange for those goods or services.
Revenue Recognition Under Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (“ASC 606”), we recognize revenue when our customer obtains control of promised goods or services, in an amount that reflects the consideration which we expect to receive in exchange for those goods or services.
The $107.3 million increase in cash provided by investing activities for the year ended December 31, 2022, as compared to the year ended December 31, 2021, was primarily related to a decrease of $71.7 million in purchases of marketable securities and an increase of $35.3 million in proceeds from maturities of marketable securities.
The $107.3 million increase in cash provided by investing activities for the year ended December 31, 2022, as compared to the year ended December 70 Table of Contents 31, 2021, was primarily related to a decrease of $71.7 million in purchases of marketable securities and an increase of $35.3 million in proceeds from maturities of marketable securities.
We recognize the amounts related to our Australian research and development refundable cash tax incentive that are not subject to refund provisions as a reduction of research and development expenses.
We recognize the amounts related to our Australian research and development refundable cash tax incentive that are not subject to refund provisions as a reduction in research and development expenses.
In the fourth quarter of 2021, we received a $7.5 million milestone payment from Janssen triggered by completion of the data collection for JNJ-2113 Phase 1 activities. In the second quarter of 2022, we received a $25.0 million milestone payment in connection with the dosing of a third patient in FRONTIER1 during the first quarter of 2022.
In the fourth quarter of 2021, we received a $7.5 million milestone payment from JNJ triggered by completion of the data collection for JNJ-2113 Phase 1 activities. In the second quarter of 2022, we received a $25.0 million milestone payment in connection with the dosing of a third patient in FRONTIER 1 during the first quarter of 2022 .
If we do raise additional capital through public or private equity offerings or convertible debt securities, the ownership interest of our existing stockholders could be diluted, and the terms of these securities 69 ​ Table of Contents could include liquidation or other preferences that could adversely affect our stockholders’ rights.
If we do raise additional capital through public or private equity offerings or convertible debt securities, the ownership interest of our existing stockholders could be diluted, and the terms of these securities could include liquidation or other preferences that could adversely affect our stockholders’ rights.
Milestone payments: At the inception of each arrangement or amendment that includes development, regulatory or commercial milestone payments, we evaluate whether the milestones are considered probable of being reached and estimate the amount to be included in the transaction price.
Milestone payments: At the inception of each arrangement or amendment that includes development, regulatory or commercial milestone payments, we evaluate whether the milestones are considered probable of being reached and 61 Table of Contents estimate the amount to be included in the transaction price.
See Note 10 to the Consolidated Financial Statements elsewhere in this Annual Report on Form 10-K for additional information. ​ Under the Restated Agreement, we share with Janssen certain development, regulatory and compound supply costs.
See Note 8 to the Consolidated Financial Statements elsewhere in this Annual Report on Form 10-K for additional information. ​ Under the Restated Agreement, we share with JNJ certain development, regulatory and compound supply costs.
We also expect to receive payments for services provided under the collaboration agreement and we may make in-kind payment reimbursements to Janssen for certain costs they have incurred pursuant to the cost sharing terms of the agreement. Pursuant to the Restated Agreement, we may be eligible to receive clinical development, regulatory and sales milestones, if and when achieved.
We have also received payments for services provided under the collaboration agreement and we may make in-kind payment reimbursements to JNJ for certain costs they have incurred pursuant to the cost sharing terms of the agreement. Pursuant to the Restated Agreement, we may be eligible to receive clinical development, regulatory and sales milestones, if and when achieved.
Research and development expenses consist primarily of the following: ● expenses incurred under agreements with clinical study 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, non-clinical, and clinical studies; ● costs related to production of clinical supplies and non-clinical materials, including fees paid to contract manufacturers; ● license fees and 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 other supplies.
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; 63 Table of Contents ● employee-related expenses, which include salaries, benefits and stock-based compensation; ● laboratory vendor expenses related to the preparation and conduct of pre-clinical and non-clinical studies and clinical trials; ● costs related to production of clinical supplies and non-clinical materials, including fees paid to contract manufacturers; ● license fees and 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 other administrative supplies.
Also, the failure of Silicon Valley Bank and other banks in the United States in March 2023 has given rise to uncertainty in the security of amounts in deposit accounts uninsured by the Federal Deposit Insurance Corporation. We continue to monitor these events and the potential impact on our business.
Also, the failure of Silicon Valley Bank and other regional banks in the United States during the first half of 2023 has given rise to uncertainty in the security of amounts in deposit accounts uninsured by the Federal Deposit Insurance Corporation. We continue to monitor these events and the potential impact on our business.
Data from our rusfertide Phase 2 clinical trials presented at medical conferences in 2021 and 2022 provided evidence regarding the potential of rusfertide for managing hematocrit, reducing thrombotic risk and improving iron deficiency symptoms.
Data from our rusfertide Phase 2 clinical trials presented at medical conferences from 2021 through 2023 provided evidence regarding the potential of rusfertide for managing hematocrit, reducing thrombotic risk and improving iron deficiency symptoms.
Rusfertide has a unique mechanism of action in the potential treatment of the blood disorder polycythemia vera (“PV”), which may enable it to specifically decrease and maintain hematocrit levels within the range of recommended clinical guidelines without causing the iron deficiency that can occur with frequent phlebotomy.
Rusfertide has a unique mechanism of action in the potential treatment of PV, which may enable it to specifically decrease and maintain hematocrit levels within the range of recommended clinical guidelines without causing the iron deficiency that can occur with frequent phlebotomy.
The actual amounts that we pay Janssen or that Janssen pays us will depend on numerous factors, some of which are outside of our control and some of which are contingent upon the success, if achieved, of certain development and regulatory activities.
The actual amounts that we pay JNJ or that JNJ pays us will depend on a number of factors, some of which are outside of our control and some of which are contingent upon the success, if achieved, of certain development and regulatory activities.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ​ Overview We are a biopharmaceutical company with peptide-based new chemical entities rusfertide and JNJ-2113 (formerly known as PN-235) in different stages of development, all derived from our proprietary discovery technology platform.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ​ Overview We are a biopharmaceutical company with peptide-based new chemical entities rusfertide and JNJ-2113 (formerly PN-235) in advanced stages of development, both derived from our proprietary peptide technology platform.
Operations We have incurred net losses in each year since inception and we do not anticipate achieving sustained profitability in the foreseeable future. Our net losses were $127.4 million, $125.6 million and $66.2 million for the years ended December 31, 2022, 2021 and 2020, respectively. As of December 31, 2022, we had an accumulated deficit of $536.8 million.
Operations We have incurred net losses in each year since inception and we do not anticipate achieving sustained profitability in the foreseeable future. Our net losses were $79.0 million, $127.4 million and $125.6 million for the years ended December 31, 2023, 2022 and 2021, respectively. As of December 31, 2023, we had an accumulated deficit of $615.7 million.
Purchases of property and equipment were primarily related to purchases of laboratory equipment, furniture and computer equipment. 70 ​ Table of Contents Cash Provided by Financing Activities Cash provided by financing activities for the year ended December 31, 2022, was $18.8 million, consisting primarily of net cash proceeds from sales of $14.6 million under the 2019 ATM Facility and proceeds from the issuance of common stock upon the exercise of stock options and purchases of common stock under our employee stock purchase plan of $4.4 million.
Cash provided by financing activities for the year ended December 31, 2022 was $18.8 million, consisting primarily of net cash proceeds of $14.6 million from sales under the 2019 ATM Facility and proceeds from the issuance of common stock upon the exercise of stock options and purchases of common stock under our employee stock purchase plan of $4.4 million.
Our clinical programs fall into two broad categories of diseases; (i) hematology and blood disorders, and (ii) inflammatory and immunomodulatory diseases. Rusfertide ​ Our most advanced clinical asset, rusfertide (generic name for PTG-300), is an injectable hepcidin mimetic in development for the potential treatment of erythrocytosis, iron overload and other blood disorders and is wholly owned.
Our clinical programs fall into two broad categories of diseases: (i) hematology and blood disorders, and (ii) inflammatory and immunomodulatory (“I&I”) diseases. Rusfertide ​ Our most advanced clinical asset, rusfertide (generic name for PTG-300), is an injectable hepcidin mimetic in development for the potential treatment of polycythemia vera (“PV”) and other blood disorders.
Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, we may be adversely affected in the future due to domestic and global monetary and fiscal policy, supply chain constraints, consequences associated with COVID-19 and the ongoing conflict between Russia and Ukraine, and such factors may lead to increases in the cost of manufacturing our product candidates and delays in initiating trials.
Although we do not believe that inflation has had a material adverse impact on our financial position or results of operations to date, our financial position or results of 59 Table of Contents operations may be adversely affected in the future due to numerous factors, including domestic and global monetary and fiscal policy, supply chain constraints, consequences associated with ongoing military conflicts, including between Russia and Ukraine and in Israel and surrounding areas, and other factors, and such factors may lead to increases in the cost of manufacturing our product candidates and delays in initiating trials.
See Note 7 and Note 11 to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for additional information. ​ 71 ​ Table of Contents
See Note 7 and Note 9 to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for additional information. ​
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.
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 60 Table of Contents value of assets and liabilities that are not readily apparent from other sources.
Capital Requirements As of December 31, 2022, we had $237.4 million of cash, cash equivalents and marketable securities and an accumulated deficit of $536.8 million. Our capital expenditures were $0.8 million, $1.1 million and $0.5 million for the years ended December 31, 2022, 2021 and 2020, respectively.
Capital Requirements As of December 31, 2023, we had $341.6 million of cash, cash equivalents and marketable securities and an accumulated deficit of $615.7 million. Our capital expenditures were $0.6 million, $0.8 million and $1.1 million for the years ended December 31, 2023, 2022 and 2021, respectively.
We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.
Actual results may differ from these estimates under different assumptions or conditions. We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.
Net proceeds, after deducting underwriting commissions and offering costs paid by us, were $105.3 million. In November 2019, we entered into an Open Market Sale Agreement SM (the “Prior Sales Agreement”), pursuant to which we could offer and sell up to $75.0 million of shares of our common stock from time to time in “at-the-market” offerings (the “2019 ATM Facility”).
Net proceeds, after deducting underwriting commissions and offering costs paid by us, were approximately $107.8 million. ​ In August 2022, we entered into an Open Market Sale Agreement SM , pursuant to which we may offer and sell up to $100.0 million shares of our common stock from time to time in “at-the-market” offerings (the “2022 ATM Facility”).
In such case the effect that the contract modification has on the transaction price, and on the entity’s measure of progress toward complete satisfaction of the performance obligation, is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) at the date of the contract modification (the adjustment to revenue is made on a cumulative catch-up basis).
In such case the effect that the contract modification has on the transaction price, and on the entity’s measure of progress toward complete satisfaction of the performance obligation, is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) at the date of the contract modification (the adjustment to revenue is made on a cumulative catch-up basis). 62 Table of Contents Research and Development Costs Research and development costs are expensed as incurred, unless there is an alternate future use in other research and development projects or otherwise.
Janssen is a related party to us as Johnson & Johnson Innovation - JJDC, Inc., a significant stockholder of ours, and Janssen are both subsidiaries of Johnson & Johnson. Upon the effectiveness of the Original Agreement, we received a non-refundable, upfront cash payment of $50.0 million from Janssen.
Prior to January 1, 2023, JNJ was a related party to us as Johnson & Johnson Innovation - JJDC, Inc. was a significant (greater than 5%) stockholder of the Company, and both companies are subsidiaries of Johnson & Johnson. Upon the effectiveness of the Original Agreement, we received a non-refundable, upfront cash payment of $50.0 million from JNJ.
Our future results of operations and liquidity could be adversely impacted by further delays in existing and planned clinical trials, continued difficulty in recruiting patients for these clinical trials, delays in manufacturing and collaboration activities, supply chain disruptions and the ongoing impact on our operating activities and employees.
Our future results of operations and liquidity could be adversely impacted by outbreaks of disease, epidemics and pandemics, including potential further delays in existing and planned clinical trials, difficulty in recruiting patients for these clinical trials, delays in manufacturing and collaboration activities and supply chain disruptions.
As discussed in Part I, Item1A.“Risk Factors”, we are currently operating in a period of economic uncertainty and capital markets disruption, which has been significantly impacted by domestic and global monetary and fiscal policy, and geopolitical instability, among other factors.
As discussed in Part I, Item 1A,”Risk Factors,” we are currently operating in a period of macroeconomic uncertainty and capital markets disruption, which has been significantly impacted by domestic and global monetary and fiscal policy, geopolitical instability, inflationary pressures, high interest rates and banking and other financial institution instability, among other factors.
(2) Includes $9.5 million and $7.4 million of non-cash stock-based compensation expense for the years ended December 31, 2022 and 2021, respectively. ​ *Percentage not meaningful ​ License and Collaboration Revenue License and collaboration revenue decreased $0.8 million, or 3%, from $27.4 million for the year ended December 31, 2021 to $26.6 million for the year ended December 31, 2022.
(2) Includes $12.2 million and $9.5 million of non-cash stock-based compensation expense for the years ended December 31, 2023 and 2022, respectively. ​ License and Collaboration Revenue License and collaboration revenue increased $33.4 million, or 126%, from $26.6 million for the year ended December 31, 2022 to $60.0 million for the year ended December 31, 2023.
The agreement with Janssen was amended in May 2019 to expand the collaboration by supporting efforts towards second-generation IL-23R antagonists; and in July 2021 to, among other things, enable Janssen to independently research and develop collaboration compounds for multiple indications in the IL-23 pathway and further align our financial interests. ​ 55 ​ Table of Contents During the fourth quarter of 2021, following a pre-specified interim analysis criteria, a portfolio decision was made by Janssen to advance second-generation product candidate JNJ-2113 (JNJ-77242113) based on its superior potency and overall pharmacokinetic and pharmacodynamic profile.
The agreement with JNJ was amended in May 2019 to expand the collaboration by supporting efforts towards second-generation IL-23R antagonists; and in July 2021 to, among other things, enable JNJ to independently research and develop collaboration compounds for multiple indications in the IL-23 pathway and further align our financial interests. ​ Following completion of a Phase 1 trial in the fourth quarter of 2021, a decision was made by JNJ to advance second-generation product candidate JNJ-2113 (JNJ-77242113) based on its superior potency and overall pharmacokinetic and pharmacodynamic profile. ​ In February 2022, JNJ initiated FRONTIER 1, a 255-patient Phase 2b clinical trial of JNJ-2113 in moderate-to-severe plaque psoriasis, which was completed in December 2022.
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.
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.
We are currently operating in a period of economic uncertainty and capital markets disruption, which has been impacted by domestic and global monetary and fiscal policy, geopolitical instability, the ongoing military conflict between Russia and Ukraine and the rising tensions between China and Taiwan, a recessionary environment and historically high domestic and global inflation.
We expect to nominate a development candidate by the end of 2024. ​ Business Update ​ We are currently operating in a period of economic uncertainty and capital markets disruption, which has been impacted by domestic and global monetary and fiscal policy, geopolitical instability, ongoing military conflicts, including between Russia and Ukraine and in Israel and surrounding areas, rising tensions between China and Taiwan, a recessionary environment, historically high domestic and global inflation, high interest rates and instability in banks and other financial institutions.
Because of the numerous risks and uncertainties associated with the development and commercialization of our product candidates, we are unable to fully estimate the amounts of increased capital outlays and operating expenditures associated with our current and anticipated product development programs. For additional information, see Part I, Item 1A, Risk Factors—“Risks Related to our Financial Position and Capital Requirements”.
Because of the numerous risks and uncertainties associated with the development and commercialization of our product candidates, we are unable to fully estimate the amounts of increased capital outlays and operating expenditures associated with our current and anticipated product development programs.
Our future funding requirements will depend on many factors, including: ● the progress, timing, scope, results and costs of advancing our clinical trials for our product candidates, including the ability to enroll patients in a timely manner for our clinical trials; ● the costs of and our ability to obtain clinical and commercial supplies and any other product candidates we may identify and develop; ● our ability to successfully commercialize the product candidates we may identify and develop; ● the selling and marketing costs associated with our current product candidates and any other product candidates we may identify and develop, including the costs and timing of expanding our sales and marketing capabilities; ● the achievement of development, regulatory and sales milestones resulting in payments to us from Janssen under the Restated Agreement or other such arrangements that we may enter into, and the timing of such payments, if any; ● the timing, receipt and amount of royalties under the Restated Agreement on worldwide net sales of IL-23 receptor antagonist compounds, upon regulatory approval or clearance, if any; ● the amount and timing of sales and other revenues from our current product candidates and any other product candidates we may identify and develop, including the sales price and the availability of adequate third-party reimbursement; ● the cash requirements of any future acquisitions or discoveries of product candidates; ● the time and costs necessary to respond to technological and market developments; ● the extent to which we may acquire or in-license other product candidates and technologies; ● the costs necessary to attract, hire and retain qualified personnel; ● the costs of maintaining, expanding and protecting our intellectual property portfolio; and ● the costs of ongoing general and administrative activities to support the growth of our business.
Our future funding requirements will depend on many factors, including: ● the progress, timing, scope, results and costs of advancing our clinical trials for our product candidates, including the ability to enroll patients in a timely manner for our clinical trials; ● the costs of and our ability to obtain clinical and commercial supplies for our current product candidates and any other product candidates we may identify and develop; ● our ability to successfully commercialize our current product candidates and any other product candidates we may identify and develop; ● the success of our existing or future collaborations with third parties; ● the selling and marketing costs associated with our current product candidates and any other product candidates we may identify and develop, including the costs and timing of expanding our sales and marketing capabilities; ● the achievement of development, regulatory and sales milestones resulting in payments to us from JNJ under the Restated Agreement, Takeda under the Takeda Collaboration Agreement or other such arrangements that we may enter into, and the timing of receipt of such payments, if any; ● the timing, receipt and amount of royalties from JNJ under the Restated Agreement or Takeda under the Takeda Collaboration Agreement upon regulatory approval or clearance, if any; ● the amount and timing of sales and other revenues from our current product candidates and any other product candidates we may identify and develop, including the sales price and the availability of adequate third-party reimbursement; ● the cash requirements of any future acquisitions or discoveries of product candidates; ● the time and costs necessary to respond to technological and market developments; ● the extent to which we may acquire or in-license other product candidates and technologies; 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.
In the REVIVE trial, subjects were initially enrolled in the 28-week open label dose-titration and efficacy evaluation Part 1 of the study, followed by 1:1 randomization of 53 subjects to placebo versus rusfertide therapy for a subsequent duration of 12 weeks. 54 ​ Table of Contents More subjects receiving rusfertide during the blinded randomized withdrawal portion of the REVIVE trial were responders compared with placebo (69.2% versus 18.5%, p=0.0003).
In the REVIVE trial, subjects were initially enrolled in the 28-week open label dose-titration and efficacy evaluation Part 1 of the study, followed by 1:1 randomization of 53 subjects to placebo versus rusfertide therapy for a subsequent duration of 12 weeks.
We believe that, compared to antibody drugs, JNJ-2113 has the potential to provide clinical improvement in an oral medication with increased convenience and compliance and the opportunity for the earlier introduction of targeted oral therapy. ​ In May 2017, we entered into a worldwide license and collaboration agreement with Janssen Biotech, Inc.
We believe that, compared to antibody drugs, JNJ-2113 has the potential to provide clinical improvement in an oral medication with increased convenience and compliance and the opportunity for the earlier introduction of targeted oral therapy. ​ In May 2017, we entered into a worldwide license and collaboration agreement with JNJ, formerly Janssen, to co-develop and co-detail our IL-23R antagonist compounds, including PTG-200 (JNJ-67864238) and certain related compounds for all indications, including inflammatory bowel disease (“IBD”).
We do not assess whether a contract has a significant financing component if the expectation at contract inception is such that the period between payment by the customer and the transfer of the promised goods or services to the customer will be one year or less. 59 ​ Table of Contents Contractual cost sharing payments made to a customer or collaboration partner are accounted for as a reduction to the transaction price if such payments are not related to distinct goods or services received from the customer or collaboration partner.
We do not assess whether a contract has a significant financing component if the expectation at contract inception is such that the period between payment by the customer and the transfer of the promised goods or services to the customer will be one year or less.
Allocated expenses consist of expenses for rent and maintenance of facilities, information technology, depreciation and amortization expense and other administrative supplies.
Personnel costs consist of salaries, benefits and 64 Table of Contents stock-based compensation. Allocated expenses consist of expenses for rent and maintenance of facilities, information technology, depreciation and amortization expense and other administrative supplies.
PN-943 ​ PN-943 is a wholly owned, investigational, orally delivered, gut-restricted alpha 4 beta 7 (“α4β7”) specific integrin antagonist for IBD. During the second quarter of 2020, we initiated IDEAL, a 159 patient Phase 2 trial evaluating the safety, tolerability and efficacy of PN-943 in patients with moderate to severe UC.
PN-943 ​ PN-943 is a wholly owned investigational orally delivered gut-restricted alpha 4 beta 7 specific integrin antagonist for IBD. We completed a Phase 2 trial of PN-943 in patients with moderate to severe UC in early 2023.
Our platform enables us to engineer novel, structurally constrained peptides that are designed to retain key advantages of both orally delivered small molecules and injectable antibody drugs in an effort to overcome many of their limitations as therapeutic agents. 56 ​ Table of Contents Importantly, constrained peptides can be designed to potentially alleviate the fundamental instability inherent in traditional peptides to allow different delivery forms, such as oral, subcutaneous, intravenous, and rectal.
Our platform enables us to engineer novel, structurally constrained peptides that are designed to retain key advantages of both orally delivered small molecules and injectable antibody drugs in an effort to overcome many of their limitations as therapeutic agents.
Contracts may be amended to account for changes in contract specifications and requirements. Contract modifications exist when the amendment either creates new, or changes existing, enforceable rights and obligations.
Contract modifications exist when the amendment either creates new, or changes existing, enforceable rights and obligations.
Any failure to raise capital as and when needed could have a negative impact on our financial condition and on our ability to pursue our business plans and strategies. Further, our operating plans may change, and we may need additional funds to meet operational needs and capital requirements for clinical trials, other research and development activities and pre-commercialization costs.
Further, our operating plans may change, and we may need additional funds to meet operational needs and capital requirements for clinical trials, other research and development activities and pre-commercialization costs.
Purchases of property and equipment were primarily related to purchases of laboratory and computer equipment. Cash used in investing activities for the year ended December 31, 2021, was $15.9 million, consisting of purchases of marketable securities of $286.6 million and purchases of property and equipment of $1.1 million, partially offset by proceeds from maturities of marketable securities of $271.8 million.
Cash (Used in) Provided by Investing Activities Cash used in investing activities for the year ended December 31, 2023 was $39.3 million, consisting of purchases of marketable securities of $191.1 million and purchases of property and equipment of $0.6 million, partially offset by proceeds from maturities of marketable securities of $152.4 million.
The following table includes our cash flow data for the periods indicated (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, Consolidated Statements of Cash Flows Data: 2022 2021 2020 ​ ​ (Dollars in thousands) Cash used in operating activities ​ $ (108,137) ​ $ (107,865) ​ $ (72,484) Cash provided by (used in) investing activities ​ $ 91,468 ​ $ (15,860) ​ $ (90,965) Cash provided by financing activities ​ $ 18,838 ​ $ 129,923 ​ $ 247,626 Stock-based compensation ​ $ 24,202 ​ $ 16,395 ​ $ 7,899 ​ Cash Used in Operating Activities Cash used in operating activities during the year ended December 31, 2022, was $108.1 million, consisting primarily of our net loss of $127.4 million and a net change of $7.8 million in net operating assets and liabilities, partially offset by certain non-cash items, including $24.2 million of stock-based compensation expense.
For additional information, see Part I, Item 1A, “Risk Factors — Risks Related to our Financial Position and Capital Requirements.” The following table summarizes our cash flows for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 2022 2021 Consolidated Statements of Cash Flows Data: ​ (Dollars in thousands) Cash used in operating activities ​ $ (70,236) ​ $ (108,137) ​ $ (107,865) Cash (used in) provided by investing activities ​ $ (39,258) ​ $ 91,468 ​ $ (15,860) Cash provided by financing activities ​ $ 170,477 ​ $ 18,838 ​ $ 129,923 Stock-based compensation ​ $ 29,293 ​ $ 24,202 ​ $ 16,395 ​ Cash Used in Operating Activities Cash used in operating activities for the year ended December 31, 2023 was $70.2 million, consisting primarily of our net loss of $79.0 million and a net change of $19.5 million in net operating assets and liabilities, partially offset by certain non-cash items, including $29.2 million of stock-based compensation expense.
Upcoming potential development milestones for second-generation products include: ● $10.0 million upon the dosing of the third patient in the first Phase 2 clinical trial for any second-generation product for a second indication (i.e., an indication different than the indication which triggered the $25.0 million milestone payment received during the first quarter of 2022 described above); ● $50.0 million upon the dosing of the third patient in a Phase 3 clinical trial for a second-generation compound for any indication; ● $15.0 million upon the dosing of the third patient in a Phase 3 clinical trial for a second-generation compound for a second indication; and ● $115.0 million upon a Phase 3 clinical trial for a second-generation compound for any indication meeting its primary clinical endpoint.
Upcoming potential development milestones for second-generation products include: ● $115.0 million upon a Phase 3 clinical trial for a second-generation compound for any indication meeting its primary clinical endpoint; ● $35.0 million upon the filing of an NDA for a second-generation compound with the FDA; ● $50.0 million upon FDA approval of an NDA for a second-generation compound; and ● $15.0 million upon the dosing of the third patient in a Phase 3 clinical trial for a second-generation compound for a second indication.
See Note 3 to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for additional information. Critical Accounting Polices and Estimates Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with United States generally accepted accounting principles.
Critical Accounting Polices and Estimates Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”).
We amended the Zealand Agreement on February 28, 2014, at which point we assumed responsibility for the development program. On January 23, 2020, we initiated arbitration proceedings with the International Court of Arbitration of the International Chamber of Commerce against Zealand. On August 4, 2021, we and Zealand agreed to resolve the dispute and reached an Arbitration Resolution Agreement.
In January 2020, we initiated arbitration proceedings with the International Court of Arbitration of the International Chamber of Commerce against Zealand. In August 2021, we and 71 Table of Contents Zealand agreed to resolve the dispute and reached an Arbitration Resolution Agreement.
Cash provided by financing activities for the year ended December 31, 2021, was $129.9 million, consisting primarily of cash proceeds from our public offerings of common stock of $123.8 million and proceeds from the issuance of common stock upon the exercise of stock options and purchases of common stock under our employee stock purchase plan of $6.3 million.
Cash Provided by Financing Activities Cash provided by financing activities for the year ended December 31, 2023 was $170.5 million, consisting primarily of net cash proceeds of $107.8 million from the April 2023 public offering of our common stock, $24.3 million from sales of our common stock under the 2022 ATM Facility, $34.4 million from the exercise of the Warrants in exchange for issuance of Pre-Funded Warrants and common stock, and $4.8 million in proceeds from the issuance of common stock upon exercise of stock options and purchases of common stock under our employee stock purchase plan.
The $35.4 million increase in cash flow used in operating activities during the year ended December 31, 2021, as compared to the year ended December 31, 2020, was primarily due to a $59.4 million increase in our net loss, partially offset by certain non-cash items including an increase of $8.5 million of stock-based compensation expense, and a $14.2 million change in decrease in deferred revenue.
Cash used in operating activities for the year ended December 31, 2022 was $108.1 million, consisting primarily of our net loss of $127.4 million and a net change of $7.8 million in net operating assets and liabilities, partially offset by certain non-cash items, including $24.2 million of stock-based compensation expense.
With the exception of completing the 40-week extended treatment period for eligible patients in the IDEAL trial, which is expected to be completed in the first quarter of 2023, we do not intend to dedicate further internal resources to clinical development or contract manufacturing activities for our PN-943 clinical program. ​ Discovery Platform ​ Our clinical assets are all derived from our proprietary discovery platform.
We do not intend to dedicate further internal resources to clinical development or contract manufacturing activities for our PN-943 clinical program. ​ Discovery Platform ​ Our clinical assets are all derived from our proprietary discovery platform.
Net proceeds, after deducting underwriting commissions and offering costs paid by us, were $107.6 million. ​ In May 2020, we completed an underwritten public offering of 7,000,000 shares of our common stock at a public offering price of $14.00 per share, and we issued an additional 1,050,000 shares of our common stock at a price of $14.00 per share following the underwriters’ exercise of their option to purchase additional shares.
Proceeds from Sales of Our Common Stock ​ In April 2023, we completed an underwritten public offering of 5,000,000 shares of our common stock at a public offering price of $20.00 per share and issued an additional 750,000 shares of common stock at a price of $20.00 per share following the underwriters’ exercise of their option to purchase additional shares.
The process of conducting research, identifying potential product candidates and conducting pre-clinical 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 product candidates regardless of our costs and efforts.
We do not intend to dedicate further internal resources to clinical development or contract manufacturing activities for our PN-943 clinical program. The process of conducting research, identifying potential product candidates and conducting pre-clinical studies and clinical trials necessary to obtain regulatory approval and commencing pre-commercialization activities is costly and time intensive.
Our primary uses of cash are to fund our operating expenses, primarily related to our research and development expenditures, general and administrative costs and pre-commercialization costs. Cash used in operating activities is impacted by the timing of when we pay these expenses.
Our primary uses of cash are to fund our operating 68 Table of Contents expenses, primarily related to our research and development expenditures and general 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. Interest Expense Interest expense consists of interest recognized on our long-term debt, which is comprised of contractual interest, amortization of origination fees and other issuance costs, and accretion of final payment fees.
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, Net Other expense, net consists primarily of amounts related to foreign exchange gains and losses and related items.
Research and development expenses for the year ended December 31, 2022 included increases of $5.7 million in stock-based compensation expense and $4.7 million of other personnel-related expenses compared to the year ended December 31, 2021.
Research and development personnel-related expenses for the year ended December 31, 2023 increased by $1.1 million as compared to the year ended December 31, 2022 primarily due to an increase of $2.3 million in stock-based compensation expense, partially offset by a decrease of $1.2 million of other personnel-related expenses.
We will continue to explore out-licensing opportunities globally. ​ General and Administrative Expenses General and administrative expenses consist of personnel costs, allocated facilities costs and other expenses for outside professional services, including legal, human resources, audit and accounting services, and pre-commercialization expenses, including selling and marketing costs. Personnel costs consist of salaries, benefits and stock-based compensation.
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 facilities costs and other expenses for outside professional services, including legal, human resources, audit and accounting services, and pre-commercialization expenses, including selling and marketing costs.
Contractual Obligations and Other Commitments In the normal course of business, we enter into agreements with contract service providers to assist in the performance of our research and development activities and clinical and commercial manufacturing activities. Subject to required notice periods and our obligations under binding commitments, we can elect to discontinue the work under these agreements at any time.
These decreases were partially offset by a $14.6 million increase in cash proceeds from ATM sales. Contractual Obligations and Other Commitments In the normal course of business, we enter into agreements with contract service providers to assist in the performance of our research and development activities and clinical and commercial manufacturing activities.
Other Expense, Net Other expense, net consists primarily of amounts related to foreign exchange gains and losses and related items. ​ 62 ​ Table of Contents Results of Operations ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Dollar ​ % ​ 2022 2021 Change Change ​ ​ (Dollars in thousands) ​ ​ License and collaboration revenue - related party ​ $ 26,581 ​ $ 27,357 ​ $ (776) ​ (3) Operating expenses: ​ ​ ​ Research and development (1) ​ ​ 126,215 ​ ​ 126,006 ​ ​ 209 - General and administrative (2) ​ 31,739 ​ 27,196 ​ 4,543 17 Total operating expenses ​ 157,954 ​ 153,202 ​ 4,752 3 Loss from operations ​ (131,373) ​ (125,845) ​ (5,528) 4 Interest income ​ 4,060 ​ ​ 443 ​ 3,617 * Other expense, net ​ ​ (80) ​ ​ (149) ​ ​ 69 ​ (46) Net loss ​ $ (127,393) ​ $ (125,551) ​ $ (1,842) 1 (1) Includes $14.7 million and $9.0 million of non-cash stock-based compensation expense for the years ended December 31, 2022 and 2021, respectively.
Results of Operations ​ Comparison of the Years Ended December 31, 2023 and 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Dollar ​ % ​ 2023 2022 Change Change ​ ​ (Dollars in thousands) ​ ​ License and collaboration revenue ​ $ 60,000 ​ $ 26,581 ​ $ 33,419 ​ 126 Operating expenses: ​ ​ ​ Research and development (1) ​ ​ 120,161 ​ ​ 126,215 ​ ​ (6,054) (5) General and administrative (2) ​ 33,491 ​ 31,739 ​ 1,752 6 Total operating expenses ​ 153,652 ​ 157,954 ​ (4,302) (3) Loss from operations ​ (93,652) ​ (131,373) ​ 37,721 (29) Interest income ​ 14,898 ​ ​ 4,060 ​ 10,838 267 Other expense, net ​ ​ (201) ​ ​ (80) ​ ​ (121) ​ 151 Net loss ​ $ (78,955) ​ $ (127,393) ​ $ 48,438 (38) (1) Includes $17.1 million and $14.7 million of non-cash stock-based compensation expense for the years ended December 31, 2023 and 2022, respectively.
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. 61 ​ Table of Contents We expect our research and development expenses to decrease in the near term as we continue to de-prioritize our PN-943 clinical program and streamline certain discovery programs to focus our resources toward progressing our rusfertide program into later stage clinical trials and preparing for commercialization.
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.
As a result, we expect to continue to incur losses in the future as we continue our development of, and seek regulatory approval for, our product candidates. 57 ​ Table of Contents Janssen License and Collaboration Agreement On July 27, 2021, we entered into the Restated Agreement with Janssen, which amends and restates the Original Agreement, as amended by the First Amendment.
As a result, we expect to continue to incur losses in the future as we continue our development of, and seek regulatory approval for, our product candidates.
The $117.7 million decrease in cash provided by financing activities for the year ended December 31, 2021, as compared to the year ended December 31, 2020, was primarily due to an $89.5 million decrease in cash proceeds from our public offerings of common stock, a $42.1 million decrease in cash proceeds from ATM sales.
The $151.6 million increase in cash provided by financing activities for the year ended December 31, 2023, as compared to the year ended December 31, 2022, was primarily due to a $107.8 million increase in net cash proceeds from the April 2023 public offering, a $9.7 million increase in cash proceeds from ATM sales and a $34.4 million increase in net cash proceeds from the exercise of the Warrants.
See Note 3 to the Consolidated Financial Statements elsewhere in this Annual Report on Form 10- K for additional information. In June 2012, we entered into the Zealand Agreement to identify, optimize and develop novel disulfide-rich peptides to discover a hepcidin mimetic.
See Note 3 to the Consolidated Financial Statements elsewhere in this Annual Report on Form 10- K for additional information. In January 2024, we entered into the Takeda Collaboration Agreement, which is yet to become effective. See Note 15 to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for additional information.
A study subject was defined as a responder if the subject completed 12 weeks of double-blind treatment while maintaining hematocrit control without phlebotomy eligibility and without phlebotomy.
More subjects receiving rusfertide during the blinded randomized withdrawal portion of the REVIVE trial were responders compared with placebo (69.2% versus 18.5%, p=0.0003). A trial subject was defined as a responder if the subject completed 12 weeks of double-blind treatment while maintaining hematocrit control without phlebotomy eligibility and without phlebotomy.
We completed enrollment of patients in the first quarter of 2022 with a target of approximately 50 patients to be enrolled through the end of the randomization portion of the trial, which was completed during the first quarter of 2023, and will continue in open label extension. ​ ● PACIFIC, another Phase 2 trial for rusfertide patients diagnosed with PV and with routinely elevated hematocrit levels (>48%), was initiated during the first quarter of 2021 and completion of the 52-week trial is expected during the second quarter of 2023. ​ At the June 2022 American Society of Clinical Oncology (“ASCO”) Annual Meeting, we presented updated interim results for REVIVE and PACIFIC demonstrating the effects of dosing interruption and resumption.
We completed enrollment of patients in the first quarter of 2022 and 70 patients were enrolled through the end of the randomized withdrawal portion of the trial, which was completed during the first quarter of 2023 and is continuing in an ongoing open-label extension (“OLE”); ​ ● THRIVE, a Phase 2 long-term extension trial for REVIVE patients on years three through five of treatment; and ​ ● PACIFIC, another Phase 2 trial for rusfertide for patients diagnosed with PV and with routinely elevated hematocrit levels (>48%), was initiated during the first quarter of 2021, and the 52-week trial was completed during the second quarter of 2023. ​ In March 2023, we announced positive topline results from the blinded, placebo-controlled, randomized withdrawal portion of the REVIVE trial.
In the second quarter of 2022, we received a $25.0 million milestone payment in connection with the dosing of a third patient in FRONTIER1 during the first quarter of 2022.
In the first quarter of 2024, we received a $10.0 million milestone payment from JNJ in connection with the dosing of the third patient in connection with the ANTHEM Phase 2b clinical trial of JNJ-2113 in patients with UC in the fourth quarter of 2023.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeInflation Fluctuation Risk Inflation has increased during the period covered by this report and is expected to continue to at elevated levels or even increase for the near future. Inflation generally affects us by increasing our costs, such as the cost of labor and research and development contract costs.
Biggest changeInflation Fluctuation Risk The inflationary environment has decreased over the period covered by this Annual Report on Form 10-K as compared to prior year periods. Inflation generally affects us by increasing our costs, such as the cost of labor and research and development contract costs.
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 our results of operations.
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.
We do not believe inflation has had a material effect on our results of operations during the year ended December 31, 2022. 72 ​ Table of Contents
We do not believe inflation has had a material effect on the results of our operations during the year ended December 31, 2023. ​ 72 Table of Contents
Approximately $2.5 million and $1.1 million of our cash balance was located in Australia at December 31, 2022 and 2021, 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.
Approximately $0.9 million and $2.5 million of our cash balance was located in Australia at December 31, 2023 and 2022, 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.
Interest Rate Fluctuation Risk We had $237.4 million and $326.9 million in cash, cash equivalents and marketable securities at December 31, 2022 and 2021, respectively. Our cash and cash equivalents consist of cash, money market funds, commercial paper and government bonds. Marketable securities consist of corporate bonds, commercial paper, government bonds and highly rated supranational and sovereign government securities.
Interest Rate Fluctuation Risk We had $341.6 million and $237.4 million in cash, cash equivalents and marketable securities at December 31, 2023 and 2022, respectively. Our cash and cash equivalents consist of cash, money market funds, commercial paper and government bonds. Marketable securities consist of certificates of deposit, corporate bonds, commercial paper and government bonds.
Removed
A portion of our investments may be subject to interest rate risk and could fall in value if market interest rates continue to increase.
Added
A portion of our investments are interest-bearing instruments carrying a degree of interest rate risk.
Removed
Based on our interest rate sensitivity analysis, a hypothetical 100 basis point increase in interest rates would increase our interest income by approximately $1.8 million, while an immediate 100 basis point decrease in interest rates would decrease our interest income by approximately $2.3 million.
Added
However, because our investments are of high-quality credit rating and are short term in duration, we believe that our exposure to interest rate risk is not significant and that a hypothetical 100 basis point change in interest rates would not have a significant impact on the total value of our portfolio.

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