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What changed in Protagonist Therapeutics, Inc's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Protagonist Therapeutics, Inc's 2023 and 2024 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 2024 report.

+518 added−503 removedSource: 10-K (2025-02-21) vs 10-K (2024-02-27)

Top changes in Protagonist Therapeutics, Inc's 2024 10-K

518 paragraphs added · 503 removed · 334 edited across 10 sections

Item 1. Business

Business — how the company describes what it does

148 edited+95 added−65 removed146 unchanged
Biggest changeThe 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.
Biggest changeFailure 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. 23 Table of Contents 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.
We have robust recruitment and retention processes in place that are designed to attract and retain individuals who possess the necessary expertise, innovative drive and commitment to contribute to our mission. We offer competitive compensation packages, including performance-based incentives, equity awards, and comprehensive benefits, including 401(k) plan matching contributions and an employee stock purchase plan for U.S. employees.
We have robust recruitment and retention processes in place that are designed to attract and retain individuals who possess the necessary expertise, innovative drive and commitment to contribute to our mission. We offer competitive compensation packages, including performance-based incentives, equity awards, and robust benefits, including 401(k) plan matching contributions and an employee stock purchase plan for U.S. employees.
The principal purpose of our equity incentive and annual bonus programs is to attract, retain and motivate personnel through the granting of stock-based compensation awards and cash-based performance bonus awards. As a biopharmaceutical company, we recognize the importance of access to high quality healthcare and as such we cover 100% of our U.S. employees’ monthly healthcare premiums.
The principal purpose of our equity incentive and annual bonus programs is to attract, retain and motivate personnel through the granting of stock-based compensation awards and cash-based performance bonus awards. As a biopharmaceutical company, we recognize the importance of access to high quality healthcare and as such we currently cover 100% of our U.S. employees’ monthly healthcare premiums.
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).
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 (Omvoh®) (UC and CD).
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.
Specific patents and patent applications are directed to compositions of α 4 β7 integrin peptides, IL-23R antagonist peptides, IL-17 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.
A protocol for each clinical trial and any subsequent protocol amendments must be submitted to the FDA as part of the IND (or equivalent international submission). In addition, an IRB or ethics committee (“EC”) must review and approve the plan for any clinical trial at all institutions participating in the clinical trial before it commences at that site.
A protocol for each clinical trial and any subsequent protocol amendments must be submitted to the FDA as part of the IND (or equivalent international submission). In addition, an IRB or ethics committee must review and approve the plan for any clinical trial at all institutions participating in the clinical trial before it commences at that site.
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.
More subjects receiving rusfertide during the blinded randomized withdrawal portion 10 Table of Contents 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.
Our rusfertide Phase 2 clinical trials include the following: ​ ● REVIVE, a Phase 2 proof of concept (“POC”) trial, was initiated in the fourth quarter of 2019.
Our rusfertide Phase 2 clinical trials include the following: ● REVIVE (NCT04057040) – A Phase 2 proof of concept (“POC”) trial, was initiated in the fourth quarter of 2019.
Rusfertide acts by 7 Table of Contents redistributing iron away from the bone marrow, where iron is essential for RBC production, thereby limiting excess RBC production while still providing sufficient iron levels to support other normal cellular and organ functions. Cancers are common in PV patients.
Rusfertide acts by redistributing iron away from the bone marrow, where iron is essential for RBC production, thereby limiting excess RBC production while still providing sufficient iron levels to support other normal cellular and organ functions. 9 Table of Contents Cancers are common in PV patients.
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.
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 the Children’s Health Insurance Program, with specific exceptions, to report annually to the CMS information related to payments and other transfers of value made to various healthcare professionals including physicians, physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, certified nurse-midwives and teaching hospitals, and ownership and investment interests held by physicians and their immediate family members.
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”).
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”). 34 Table of Contents
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.
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 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.
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.
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 JNJ-2113, phage display is tightly coupled to medicinal chemistry, structural biology and oral stability techniques to develop potent, selective and orally delivered molecules. Oral stability is profiled in a series of in vitro and ex vivo assays that portray the chemical and metabolic barriers a peptide will encounter as it transits the GI and systemic compartments as needed.
For icotrokinra, phage display is tightly coupled to medicinal chemistry, structural biology and oral stability techniques to develop potent, selective and orally delivered molecules. Oral stability is profiled in a series of in vitro and ex vivo assays that portray the chemical and metabolic barriers a peptide will encounter as it transits the GI and systemic compartments as needed.
In July 2023, we announced updated positive topline results from the trial, which were presented by JNJ at the World Congress of Dermatology in Singapore. JNJ-2113 achieved the trial’s primary and secondary efficacy endpoints.
In July 2023, we announced updated positive topline results from the trial, which were presented by JNJ at the World Congress of Dermatology in Singapore. Icotrokinra achieved the trial’s primary and secondary efficacy endpoints.
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.
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, PsA and UC and has completed successful Phase 3 clinical trials in CD.
An advisory committee is a panel of independent experts, including clinicians and other scientific experts, that reviews, evaluates and provides a recommendation as to whether the application should be approved and under what conditions. The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions.
An advisory committee is a panel of independent experts, including clinicians and other scientific experts, that reviews, evaluates and provides a recommendation as to whether the application should be approved and under what conditions. The FDA is not bound by 25 Table of Contents the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions.
Accordingly, manufacturers must continue to expend time, money, and effort in the area of production and quality control to maintain cGMP compliance. Once an approval is granted, the FDA may withdraw the approval if compliance with regulatory requirements and standards is not maintained or if problems occur after the product reaches the market.
Accordingly, manufacturers must continue to expend time, money, and effort in the area of production and quality control to maintain cGMP compliance. 27 Table of Contents Once an approval is granted, the FDA may withdraw the approval if compliance with regulatory requirements and standards is not maintained or if problems occur after the product reaches the market.
Bimekizumab (anti-IL-17A and F, UCB) has completed a positive Phase 3 program in psoriasis. Otezla® (Amgen) was the first oral agent approved in both psoriasis and psoriatic arthritis. The oral JAK inhibitors Xeljanz® (Pfizer) and Rinvoq® are approved in psoriatic arthritis. Several oral small molecules that inhibit the Janus kinase TYK2 are advancing in development.
Bimekizumab (anti-IL-17A and F, UCB) has completed a positive Phase 3 program in psoriasis. Otezla® (Amgen) was the first oral agent approved in both psoriasis and PsA. The oral JAK inhibitors Xeljanz® (Pfizer) and Rinvoq® are approved in PsA. Several oral small molecules that inhibit the Janus kinase TYK2 are advancing in development.
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).
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 (“PHL”).
Moreover, a patent can only be extended once, and thus, if a single patent is applicable to multiple products, it can only be extended based on one product. Similar provisions are available in Europe and other foreign jurisdictions to extend the term of a patent that covers an approved drug.
Moreover, a patent can only be extended 22 Table of Contents once, and thus, if a single patent is applicable to multiple products, it can only be extended based on one product. Similar provisions are available in Europe and other foreign jurisdictions to extend the term of a patent that covers an approved drug.
In addition to financial support of continuing education, we are active sponsors, mentors, and hosts for students seeking to broaden their understanding of life sciences in the interest of advancing human health. Human Capital ​ We recognize that our success is driven by the knowledge, skills and dedication of our employees.
In addition to financial support of continuing 33 Table of Contents education, we are active sponsors, mentors, and hosts for students seeking to broaden their understanding of life sciences in the interest of advancing human health. Human Capital We recognize that our success is driven by the knowledge, skills and dedication of our employees.
Orphan designation must be requested before submitting an NDA or BLA. After the FDA grants orphan designation, the identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA. Drugs or biologics with orphan designation are not subject to a PDUFA fee upon the submission of an NDA.
Orphan designation must be requested before submitting an NDA or BLA. After the FDA grants orphan designation, the identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA. Drugs or 26 Table of Contents biologics with orphan designation are not subject to a PDUFA fee upon the submission of an NDA.
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.
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.
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.
For more information, please see Item 1A, “Risk Factors—Risks Related to Our Intellectual Property.” We own or co-own 30 issued U.S. patents, over 68 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.
The injectable mAbs Cosentyx and Taltz targeting IL-17 AA and AF are approved in psoriasis, psoriatic arthritis, and SpA. Cosentyx was also recently the first IL-17 inhibitor approved in HS. Siliq, a mAb to the IL-17 receptor, is approved in psoriasis only and carries a black box warning for suicidal ideations.
The injectable mAbs Cosentyx and Taltz targeting IL-17 AA and AF are approved in psoriasis, PsA, and SpA. Cosentyx was also recently the first IL-17 inhibitor approved in HS. Siliq, a mAb to the IL-17 receptor, is approved in psoriasis only and carries a black box warning for suicidal ideations.
We also rely on trade secrets relating to our proprietary technology platform and on know-how, and continuing technological innovation to develop, strengthen, and maintain our proprietary position in the field of peptide-based therapeutics that may be important for the development of our business.
We also rely on trade secrets relating to our proprietary technology platform and on know-how, and continuing technological innovation to develop, strengthen, and maintain our 21 Table of Contents proprietary position in the field of peptide-based therapeutics that may be important for the development of our business.
Similarly, an IRB or EC can suspend or terminate approval of a clinical trial at its institution if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the drug has been associated with unexpected serious harm to patients.
Similarly, an IRB or ethics committee can suspend or terminate approval of a clinical trial at its institution if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the drug has been associated with unexpected serious harm to patients.
The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, collectively referred to as the ACA, enacted in March 2010, has had and is expected to continue to have a significant impact on the health care industry.
The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, collectively referred to as the ACA, enacted in March 2010, has had and is expected to continue to have a 28 Table of Contents significant impact on the health care industry.
Adoption of price controls and other cost-containment measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures reforms may prevent or limit our ability to generate revenue, attain profitability or commercialize our product candidates.
Adoption of price controls and other cost-containment measures, and adoption of more 29 Table of Contents restrictive policies in jurisdictions with existing controls and measures reforms may prevent or limit our ability to generate revenue, attain profitability or commercialize our product candidates.
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.
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.
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.
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. 19 Table of Contents Discovery and Pre-clinical Activities We believe we have built a versatile, well-validated and unique discovery platform.
In addition, in subjects with moderate or severe Myeloproliferative Neoplasm-Symptom Assessment Form (MPN-SAF) symptom scores at baseline, the change from baseline was statistically significant in fatigue, problems with concentration, inactivity and itching during the 28-week open label Part 1 of the trial.
In addition, in subjects with moderate or severe Myeloproliferative Neoplasm-Symptom Assessment Form (“MPN-SAF”) symptom scores at baseline, the change from baseline was statistically significant in fatigue, problems with concentration, inactivity and itching during the 28-week open label Part 1 of the trial.
For the year ended December 31, 2023, our employee turnover rate was approximately 7%. We have a performance development review process in which managers provide regular feedback to assist with the development of our employees, including the use of individual plans to assist with career development.
For the year ended December 31, 2024, our employee turnover rate was approximately 11%. We have a performance development review process in which managers provide regular feedback to assist with the development of our employees, including the use of individual plans to assist with career development.
At later stages, patients may receive interferons, marketed as Besrami® or Pegasus®, or ruxolitinib, a JAK inhibitor marketed as Jakafi®. Cytoreductive therapies such as hydroxyurea, interferons and ruxolitinib impact all cell lines and can have challenging side effect profiles associated with their cytoreductive mechanisms.
At later stages, patients may receive interferons, marketed as Besremi® or Pegasys®, or ruxolitinib, a JAK inhibitor marketed as Jakafi®. Cytoreductive therapies such as hydroxyurea, interferons and ruxolitinib impact all cell lines and can have challenging side effect profiles associated with their cytoreductive mechanisms.
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”).
JNJ License and Collaboration Agreement On July 27, 2021, we entered into an Amended and Restated License and Collaboration Agreement (the “JNJ License and Collaboration 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”).
We are aware of other investigational compounds under clinical development for treatment of PV, including short interfering RNA approaches aimed at modulating or increasing endogenous hepcidin levels. JNJ-2113 In psoriasis and psoriatic arthritis, competition will come from companies with approved injectable agents in the IL-17 and IL-12/23 pathway, including Cosentyx®, Taltz®, Siliq®, Tremfya®, and Skyrizi®.
We are aware of other investigational compounds under clinical development for treatment of PV, including short interfering RNA approaches aimed at modulating or increasing endogenous hepcidin levels. Icotrokinra In psoriasis and PsA, competition will come from companies with approved injectable agents in the IL-17 and IL-12/23 pathway, including Cosentyx®, Taltz®, Siliq®, Tremfya®, and Skyrizi®.
Cytokines are cell signaling proteins that are released by cells and affect the behavior of other cells. Binding of the IL-23 ligand to the IL-23R receptor leads to an expression of pro-inflammatory cytokines involved in the local tissue autocrine cascade that is an important pathway of many inflammatory diseases, including psoriasis and IBD.
Cytokines are cell signaling proteins that are released by cells and affect the behavior of other cells. Binding of the IL-23 ligand to the IL-23R receptor leads to an expression of pro-inflammatory cytokines involved in the local tissue autocrine cascade that is an important pathway of many inflammatory diseases, including psoriasis, PsA and inflammatory bowel disease (“IBD”).
A statistically significant greater proportion of patients who received JNJ-2113 achieving PASI-75 responses as well as PASI-90 and PASI-100 responses compared to placebo at week 16 in all five of the trial’s treatment groups. A clear dose response was observed across an eight-fold dose range.
A statistically significant greater proportion of patients who received icotrokinra achieved PASI-75 responses as well as PASI-90 and PASI-100 responses compared to placebo at week 16 in all five of the trial’s treatment groups. A clear dose response was observed across an eight-fold dose range.
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. 6 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 while overcoming many of their limitations as therapeutic agents. 8 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.
There are approximately 100,000 diagnosed and treated patients living in the United States, with a similar number in Europe, representing an estimated market opportunity of approximately $1.0 billion to $2.0 billion. Patients are typically diagnosed between the ages of 50 and 70, and median survival is approximately 20 years.
There are approximately 155,000 diagnosed (approximately 78,000 treated) patients living in the United States, with a similar number in Europe, representing an estimated market opportunity of approximately $1.0 billion to $2.0 billion. Patients are typically diagnosed between the ages of 50 and 70, and median survival is approximately 14 years.
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.
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.
The injectable antibody drug Stelara® (marketed for psoriasis, psoriatic arthritis, UC and CD) is a p40 antagonist antibody that inhibits both the IL-23 and IL-12 pathways.
The injectable antibody drug Stelara® (marketed for psoriasis, PsA, UC and CD) is a p40 antagonist antibody that inhibits both the IL-23 and IL-12 pathways.
We expect our patents and patent applications, if issued, and if the appropriate maintenance, renewal, annuity, or other governmental fees are paid, to expire from October 2033 to July 2041 (excluding possible patent term extensions).
We expect our patents and patent applications, if issued, and if the appropriate maintenance, renewal, annuity, or other governmental fees are paid, to expire from October 2033 to December 2044 (excluding possible patent term extensions).
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.
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.
An analysis of the PACIFIC Phase 2 trial was also presented that indicated rusfertide improves markers of iron deficiency in patients with PV. In addition, data was presented regarding the prevalence of thromboembolic events and secondary cancers in PV patients not treated with rusfertide.
An analysis of the PACIFIC Phase 2 trial was also presented which showed that rusfertide improved markers of iron deficiency in patients with PV. In addition, data was presented regarding the prevalence of thromboembolic events and secondary cancers in PV patients not treated with rusfertide.
European Data Protection Laws The collection and use of personal health data and other personal data in the EU is governed by the provisions of the European General Data Protection Regulation (EU) 2016/679 (“GDPR”).
European Data Protection Laws The collection and use of personal health data and other personal data in the EU is governed by the provisions of the European General Data Protection Regulation (EU) 2016/679 (“GDPR”) and related data protection laws in individual EU Member States.
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).
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 (gene therapy, somatic cell therapy or tissue engineered medicines), and medicinal products with a new active substance indicated for the treatment of certain diseases (HIV/AIDS, cancer, neurodegenerative disorders, diabetes, autoimmune and viral diseases).
In 2022, global sales for CD therapies were estimated to be $16.2 billion, with anticipated growth to $18.9 billion by 2028. ​ For many years, tumor necrosis factor-alpha (“TNF-α”) antibody drugs were the primary treatment for moderate-to-severe IBD. Humira® and Remicade® are injectable and infused, respectively.
In 2023, global sales for CD therapies were estimated to be $15.2 billion, with anticipated growth to $18.1 billion by 2030. For many years, tumor necrosis factor-alpha (“TNF-α”) antibody drugs were the primary treatment for moderate-to-severe IBD. Humira® and Remicade® are injectable and infused, respectively.
The next-generation selective JAK1/3 inhibitors, including Abbvie’s upadacitinib (Rinvoq®) was approved in UC and 16 Table of Contents CD in 2022. Pfizer’s selective JAK1/TEC inhibitor ritlecitinib is in Phase 2 development for UC and CD; and ● S1P1 receptor modulators: BMS’s ozanimod (Zeposia®) is approved in UC.
The next-generation selective JAK1/3 inhibitors, including Abbvie’s upadacitinib (Rinvoq®), were approved in UC and CD in 2022. Pfizer’s selective JAK1/TEC inhibitor ritlecitinib is in Phase 2 development for UC and CD; 20 Table of Contents ● S1P1 receptor modulators: BMS’s ozanimod (Zeposia®) and Pfizer’s etrasimod (Velsipity®) are approved in UC.
Alternatively, such transfers can be based on an adequacy decision by the EU commission. Regarding transfers to the US, the EU commission issued an adequacy decision for transfers to companies that are certified under the new EU-US Data Privacy Framework, which entered into force on June 10, 2023.
Regarding transfers to the US, the EU commission issued an adequacy decision for transfers to companies that are certified under the new EU-US Data Privacy Framework, which entered into force on June 10, 2023.
More recently, antibody products focused on potentially safer mechanisms of action have been gaining market share. One such product is Takeda’s Entyvio®, which targets the α4β7 integrin pathway. Takeda reported 2022 sales of Entyvio® of approximately $6.4 billion. Similarly, Johnson & Johnson’s Stelara®, which targets the Interleukin 12 (“IL-12”) and Interleukin 23 (“IL-23”) pathways, has gained significant traction.
More recently, antibody products focused on potentially safer mechanisms of action have been gaining market share. One such product is Takeda’s Entyvio®, which targets the α4β7 integrin pathway. Takeda reported 2023 sales of Entyvio® of approximately $5.2 billion. Similarly, Johnson & Johnson’s Stelara®, which targets the IL-12 and IL-23 pathways, has gained significant traction.
Human clinical trials are typically conducted in three sequential phases, which may overlap or be combined: ● Phase 1: The drug is initially introduced into healthy human subjects or patients with the target disease or condition and is tested for safety, dosage tolerance, absorption, metabolism, distribution, excretion and, if possible, to gain an early indication of its effectiveness. ● Phase 2: The drug is administered to a limited patient population to identify possible adverse effects and safety risks, and to preliminarily evaluate the efficacy of the investigational drug product for specific targeted diseases and to determine dosage tolerance and optimal dosage. ● Phase 3: The drug is administered to an expanded patient population to establish the overall risk-benefit profile of the product, and to provide adequate labeling information (labeling) for the safe and efficacious administration for the labeling of the product.
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. 24 Table of Contents Human clinical trials are typically conducted in three sequential phases, which may overlap or be combined: ● Phase 1: The drug is initially introduced into healthy human subjects or patients with the target disease or condition and is tested for safety, dosage tolerance, absorption, metabolism, distribution, excretion and, if possible, to gain an early indication of its effectiveness. ● Phase 2: The drug is administered to a limited patient population to identify possible adverse effects and safety risks, and to preliminarily evaluate the efficacy of the investigational drug product for specific targeted diseases and to determine dosage tolerance and optimal dosage. ● Phase 3: The drug is administered to an expanded patient population to establish the overall risk-benefit profile of the product, and to provide adequate labeling information (labeling) for the safe and efficacious administration for the labeling of the product.
We 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.
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 (NCT06033586) – A Phase 2 long-term OLE for REVIVE patients on years three through five of treatment; and ● PACIFIC (NCT04767802) – 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.
We may be subject to state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.
We may be subject to state laws governing the privacy and security of health information in certain circumstances, such as California’s Confidentiality of Medical Information Act and Washington’s My Health My Data Act, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.
Many other agents are in early-stage development in IBD, including injectable anti-TLIA antibodies by Pfizer and Prometheus, which have both recently presented positive Phase 2 results in UC. IL-17 In competitive areas, we believe there is a strong need for a differentiated oral approach.
Many other agents are in early-stage development in IBD, including injectable anti-TLIA antibodies by Pfizer and Merck, and Teva and Sanofi which have recently presented positive Phase 2 results in IBD. PN-881 In competitive areas, we believe there is a strong need for a differentiated oral approach.
If we are found to be in violation of any of the laws described above or any other governmental regulations that apply to us, we may be subject to penalties, including significant administrative, civil and criminal penalties, damages, fines, imprisonment, disgorgement, additional reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws, exclusion of products from reimbursement under U.S. federal or state health care programs, and the curtailment or restructuring of our operations.
If we are found to be in violation of any of the laws described above or any other governmental regulations that apply to us, we may be subject to penalties, including significant administrative, civil and criminal penalties, damages, fines, imprisonment, disgorgement, additional reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws, exclusion of products from reimbursement under U.S. federal or state health care programs, and the curtailment or restructuring of our operations. 30 Table of Contents Government Regulation Outside of the United States In addition to regulations in the United States, we will be subject to a variety of regulations in other jurisdictions governing clinical studies and any commercial sales and distribution of our products.
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.
We expect to initiate a PN-881 first-in-human Phase 1 study in fourth quarter of 2025. 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 discovery pipeline has strategically focused on i) hematology and blood disorders and ii) I&I diseases.
Our discovery pipeline has strategically focused on (i) hematology and blood disorders, (ii) I&I diseases and (iii) metabolic diseases, including obesity.
We initiated VERIFY, a global double-blind, placebo-controlled Phase 3 clinical trial of rusfertide in PV for approximately 250 patients, in the first quarter of 2022 (Figure 3). We expect enrollment completion by the end of the first quarter of 2024.
VERIFY: Rusfertide Phase 3 PV Trial Design We initiated VERIFY, a global double-blind, placebo-controlled Phase 3 clinical trial of rusfertide in PV for approximately 250 patients, in the first quarter of 2022 (Figure 4).
The mechanisms contributing to the increased risk of cancers in PV patients are not well understood. However, the subset of PV patients treated with hydroxyurea in this study of real-world claims data had nearly twice the rate of cancers compared to phlebotomy-only treated patients.
However, the subset of PV patients treated with hydroxyurea in this study of real-world claims data had nearly twice the rate of cancers compared to phlebotomy-only treated patients.
Environmental, Social, Governance (“ESG”) and Human Capital Disclosures ​ Governance and Leadership ​ Our Board of Directors (“Board”) plays a pivotal role in overseeing our strategic direction, risk management related to ESG matters and our overall governance framework. Our Board composition reflects a diversity in backgrounds, skills and experiences.
Sustainability, Corporate Responsibility and Human Capital Disclosures Governance and Leadership Our Board of Directors (“Board”) plays a pivotal role in overseeing our strategic direction, risk management related to sustainability and corporate responsibility matters and our overall governance framework. Our Board composition reflects a wide range of backgrounds, skills and experiences.
JNJ has initiated five additional JNJ-2113 trials, including: ● ICONIC-LEAD – A 600-patient randomized, controlled Phase 3 trial to evaluate the safety and efficacy of JNJ-2113 compared with placebo in participants with moderate-to-severe plaque psoriasis, with PASI-90 and Investigator’s Global Assessment (“IGA”) score of 0 (clear) or 1 (almost clear) as co-primary endpoints; ● ICONIC-TOTAL – A 300-patient randomized, controlled Phase 3 trial to evaluate the efficacy and safety of JNJ-2113 compared with placebo for the treatment of plaque psoriasis in participants with at least moderate severity affecting special areas (scalp, genital, and/or palms of the hands and soles of the feet) with overall IGA score of 0 or 1 as the primary endpoint; ● ICONIC ADVANCE 1 – A 750-patient randomized, controlled Phase 3 trial to evaluate the effectiveness of JNJ-2113 in participants with moderate-to-severe plaque psoriasis compared to placebo and Sotyktu (“deucravacitinib”).
JNJ has initiated the following icotrokinra trials: ● ICONIC-LEAD (NCT06095115) – A 684-patient randomized, controlled Phase 3 trial to evaluate the safety and efficacy of icotrokinra compared with placebo in participants with moderate-to-severe plaque psoriasis, with PASI-90 and IGA scores of 0 (clear) or 1 (almost clear) as co-primary endpoints; ● ICONIC-TOTAL (NCT06095102) – A 311-patient randomized, controlled Phase 3 trial to evaluate the efficacy and safety of icotrokinra compared with placebo for the treatment of plaque psoriasis in participants with at least moderate severity affecting special areas (scalp, genital, and/or palms of the hands and soles of the feet) with overall IGA scores of 0 or 1 as the primary endpoint; ● ICONIC-ADVANCE 1 (NCT06143878) – A 774-patient randomized, controlled Phase 3 trial to evaluate the effectiveness of icotrokinra in participants with moderate-to-severe plaque psoriasis compared to placebo and Sotyktu® (“deucravacitinib”).
Bimzelx is a mAb that targets IL-17 AA, AF and FF. It is approved in psoriasis and psoriatic arthritis with positive phase 3 results in SpA and HS. Sonelokimab (MoonLake) is an injectable nanobody with IL-17 AA, AF and FF activity and has demonstrated POC in Phase 2 in psoriasis, psoriatic arthritis, and HS.
Bimzelx is a mAb that targets IL-17 AA, AF and FF. It is approved in psoriasis, PsA, HS, SS and nr-axSpA. Sonelokimab (MoonLake) is an injectable nanobody with IL-17 AA, AF and FF activity and has demonstrated POC in Phase 2 in psoriasis, PsA, and HS.
EU Member States may also have additional requirements for health, genetic, and biometric data through their national legislation. The GDPR also imposes restrictions on the transfer of personal data to countries outside of the EU that do not provide an adequate level of data protection. To enable such transfers, appropriate safeguards, such as standard contractual clauses must be in place.
EU Member States may also have additional requirements for health, genetic, and biometric data through their national legislation. The GDPR also imposes restrictions on the transfer of personal data to countries outside of the EU that do not provide an adequate level of data protection.
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 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.
JNJ IL-23 monoclonal antibody (“mAb”) drugs Stelara and Tremfya generated $14.0 billion in revenues in 2023. In February 2024, the JNJ-2113 Phase 2b FRONTIER 1 trial results in adults living with moderate-to-severe plaque psoriasis were published in the New England Journal of Medicine.
JNJ IL-23 monoclonal antibody drugs Stelara and Tremfya generated approximately $14.1 billion in revenues in 2024. In February 2024, the icotrokinra Phase 2b FRONTIER 1 trial results in adults living with moderate-to-severe plaque psoriasis were published in the NEJM.
There are several oral IL-17 small molecules in clinical development with the most advanced, DC-806 (Lilly via acquisition of DICE Therapeutics) in a Phase 2b trial in psoriasis. JNJ and Sanofi are also developing small molecules.
There are several oral IL-17 small molecules in clinical development with the most advanced, DC-853 (Lilly via acquisition of DICE Therapeutics) in a Phase 2b trial in psoriasis. JNJ and Sanofi are also developing small molecules. Material Agreements Takeda Collaboration Agreement In January 2024, we entered into the Takeda Collaboration Agreement.
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.
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, 32 Table of Contents personal data breaches which may have to be notified to national data protection authorities and data subjects, the measures to be taken when engaging processors, and the technical and organization measures to ensure the security and confidentiality of the personal data.
We are developing rusfertide for the treatment of PV. Polycythemia Vera (“PV”) PV Overview and Market Opportunity PV is a rare myeloproliferative neoplasm that is typically associated with a Janus Kinase (“JAK”) 2 mutation. PV is primarily characterized by the overproduction of RBCs, which contributes to an elevated risk of cardiovascular and thrombotic events, such as heart attack and stroke.
Polycythemia Vera PV is a rare myeloproliferative neoplasm that is typically associated with a Janus Kinase (“JAK”) 2 mutation. PV is primarily characterized by the overproduction of red blood cells (“RBCs”), which contributes to an elevated risk of cardiovascular and thrombotic events, such as heart attack and stroke.
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.
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.
ICOTROKINRA: 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 IL-23R antagonist compounds for all indications, including IBD. See Part II, Item 7.
At JNJ’s Enterprise Business Review in December 2023, JNJ highlighted JNJ-2113 as a potential first- and best-in class targeted oral IL-23 peptide antagonist with potential across multiple indications, including plaque psoriasis, psoriatic arthritis and IBD, with potential peak year sales projection of $5.0 billion plus.
At JNJ’s Enterprise Business Review in December 2023, JNJ highlighted icotrokinra as a potential first- and best-in-class targeted oral IL-23 peptide antagonist with potential across multiple indications, including plaque psoriasis, PsA and inflammatory bowel disease, with potential peak year sales projected at greater than $5.0 billion.
Our human capital is fundamental to our ability to innovate and develop life-changing peptide drug therapies. We invest in our employees by seeking to foster a supportive, diverse and inclusive workplace.
Our human capital is fundamental to our ability to innovate and develop life-changing peptide drug therapies. We invest in our employees by seeking to foster a supportive and inclusive workplace. We offer competitive compensation and benefits and provide opportunities for professional growth and development.
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.
FRONTIER 1 was a randomized, multicenter, double-blind, placebo-controlled trial that evaluated three once-daily dosages and two twice-daily dosages of icotrokinra taken orally. The primary endpoint of the trial was the proportion of patients achieving PASI-75 at 16 weeks.
If these third-party payors do not consider our products to be cost-effective compared to other therapies, they may not cover our products after approval as a benefit under their plans or, if they do, the level of payment may not be sufficient to allow us to sell our products on a profitable basis. 24 Table of Contents There is no uniform policy requirement for coverage and reimbursement for drug products among third-party payors in the United States.
If these third-party payors do not consider our products to be cost-effective compared to other therapies, they may not cover our products after approval as a benefit under their plans or, if they do, the level of payment may not be sufficient to allow us to sell our products on a profitable basis.
Government Regulation ​ The FDA and comparable regulatory authorities in state and local jurisdictions and in other countries impose substantial requirements upon companies involved in the clinical development, manufacture, marketing and distribution 19 Table of Contents of drugs, such as those we are developing.
We currently engage CMOs on a “fee for services” basis for our current development and clinical supplies. Government Regulation The FDA and comparable regulatory authorities in state and local jurisdictions and in other countries impose substantial requirements upon companies involved in the clinical development, manufacture, marketing and distribution of drugs, such as those we are developing.
The FDA may decide to rescind the fast track designation if it determines that the qualifying criteria no longer apply. ​ Orphan Designation ​ The FDA may grant orphan designation to drugs or biologics intended to treat a rare disease or condition that affects fewer than 200,000 individuals in the United States.
Orphan Designation The FDA may grant orphan designation to drugs or biologics intended to treat a rare disease or condition that affects fewer than 200,000 individuals in the United States.
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.
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.
We believe in fostering a culture of integrity, ethical decision making, and responsible corporate citizenship. ​ Business Ethics ​ We are committed to creating an environment where we are able to excel in our business while maintaining the highest standards of business conduct and ethics.
Our executive leadership team is responsible for driving our performance and guiding our long-term growth initiatives. We believe in fostering a culture of integrity, ethical decision making, and responsible corporate citizenship. Business Ethics We are committed to creating an environment where we are able to excel in our business while maintaining high standards of business conduct and ethics.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisks Related to our Business and Industry We face significant competition from other biotechnology and pharmaceutical companies, and our operating results will suffer if we or our collaboration partners fail to compete effectively. The biotechnology and pharmaceutical industries are intensely competitive and subject to rapid and significant technological change.
Biggest changeThe potentially addressable patient population for our products may be limited or may not be amenable to treatment with our products, and new patients may become increasingly difficult to identify or access, which would adversely affect our results of operations and our business. 45 Table of Contents Risks Related to our Business and Industry We face significant competition from other biotechnology and pharmaceutical companies, and our operating results will suffer if we or our collaboration partners fail to compete effectively.
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.
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, and malicious intrusion such as ransomware and computer viruses that may result in the impairment of key business processes.
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.
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; 44 Table of Contents ● 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 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.
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; 55 Table of Contents ● 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.
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.
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; 41 Table of Contents ● 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.
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.
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 icotrokinra.
If we are not able to comply with the requirements of Section 404 or if we or our independent registered public accounting firm are unable to attest to the effectiveness of our internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports, the market price of our stock could decline and we could be subject to sanctions or investigations by Nasdaq, the SEC, or other regulatory authorities, which would require additional financial and management resources.
If we are not able to comply with the requirements of Section 404 or if we or our independent registered public accounting firm are unable to attest to the effectiveness of our internal control over 56 Table of Contents financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports, the market price of our stock could decline and we could be subject to sanctions or investigations by Nasdaq, the SEC, or other regulatory authorities, which would require additional financial and management resources.
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.
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.
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.
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.
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.
Any such adverse result or determination could have a material adverse effect on our business, financial condition and results of operations. 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.
The incurrence of indebtedness and/or the issuance of certain equity securities could result in fixed payment obligations and could also result in certain additional restrictive covenants, such as limitations on our ability to incur debt and/or issue additional equity, limitations on our ability to acquire or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business.
The incurrence of indebtedness and/or the issuance of certain equity securities could result in fixed 38 Table of Contents payment obligations and could also result in certain additional restrictive covenants, such as limitations on our ability to incur debt and/or issue additional equity, limitations on our ability to acquire or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct 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.
We may have disagreements with JNJ during the term of the JNJ License and Collaboration Agreement or Takeda under the Takeda Collaboration Agreement, and if they are not settled amicably or in the favor of Protagonist, the result may harm our business.
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.
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.
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.
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.
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.
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.
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.
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.
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 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 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.
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 have experienced ownership changes in the past, resulting in annual limitations in our ability to use our NOLs and credits. In addition, we may experience subsequent ownership changes as a result of future equity offerings or other changes in the ownership of our stock, some of which are beyond our control.
We have experienced ownership changes in the past, resulting in annual limitations in our ability to use our NOLs and credits. In addition, we may experience subsequent ownership changes as a result of future equity offerings or other changes in the ownership of our stock, some of which 57 Table of Contents are beyond our control.
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.
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 failure to identify relevant prior art relating to a patent or patent applications can invalidate a patent or prevent a patent from issuing. Even if patents have been issued, third parties may challenge the validity, enforceability or scope thereof, which may result in such patents being narrowed, invalidated or held unenforceable.
Any failure to 51 Table of Contents identify relevant prior art relating to a patent or patent applications can invalidate a patent or prevent a patent from issuing. Even if patents have been issued, third parties may challenge the validity, enforceability or scope thereof, which may result in such patents being narrowed, invalidated or held unenforceable.
We will have to pay any amounts awarded by a court or negotiated in a settlement that exceed our coverage limitations or that are not covered by our insurance, and we may not have, or be able to obtain, sufficient capital to pay such amounts. Our headquarters is located near known earthquake fault zones.
We will have to pay any amounts awarded by a court or negotiated in a settlement that exceed our coverage limitations or that are not covered by our insurance, and we may not have, or be able to obtain, sufficient capital to pay such amounts. 50 Table of Contents Our headquarters is located near known earthquake fault zones.
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.
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, who are responsible for appointing the members of our management.
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.
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, 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.
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.
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 creates concurrent jurisdiction for federal and state courts over all Securities Act actions.
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.
Icotrokinra, the product candidate in development pursuant to our JNJ collaboration, and rusfertide, the product candidate in development pursuant to the Takeda Collaboration Agreement, 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.
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.
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.
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.
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 the case of the Restated Agreement with JNJ or the Takeda Collaboration Agreement, we may elect to exercise our right to co-detail products, which would require us to establish a U.S. sales team.
In the case of the JNJ License and Collaboration Agreement or the Takeda Collaboration Agreement, we may elect to exercise our right to co-detail products, which would require us to establish a U.S. sales team.
If we are not successful in commercializing our product candidates, either on our own or through collaborations with one or more third parties, our future revenue will be materially and adversely impacted.
If we are not successful in 42 Table of Contents commercializing our product candidates, either on our own or through collaborations with one or more third parties, our future revenue will be materially and adversely impacted.
As a result of this volatility, investors may experience losses on their investment in our common stock, including due to the factors discussed in these “Risk Factors” and elsewhere in this Annual Report on Form 10-K. 50 Table of Contents Volatility in our share price could subject us to securities class action litigation.
As a result of this volatility, investors may experience losses on their investment in our common stock, including due to the factors discussed in these “Risk Factors” and elsewhere in this Annual Report. Volatility in our share price could subject us to securities class action litigation.
Risks Related to Regulatory Approval The regulatory approval processes of the FDA and comparable foreign authorities are lengthy and time consuming, and if we are ultimately unable to obtain regulatory approval for our product candidates, our business will be substantially harmed.
Risks Related to Regulatory Process and Other Legal Compliance Matters The regulatory approval processes of the FDA and comparable foreign authorities are lengthy and time consuming, and if we are ultimately unable to obtain regulatory approval for our product candidates, our business will be substantially harmed.
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.
Significant disruptions of information technology systems or cybersecurity incidents 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.
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 36 Table of Contents complete enrollment in our clinical trials.
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.
Under the terms of the JNJ License and Collaboration Agreement, 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 icotrokinra and any other licensed compounds.
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.
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.
If we are unable to prevent such data security breaches or privacy violations or implement satisfactory remedial measures, our operations could be disrupted, and we may suffer loss of reputation, financial loss and other regulatory penalties.
If we are unable to prevent such cybersecurity incidents or privacy violations or implement satisfactory remedial measures, our operations could be disrupted, and we may suffer loss of reputation, financial loss and other regulatory penalties.
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.
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.
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.
The laws that may affect our ability to operate include, but are not limited to: ● the federal Anti-Kickback Statute; 47 Table of Contents ● 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.
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.
If the JNJ License and Collaboration Agreement or the Takeda Collaboration Agreement is terminated early, or if JNJ’s or Takeda’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.
We expect to expand the size of our organization in the future, and we may experience difficulties in managing this growth. As of December 31, 2023, we had 112 full-time equivalent employees, including 85 full-time equivalent employees engaged in research and development.
We expect to expand the size of our organization in the future, and we may experience difficulties in managing this growth. As of December 31, 2024, we had 126 full-time equivalent employees, including 98 full-time equivalent employees engaged in research and development.
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.
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.
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.
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.
We will rely on our internal process research and development efforts and those of contract manufacturers to develop the required manufacturing processes for cost-effective, large-scale 40 Table of Contents production.
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.
Absent the funding support obtained under these agreements, 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, 2024, we had cash, cash equivalents and marketable securities of $559.2 million.
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.
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.
Clinical trials can also be delayed by the institutional review boards or ethics committees of the institutions in which such clinical trials are being conducted, by a Data Safety Monitoring Board, for such trial or by the FDA or other regulatory authorities.
Clinical trials can also be delayed by the institutional review boards or ethics committees of the institutions in which such clinical trials are being conducted, by a Data Safety Monitoring Board, for such trial or by the FDA or other regulatory authorities. Such authorities may impose a modification, suspension or termination due to a number of factors.
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.
Further, in the event that the JNJ License and Collaboration Agreement or the Takeda Collaboration Agreement is terminated, we may not receive any additional fees or milestone payments under these agreements.
Risks Related to our Financial Position and Capital Requirements We have incurred significant losses since our inception and anticipate that we will continue to incur significant losses for the foreseeable future. We have never generated any revenue from product sales and may never be profitable.
Risks Related to our Financial Position and Capital Requirements We have incurred a cumulative net loss since our inception and anticipate that we may incur significant losses in the future. We have never generated any revenue from product sales and may never be profitable.
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.
Our stock price has fluctuated in the past and is likely to be volatile in the future. From January 1, 2024 through December 31, 2024, the reported sale price of our common stock has fluctuated between $21.43 and $48.89 per share.
Such authorities may impose a modification, suspension or termination due to a number of factors. ​ For example, our rusfertide clinical studies were subject to a three-week clinical hold by the FDA beginning in September 2021. The clinical hold was triggered by a non-clinical finding in a 26-week rasH2 transgenic mouse model indicating benign and malignant subcutaneous skin tumors.
For example, our rusfertide clinical studies were subject to a three-week clinical hold by the FDA beginning in September 2021. The clinical hold was triggered by a non-clinical finding in a 26-week rasH2 transgenic mouse model indicating benign and malignant subcutaneous skin tumors.
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.
We are subject to the risk of possible disagreements with JNJ regarding the development of icotrokinra or other matters under the JNJ License and Collaboration Agreement and Takeda regarding the development of rusfertide or other matters under the Takeda Collaboration Agreement, such as the interpretation of such agreement or ownership of proprietary rights.
Our future success depends on our ability to retain our executive officers and to attract, retain and motivate qualified personnel. If we are not successful in attracting and retaining highly qualified personnel, we may not be able to successfully implement our business strategy. We are highly dependent on our existing senior management team.
If we are not successful in attracting and retaining highly qualified personnel, we may not be able to successfully implement our business strategy. We are highly dependent on our existing senior management team.
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.
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.
Those trials, such as our ongoing VERIFY Phase 3 trial evaluating rusfertide for the treatment of PV or subsequent late-stage product candidates, may not demonstrate the safety and efficacy of our product candidates to support a marketing approval in the United States or other jurisdictions.
Those trials, such as our ongoing VERIFY Phase 3 trial evaluating rusfertide for the treatment of PV or subsequent late-stage product candidates, may not demonstrate the safety and efficacy of our product candidates to support a marketing approval in the United States or other jurisdictions. 35 Table of Contents Our product candidates require additional clinical development, regulatory approval and secure sources of commercial manufacturing supply prior to commercialization.
Any of the foregoing possibilities could materially harm the prospects for our product candidates and business and operations. 37 Table of Contents We may fail to obtain orphan drug designations from the FDA and/or the EMA for our product candidates, as applicable, and even if we obtain such designations, we may be unable to maintain the benefits associated with orphan drug designation, including the potential for market exclusivity.
We may fail to obtain additional orphan drug designations from the FDA and/or the EMA for our product candidates, as applicable, and even if we obtain such designations, we may be unable to maintain the benefits associated with orphan drug designation, including the potential for market exclusivity.
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.
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. 48 Table of Contents Our future success depends on our ability to retain our executive officers and to attract, retain and motivate qualified personnel.
The results of pre-clinical studies and early clinical trials of our product candidates and studies and trials of other products may not be predictive of the results of later-stage clinical trials.
Failure can occur at any time during the clinical development process. The results of pre-clinical studies and early clinical trials of our product candidates and studies and trials of other products may not be predictive of the results of later-stage clinical trials.
Outbreaks of disease, epidemics and pandemics have and could continue to adversely impact our business, including our ongoing and planned clinical trials and pre-clinical and discovery research.
Outbreaks of disease, epidemics and pandemics have and could continue to adversely impact our business, including our ongoing and planned clinical trials and pre-clinical and discovery research. Our future results of operations and liquidity could be adversely impacted by direct and indirect impacts of epidemics and pandemics.
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.
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.
Maintaining adequate internal controls in place so that we can produce accurate financial statements on a timely basis is a costly and time-consuming effort that will need to be evaluated frequently.
Our independent registered public accounting firm is required to attest to the effectiveness of our internal control over financial reporting. Maintaining adequate internal controls in place so that we can produce accurate financial statements on a timely basis is a costly and time-consuming effort that will need to be evaluated frequently.
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.
We have incurred a cumulative net operating loss since inception and may continue to incur operating losses in the future. As of December 31, 2024, we had an accumulated deficit of $340.5 million. We expect to continue to incur significant research, development and other expenses related to our ongoing operations and product development.
If approved, we may commercialize our product candidates abroad. We will thus be subject to the risks of doing business outside of the United States.
We currently conduct, and intend to continue to conduct, a substantial portion of the clinical trials for our product candidates outside of the United States. If approved, we may commercialize our product candidates abroad. We will thus be subject to the risks of doing business outside of the United States.
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.
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 the macroeconomic factors discussed above, and such factors may lead to increases in the cost of manufacturing our product candidates and delays in initiating trials.
Some provisions of our charter documents and Delaware law may have anti-takeover effects that could discourage an acquisition of us by others, even if an acquisition would be beneficial to our stockholders, and may prevent attempts by our stockholders to replace or remove our current management. ​ There are provisions in our Certificate of Incorporation and Bylaws, such as the existence of a classified Board and the authorization of “blank-check” preferred stock, that may make it difficult for a third party to acquire, or attempt to acquire, control of our company, even if a change in control was considered favorable by our stockholders.
There are provisions in our Certificate of Incorporation and Bylaws, such as the existence of a classified Board and the authorization of “blank-check” preferred stock, that may make it difficult for a third party to acquire, or attempt to acquire, control of our company, even if a change in control was considered favorable by our stockholders.
If we are unable to anticipate and address these risks properly, our business and financial results will be harmed.
If we are unable to anticipate and address these risks properly, our business and financial results will be harmed. We may fail or elect not to commercialize our product candidates, even if approved.
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.
Because we have limited financial and managerial resources, we have historically focused on research programs and product candidates mainly on the development of rusfertide and the product candidates subject to our JNJ collaboration. We have an ongoing commitment to optimize and focus resources toward our rusfertide program in PV.
If any of the parties to these confidentiality agreements breaches or violates the terms of such agreements, we may not have adequate remedies for any such breach or violation, and we could lose our trade secrets as a result.
If any of the parties to these confidentiality agreements breaches or violates the terms of such agreements, we may not have adequate remedies for any such breach or violation, and we could lose our trade secrets as a result. 52 Table of Contents Even if we are able to adequately protect our trade secrets and proprietary information, our trade secrets could otherwise become known or could be independently discovered by our competitors.
However, we expect that we will need to have access to additional funds in the future in order to complete clinical development or commercialize our product candidates to a point where our operations generate net cash inflows.
However, we may need to have access to additional funds in the future in order to complete clinical development or commercialize our product candidates to a point where our operations generate net cash inflows. Raising additional capital may cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to our product candidates or technologies.
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.
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, trade regulations, including changes in trade policies, tariffs or other trade restrictions or the threat of such actions, 46 Table of Contents geopolitical instability, including ongoing military conflicts between Russia and Ukraine and in the Middle East, rising tensions between China and Taiwan, and high interest rates.
Our proprietary peptide platform may not result in any products of commercial value. We have developed a proprietary peptide technology platform to enable the identification, testing, design and development of new product candidates. Our peptide platform may not yield additional product candidates that enter clinical development and, ultimately, become commercially valuable.
Our research programs may initially show promise in identifying potential product candidates yet fail to yield product candidates for clinical development for many reasons. Our proprietary peptide platform may not result in any products of commercial value. We have developed a proprietary peptide technology platform to enable the identification, testing, design and development of new product candidates.
We may be subject to claims challenging the inventorship or ownership of our issued patents, any patents issued as a result of our pending or future patent applications and other intellectual property.
Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management. 54 Table of Contents We may be subject to claims challenging the inventorship or ownership of our issued patents, any patents issued as a result of our pending or future patent applications and other intellectual property.
If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management.
If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel.
Our stock price also dropped significantly in April 2022 following the announcement of our voluntary withdrawal of Breakthrough Therapy Designation for rusfertide and the announcement of topline data from our Phase 2 clinical trial evaluating PN-943 in UC. 31 Table of Contents Clinical development is a lengthy and expensive process with an uncertain outcome, and results of earlier studies and trials may not be predictive of future trial results.
Our stock price also dropped significantly in April 2022 following the announcement of our voluntary withdrawal of Breakthrough Therapy Designation for rusfertide and the announcement of topline data from our Phase 2 clinical trial evaluating PN-943 in UC.
Accordingly, despite our efforts, we may not be able to prevent third parties from infringing upon or misappropriating or from successfully challenging our intellectual property rights. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace.
Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace. 53 Table of Contents Third-party claims of intellectual property infringement may prevent or delay our drug discovery and development efforts.
Clinical failure can occur at any stage of clinical development. Clinical testing is expensive and can take many years to complete, and its outcome is inherently uncertain. Failure can occur at any time during the clinical development process.
Clinical development is a lengthy and expensive process with an uncertain outcome, and results of earlier studies and trials may not be predictive of future trial results. Clinical failure can occur at any stage of clinical development. Clinical testing is expensive and can take many years to complete, and its outcome is inherently uncertain.
For example, our stock price dropped significantly in September 2021 following the announcement of a full clinical hold imposed by the FDA on our rusfertide clinical studies.
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. For example, our stock price dropped significantly in September 2021 following the announcement of a full clinical hold imposed by the FDA on our rusfertide clinical studies.
For additional information, see the risk factor entitled “Our product candidates may cause undesirable side effects or have other properties adversely impacting safety that delay or prevent their regulatory approval, restrict their approved labeling, or otherwise limit their commercial opportunity” below. ​ In addition, there are a significant number of global clinical trials in hematologic disorders that are currently ongoing, especially in Phases 2 and 3, making it highly competitive and challenging to recruit subjects.
For additional information, see the risk factor entitled “Our product candidates may cause undesirable side effects or have other properties adversely impacting safety that delay or prevent their regulatory approval, restrict their approved labeling, or otherwise limit their commercial opportunity” below.
Raising additional capital may cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to our product candidates or technologies. We have in the past and may in the future seek additional funding through a combination of equity offerings, including the use of the 2022 ATM facility, debt financings, collaborations and/or licensing arrangements.
We have in the past and may in the future seek additional funding through a combination of equity offerings, including the use of the 2022 ATM Facility, debt financings, collaborations and/or licensing arrangements. Additional funding may not be available to us on acceptable terms, or at all.
Competition may increase further as a result of advances in the commercial applicability of newer technologies and greater availability of capital for investment in these industries.
Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large, established companies. Competition may increase further as a result of advances in the commercial applicability of newer technologies and greater availability of capital for investment in these industries.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeAdditional information on the cybersecurity risks we face is discussed in Part I, Item 1A, “Risk Factors - Significant disruptions of information technology systems or breaches of data security could adversely affect our business.” Our Board as a whole has oversight for the most significant risks facing us and for our processes to identify, prioritize, assess, manage, and mitigate those risks, including oversight of cybersecurity risks.
Biggest changeAdditional information on the cybersecurity risks we face is discussed in Part I, Item 1A, “Risk Factors - Significant disruptions of information technology systems or cybersecurity incidents could adversely affect our business.”
These processes are managed and monitored by a dedicated cybersecurity team, including third-party service providers and led by our Head of IT, and include mechanisms, controls, technologies, systems, and other processes designed to prevent or mitigate data loss, theft, misuse, or other security incidents or vulnerabilities affecting the data and maintain a stable information technology environment.
These processes are managed and monitored by a dedicated cybersecurity team, including third-party service providers, and led by our Head of IT, and include mechanisms, controls, technologies, systems, and other processes designed to help prevent or mitigate data loss, theft, misuse, or other security incidents or vulnerabilities affecting the data and help maintain a stable information technology environment.
In addition, we consult with outside advisors and experts when appropriate to assist with assessing, identifying, and managing cybersecurity risks, including to anticipate future threats and trends, and their impact on our risk environment. 52 Table of Contents Our current Head of IT reports directly to our Chief Financial Officer and has over twenty years of experience managing information technology and cybersecurity matters, holds a Master of Science degree in Telecommunications and Computer Networks and is Project Management Professional, Certified Scrum Master and IT Infrastructure Library certified.
In addition, we consult with outside advisors and experts when appropriate to assist with assessing, identifying, and managing cybersecurity risks, including to help anticipate future threats and trends, and their impact on our risk environment. 58 Table of Contents Governance Our current Head of IT reports directly to our Chief Financial Officer and has over twenty years of experience managing information technology and cybersecurity matters, holds a Master of Science degree in Telecommunications and Computer Networks and is Project Management Professional, Certified Scrum Master and IT Infrastructure Library certified.
Item 1C. Cybersecurity In the ordinary course of our business, we collect, use, store, and transmit confidential, sensitive, proprietary, and personal information. The secure maintenance of this information and our information technology (“IT”) systems is important to our operations and business strategy.
Item 1C. Cybersecurity In the ordinary course of our business, we collect, use, store, and transmit confidential, sensitive, proprietary, and personal information. The secure maintenance of this information and our IT systems is important to our operations and business strategy.
Our Board receives at least two updates each year on cybersecurity and information technology matters and related risk exposures from our Head of IT as well as other members of our senior leadership team.
Our Board receives at least two updates each year on cybersecurity and information technology matters and related risk exposures from our Head of IT as well as other members of our senior leadership team. We consider cybersecurity, along with other significant risks that we face, within our overall enterprise risk management framework.
In the last fiscal year, we have identified and mitigated certain known cybersecurity threats, which we determined are not reasonably likely to materially affect us, and have strengthened our cybersecurity ecosystem. However, cybersecurity attack techniques change frequently, and with increased volume and sophistication of such attacks there is the potential for us to be adversely affected.
Since the beginning of the last fiscal year, we have identified and mitigated certain known cybersecurity threats, which we determined are not reasonably likely to materially affect us and have strengthened our cybersecurity ecosystem.
For example, we use processes and tools to conduct vulnerability testing, data recovery testing, security audits, and ongoing risk assessments, including due diligence on and audits of our key technology vendors, CROs, and other contractors and suppliers. We also conduct regular employee training on matters such as phishing and email security best practices, among other topics.
For example, we use processes, tools and external services to conduct regular vulnerability testing, penetration testing, data recovery testing, security audits, and ongoing risk assessments, including due diligence on and audits of our key technology vendors, CROs, and other contractors and suppliers. We work to maintain a strong cybersecurity posture through a multi-layered approach.
To this end, we have documented cybersecurity policies and standards and we assess risks from cybersecurity threats and monitor information systems for potential cybersecurity issues.
We understand the growing challenges associated with cybersecurity threats and have established a strong cybersecurity program intended to continue to monitor and improve our cybersecurity posture. Risk Management Approach We have documented cybersecurity policies and standards, and we assess risks from cybersecurity threats and monitor information systems for potential cybersecurity issues.
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He, together with our senior leadership team, is responsible for assessing and managing cybersecurity risks. We consider cybersecurity, along with other significant risks that we face, within our overall enterprise risk management framework.
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Our endpoint detection and response (“EDR”) system helps monitor and analyze endpoint devices, and is designed to assist us in quickly identifying and responding to emerging threats. Complementing our EDR capabilities, our managed detection and response service assists with threat monitoring, proactive threat hunting, and rapid incident response.
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Furthermore, we employ data loss prevention tools to help enforce strict data security policies, prevent unauthorized access and protect the transmission of sensitive information. These integrated technologies help us to detect, mitigate, and respond to cyber threats, with the goal of minimizing potential disruptions to our business operations.
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We have an incident response plan designed to help quickly detect, contain and remediate cybersecurity incidents. This plan outlines clear escalation procedures, roles and responsibilities to help us respond in a timely manner to potential threats. We also conduct regular employee training on matters such as phishing and email security best practices, among other topics.
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We have established a cybersecurity council, facilitated by the Head of IT, which includes senior leadership from various departments. The council meets quarterly to review cybersecurity strategies, assess emerging threats, and receive updates on regulatory and industry best practices.
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Our Board as a whole has oversight for the most significant risks facing us and for our processes to help identify, prioritize, assess, manage, and mitigate those risks, including oversight of cybersecurity risks.
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However, cybersecurity attack techniques change frequently, and with increased volume and sophistication of such attacks, there can be no guarantee that we will not be the subject of future successful attacks, threats or incidents that could materially affect us.

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.
Biggest changeItem 2. Properties We lease approximately 75,600 square feet of office and laboratory space in Newark, California under a lease agreement, as amended, that expires in November 2029. 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.
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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 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
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. ​ 59 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 ​ 53 ​ ​ ​ ​ ​ PART II ​ ​ ​ ​ ​ ​ ​ ​ ​ Item 5. ​ Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ​ 54
Biggest changeItem 4. ​ Mine Safety Disclosures ​ 59 ​ ​ ​ ​ ​ PART II ​ ​ ​ ​ ​ ​ ​ ​ ​ Item 5. ​ Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ​ 60

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, 2018 to December 31, 2023. Recent Sales of Unregistered Securities None. Issuer Purchases of Equity Securities None. Item 6. Reserved ​ 55 Table of Contents
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, 2019 to December 31, 2024. ​ Recent Sales of Unregistered Securities None. Issuer Purchases of Equity Securities None. 61 Table of Contents Item 6. Reserved ​ ​
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.
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. 60 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, 2018 in each of our common stock, the Nasdaq Composite Index and the Nasdaq Biotechnology Index.
The graph below shows the cumulative total stockholder return assuming an investment on December 31, 2019 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 February 22, 2024, 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 19, 2025, 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 ​ 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
Biggest changeItem 6. ​ Reserved ​ 62 Item 7. ​ Management’s Discussion and Analysis of Financial Condition and Results of Operations ​ 62 Item 7A. ​ Quantitative and Qualitative Disclosures about Market Risk ​ 76 Item 8. ​ Financial Statements and Supplementary Data ​ 77

Item 7. Management's Discussion & Analysis

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

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Biggest changeResults 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.
Biggest changeOther Income (Expense), Net Other income (expense), net consists primarily of amounts related to foreign exchange gains and losses and related items. 68 Table of Contents Results of Operations ​ Comparison of the Years Ended December 31, 2024 and 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Dollar ​ % ​ 2024 2023 Change Change ​ ​ (Dollars in thousands) ​ ​ Revenue: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ License and collaboration revenue ​ $ 434,433 ​ $ 60,000 ​ $ 374,433 ​ * Operating expenses: ​ ​ ​ Research and development (1) ​ ​ 138,128 ​ ​ 120,161 ​ ​ 17,967 15 General and administrative (2) ​ 43,462 ​ 33,491 ​ 9,971 30 Total operating expenses ​ 181,590 ​ 153,652 ​ 27,938 18 Income (loss) from operations ​ 252,843 ​ (93,652) ​ 346,495 * Interest income ​ 26,315 ​ ​ 14,898 ​ 11,417 77 Other income (expense), net ​ ​ 250 ​ ​ (201) ​ ​ 451 ​ * Income (loss) before income tax expense ​ ​ 279,408 ​ ​ (78,955) ​ ​ 358,363 ​ * Income tax expense ​ ​ 4,220 ​ ​ — ​ ​ 4,220 ​ * Net income (loss) ​ $ 275,188 ​ $ (78,955) ​ $ 354,143 * *Percentage not meaningful.
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.
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, conducting pre-clinical studies and clinical trials necessary to obtain regulatory approval and commencing pre-commercialization activities is costly and time intensive.
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.
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, IT and pre-commercialization expenses, including selling and marketing costs.
Components of Our Results of Operations License and Collaboration Revenue Our license and collaboration revenue is derived from payments we receive under the JNJ License and Collaboration Agreement. See Note 3 to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for additional information.
Components of Our Results of Operations License and Collaboration Revenue Our license and collaboration revenue is derived from payments we receive under the Takeda Collaboration Agreement and the JNJ License and Collaboration Agreement. See Note 3 to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for additional information.
Research and development costs include salaries and benefits, stock-based compensation expense, laboratory supplies and facility-related overhead, outside contracted services, including clinical trial costs, manufacturing and process development costs for both clinical and pre-clinical materials, research costs, development milestone payments under license and collaboration agreements, and other consulting services.
Research and development costs include salaries and benefits, stock-based compensation expense, laboratory supplies and facility-related overhead, outside contracted services, including clinical and pre-clinical trial costs, manufacturing and process development costs for both clinical and preclinical materials, research costs, development milestone payments under license and collaboration agreements, and other consulting services.
In accordance with Accounting Standards Codification Topic 260, Earnings Per Share , outstanding Pre-Funded Warrants are included in the computation of basic net loss per share because the exercise price is negligible, and they are fully vested and exercisable after the original issuance date.
In accordance with Accounting Standards Topic 260, Earnings Per Share , outstanding Pre-Funded Warrants are included in the computation of basic net loss per share because the exercise price is negligible, and they are fully vested and exercisable after the original issuance date.
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 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.
Our rusfertide Phase 2 clinical trials include the following: ​ ● REVIVE, a Phase 2 proof of concept (“POC”) trial, was initiated in the fourth quarter of 2019.
Our rusfertide Phase 2 clinical trials include the following: ● REVIVE (NCT04057040) – A Phase 2 proof of concept (“POC”) trial, was initiated in the fourth quarter of 2019.
A future recession or market correction, including those due to significant geopolitical or macroeconomic events, could materially affect our business and our access to credit and financial markets. 69 Table of Contents 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.
A future recession or market correction, including those due to significant geopolitical or macroeconomic events, could materially affect our business and our access to credit and financial markets. 73 Table of Contents 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.
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.
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 JNJ License and Collaboration Agreement, we may be eligible to receive clinical development, regulatory and sales milestones, if and when achieved.
Program-specific costs are unallocated when the clinical expenses are incurred for our early-stage research and drug discovery projects as our internal resources, employees and infrastructure are not tied to any one research or drug discovery project and are typically deployed across multiple projects.
Program-specific costs are unallocated when the related expenses are incurred for our early-stage research and drug discovery projects as our internal resources, employees and infrastructure are not tied to any one research or drug discovery project and are typically deployed across multiple projects.
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.
Research and development expenses consist primarily of the following: ● expenses incurred under agreements with clinical trial sites that conduct research and development activities on our behalf; ● employee-related expenses, which include salaries, benefits and stock-based compensation; ● laboratory vendor expenses related to the preparation and conduct of pre-clinical studies and clinical trials; ● costs related to production of clinical supplies and pre-clinical materials, including fees paid to contract manufacturers; ● license fees and milestone payments under license and collaboration agreements; and ● facilities and other allocated expenses, which include expenses for rent and maintenance of facilities, information technology, depreciation and amortization expense and administrative and other supplies.
The Pre-Funded Warrants will expire upon the day they are exercised in full. The Pre-Funded Warrants are exercisable at any time prior to expiration except that the Pre-Funded Warrants cannot be exercised by the Investors if, after giving effect thereto, the Investors would beneficially own more than 9.99% of our common stock, subject to certain exceptions.
The Pre-Funded Warrants will expire upon the day they are exercised in full. The Pre-Funded Warrants are exercisable at any time prior to expiration except that the Pre-Funded Warrants cannot be exercised by the Investors if, after giving effect thereto, the Investors would beneficially 71 Table of Contents own more than 9.99% of our common stock, subject to certain exceptions.
There were no sales of our common stock under the 2022 ATM Facility during the year ended December 31, 2022. ​ In August 2018, we entered into a Securities Purchase Agreement with certain accredited investors (each, an “Investor” and, collectively, the “Investors”), pursuant to which we sold an aggregate of 2,750,000 shares of our common stock at a price of $8.00 per share for aggregate net proceeds of $21.7 million, after deducting offering expenses payable by us.
There were no sales of our common stock under the 2022 ATM Facility during the years ended December 31, 2024 and 2022. ​ Pre-Funded Warrants ​ In August 2018, we entered into a Securities Purchase Agreement with certain accredited investors (each, an “Investor” and, collectively, the “Investors”), pursuant to which we sold an aggregate of 2,750,000 shares of our common stock at a price of $8.00 per share for aggregate net proceeds of $21.7 million, after deducting offering expenses payable by us.
However, the status and timing of actual services performed, number of patients enrolled, the rate of patient enrollment and the number and location of sites activated may vary from our estimates and may result in adjustments to our research and development expenses in future periods.
However, the status and timing of actual services performed, number of patients enrolled, the rate of patient enrollment and the number and location of sites activated may vary from our estimates and may result in adjustments to our research and development expenses in future 66 Table of Contents periods.
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 discovery pipeline has strategically focused on i) hematology and blood disorders and ii) I&I diseases.
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 discovery pipeline has strategically focused on (i) hematology and blood disorders, (ii) I&I diseases and (iii) metabolic diseases, including obesity.
The research and development tax incentives are recognized when there is reasonable assurance that the incentives will be received, the relevant expenditure has been incurred and the amount of the consideration can be reliably measured.
The research and development tax offsets are recognized when there is reasonable assurance that the offset will be received, the relevant expenditure has been incurred and the amount of the consideration can be reliably measured.
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.
Cash provided by financing activities for the year ended December 31, 2023 was $170.5 million and consisted 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 ESPP.
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.
We recognize the amounts related to our Australian research and development refundable tax offset that are not subject to refund provisions as a reduction in research and development expenses.
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.
Personnel costs consist of salaries, benefits and stock-based compensation. Allocated expenses consist of expenses for rent and maintenance of facilities, information technology, depreciation and amortization expense and other administrative supplies.
We base these estimates on historical and anticipated results, trends and various other assumptions that we believe are reasonable under the circumstances, including assumptions as to forecasted amounts and future events.
We base these estimates on historical and anticipated results, trends and various other assumptions that we believe are reasonable under the circumstances, including assumptions as to forecasted amounts and future events. Actual results may differ materially from these estimates.
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.
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 while overcoming many of their limitations as therapeutic agents.
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.
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 (NCT06033586) – A Phase 2 long-term OLE for REVIVE patients on years three through five of treatment; and ● PACIFIC (NCT04767802) – 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.
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.
The actual amounts that we may pay Takeda or that Takeda may pay 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 75 Table of Contents achieved, of certain development and regulatory activities.
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.
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 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 with our collaboration partners 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 rusfertide, which is being co-developed and co-commercialized with Takeda under the Takeda Collaboration Agreement, 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 JNJ License and Collaboration 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 JNJ License and Collaboration 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; and ● the extent to which we may acquire or in-license other product candidates and technologies.
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.
As discussed in Part I, Item 1A, “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, changes in trade policies, including tariffs or other restrictions or the threat of such actions, geopolitical instability, inflationary pressures, high interest rates and banking and other financial institution instability, among other factors.
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.
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.
We earned a $50.0 million milestone payment upon dosing of the third patient in the ICONIC-TOTAL Phase 3 trial in late October 2023, which we received in December 2023. We earned a $10.0 million milestone payment upon the dosing of the third patient in the ANTHEM Phase 2b trial in UC in December 2023, which we received in January 2024.
We earned a $10.0 million milestone payment upon the dosing of the third patient in the ANTHEM Phase 2b trial in patients with UC in December 2023, which we received in January 2024.
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.
See Note 8 to the Consolidated Financial Statements elsewhere in this Annual Report on Form 10-K for additional information. ​ Under the Takeda Collaboration Agreement, we may share with Takeda certain development, manufacturing and commercialization costs.
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.
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.
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.
Purchases of property and equipment were primarily related to purchases of leasehold improvements and laboratory equipment. 74 Table of Contents Cash used in investing activities for the year ended December 31, 2023 was $39.3 million and consisted 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.
JNJ has initiated five additional JNJ-2113 trials, including: ● ICONIC-LEAD – A 600-patient randomized, controlled Phase 3 trial to evaluate the safety and efficacy of JNJ-2113 compared with placebo in participants with moderate-to-severe plaque psoriasis, with PASI-90 and Investigator’s Global Assessment (“IGA”) score of 0 (clear) or 1 (almost clear) as co-primary endpoints; ● ICONIC-TOTAL – A 300-patient randomized, controlled Phase 3 trial to evaluate the efficacy and safety of JNJ-2113 compared with placebo for the treatment of plaque psoriasis in participants with at least moderate severity affecting special areas (scalp, genital, and/or palms of the hands and soles of the feet) with overall IGA score of 0 or 1 as the primary endpoint; ● ICONIC ADVANCE 1 – A 750-patient randomized, controlled Phase 3 trial to evaluate the effectiveness of JNJ-2113 in participants with moderate-to-severe plaque psoriasis compared to placebo and Sotyktu (“deucravacitinib”).
JNJ has initiated the following icotrokinra trials: ● ICONIC-LEAD (NCT06095115) – A 684-patient randomized, controlled Phase 3 trial to evaluate the safety and efficacy of icotrokinra compared with placebo in participants with moderate-to-severe plaque psoriasis, with PASI-90 (90% improvement in skin lesions as measured by the Psoriasis Area and Severity Index (“PASI”) and Investigator’s Global Assessment (“IGA”) scores of 0 (clear) or 1 (almost clear) as co-primary endpoints; ● ICONIC-TOTAL (NCT06095102) – A 311-patient randomized, controlled Phase 3 trial to evaluate the efficacy and safety of icotrokinra compared with placebo for the treatment of plaque psoriasis in participants with at least moderate severity affecting special areas (scalp, genital, and/or palms of the hands and soles of the feet) with overall IGA scores of 0 or 1 as the primary endpoint; ● ICONIC-ADVANCE 1 (NCT06143878) – A 774-patient randomized, controlled Phase 3 trial to evaluate the effectiveness of icotrokinra in participants with moderate-to-severe plaque psoriasis compared to placebo and Sotyktu® (“deucravacitinib”).
During the three months ended March 31, 2023, we sold 1,749,199 shares of our common stock under the 2022 ATM Facility for net proceeds of $24.3 million, after deducting issuance costs. There were no sales of our common stock under the 2022 ATM Facility during the three months ended June 30, 2023, September 30, 2023 or December 31, 2023.
During the year ended December 31, 2023, we sold 1,749,199 shares of our common stock under the 2022 ATM Facility for net proceeds of $24.3 million, after deducting issuance costs.
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.
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, ​ 2024 2023 2022 Consolidated Statements of Cash Flows Data: ​ (Dollars in thousands) Cash provided by (used) in operating activities ​ $ 184,152 ​ $ (70,236) ​ $ (108,137) Cash (used in) provided by investing activities ​ $ (299,483) ​ $ (39,258) ​ $ 91,468 Cash provided by financing activities ​ $ 25,853 ​ $ 170,477 ​ $ 18,838 Stock-based compensation ​ $ 37,554 ​ $ 29,293 ​ $ 24,202 Deferred revenue ​ $ 30,567 ​ $ — ​ $ — ​ Cash Provided by (Used in) Operating Activities Cash provided by operating activities for the year ended December 31, 2024 was $184.2 million and consisted primarily of our net income of $275.2 million and certain non-cash items, including $37.6 million of stock-based compensation, partially offset by a net change of $122.6 million in net operating assets and liabilities.
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”).
On July 27, 2021, we entered into an Amended and Restated License and Collaboration Agreement with JNJ, which amended and restated the License and Collaboration Agreement, effective July 13, 2017, by and between the Company and JNJ, as amended by the first amendment, effective May 7, 2019 (together, the “JNJ License and Collaboration Agreement”) for the development and commercialization of icotrokinra.
There has been uncertainty and disruption in the global economy and financial markets due to a number of factors, including geopolitical instability, inflationary pressures, high interest rates, instability in banks and other financial institutions and domestic and global monetary and fiscal policy.
There has been uncertainty and disruption in the global economy and financial markets due to a number of factors, including geopolitical instability, inflationary pressures, high interest rates, a recessionary environment, domestic and global monetary and fiscal policy, changes in trade policies, including tariffs or other trade restrictions or the threat of such actions, banking and other financial institution instability and other factors.
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.
Cash used in operating activities for the year ended December 31, 2023 was $70.2 million and consisted 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.
We expect that our existing cash, cash equivalents and marketable securities will be sufficient to fund our operations for at least the next twelve months from the date of this Annual Report on Form 10-K based on current operating plans and financial forecasts. ​ In January 2024, we entered into a worldwide license and collaboration agreement for the development and commercialization of rusfertide with Takeda, which is yet to become effective.
We expect that our existing cash, cash equivalents and marketable securities will be sufficient to fund our operations for at least the next twelve months from the date of this Annual Report on Form 10-K based on current operating plans and financial forecasts.
This increase was primarily due to higher invested balances and higher yields due to increased interest rates compared to the prior year period. ​ Comparison of the Years Ended December 31, 2022 and 2021 See Part II, Item 7—Results of Operations—Comparison of the Years Ended December 31, 2022 and 2021 in our Annual Report on Form 10-K for the year ended December 31, 2022, filed on March 15, 2023, for a discussion of our results of operations for the year ended December 31, 2022 compared to the year ended December 31, 2021. ​ 66 Table of Contents Liquidity and Capital Resources Sources of Liquidity Historically we have funded our operations primarily from net proceeds from the sale of shares of our common stock and receipt of payments under collaboration agreements.
The effective tax rate was 1.5% and 0.0% for the years ended December 31, 2024 and 2023, respectively. ​ Comparison of the Years Ended December 31, 2023 and 2022 See Part II, Item 7—Results of Operations—Comparison of the Years Ended December 31, 2023 and 2022 in our Annual Report on Form 10-K for the year ended December 31, 2023, filed on February 17, 2024, for a discussion of our results of operations for the year ended December 31, 2023 compared to the year ended December 31, 2022. ​ Liquidity and Capital Resources Sources of Liquidity Historically we have funded our operations primarily from net proceeds from the sale of shares of our common stock and receipt of payments under collaboration agreements.
The common stock and Warrants met the criteria for equity classification, and the net proceeds from the transaction were recorded as a credit to additional paid-in capital. ​ In August 2023, prior to the expiration of the Warrants, we entered into certain agreements with the Investors and their affiliates under which we agreed to allow the Warrants to be exercised in exchange for pre-funded warrants representing the same number of Warrant Shares underlying the Warrants with an exercise price of $0.001 per share (the “Pre-Funded Warrants”).
Warrants to purchase 1,375,000 shares of our common stock had an exercise price of $10.00 per share and Warrants to purchase 1,375,000 shares of our common stock had an exercise price of $15.00 per share. ​ In August 2023, prior to the expiration of the Warrants, we entered into certain agreements with the Investors and their affiliates under which we agreed to allow the Warrants to be exercised in exchange for pre-funded warrants representing the same number of Warrant Shares underlying the Warrants with an exercise price of $0.001 per share (the “Pre-Funded Warrants”).
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.
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.
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.
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.
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.
We expect to continue to incur significant research and development expenses and other expenses related to our ongoing operations, product development, pre-clinical discovery programs and pre-commercialization activities. As a result, we may incur losses in the future as we continue the development of, and seek regulatory approval for, our product candidates.
In the fourth quarter of 2023, we received a $50.0 million milestone payment from JNJ in connection with the dosing of the third patient in the ICONIC-LEAD Phase 3 clinical trial of JNJ-2113 in patients with moderate-to-severe psoriasis.
During the fourth quarter of 2023, we earned a $50.0 million milestone payment in connection with the dosing of the third patient in the ICONIC-TOTAL Phase 3 clinical trial of icotrokinra in patients with moderate-to-severe psoriasis and a $10.0 million milestone payment upon the dosing of the third patient in the ANTHEM Phase 2b trial in patients with moderately-to-severely active UC.
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 (Used in) Provided by Investing Activities Cash used in investing activities for the year ended December 31, 2024 was $299.5 million and consisted of purchases of securities of $621.7 million and purchases of property and equipment of $1.4 million, partially offset by proceeds from maturities of marketable securities of $323.6 million.
We evaluate our eligibility under the tax incentive program as of each balance sheet date and make accruals and related adjustments based on the most current and relevant data available. We may alternatively be eligible for a taxable credit in the form of a non-cash tax incentive.
We evaluate our eligibility under the tax incentive program as of each balance sheet date and make accruals and related adjustments based on the most current and relevant data available. We may alternatively be eligible for a nonrefundable tax offset. 67 Table of Contents We allocate direct and indirect costs incurred to product candidates when they enter clinical development.
We expect our research and development expenses to increase in the near term as compared to prior year periods as we continue to focus our resources toward progressing our rusfertide program into later stage clinical trials and preparing for commercialization.
We expect our research and development expenses to increase in the near term as compared to prior year periods as we continue to focus our resources toward (i) progressing our rusfertide program into late stage clinical trials and preparing for regulatory filings and commercialization, and (ii) advancing our pre-clinical and drug discovery research programs, including progressing our recently nominated product development candidate PN-881 through IND-enabling studies, or foreign equivalents.
See Note 15 to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for additional information. We may require additional funding to advance our early discovery pipeline and to develop, acquire, or in-license other potential product candidates.
We may require additional funding to advance our early discovery pipeline and to develop, acquire, or in-license other potential product candidates.
Substantially all of our net losses have resulted from costs incurred in connection with our research and development programs and from general and administrative costs associated with our operations. We expect to continue to incur significant research and development expenses and other expenses related to our ongoing operations, product development, and pre-commercialization activities.
Operations We have incurred cumulative net losses from inception through December 31, 2024 of $340.5 million. Substantially all of our net losses have resulted from costs incurred in connection with our research and development programs and from general and administrative costs associated with our operations.
Further details related to the agreement, including our right to opt-out of the 50:50 U.S. profit and loss sharing arrangement in exchange for enhanced economics, are available in our Current Report on Form 8-K filed on January 31, 2024 with the U.S. Securities and Exchange Commission (the “SEC”).
See Note 3 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details related to the agreement, including our right to opt-out of the 50:50 U.S. profit and loss sharing arrangement.
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 had 98 and 85 full-time equivalent research and development employees as of December 31, 2024 and 2023, respectively. Research and development personnel-related expenses for the year ended December 31, 2024 increased by $10.0 million as compared to the year ended December 31, 2023, including increases of $6.1 million in personnel-related expenses and $3.9 million in stock-based compensation expense.
The trial’s primary co-endpoints are PASI-90 and IGA score of 0 or 1; ● ICONIC ADVANCE 2 – A 675-patient Phase 3 trial similarly designed to ICONIC ADVANCE 1, which is expected to start enrolling patients later in 2024; and ● ANTHEM-UC – A 240-patient Phase 2b randomized, controlled trial to evaluate the safety and effectiveness of JNJ-2113 compared with placebo in participants with moderate-to-severely active ulcerative colitis (“UC”).
The trial’s primary co-endpoints are PASI-90 and IGA scores of 0 or 1; ● ICONIC-ADVANCE 2 (NCT06220604) – A 731-patient Phase 3 trial similarly designed to ICONIC ADVANCE 1 in participants with moderate-to-severe plaque psoriasis; ● Pustular/Erythrodermic Psoriasis (NCT06295692) – A 19-patient open label Phase 3 trial to evaluate the effectiveness of icotrokinra in participants with pustular or erythrodermic psoriasis; ● ICONIC-PsA 2 (NCT06807424) – A 750-patient randomized, controlled Phase 3 trial to evaluate the efficacy and safety of icotrokinra compared with placebo in biologic-experienced patients with active psoriatic arthritis (“PsA”); and ● ANTHEM-UC (NCT06049017) – A 252-patient randomized, controlled Phase 2b trial to evaluate the safety and effectiveness of icotrokinra compared with placebo in participants with moderate-to-severely active ulcerative colitis (“UC”). 63 Table of Contents In the fourth quarter of 2024, we announced positive topline results for the ICONIC-LEAD and ICONIC-TOTAL Phase 3 trials.
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.
Cash Provided by Financing Activities Cash provided by financing activities for the year ended December 31, 2024 was $25.9 million and consisted of net cash proceeds of $26.5 million from the issuance of common stock upon exercises of stock options and purchases of stock under our employee stock purchase plan (“ESPP”), partially offset by $0.6 million in tax withholding payments related to the net settlement of restricted stock units.
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.
In May 2024, we entered into a third amendment to our facility lease agreement dated as of March 2017 to extend the lease term for our existing office and laboratory space from one to 66 months and to lease approximately 17,700 rentable square feet of additional office space.
The $111.1 million decrease in cash provided by financing activities for the year ended December 31, 2022, as compared to the year ended December 31, 2021, was primarily due to a $123.8 million decrease in cash proceeds from our public offerings of common stock and a $1.8 million decrease 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 $144.6 million decrease in cash provided by financing activities for year ended December 31, 2024, as compared to the year ended December 31, 2023, was primarily due to $107.8 million of proceeds received from a public offering of our common stock in April 2023, $24.3 million of proceeds from ATM sales of our common stock in 2023, and $34.3 million in proceeds from exercises of warrants in 2023 in exchange for Pre-Funded Warrants and common stock.
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.
The JNJ License and Collaboration Agreement was further amended in November 2024 to: ● increase the milestone payment for a Phase 3 clinical trial of any licensed product for any indication meeting its primary endpoint by $50.0 million, from $115.0 million to $165.0 million; ● eliminate the $35.0 million milestone payment previously due for the acceptance of an NDA filing by the FDA for a licensed product for any indication; and ● eliminate the $15.0 million milestone payment previously due for the dosing of the third patient in the first Phase 3 clinical trial of a licensed product for a second indication.
The decrease was primarily due to (i) a decrease of $35.8 million in expenses for the PN-943 program, and (ii) a decrease of $2.8 million in expenses related to pre-clinical and drug discovery research expense, partially offset by (iii) an increase of $33.3 million in rusfertide clinical and contract manufacturing expenses primarily for the Phase 3 VERIFY clinical trial.
The increase was primarily due to an increase of $19.0 million in pre-clinical and drug discovery research expense, including costs related to PN-881, our recently nominated IL-17 development candidate, partially offset by a decrease of $0.9 million in expenses for our PN-943 program as further development work was deprioritized in 2023.
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.
See Note 3 to the Consolidated Financial Statements elsewhere in this Annual Report on Form 10-K for additional information. In January 2020, we initiated arbitration proceedings with the International Court of Arbitration of the International Chamber of Commerce against Zealand Pharma A/S (“Zealand”) related to a collaboration agreement we and Zealand entered into in 2012 and terminated in 2014.
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 believe that, compared to antibody drugs, icotrokinra 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.
The increase in revenue was primarily due to milestone payments earned under our license and collaboration agreement with JNJ during the fourth quarter of 2023, including a $50.0 million milestone payment upon dosing of the third patient in the ICONIC-LEAD Phase 3 trial of JNJ-2113 in patients with moderate-to-severe psoriasis, and a $10.0 million milestone payment upon the dosing of the third patient in the ANTHEM-UC Phase 2b trial in UC.
Under the JNJ License and Collaboration Agreement, we earned a $50.0 million milestone payment upon the dosing of the third patient in the ICONIC-TOTAL Phase 3 trial in late October 2023, which we received in December 2023.
(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.
(1) Includes $20.9 million and $17.1 million of non-cash stock-based compensation expense for the years ended December 31, 2024 and 2023, respectively.
For example, we have a pre-clinical stage program to identify an orally active hepcidin mimetic, which we believe to be complementary to the injectable rusfertide for offering the best treatment options for PV, hereditary hemochromatosis and other potential erythropoietic and iron imbalance disorders. ​ In January 2024, we announced a new oral Interleukin-17 (“IL-17”) peptide antagonist program targeting three IL-17 dimers (IL-17 AA, AF and FF) which may offer potential treatment options for hidradenitis suppurativa (“HS”), spondyloarthritis (“SpA”), plaque psoriasis and psoriatic arthritis.
We have a pre-clinical stage program to identify an orally administered hepcidin mimetic/ferroportin blocker, which we believe to be complementary to the injectable rusfertide for offering the best treatment options for PV and other potential erythropoietic and iron imbalance disorders, and we expect to nominate a development candidate in the fourth quarter of 2025.
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.
Our capital expenditures were $1.4 million, $0.6 million and $0.8 million for the years ended December 31, 2024, 2023 and 2022, respectively. Our primary uses of cash are to fund our operating expenses, including our research and development expenditures and general and administrative costs.
Our orally stable peptide approach may offer a targeted therapeutic approach for gastrointestinal (“GI”) and systemic compartments as needed.
Icotrokinra Our IL-23R antagonist compound icotrokinra, licensed to J&J, is an orally delivered drug that is designed to block biological pathways currently targeted by marketed injectable antibody drugs. Our orally stable peptide approach may offer a targeted therapeutic approach for gastrointestinal and systemic compartments as needed.
We had 27 and 23 full-time equivalent general and administrative employees as of December 31, 2023 and 2022, respectively. Interest Income Interest income increased $10.8 million, or 267%, from $4.1 million for the year ended December 31, 2022 to $14.9 million for the year ended December 31, 2023.
Interest Income Interest income increased $11.4 million, or 77%, from $14.9 million for the year ended December 31, 2023 to $26.3 million for the year ended December 31, 2024.
Food and Drug Administration (the “FDA”); ● $50.0 million milestone payment upon approval of the NDA by the FDA; and ● $15.0 million milestone payment upon the advancement of JNJ-2113 into a Phase 3 trial in a second indication. 58 Table of Contents We also remain eligible to receive upward tiering royalties on net product sales at percentages ranging from six percent to ten percent, with ten percent applicable for net sales over $4.0 billion.
We also remain eligible to receive upward tiering royalties on net product sales at percentages ranging from 6% percent to 10% percent, with 10% percent applicable for net sales over $4.0 billion. See Note 3 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information.
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.
The $260.2 million increase in cash used in investing activities for the year ended December 31, 2024, as compared to the year ended December 31, 2023, was primarily due to the investment made with a portion of the proceeds from the $300.0 million payment from the Takeda Collaboration Agreement.
General and Administrative Expenses General and administrative expenses increased $1.8 million, or 6%, from $31.7 million for the year ended December 31, 2022 to $33.5 million for the year ended December 31, 2023 primarily due to an increase in stock-based compensation expense during the current year period, partially offset by one-time costs incurred during the first quarter of 2022.
General and Administrative Expenses General and administrative expenses increased $10.0 million, or 30%, from $33.5 million for the year ended December 31, 2023 to $43.5 million for the year ended December 31, 2024.
License and collaboration revenue for the year ended December 31, 2022 was primarily related to the transaction price under the license and collaboration agreement with JNJ recognized based on proportional performance.
Income tax expense for the year ended December 31, 2024 was a result of taxable income from the recognition of revenue in connection with the Takeda Collaboration Agreement and the JNJ License and Collaboration Agreement.
We completed our performance obligation under the license and collaboration agreement with JNJ as of June 30, 2022. 65 Table of Contents Research and Development Expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Dollar ​ % ​ 2023 ​ 2022 ​ Change ​ Change ​ ​ (Dollars in thousands) ​ ​ Clinical and development expense — rusfertide (PTG-300) ​ $ 98,060 ​ $ 64,789 ​ $ 33,271 ​ 51 Clinical and development expense — PN-943 ​ ​ 1,058 ​ ​ 36,906 ​ ​ (35,848) ​ (97) Clinical and development expense — JNJ-2113 (PN-235) ​ ​ 99 ​ ​ 201 ​ ​ (102) ​ (51) Clinical and development expense — Other ​ ​ — ​ ​ 657 ​ ​ (657) ​ (100) Preclinical and drug discovery research expense ​ ​ 20,944 ​ ​ 23,704 ​ ​ (2,760) ​ (12) Grants and tax incentives expense reimbursement, net ​ — ​ (42) ​ 42 ​ (100) Total research and development expenses ​ $ 120,161 ​ $ 126,215 ​ $ (6,054) ​ (5) ​ Research and development expenses decreased $6.0 million, or 5%, from $126.2 million for the year ended December 31, 2022 to $120.2 million for the year ended December 31, 2023.
Research and Development Expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Dollar ​ % ​ 2024 ​ 2023 ​ Change ​ Change ​ ​ (Dollars in thousands) ​ ​ Clinical and development expense — rusfertide ​ $ 97,862 ​ $ 98,060 ​ $ (198) ​ - Clinical and development expense — PN-943 ​ ​ 150 ​ ​ 1,058 ​ ​ (908) ​ (86) Clinical and development expense — other ​ ​ 176 ​ ​ 99 ​ ​ 77 ​ 78 Pre-clinical and drug discovery research expense ​ ​ 39,940 ​ ​ 20,944 ​ ​ 18,996 ​ 91 Total research and development expenses ​ $ 138,128 ​ $ 120,161 ​ $ 17,967 ​ 15 ​ Research and development expenses increased $18.0 million, or 15%, from $120.2 million for the year ended December 31, 2023 to $138.1 million for the year ended December 31, 2024.
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.
The agreement provides for certain post-termination payment obligations to Zealand with respect to compounds related to the collaboration that we elect to further develop and that meet specified conditions. In August 2021, we and Zealand agreed to resolve the dispute and reached an Arbitration Resolution Agreement.
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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.
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ​ OVERVIEW We are a discovery through late-stage development biopharmaceutical company focused on peptide therapeutics. Our clinical programs fall into two broad categories of diseases: (i) hematology and blood disorders, and (ii) inflammatory and immunomodulatory (“I&I”) diseases.
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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.
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Two novel peptides derived from our proprietary discovery technology platform, rusfertide and icotrokinra (formerly known as JNJ-2113), are currently in advanced Phase 3 clinical development, with New Drug Application (“NDA”) submissions to the U.S. Food and Drug Administration (“FDA”) potentially in 2025.
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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.
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Rusfertide, an injectable mimetic of the natural hormone hepcidin, is currently in Phase 3 development for treatment of the rare blood disorder polycythemia vera (“PV”). Rusfertide is being co-developed and will be co-commercialized with Takeda Pharmaceuticals, Inc. (“Takeda”) and the Company remains primarily responsible for development through NDA filing.
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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.
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Icotrokinra is a first-in-class investigational targeted oral peptide that selectively blocks the Interleukin-23 receptor (“IL-23R”) and is licensed to J&J Innovative Medicines (“JNJ”), formerly Janssen Biotech, Inc.
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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.

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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 changeWe 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
Biggest changeInflation Fluctuation Risk Inflation generally affects us by increasing our costs, such as the cost of labor and research and development contract costs. We do not believe inflation has had a material adverse effect on the results of our operations during the year ended December 31, 2024. ​ 76 Table of Contents
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.
Approximately $0.6 million and $0.9 million of our cash balance was located in Australia at December 31, 2024 and 2023, 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 $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.
Interest Rate Fluctuation Risk We had $559.2 million and $341.6 million in cash, cash equivalents and marketable securities at December 31, 2024 and 2023, 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.
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A portion of our investments are interest-bearing instruments carrying a degree of interest rate risk.
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A portion of our investments may be subject to interest rate risk and could decline in value if market interest rates increase.
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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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Based on our interest rate sensitivity analysis, an immediate 100 basis point increase in interest rates would increase our annual interest income by approximately $2.8 million, while an immediate 100 basis point decrease in interest rates would decrease our annual interest income by approximately $2.8 million.
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Inflation 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.

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