IPO Preview: Protagonist Therapeutics

Summary

PTGX intends to raise up to $87.233 million in its upcoming IPO through the sale of 5,835,000 shares.

The company has an expected price range of $11 to $13, and the underwriters include Barclays, BMO Capital Markets and Leerink Partners.

PTGX is a biopharmaceutical company, developing peptide-based oral medications for IBD and ulcerative colitis. It has not turned a profit and has substantial accumulated debts.

We recommend that investors avoid purchasing shares of PTGX at this time, waiting at least until the results from the clinical trials of its main product candidate have been released.

Protagonist Therapeutics (Pending:PTGX) filed its S-1/A with the Securities and Exchange Commission, announcing its intention to raise up to $87,233,250 in its upcoming initial public offering. The company is offering 5,835,000 shares with an additional 875,250 shares over-allotted. Protagonist Therapeutics has an expected price range of $11 to $13. The underwriters for the IPO include Barclays, BMO Capital Markets and Leerink Partners.

Business summary

Headquartered in Milpitas, California, Protagonist Therapeutics is a biopharmaceutical company in the clinical stage that is in the process of developing oral treatments for various gastrointestinal issues, including ulcerative colitis and inflammatory bowel disease. The company's candidates are peptide-based. The company states that its oral peptide-based drugs would utilize the same biological pathways that are used by injectable medications that are used to treat the same disorders, alleviating the need for people to have to undergo frequent injections.

Protagonist Therapeutics currently has three primary candidate drugs. The first, PTG-100, is currently in phase one of its clinical trials and is designed to treat ulcerative colitis. The remaining two candidates are both in the preclinical development stage, with PTG-200 meant to treat severe inflammatory bowel disease and PTG-300, an injectable, intended to treat sickle cell anemia. The company hopes to have PTG-100 in its phase 2b clinical trials by the end of the year.

(Source)

Executive management overview

Dinesh V. Patel is the president and CEO of Protagonist Therapeutics. He has served in those roles since 2008. Patel has more than 30 years of executive-level experience in the biotechnology and biopharmaceutical industries. From 2006 to 2008, Patel served as the president and CEO for Arête Therapeutics. Prior to that, Patel was the CEO and president of Miikana Therapeutics from 2003 until its acquisition in 2005. Patel completed his Ph.D. in chemistry at Rutgers University. He also holds a Bachelor of Science in industrial chemistry from S. P. University in India.

The chief scientific officer of Protagonist Therapeutics since May 2013, David Y. Liu also serves as the head of research and development. Liu co-founded and served as the chief operating officer of Trenovus, Inc. from 2010 to 2012. From 2002 to 2010, Liu was the vice president of research for Fibrogen, Inc. He holds a Ph.D. in immunology and microbiology from Michigan State University and a Bachelor of Science in chemistry from the University of Chicago.

Financial highlights and risks

The company has not turned any profits. As of the end of the first quarter, Protagonist Therapeutics had debts totaling $39.2 million. At that time, Protagonist Therapeutics had $29 million in cash equivalents and in cash on hand. In its filings, the company also states that it will need a substantial amount of additional capital funding that may or may not be available to it. Protagonist Therapeutics indicates that if its IPO is successful, the money raised through it will be enough to fund the company's continued development efforts for the next 18 months.

Conclusion: Be Cautious

Protagonist Therapeutics has no products that have been approved and is still in the clinical and preclinical stages for the three candidates it has. There are significant risk factors, including stiff competition and the need for substantial additional capital in order to continue operating beyond 18 months.

At this point, we believe this stock is only appropriate for highly speculative investors, who have a strong belief in the potential efficacy of oral peptide-based medications for the treatment of ulcerative colitis and IBD. In general, we recommend that investors wait for the results from the clinical trials before deciding to purchase shares of this company.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.