Under WSA’s IPO Scanner: Protagonist Therapeutics Inc.

Protagonist raised $90 million against expectations of $70 million at $12 per share

The U.S. IPO market seems to be primed for a post Labor Day pickup, with 21 IPOs being priced so far in Q3 FY16. As of September 19th, 2016, there have been 63 IPOs priced and 92 IPOs filed, raising a total of $10.6 billion. Of the total number of IPOs filed, 30 have been in the Healthcare sector, raising total proceeds of $2.6 billion, followed by Financials with 9 deals raising $1.7 billion, and IT with 9 deals raising $1.8 billion.

As of September 1st, 2016, the IPOs priced gained an average 32% from their offer price (45% excluding biotech IPOs), with 81% of the IPOs trading above their issue price (95% excluding biotech IPOs). The IPO market has averaged at about 10 deals per month since April 2016, and this pace is expected to increase after Labor Day, putting the year on track to close at 100 IPOs. IPO activity is expected to be the highest in September and October, followed by narrower windows of opportunity around the U.S. presidential election and the holiday season.

The active pipeline of companies that have submitted new or amended filings since June 1st, 2016, consists of 43 companies seeking to raise an estimated $10.2 billion. This includes IPOs from tech companies such as The Trade Desk as well as companies such as Valvoline and Acushnet. For the remaining part of 2016, there is more number of tech IPOs expected, notably in cloud software.

Source: Renaissancecapital.com
Source: Renaissancecapital.com

About Protagonist Therapeutics

p2Protagonist Therapeutics Inc. is a clinical-stage biopharmaceutical company with a proprietary technology platform that focuses on discovering and developing peptide-based new chemical entities (NCEs) to address significant unmet medical needs. Its primary focus is to develop first-in-class oral peptide drugs that target the same biological pathways as injectable antibody drugs. Compared to injectable antibody drugs, Protagonist’s oral peptides offer targeted delivery to the gastrointestinal (GI) tissues. This in turn provides improved safety due to minimal exposure in the blood, convenience and compliance due to oral delivery, and potentially an opportunity for earlier introduction of targeted therapy for inflammatory bowel disease (IBD). Protagonist’s initial lead product candidates, PTG-100 and PTG-200, have the potential to change the existing treatment for IBD, a GI disease consisting primarily of ulcerative colitis and Crohn’s disease.

PTG-100, a potential first-in-class oral alpha-4-beta-7 integrin specific antagonist peptide product candidate, is being developed initially for moderate-to-severe ulcerative colitis. It has completed a phase 1 clinical trials in normal healthy volunteers. PTG-200, a potential first-in-class oral Interleukin-23 receptor antagonist that is being developed initially for moderate-to-severe Crohn’s disease, is currently in IND-enabling studies.

p3Protagonist’s peptide technology platform enables the discovery of oral and injectable peptides that can be utilized against a diverse set of targets and diseases. In addition to PTG-100 and PTG-200, the Company also develops injectable hepcidin mimetics, and has one lead compound from this program, PTG-300, which is currently in pre-clinical development. These mimetics have the potential to be used for the treatment of iron overload disorders, such as transfusion dependent beta-thalassemia, hereditary hemochromatosis (HH) and sickle cell disease (SCD), each of which may qualify PTG-300 for orphan drug status.

The Milpitas, California-based Company has a pre-clinical and clinical staff of 29 in California, and discovery operations both in California and in Brisbane, Queensland, Australia. Protagonist has had no revenue yet; however, its losses widened to $11.7 million in the first three months of 2016 versus a loss of $2.7 million a year ago. It has accumulated a deficit of $39.1 million.

p4The company has so far raised $67 million since it was founded in 2001 as a spinout from the University of Queensland’s Institute of Molecular Biosciences. Its biggest stakeholders are Canaan Partners (20.9%), Johnson & Johnson (NYSE: JNJ) (20.8%), Lilly Ventures (16.9%), Adage Capital Partners (9.3%), Pharmstandard International (8.5%), Starfish Technology Fund (7.8%) and R.A. Capital Healthcare Fund (7.7%).

IPO details

Protagonist first filed confidential IPO paperwork in May 2016. On August 10th, 2016, the Company announced the pricing of its IPO of 7.5 million shares of common stock, at a price to the public of $12 per share, before underwriting discounts and commissions. The shares began trading on The NASDAQ Global Market on August 11th, 2016, under the symbol “PTGX.” In addition, Protagonist has granted the underwriters a 30-day option to purchase up to 1,125,000 additional shares at the initial public offering price, less underwriting discounts and commissions.

Protagonist was able to raise $90 million by offering 7.5 million shares at $12; it had originally planned to raise $70 million by offering 5.84 million shares, according to its previous filings. Insiders had been set on buying around $40 million of the IPO. The IPO closed on August 16th, 2016. Leerink Partners LLC, Barclays Capital Inc., and BMO Capital Markets Corp. were the joint book-running managers for the IPO. Protagonist will use the proceeds of the IPO to discover and develop peptide-based NCEs to address significant unmet medical needs.

Protagonist is the third Bay Area life sciences company to go public in 2016, following San Francisco-based Audentes Therapeutics’ (NASDAQ: BOLD) $75-million debut in July 2016 and Burlingame-based Corvus Pharmaceuticals’ (NASDAQ: CRVS) $70.5-million offering in March 2016.

Key developments

SBIR grant: Protagonist announced on July 28th, 2016, that it had received a Phase 1 Small Business Innovation Research (SBIR) Grant from the National Institute of Heart and Lung Diseases of the National Institutes of Health. The award, Number HL132702-01A1, supports preclinical research aimed at discovering and optimizing lead molecules as novel peptide mimetics of the natural hepcidin hormone. Protagonist aims to develop these mimetics as potential injectable treatments for iron overload disorders, such as beta-thalassemia and hereditary hemochromatosis.

Addition to Board of Directors: Protagonist announced on July 8th, 2016, that it had elected William D. Waddill, Senior Vice President and Chief Financial Officer of Calithera Biosciences, to the Protagonist Board of Directors.

Stock performance

p5Protagonist’s stock stood at $15.10, gaining 5.37%, at the close on Monday, September 19th, 2016, having vacillated between an intraday high of $16.54 and a low of $14.48 during the session. The stock’s trading volume was at 160,941 for the day. The Company’s market cap was at $221.34 million as of Monday’s close.

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