J&J’s venture arm participated in the startup rounds for Protagonist Therapeutics’ early development, fueling its work on a new group of oral peptide therapies built to withstand a perilous journey in the gut. And that front row seat J&J took is now paying added dividends with a Big Pharma licensing pact for the Newark, CA-based biotech’s $PTGX second drug in the pipeline.
J&J has come in with a $50 million upfront — a sizable amount for a preclinical program — and a full slate of milestones worth up to $940 million to gain exclusive worldwide licensing rights to Protagonist’s PTG-200. The IL-23 peptide antagonist is being built to treat Crohn’s disease, one of its top inflammatory bowel disease targets.
Protagonist’s shares shot up 37% on the news.
This drug has a long way to go. It’s slated to go into a Phase I trial with healthy humans before being steered into an IBD study. But Protagonist has a more advanced lead drug in the clinic, which likely provided some of the proof-of-concept data J&J was looking for on the drug class.
Protagonist will partner with J&J on the development work through Phase II, giving the pharma giant rights to carry it on from there. And the little biotech is hanging on to co-detail marketing rights in the US.
In an 8-K filing Tuesday morning, Protagonist provided some key details on the pact you won’t find in the release. J&J is paying 80% of the shared development costs on this drug. If the pharma partner decides to stay on after Phase IIa, J&J will hand over $125 million. And if it picks up the option for Phase III, J&J will add $200 million more.
Protagonist CEO Dinesh Patel took the company public in 2016, watched shares double up and then slide to a lackluster $8.22 on Friday’s close, well below its IPO price.
As Patel told me a couple of years ago, the biotech set out to build a new kind of oral peptide therapy which could withstand the harsh environment of the stomach to do its work. Its lead therapy is PTG-100, an alpha-4-beta-7 (α4β7) integrin-specific peptide drug now in a mid-stage program for ulcerative colitis.
Susan B. Dillon, the immunology chief at Janssen, says this partnership is the latest in several steps the biotech and pharma giant have taken together. “Together with Johnson & Johnson Innovation, we have forged a strong relationship with the Protagonist Therapeutics team over the course of several years.”
“Our oral peptide PTG-200 works by blocking the IL-23 pathway, a mechanism which has been proven by injectable antibodies, including an approved drug and others in different stages of clinical development,” said David Y. Liu, Protagonist’s chief scientific officer and head of R&D. “As evidenced by PTG-200, we believe our technology platform is validated in its ability to generate potential first-in-class oral peptides as the next generation of targeted therapy drugs for IBD.”
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