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Item 1. Business

2021-03-10 compared with 2020-03-10 · 357 added, 332 removed, 291 unchanged (70% of the section changed)

We are a clinical-stage biopharmaceutical company that utilizes a proprietary technology platform to discover and develop novel peptide-based drugs to address significant unmet medical needs and transform existing treatment paradigms for patients.

We have three assets in various stages of clinical development derived from this platform, and we expect to report results from six different Phase 2 studies by the end of 2021.

We have multiple clinical assets derived from this platform in development for multiple indications.

Our clinical programs fall into two broad categories of diseases;

(i) hematology and blood disorders, and (ii) inflammatory and immunomodulatory diseases.

Our Product Pipeline

Our most advanced clinical asset, PTG-300, is an injectable hepcidin mimetic in development for the potential treatment of iron overload and other blood disorders.

PTG-300 mimics the effect of the natural hormone hepcidin, but with greater potency, solubility and stability.

*Subject to Covid-19 related delays

Our most advanced clinical asset, rusfertide (generic name for PTG-300) is an injectable hepcidin mimetic in development for the potential treatment of erythrocytosis, iron overload and other blood disorders.

Hepcidin is a key hormone in regulating iron equilibrium and is critical to the proper development of red blood cells.

We are currently developing PTG-300 for the treatment of ineffective erythropoiesis, chronic anemia and iron overload, with an initial focus on beta-thalassemia non-transfusion dependent (“NTD”) and transfusion dependent (“TD”) patients where the primary endpoints are hemoglobin increases and transfusion burden reductions, respectively.

PTG-300 has received an orphan drug designation from the U.S.

Food and Drug Administration (“FDA”) and European Union (“EU”) regulatory authorities for the treatment of beta-thalassemia.

The FDA has granted Fast Track designation to PTG-300 for the treatment of beta-thalassemia.

In the first quarter of 2019, we began dosing patients in a global Phase 2 study of PTG-300 in beta-thalassemia.

Preliminary results from this Phase 2 study reported in the fourth quarter of 2019 suggest that the dose related pharmacodynamic responses in lowering serum iron and transferrin saturation (“TSAT”) warrant continued evaluation at higher and/or more frequent doses which will be required to evaluate the rate and durability of clinical response in order to reach definitive conclusions.

We expect to report clinical efficacy results from this Phase 2 study in 2020.

We initiated a Phase 2 study in polycythemia vera (“PV”) in the third quarter of 2019 and a Phase 2 study in hereditary hemochromatosis (“HH”) in January 2020.

We are working toward the initiation of an investigator-sponsored study (“IST”) of PTG-300 in patients with myelodysplastic syndromes (“MDS”) in the first half of 2020.

Assuming PTG-300 shows clinical efficacy in one or more of the above indications, we intend to select our first indication in 2020 for a potential pivotal study to begin in 2021.

Our clinical assets PTG-200 and PN-943 are orally delivered drugs currently in development for inflammatory bowel disease (“IBD”), a gastrointestinal (“GI”) disease consisting primarily of ulcerative colitis (“UC”) and Crohn’s disease (“CD”), that block biological pathways currently targeted by marketed injectable antibody drugs.

Our orally stable peptide approach offers targeted delivery to the GI tissue compartment.

Rusfertide mimics the effect of the natural hormone hepcidin, but with greater potency, solubility and stability.

We initiated Phase 2 proof of concept (“POC”) studies in the blood disorders polycythemia vera (“PV”) in the third quarter of 2019 and hereditary hemochromatosis (“HH”) in January 2020.

In December 2020, we presented four posters and one oral presentation relating to rusfertide at the American Society for Hematology’s virtual annual meeting, including updated interim Phase 2 results for rusfertide in PV.

We believe these interim results provide evidence regarding the potential of rusfertide to eliminate the need for phlebotomy by controlling hematocrit levels below 45% on an individual patient basis.

Rusfertide has a unique mechanism of action in the potential treatment of PV, which may enable it to decrease and maintain hematocrit levels within the range of recommended clinical guidelines without causing the iron deficiency that may occur with frequent phlebotomy.

We selected PV as our first indication for potential pivotal study in rusfertide and expect to complete patient enrollment in the ongoing Phase 2 clinical trial by mid-2021.

We are consulting with regulatory authorities in the first half of 2021 to discuss the registrational clinical development plan.

In June 2020, the U.S.

Food and Drug Administration (“FDA”) granted orphan drug designation for rusfertide for the treatment of PV.

In October 2020, the European Medicines Agency granted orphan drug designation for rusfertide for the treatment of PV.

In December 2020, the FDA granted Fast Track designation for rusfertide for the treatment of PV.

In addition, we expect to disclose preliminary data from our Phase 2 POC study in HH, our second indication, in the second half of 2021.

We discontinued development of rusfertide for anemia associated with beta-thalassemia and myelodysplastic syndromes during the first half of 2020.

Our clinical assets PTG-943 and PTG-200 are orally delivered investigational drugs currently in development for inflammatory bowel disease (“IBD”), a gastrointestinal (“GI”) disease consisting primarily of ulcerative colitis (“UC”) and Crohn’s disease (“CD”), that are designed to block biological pathways currently targeted by marketed injectable antibody drugs.

Our orally stable peptide approach may offer targeted delivery to the GI tissue compartment.

We believe that, compared to antibody drugs, these product candidates have the potential to provide improved safety due to minimal exposure in the blood, increased convenience and compliance due to oral delivery, and the opportunity for the earlier introduction of targeted oral therapy.

As a result, if approved, they may transform the existing treatment paradigm for IBD.

PTG-200 (also referenced as JNJ-67864238) is an orally delivered gut-restricted Interleukin-23 receptor (“IL-23R”) antagonist for the treatment of IBD.

As a result, if successfully developed and approved, we believe they may transform the existing treatment paradigm for IBD.

PN-943 is an investigational, orally delivered, gut-restricted alpha-4-beta-7 (“α4β7”) specific integrin antagonist.

We developed PN-943 as a potentially more potent orally delivered, gut-restricted α4β7 backup compound to PTG-100, our first-generation orally delivered gut-restricted α4β7 inhibitor that was being developed for treatment of IBD.

In 2019, we completed a Phase 1 single ascending dose (“SAD”) and multiple ascending dose (“MAD”) clinical study of PN-943 in healthy volunteers to evaluate safety, pharmacokinetics and pharmacodynamics.

The pharmacodynamic results indicated that the administration of PN-943 was well tolerated and showed results of target engagement that were suggestive of higher potency for PN-943 as compared to PTG-100.

We submitted a U.S.

Investigational New Drug application (“IND”) with the FDA for PN-943 in December 2019, which took effect in January 2020, and we initiated a Phase 2 POC study in UC in the second quarter of 2020 which is expected to be completed in 2022, subject to delays related to the COVID-19 pandemic.

PTG-200 (also referenced as JNJ-67864238) is an investigational, orally delivered, gut-restricted Interleukin-23 receptor (“IL-23R”) antagonist for the treatment of IBD.

In May 2017, we entered into a worldwide license and collaboration agreement with Janssen Biotech, Inc.

(“Janssen”), a Johnson & Johnson company, to co-develop and co-detail PTG-200 and any second-generation compounds for all indications, including IBD.

(“Janssen”), a Johnson & Johnson company, to co-develop and co-detail PTG-200 and certain related compounds for all indications, including IBD.

The agreement with Janssen was amended in May 2019 to expand the collaboration by supporting efforts towards second-generation IL- 23R antagonists, triggering a $25.0 million milestone payment to us.

In January 2020, as part of the expanded research collaboration, we announced the identification and nomination of an orally delivered, gut-restricted IL-23R antagonist peptide as a second-generation development candidate, triggering a $5.0 million milestone payment to us.

See “Item 7.

Management’s Discussion and Analysis –

Overview”

and Note 3 to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for additional information.

In 2018, we completed a Phase 1 clinical study to evaluate the safety, pharmacokinetics and pharmacodynamics of PTG-200 in healthy volunteers.

Janssen submitted a U.S.

Investigational New Drug application (“IND”) for PTG-200 in CD during the second quarter of 2019, which took effect in July 2019.

In collaboration with Janssen, we initiated a Phase 2 clinical study for PTG-200 in CD in the fourth quarter of 2019, with results expected in the first half of 2021.

PN-943 is an orally delivered, gut-restricted, alpha-4-beta-7 (“α4β7”) specific integrin antagonist.

We reported results of the SAD part of the study during the second quarter of 2019 and the MAD part of the study during the third quarter of 2019.

The pharmacodynamic results indicated that the administration of PN-943 was well tolerated, and results of target engagement were supportive of the higher potency of PN-943 as compared to PTG-100.

We submitted a U.S.

IND for PN-943 in December 2019, which took effect in January 2020.

We anticipate initiating a Phase 2 proof of concept (“POC”) study in UC in the second quarter of 2020, with topline data expected in the second half of 2021.

In January 2020, as part of the expanded research collaboration, we announced the identification and nomination of an orally delivered IL-23R antagonist peptide as a second-generation development candidate, triggering a $5.0 million milestone payment to us.

Janssen initiated a global Phase 2 POC clinical study for PTG-200 in moderate-to-severe CD in the fourth quarter of 2019.

Due to the uncertain effect on the timing of clinical trials caused by the COVID-19 pandemic, we have suspended guidance on a timeline for completion of the PTG-200 Phase 2 study.

In October 2020, we announced the selection of two second-generation IL-R antagonists for advancement into clinical development, PN-235 (also referenced as JNJ-77242113) and PN-232 (also referenced as JNJ-75105186).

A Phase 1 study was initiated for PN-235 in December 2020 and is expected to be completed in 2021.

PN-232 is in the late preclinical stage and we expect to initiate and complete a Phase 1 study for PN-232 in 2021.

The advancement of three different oral co-development candidates provides us with several strategic options for development in multiple indications.

We are also continuing our joint research efforts to identify additional IL-23R antagonists.

Our clinical assets are all derived from our proprietary discovery platform.

Our platform enables us to engineer novel, structurally constrained peptides that retain key advantages of both orally delivered small molecules and injectable antibody drugs, while overcoming many of their limitations as therapeutic agents.

Importantly, constrained peptides can be designed to alleviate the fundamental instability inherent in traditional peptides to allow different delivery forms, such as oral, subcutaneous, intravenous, and rectal.

Our platform enables us to engineer novel, structurally constrained peptides that are designed to retain key advantages of both orally delivered small molecules and injectable antibody drugs in an effort to overcome many of their limitations as therapeutic agents.

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.

We continue to use our peptide technology platform to discover product candidates against targets in disease areas with significant unmet medical needs.

AN INJECTABLE HEPCIDIN MIMETIC

PTG-300, an injectable hepcidin mimetic, was discovered through our peptide technology platform.

Rusfertide, an injectable hepcidin mimetic, was discovered through our peptide technology platform.

Hepcidin is a natural hormone that regulates iron metabolism.

We are developing PTG-300 for the treatment of certain disorders characterized by ineffective erythropoiesis, excessive red blood cells or iron overload.

In diseases of ineffective erythropoiesis, excessive quantities of iron in the bone marrow contribute to oxidative stress and premature cell death causing anemia.

In healthy individuals, hepcidin regulates iron levels by inhibiting iron absorption from the GI tract and by limiting macrophage release of iron.

Individuals with beta-thalassemia and MDS can have insufficient hepcidin to maintain appropriate iron levels that result in chronic anemia.

We are developing rusfertide for the treatment of certain disorders characterized by excessive red blood cells, iron overload or imbalance.

In healthy individuals, hepcidin regulates iron levels by limiting release of iron from macrophages and inhibiting iron absorption from the GI tract.

In diseases of excessive red blood cells (“RBCs”), such as PV, the body consumes iron in the production of cells, leading to iron

deficiency which can be exacerbated by phlebotomy.

In diseases of iron overload, such as HH, there may be insufficient hepcidin to maintain appropriate iron levels.

In other disorders, iron imbalance can benefit from increased levels of hepcidin-like activity to restore proper balance.

Because of stability issues, complexity of synthesis and solubility limitations, direct replacement with native hepcidin is not a practical therapeutic approach.

We developed PTG-300 as a stable, soluble, more readily manufactured injectable hepcidin mimetic that could potentially prevent iron toxicity and anemia with chronic subcutaneous injections.

We developed rusfertide as a more potent, stable, soluble, and more readily manufactured injectable hepcidin mimetic.

Mechanism of Action and Rationale

The molecular target of the hormone hepcidin is the cellular trans-membrane protein ferroportin, which functions as an export channel for intracellular iron in macrophages, liver hepatocytes, and duodenal enterocytes.

The molecular target of the hormone hepcidin is the cellular trans-membrane protein ferroportin, which functions as the major export channel for intracellular iron in macrophages, liver hepatocytes, and duodenal enterocytes.

By binding to the extracellular domain of ferroportin, hepcidin redistributes iron by reducing the export of iron from inside the enterocytes and macrophages to the systemic circulation.

Excessive quantities of iron relative to the lower levels of beta-globin chains in the bone marrow induce ineffective erythropoiesis resulting in anemia.

As a hepcidin mimetic, PTG-300 may redistribute iron to the macrophages, reduce iron-induced oxidative stress in the bone marrow, and allow for sufficient production of red blood cells.

In addition, by limiting the release of iron into the blood, PTG-300 may inhibit the damage caused by excessive absorption of iron by vital organs such as the liver and heart (i.e.

secondary iron overload).

As a hepcidin mimetic, rusfertide can downregulate ferroportin and normalize red blood cell production by controlling the supply of iron from the macrophages and other stores to the bone marrow.

In addition, by limiting the release of iron into the blood, rusfertide may inhibit the damage caused by excessive absorption of iron by vital organs such as the liver and heart.

Iron Disorders Overview

Beta-thalassemia

Beta-thalassemia is a rare genetic blood disorder that is characterized by impaired red blood cell production.

As a result of the underlying genetic defect in 

-globin production, beta-thalassemia patients may be severely anemic, resulting in the need for lifelong supportive care with regular red blood cell transfusions.

Repeated transfusions can cause secondary iron overload in the heart and liver which results in shortened lifespan in patients.

In the bone marrow, elevated levels of iron relative to the decreased levels of beta-globin can prevent red blood cells from fully developing, resulting in anemia.

In addition, the resulting immature red blood cells can aggregate in the spleen causing organ enlargement that may require surgical removal.

In conditions of ineffective erythropoiesis, such as beta-thalassemia and MDS, hepcidin levels are suppressed leading to increases in iron absorption from the GI tract and iron export from macrophages which may be toxic to developing erythrocytes.

It has been proposed that agents with hepcidin activity may help correct the iron distribution abnormalities in beta-thalassemia with beneficial effects on erythropoiesis.

Existing treatment options for iron-loading anemia and secondary iron overload are limited.

Patients with transfusion-dependent (“TD”) beta-thalassemia require lifelong regular red blood cell transfusions and general supportive care.

Red blood cell transfusions can treat a patient’s anemia but exacerbate the patient’s iron overload and are burdensome.

The iron overload caused by transfusions may require treatment with chelating agents, which can have adverse effects.

Transfusion and iron chelation therapy have significantly improved the survival of TD beta-thalassemia patients over the last few decades.

However, these agents work very slowly and have significant kidney, gastrointestinal, and liver toxicity issues.

The greatest unmet need for beta-thalassemia is for more effective treatment for chronic anemia to decrease the burden of frequent blood transfusions and thus eliminate the complications associated with the disease and its management as well as costs associated with red blood cell transfusions and chelation therapy.

We believe that PTG-300 may be able to restore iron homeostasis in the bone marrow as well as reduce excess circulating iron, improving anemia and thereby reducing or eliminating the need for red blood cell transfusions and related chelation treatments.

Beta-thalassemia is most prevalent in people of Mediterranean descent, such as Italians, Greeks or Turks, and is also found in people from the Arabian Peninsula, Iran, Africa, Southeast Asia and southern China.

Globally, the prevalence of beta-thalassemia was estimated to be approximately 300,000 patients in 2008, with at least 60,000 patients born each year with the disease, according to the Centers for Disease Control and Prevention.

In 2018, Decision Resource Group (“DRG”) reported that while beta-thalassemia has a worldwide carrier rate of 1.5%, the disease is rare in the United States, Italy, Germany, United Kingdom, Spain, and France with a total diagnosed prevalence of 16,000 patients, approximately 85% of which are transfusion dependent, representing an estimated market opportunity of approximately $1.4 billion to $2.5 billion.

The prevalence in the United States is low, with an estimated 3,000 patients and approximately 300 patients born each year with the disease.

Most patients with beta-thalassemia suffer from anemia caused by hepcidin deficiency and a significant number are dependent on transfusions and chelating agents, which can cost between $50,000 to $70,000 per year in the United States.

Polycythemia vera (“PV”)

PV is a rare chronic disease caused by a hematopoietic stem cell mutation.

PV is characterized by excessive erythropoiesis (production of blood cells).

These excess blood cells can increase risk of serious problems such as blood clots, potentially leading to heart attack and stroke as well as more common symptoms including fatigue, headache, blurred vision, shortness of breath and an enlarged spleen.

Over time PV may transform into myelofibrosis or leukemia.

An important aspect of the mechanism of action of the hepcidin mimetic PTG-300 is to reduce serum iron, which is required to support the excessive erythropoiesis which occurs in PV, thereby potentially enabling PTG-300 to manage this excessive erythropoiesis and ultimately reduce the phlebotomy burden and thrombotic risk in these patients.

In the United States, Italy, Germany, United Kingdom, Spain and France, there are currently more than 150,000 diagnosed PV patients representing an estimated market opportunity of approximately $1.0 billion to $2.0 billion.

Hereditary hemochromatosis (“HH”)

HH is a blood disorder caused by genetic mutations that increase iron uptake from the diet and alter its distribution in the body, leading to iron buildup in the body’s tissues and organs, particularly in the skin, heart, liver, pancreas and joint tissues.

Polycythemia vera (“PV”)

PV is a rare myeloproliferative neoplasm characterized primarily by the overproduction of red blood cells.

PV is typically caused by a form of Janus Kinase 2 (“JAK2”) mutation.

PV is a serious chronic condition as the increased red blood cell count causes the blood to thicken and puts patients at higher risk of cardiovascular and thrombotic events such as heart attack and stroke.

Patients are typically stratified as low or high risk based on age and medical history.

Regardless of risk categorization, treatment guidelines for PV are consistent:

to control the patient’s hematocrit (red blood cells as a percentage of whole blood) below 45% in order to reduce the risk of further cardiovascular or thrombotic events.

PV may progress to myelofibrosis or leukemia.

Currently patients are typically treated with low dose aspirin and phlebotomy alone or hydroxyurea alone or in combination with phlebotomy.

At later stages, patients may receive interferons or ruxolitinib, marketed as Jakafi®.

Jakafi® is currently the only branded product in the United States for PV and the only FDA-approved treatment for PV in the past 12 years.

Cytoreductive therapies such as hydroxyurea, interferons and ruxolitinib can have challenging side effect profiles as they reduce all cell types, not just red blood cells.

Current treatments are effective in some patients but have limitations.

We believe there are substantial PV patient groups that could benefit from a new non-cytoreductive therapeutic option which focuses on red blood cells.

PV Market Overview

PV is a rare disease affecting approximately 160,000 patients living in the United States, with a similar prevalence in Europe, representing an estimated market opportunity of approximately $1.0 billion to $2.0 billion.

Approximately 14,000 new patients have been diagnosed each year since 2017.

Patients are typically diagnosed between the age of 50 and 70 and median survival is approximately 20 years.

Recent analysis of a large medical claims database, representing approximately 90% of U.S.

lives, indicates that the current treatment paradigm consists primarily of therapeutic phlebotomy, hydroxyurea, or a combination of hydroxyurea and phlebotomy.

The predominant treatment is phlebotomy for both low-risk and high-risk patients, and combination therapy is commonly used to control hematocrit.

According to this database analysis, current therapies do not offer adequate hematocrit control below 45%.

In fact, less than 25% of patients in the data set had all hematocrit test results under 45% as recommended in National Comprehensive Cancer Network (“NCCN”), indicating that as many as 70,000 patients in the United States alone may be at elevated risk of cardiovascular and thrombotic events.

We believe that rusfertide has the potential to provide substantial benefit to patients by providing a tool focused entirely on managing hematocrit in a consistent and predictable manner and dramatically decrease the need for therapeutic phlebotomy.

rusfertide is a non-cytoreductive mimetic of the natural hormone hepcidin, the master regulator of iron homeostasis in the body.

Rusfertide has a unique iron regulatory mechanism which, per early results from our

Phase 2 study in PV, allows for persistent control of hematocrit without causing iron deficiency that is caused by excessive red blood cell production and exacerbated by frequent phlebotomy.

Rusfertide acts by redistributing iron away from the bone marrow where iron is in high demand and essential for red blood cell production, thereby limiting excess red blood cell production in patients with PV while still providing sufficient iron levels to support other normal cellular and organ functions requiring iron.

Hereditary Hemochromatosis (“HH”)

Excess iron in these organs and tissues can be toxic and over time lead to cirrhosis, liver cancer, heart problems, joint pain and diabetes.

Current treatments for HH, including periodic phlebotomy, can be a significant burden to patients.

PTG-300 could potentially reduce the need for phlebotomy and offer a safer and better long-term solution to management of the disease.

The genetic defects that cause most HH are present in approximately five to seven million patients in the United States and EU.

Myelodysplastic syndromes (“MDS”)

MDS are a group of disorders in which blood cells do not mature properly in the bone marrow.

Symptoms can include fatigue, shortness of breath, excessive bleeding or frequent infections.

There are approximately 19,000 transfusion dependent MDS patients in the United States, Italy, Germany, United Kingdom, Spain, and France.

There are multiple MDS subpopulations, some of which are characterized by anemia, low hepcidin, and high serum iron and transferrin saturation.

Significant unmet needs for these patients include reduction in or elimination of transfusions, prevention of disease progression to acute myelogenous leukemia and overall survival.

PTG‑300’s Clinical Development Program

PTG-300 has received orphan drug designation from the FDA and EU regulatory authorities, and Fast Track designation from the FDA for the treatment of beta-thalassemia.

Fast Track designation is an expedited review to facilitate development of investigational drugs which treat a serious or life-threatening condition and fill an unmet medical need.

In 2018, we successfully filed an IND for PTG-300 in the United States and related clinical trial applicat ions outside the United States.

In the first quarter of 2019, we began dosing patients in a global Phase 2 study of PTG-300 in beta-thalassemia called TRANSCEND.

The study is a single-arm, open label, MAD design that evaluates safety, POC and dose finding in adolescent and adult patients with anemia associated with NTD or TD beta-thalassemia.

NTD patients receive 12 weeks treatment with PTG-300 in escalating dose cohorts.

The primary efficacy endpoint in NTD patients is a change in hemoglobin from baseline.

TD patients receive 16 weeks treatment with PTG-300 in escalating dose cohorts.

The primary efficacy endpoint in TD patients is a change in transfusion burden from baseline.

The primary objectives of this study are to evaluate the safety, tolerability and preliminary efficacy of PTG-300 and identify an appropriate starting dose and titration regimen for registration studies.

Previously, we reported preliminary results from the Phase 2 study.

Dose-related drug exposure reductions from baseline TSAT and serum iron levels were observed (Figure 2), with significant reductions at the 40 mg and 80 mg weekly doses and significant and sustained reductions at the 40 mg twice weekly doses.

PTG-300 Reduces TSAT and Serum Iron Levels –

TD Beta-thalassemia Patients and Normal Human Volunteers (“NHV”)

The dose-related pharmacodynamic responses in TSAT and serum iron levels observed in this preliminary analysis provide the first evidence of the effects of PTG-300 in patients with beta-thalassemia.

These early results suggest the potential of finding an appropriate dose of PTG-300 for continued development in the treatment of beta-thalassemia.

While we have observed clinical responders in the study based on the pre-specified criteria of reductions in transfusion burden, continued evaluation at higher doses will be required to evaluate the rate and durability of these

effects in order to reach definitive conclusions.

We will continue further study with additional dose regimens and longer follow-up and expect to report topline results in 2020.

PTG-300 was well-tolerated and systemic adverse events were mild to moderate in severity and were typical of patients with beta-thalassemia.

These events were not dose-related and did not prevent dose escalation.

There was one serious drug-related adverse event of vomiting and confusion, and the most frequent treatment emergent adverse event observed was injection site erythema in 5 out of 39 patients (12.8%).

In the fourth quarter of 2019, we initiated a Phase 2 study of PTG-300 in PV designed to evaluate safety and preliminary efficacy in patients requiring phlebotomy.

Current treatments for HH are limited, the most common being therapeutic phlebotomy, which can be a significant burden to patients.

The treatment goal in HH is to bring ferritin levels into a range of 50-150ng/ml.

There are currently no pharmaceutical interventions for HH, although iron chelators may be used off-label in certain cases.

Rusfertide, if approved, could potentially reduce the need for phlebotomy and offer new solution for management of the disease.

The genetic defects that cause most HH are present in approximately five to seven million patients in the United States and European Union (“EU”).

HH affects approximately one million people in the United States.

In January 2020, we initiated a Phase 2 study of rusfertide in HH.

This study is an open label, multicenter study designed to evaluate the effects of rusfertide in up to 20 adult patients over 24 weeks of treatment.

Guidelines for HH focus on controlling baseline transferrin saturation (“TSAT”) and ferritin to prevent long-term complications.

Given the TSAT reductions from rusfertide observed to date in both healthy volunteers and beta-thalassemia and PV patients, as well as regulation of organ iron content in a mouse model of HH, we believe that a significant reduction in phlebotomy may be possible with rusfertide.

The endpoints of this POC study include change in TSAT and serum iron levels, reductions in phlebotomy requirements and an assessment of participant-reported outcomes.

We expect to report preliminary data from this Phase 2 study in 2021.

Rusfertide’s Clinical Development Program

In 2018, we successfully filed an IND for in the United States and related clinical trial applications outside the United States.

In the first quarter of 2019, we began dosing patients in a global Phase 2 study of rusfertide in beta-thalassemia called TRANSCEND.

Beta-thalassemia is a rare genetic blood disorder that is characterized by impaired red blood cell production.

The study was a single-arm, open label, MAD design that evaluates safety, POC and dose finding in adolescent and adult patients with anemia associated with non-transfusion dependent (“NTD”) or transfusion dependent (“TD”) beta-thalassemia.

NTD patients received 12 weeks treatment with rusfertide in escalating dose cohorts.

The primary efficacy endpoint in NTD patients was a change in hemoglobin from baseline.

TD patients received 16 weeks treatment with rusfertide in escalating dose cohorts.

The primary efficacy endpoint in TD patients was a change in transfusion burden from baseline.

The primary objectives of this study were to evaluate the safety, tolerability and preliminary efficacy of rusfertide and identify an appropriate starting dose and titration regimen for registration studies.

Preliminary results from the Phase 2 study in beta-thalassemia patients showed dose-related drug exposure reductions from TSAT and serum iron levels, with significant reductions at the 40 mg and 80 mg weekly doses and significant and sustained reductions at the 40 mg twice weekly doses.

These early results suggested the potential of finding an appropriate dose of rusfertide for continued development in the treatment of beta-thalassemia.

While we have observed clinical responders in the study based on the pre-specified criteria of reductions in transfusion burden, continued evaluation at higher doses would be required to evaluate the rate and durability of these effects in order to reach definitive conclusions.

We discontinued development of rusfertide for anemia associated with beta-thalassemia and myelodysplastic syndromes, a group of disorders in which blood cells do not mature properly in the bone marrow, during the first half of 2020.

Phase 2 Study of Rusfertide in PV Clinical Design

In the fourth quarter of 2019, we initiated a Phase 2 study of rusfertide in PV designed to evaluate safety and preliminary efficacy in patients requiring phlebotomy (Figure 2).

The Phase 2 study in PV is expected to enroll approximately 50 patients and consists of a 16-week open-label dose finding stage every 4 weeks from 10 mg to 80 mg and a 12-week maintenance period at doses which generate desired hematocrit levels, followed by a 12-week randomized and blinded withdrawal stage.

1 unchanged sentence

The endpoints of this clinical POC study include measurement of blood parameters (hematocrit and hemoglobin levels), reductions or delay in phlebotomy requirements, and improvements in quality-of-life symptoms.

In January 2020, we initiated a Phase 2 study of PTG-300 in HH.

This study is an open label, multicenter study designed to evaluate the effects of PTG-300 in approximately 30 adult patients over 24 weeks of treatment.

Guidelines for HH focus on controlling TSAT and ferritin to prevent long-term complications.

Given the TSAT reductions from PTG-300 observed to date in both healthy volunteers and beta-thalassemia patients, as well as regulation of organ iron content in a mouse model of HH, we believe that a significant reduction in phlebotomy may be possible with PTG-300.

The endpoints of this POC study include change in TSAT and serum iron levels, reductions in phlebotomy requirements and an assessment of participant-reported outcomes.

We expect to initiate an IST of PTG-300 in MDS in the first half of 2020.

Assuming PTG-300 shows clinical efficacy in one or more of the above indications, we intend to select our first indication in 2020 for a potential pivotal study to begin in 2021.

These preliminary results from the Phase 2 study of rusfertide in PV demonstrated dramatic decreases in the need for therapeutic phlebotomy in patients with PV, while maintaining control over blood hematocrit levels.

Rusfertide Controlled HCT <45% and Decreased RBC Count in PV Patients

(Interim Data as of November 18, 2020)

Rusfertide Leads to Reversals in Iron Deficiency Markers

(Interim Data as of November 18, 2020)

Of the 18 PV patients treated with rusfertide, the vast majority were able to eliminate therapeutic phlebotomies and maintain a target hematocrit level of less than 45 percent.

Treatment with rusfertide was also shown to reverse iron deficiency, a serious side effect of regular therapeutic phlebotomies as a treatment for PV (Figure 4).

Early observations suggest a decreased symptom burden over time, including overall burden (MPN-TSS), as well as measurements specific to mental function, fatigue and itching.

Adverse Events (“AE’s”) in Ongoing Rusfertide Phase 2 Study in PV

(Interim Data as of November 18, 2020)

Administration of rusfertide was well tolerated, with injection site reactions and bruise as the only observed adverse events (“AEs”);

no significant adverse events (“SAEs”) were observed (Figure 5).

We selected PV as our first indication for potential pivotal study in rusfertide and expect to complete patient enrollment in the ongoing Phase 2 clinical trial by mid-2021.

We are consulting with regulatory authorities in the first half of 2021 to discuss the registrational clinical development plan.

Rusfertide has received orphan drug designation from the FDA and EU regulatory authorities, and Fast Track designation from the FDA for the treatment of PV.

Fast Track designation is an expedited review to facilitate development of investigational drugs which treat a serious or life-threatening condition and fill an unmet medical need.

During the first quarter of 2021, we initiated a Phase 2 study for rusfertide in up to 20 patients diagnosed with PV and with routinely elevated hematocrit levels (>48%).

OVERVIEW OF INFLAMMATORY BOWEL DISEASE

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Patients with CD may initially present with abdominal pain, fatigue and anorexia, which can be misdiagnosed.

Both diseases’

peak diagnosis years are in young adulthood and are found about equally in both males and females.

Both diseases’ peak diagnosis years are in young adulthood and are found about equally in both males and females.

Management is lifelong and affects school attendance, graduation rates, childbearing and work productivity.

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Market Overview

According to the Crohn’s & Colitis Foundation of America, there are more than 1.6 million IBD patients in the United States alone, an increase of approximately 200,000 patients since 2011.

As many as 70,000 new cases of IBD are diagnosed in the United States each year, and there may be as many as 80,000 children in the United States with IBD.

GlobalData estimates that the UC market was approximately $5.3 billion across seven major markets:

In 2019, GlobalData estimated that the UC market was approximately $6.7 billion across seven major markets:

United States, France, Germany, Italy, Spain, United Kingdom and Japan.

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In 2016, GlobalData estimated that the CD market reached approximately $7.3 billion across those same seven major markets and is expected to grow approximately 5.5% per year to $12.4 billion by 2029.

Johnson & Johnson global sales of Stelara ®

(approved for psoriasis, psoriatic arthritis, moderate-to-severe CD and UC) exceeded $5.0 billion in 2018.

Takeda Pharmaceuticals sales of Entyvio®

for IBD reached approximately $3.0 billion in 2019.

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.

Approximately one third of IBD patients do not respond to TNF-α antibody drugs and approximately another 30% to 40% become refractory within the first year of treatment.

Additionally, TNF-α antibody drugs may predispose patients to an increased risk of serious infection and the development of anti-drug antibodies, which over time can cause loss of drug response.

More recently, antibody products focused on potentially safer mechanisms of action have been gaining market share.

One such product is Takeda Pharmaceuticals’ Entyvio®, which targets the α4β7 integrin pathway.

Takada Pharmaceuticals reported 2020 sales of Entyvio® of approximately $3.9 billion.

Similarly, Johnson & Johnson’s Stelara®, which targets the Interleukin 12 (“IL-12”) and Interleukin 23 (“IL-23”) pathways, has gained significant traction.

Johnson & Johnson global sales of Stelara® (approved for psoriasis, psoriatic arthritis, moderate-to-severe CD and UC) exceeded $7.7 billion in 2020.

Current Standard of Care in IBD

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Nonetheless, halting or reversing IBD progression has not yet been achieved with any single agent therapy, and attaining and maintaining long-term remission in most patients remains a significant unmet medical need.

Across therapeutic classes, 15% to 31% rates of clinical remission represent the current ceiling in patients with moderate-to-severely active disease.

Biosimilar infliximab and other tumor necrosis factor (“TNF”) inhibitors are the first line standard of care in moderate-to-severe IBD.

therapeutic classes, 15% to 31% rates of clinical remission represent the current ceiling in patients with moderate-to-severely active disease.

Biosimilar infliximab and other tumor necrosis factor (“TNF”) inhibitors are the first line standard of care in moderate-to-severe IBD.

Anti-TNFs bind to and neutralize a central pro-inflammatory cytokine in the gut via systemic immunosuppression.

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In addition, more than 10% of patients treated with anti-TNF agents lose response with each year of treatment.

In 2014, a novel anti-trafficking mechanism launched with vedolizumab (Entyvio®), which blocks migration of leukocytes into the gut via α

This mechanism remains the only true “gut selective”

approach in the IBD market today, although formulation technologies can limit systemic exposure from orally delivered agents.

Entyvio®

has shown an excellent safety profile, although it requires intravenous administration.

Entyvio®

was followed by the launch of ustekinumab (Stelara®) in CD in 2016, which blocks inflammation produced through the Interleukin 12 (“IL-12”) and Interleukin 23 (“IL-23”) pathways, and tofacitinib (Xeljanz®), an orally delivered pan-Janus kinase (JAK) inhibitor approved in UC.

In 2014, a novel anti-trafficking mechanism launched with vedolizumab, marketed as Entyvio®, which blocks migration of leukocytes into the gut via α4β7 integrins.

This mechanism remains the only true “gut selective” approach in the IBD market today, although formulation technologies can limit systemic exposure from orally delivered agents.

Entyvio® has shown an excellent safety profile, although it requires intravenous administration.

Entyvio® was followed by the launch of ustekinumab, marketed as Stelara®, in CD in 2016, which blocks inflammation produced through the IL-12 and IL-23 pathways, and tofacitinib, marketed as Xeljanz®, an orally delivered pan-Janus kinase (JAK) inhibitor approved in UC.

A head-to-head trial called VARSITY comparing the long-term safety and efficacy of an anti-integrin and anti-TNFs has been completed.

Entyvio®

demonstrated superior rates of clinical remission and endoscopic improvement compared with Humira, the market leader in the TNF inhibitor class.

Entyvio® demonstrated superior rates of clinical remission and endoscopic improvement compared with Humira®, the market leader in the TNF inhibitor class.

The first formal combination trials in IBD were initiated in the last year, adding new mechanisms such as integrin inhibitors or IL-23 inhibitors to anti-TNFs.

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In addition, many clinicians continue to advocate for earlier introduction of targeted therapeutics in mild-to-moderate IBD in order to prevent disease progression and irreversible gastrointestinal damage.

Our orally delivered, GI-restricted, peptide drugs PTG-200 and PN-943 work on the same specific validated targets as FDA-approved injectable antibodies and have the potential to offer improved safety and compliance and to minimize the risk of immunogenicity associated with antibodies.

Our orally delivered, GI-restricted, peptide drugs PTG-200, PN-235, PN-232 and PN-943 work on the same specific validated targets as FDA-approved injectable antibodies and have the potential to offer improved safety and compliance and to minimize the risk of immunogenicity associated with antibodies.

We believe that our product candidates, if approved, have the potential to be used more broadly, including treatment of mild-to-moderate IBD.

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We are developing our peptide therapeutics in a convenient capsule or tablet form intended for oral administration.

We believe oral administration may reduce many of the problems and

limitations associated with injections or infusions, including injection site pain and local reactions, inconvenience, anxiety, high rates of immunogenicity and potential safety risks.

We believe oral administration may reduce many of the problems and limitations associated with injections or infusions, including injection site pain and local reactions, inconvenience, anxiety, high rates of immunogenicity and potential safety risks.

● Potential for improved safety and tolerability compared to antibody drugs .

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Rapid clearance may be beneficial especially if patients need to discontinue therapy.

In contrast, antibody drugs, because of their long plasma half-life, may take months to clear from blood circulation, leaving patients exposed to continued or increased safety risk.

In contrast, antibody

drugs, because of their long plasma half-life, may take months to clear from blood circulation, leaving patients exposed to continued or increased safety risk.

● The likelihood of much lower immunogenicity of small stable peptides compared to antibody drugs reduces the risk of loss of response.

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In chronic GI diseases such as IBD, we believe that our orally delivered, GI-restricted peptide product candidates may offer improved delivery, the potential for improved safety and tolerability, and cost efficiencies that may provide an overall benefit to patients, payors, and physicians.

AN ORALLY DELIVERED IL‑23R ANTAGONIST

AN ORALLY DELIVERED α4β7 INTEGRIN ANTAGONIST

PN-943, a second-generation, orally delivered, gut-restricted α4β7 specific integrin antagonist, was discovered through our peptide technology platform and is being developed initially for patients with moderate-to-severe UC.

α4β7 integrin is considered to be one of the most GI-specific biological targets for IBD due to its binding to MAdCAM-1, an extracellular protein that resides mostly in the GI vasculature.

Like Entyvio®, which is dosed as an infusion and as an injectable antibody drug, PN-943 specifically inhibits α4β7 integrin.

We have leveraged the development and regulatory path of Entyvio® and other approved antibody drugs for IBD to help inform the design of our clinical development studies.

Mechanism of Action and Rationale

Integrins, such as α4β7, are transmembrane proteins that regulate cellular movement into extravascular tissue and play an important role in modulating the inflammatory reaction in the gut.

The α4β7 integrin is expressed on the surface of T cells, immune cells that help defend against foreign and potentially harmful substances that enter the body.

The development of IBD is driven by the migration of α4β7 T cells into the GI tissue compartment and their subsequent activation within the GI tissue compartment.

The entry of α4β7 T cells into the GI tissue compartment is facilitated by the protein-protein interactions between the α4β7 integrin and its corresponding ligand, MAdCAM-1, which is primarily expressed in the GI tissue compartment.

Hence, the binding of α4β7 to MAdCAM-1 can be categorized as a GI-specific interaction and has been identified as an IBD-specific targeted therapeutic approach.

By blocking the binding of α4β7 integrin to MAdCAM-1, PN-943 may prevent trafficking and activation of T cells, thereby reducing the inflammation that leads to the clinical manifestations and long-term implications of UC.

α4β7 for IBD is targeted by Entyvio®, which has demonstrated safety and efficacy in patients with moderate-to-severe UC and CD.

Since PN-943 targets the same biological pathway as Entyvio®, we utilized similar PD-based POC in our pre-clinical studies and Phase 1 clinical trial to inform and guide our Phase 2 development program.

We sourced these PD biomarker assays from public scientific publications and do not maintain any contractual arrangement providing access to this information with the makers of these marketed products.

PN-943 Pre-Clinical Proof-of-Concept Studies

We have completed extensive pre-clinical studies of PN-943 in which we established pharmacodynamic target engagement POC, including effects on receptor occupancy, T cell trafficking and mucosal healing in rodents and monkeys.

Pre-clinical data indicated that PN-943 may be a more potent α4β7 integrin antagonist compound than PTG-100 without sacrificing its other positive attributes, such as selectivity and tolerability.

PTG-100 is our first generation α4β7 inhibitor that shares the same α4β7 integrin target as Entyvio® for the treatment of moderate-to-severe UC and CD.

We completed extensive pre-clinical studies of PTG-100 in which we established pharmacological POC and completed a Phase 1 clinical trial in Australia in 2016.

PN-943’s Phase 1 Clinical Trial Overview

We completed a Phase 1 randomized, double-blind, placebo-controlled clinical trial of PN-943 in normal healthy male volunteers in Australia in 2019.

The Phase 1 SAD and MAD components were conducted with a solution-based liquid formulation.

In addition to determining the safety and tolerability and pharmacokinetics of PN-943, the SAD and MAD components of the trial evaluated PD-based POC through the assessment of α4β7 receptor occupancy and α4β7 target expression that indicate target engagement on peripheral blood memory T cells similar to what was done in the pre-clinical studies and in the Phase 1 trial with PTG-100.

In the clinical trial, dose escalation proceeded from 100 mg up to 1,400 mg for the SAD portion and 1,000 mg for the MAD portion.

We reported results of the SAD part of the study during the second quarter of 2019 and the MAD part of the study during the third quarter of 2019.

The pharmacodynamic results of target engagement were supportive of the three-fold higher potency of PN-943 as compared to PTG-100 and saturation at 1000 mg.

This is consistent with data from pre-clinical studies and confirmed by this Phase 1 pharmacodynamic data.

We believe this links PN-943 to greater probability of success in a Phase 2 trial based on signs of clinical efficacy of PTG-100 in the Phase 2 PROPEL trial in UC patients.

The administration of PN-943 was well-tolerated.

PN-943 Phase 2 Clinical Trial Overview

PN-943 Phase 2 in UC IDEAL Study Design

We submitted a U.S.

IND with the FDA for PN-943 in December 2019, which took effect in January 2020.

During the second quarter of 2020, we initiated a global, randomized, double-blind placebo-controlled study called IDEAL evaluating the safety, tolerability and efficacy of PN-943 in approximately 150 patients with moderate-to-severe UC (Figure 6).

This Phase 2 study is expected to be completed in 2022, subject to delays related to the COVID-19 pandemic.

PTG-200, PN-235 & PN-232:

ORALLY DELIVERED IL-23R ANTAGONISTS

PTG-200, an orally delivered, gut-restricted IL-23R specific antagonist for the treatment of IBD, was discovered through our peptide technology platform.

Interleukin‑23 (“IL-23”), a member of the IL‑12 family of pro-inflammatory cytokines, is a protein that regulates inflammatory and immune function and plays a key role in the development of IBD.

IL-23, a member of the IL-12 family of pro-inflammatory cytokines, is a protein that regulates inflammatory and immune function and plays a key role in the development of IBD.

By blocking IL-23R with PTG-200 in the GI tissue compartment, we hope to improve disease symptoms and reduce bowel wall damage while potentially minimizing the risk of systemic side effects due to its GI-restricted nature.

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Furthermore, genetic analyses of IBD patients have implicated IL-23R mutations as a risk factor associated with susceptibility to IBD.

The infused antibody drug ustekinumab (marketed as ‑Stelara ®

for psoriasis, psoriatic arthritis, and moderate-to-severe CD) is a p40 antagonist antibody that inhibits both the IL-23 and IL-12 pathways.

The infused antibody drug Stelara® (marketed for psoriasis, psoriatic arthritis, UC and moderate-to-severe CD) is a p40 antagonist antibody that inhibits both the IL-23 and IL-12 pathways.

Next-generation IBD antibody drugs, such as guselkumab, target the p19 subunit of the IL-23 ligand and are specific to the IL-23 pathway, which is believed to be an important driver of local IBD pathology, while not blockading the IL-12 pathway.

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By targeting IL-23R with our orally delivered GI-restricted IL-23R antagonist PTG-200, we believe PTG-200 may restore proper immune function in the GI tissue compartment where there is active disease while minimizing the risk of systemic side effects.

Several key cell types that reside in gut-associated lymphoid tissue (“GALT”), including T cells, innate lymphoid cells, and natural killer cells, increase their expression of IL-23R during the progression of IBD.

Therefore, the high concentrations of PTG-200 in GALT will facilitate access and binding to IL-23R expressed in the same tissue with the potential for concomitant efficacy benefits.

PTG-200’s Phase 1 Clinical Study

We completed a Phase 1 clinical trial of PTG-200 in Australia during the fourth quarter of 2018.

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The pharmacokinetic and pharmacodynamic parameters were consistent with the GI-restricted design of PTG-200.

PTG-200’s Clinical Development Plan

We have a worldwide license and collaboration agreement with Janssen to co-develop and co-detail PTG-200 and any second-generation compounds for all indications, including IBD.

The agreement was amended in May 2019 to expand the collaboration by supporting efforts towards second-generation IL-23R antagonists, triggering a $25.0 million milestone payment to the Company.

In January 2020, we announced the identification and nomination of an orally delivered, gut-restricted IL-23R antagonist peptide as a second-generation development candidate under our license and collaboration agreement with Janssen, advancing the collaboration and triggering a $5.0 million milestone payment to us.

See “Item 7.

Management’s Discussion and Analysis –

Overview”

and Note 3 to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for additional information.

Management’s Discussion and Analysis – Overview” and Note 3 to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for additional information.

Janssen submitted an IND for PTG-200 in CD during the second quarter of 2019, which took effect in July 2019.

In collaboration with Janssen, we initiated a Phase 2 clinical study in CD called PRISM in the fourth quarter of 2019.

Janssen initiated a Phase 2 clinical study of PTG-200 in CD called PRISM in the fourth quarter of 2019.

The global, randomized, double blind, placebo-controlled, Phase 2 study is evaluating the efficacy of oral administration of PTG-200 in 90 patients with moderate-to-severe CD.

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The study will also assess change from baseline in simple endoscopic score for CD rates of clinical response and remission, endoscopic response and remission, and patient-reported outcome-2 remission.

Results from this Phase 2 study in CD are expected in 2021.

AN ORALLY DELIVERED α4β7 INTEGRIN ANTAGONIST

PN-943, an orally delivered, gut-restricted α4β7 specific integrin antagonist, was discovered through our peptide technology platform and is being developed initially for patients with moderate-to-severe UC.

α4β7 integrin is considered to be one of the most GI-specific biological targets for IBD due to its binding to MAdCAM-1, an extracellular protein that resides mostly in the GI vasculature.

PN -943 shares the same α4β7 integrin target as the injectable antibody drug vedolizumab, marketed as Entyvio®, for the treatment of moderate-to-severe UC and CD.

We believe that we can leverage the development and regulatory path of Entyvio®

and other approved antibody drugs for IBD to help inform the design of our clinical development studies.

Mechanism of Action and Rationale

Integrins, such as α4β7, are transmembrane proteins that regulate cellular movement into extravascular tissue and play an important role in modulating the inflammatory reaction in the gut.

The α4β7 integrin is expressed on the surface of T cells, immune cells that help defend against foreign and potentially harmful substances that enter the body.

development of UC is driven by the migration of α4β7 T cells into the GI tissue compartment and their subsequent activation within the GI tissue compartment.

The entry of α4β7 T cells into the GI tissue compartment is facilitated by the protein-protein interactions (“PPI”) between the α4β7 integrin and its corresponding ligand, MAdCAM‑1, which is primarily expressed in the GI tissue compartment.

Hence, the binding of α4β7 to MAdCAM‑1 can be categorized as a GI-specific interaction and has been identified as an IBD-specific targeted therapeutic approach.

By blocking the binding of α4β7 integrin to MAdCAM‑1, PN-943 may prevent T cells from entering the GI tissue compartment, thereby reducing the inflammation that leads to the clinical manifestations and long-term implications of UC.

α4β7 for IBD is targeted by the FDA-approved drug Entyvio ®

, which has demonstrated safety and efficacy in patients with moderate-to-severe UC and CD.

Since PN-943 targets the same biological pathway as Entyvio ®

, we utilized similar PD-based POC in our pre-clinical studies and Phase 1 clinical trial to inform and guide our Phase 2 development program.

PN-943 Pre-Clinical Proof-of-Concept Studies

Based on pre-clinical data, we believe that PN-943 may be a more potent α4β7 integrin antagonist compound than PTG-100 without sacrificing its other positive attributes, such as selectivity and tolerability.

PTG-100 is our first generation α4β7 inhibitor that shares the same α4β7 integrin target as Entyvio®

for the treatment of moderate-to-severe UC and CD.

We completed extensive pre-clinical studies of PTG-100 in which we established pharmacological POC and completed a Phase 1 clinical trial in Australia in 2016.

PN-943’s Phase 1 Clinical Trial Overview

We completed a Phase 1 randomized, double-blind, placebo-controlled clinical trial of PN-943 in normal healthy male volunteers in Australia in 2019.

The Phase 1 SAD and MAD components were conducted with a solution-based liquid formulation.

In the clinical trial, dose escalation proceeded from 100 mg up to 1,400 mg for the SAD portion and 1,000 mg for the MAD portion.

We reported results of the SAD part of the study during the second quarter of 2019 and the MAD part of the study during the third quarter of 2019.

The pharmacodynamic results of target engagement were supportive of the three-fold higher potency of PN-943 as compared to PTG-100 and saturation at 1000 mg (Figure 3).

This is consistent with data from pre-clinical studies and confirmed by this Phase 1 pharmacodynamic data.

We believe this links PN-943 to greater probability of success in a Phase 2 trial based on signs of clinical efficacy of PTG-100 in the Phase 2 PROPEL trial in US patients.

The administration of PN-943 was well-tolerated.

Dose Related and Saturable Effect on Blood % Receptor Occupancy (“RO”)

PN-943 Clinical Development Plan

We filed an IND for PN-943 that took effect in January 2020.

We expect to initiate a Phase 2 POC study of PN-943 in UC in the second quarter of 2020.

Because of the COVID-19 pandemic, we have suspended guidance on a timeline for PTG-200 Phase 2 study completion.

Second Generation IL23-R Antagonists PN-235 and PN-232

The Phase 1 for PN-235 study is designed to determine the safety, tolerability and pharmacokinetics of PN-235 in approximately 100 healthy volunteers.

The study will be conducted in three parts:

a SAD component, an MAD component, and a randomized, crossover solid dose comparison component.

The primary endpoint is safety as measured by number and severity of adverse events.

Secondary outcomes include pharmacokinetics measurements of peak concentration and area under the curve.

We expect results from the Phase 1 study for PN-235 in 2021.

PN-232 is in the late preclinical stage and we expect to initiate and complete a Phase 1 study for PN-232 in 2021.

The advancement of three different oral co-development candidates provides us with several strategic options for development in multiple indications.

We are also continuing our joint research efforts to identify additional IL-23R antagonists.

OUR PEPTIDE TECHNOLOGY PLATFORM

Our proprietary technology platform is purposefully built to exploit the advantages of constrained peptides, which are smaller than antibody-based drugs and may be delivered orally but are big enough to bind and block the difficult targets that antibodies bind and modulate.

Our proprietary technology platform is purposefully built to exploit the advantages of constrained peptides, which are much smaller than antibody-based drugs and may be delivered orally but are big enough to bind and block the difficult targets that antibodies bind and modulate.

The platform has been successfully applied to a diverse set of biological targets that has led to several pre-clinical and clinical stage peptide-based new chemical entities, including our clinical stage product candidates, for a variety of clinical indications.

Our platform is comprised of a series of tools and methods, including a combination of molecular design, phage display, stability assays, medicinal chemistry, biomarker, formulations, and in vivo pharmacology approaches.

We apply this platform to the discovery and development of constrained peptides to develop new drug candidates.

The platform is used to develop potential drug candidates (agonists and antagonists):

(i) using the structure of a target, when available, (ii) when no target structure exists, or (iii) from publicly disclosed peptide starting points.

In a structure-based approach, our proprietary molecular design software and structural database of several thousand constrained peptides, termed Vectrix™, are screened to identify suitable scaffolds.

(i) using the structure of a target, when available, (ii) de novo when no target structure exists, or (iii) from publicly disclosed peptide starting points.

The scaffolds identified form the basis of designing and constructing the first set of phage or chemical libraries.

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These techniques are applied to optimize potency, selectivity, stability, exposure and ultimately efficacy.

For PTG-300, hit discovery and optimization relied exclusively on medicinal chemistry, with no phage display, to develop potent and selective injectable candidates with enhanced stability and exposure in blood.

For injectable products, stability in blood is determined using in vitro assay techniques to identify chemical and biological sites of degradation, which are then optimized whilst maintaining potency and selectivity.

For rusfertide, hit discovery and optimization relied exclusively on medicinal and computational chemistry, with no phage display, to develop potent and selective injectable candidates with enhanced stability and exposure in blood.

For injectable products, stability in blood is determined using in vitro assay techniques to identify chemical and biological sites of degradation, which are then optimized while still

maintaining potency and selectivity.

Conjugation strategies are used to optimize the exposure of the injected peptide.

For PN-943 and PTG‑200, phage display is tightly coupled to medicinal chemistry and oral stability techniques to develop potent,

selective and orally delivered molecules that are GI-restricted.

For PN-943, PTG-200, PN-235 and PN-232, phage display is tightly coupled to medicinal chemistry, structural biology and oral stability techniques to develop potent, selective and orally delivered molecules that are GI-restricted.

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 tract.

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This data can be used to optimize required GI exposure over the required time frame to achieve in vivo efficacy.

This is complemented by formulation studies to enhance GI exposure.

This is complemented by formulation technologies to enhance GI and systemic exposure by exploiting the intrinsic stability of our oral peptides.

Finally, various biomarkers are also developed to correlate exposure with efficacy to guide candidate selection, dose selection and provide preliminary proof-of-concept of target engagement in clinical trials.

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We believe we have built a versatile, well-validated and unique discovery platform.

For example, this peptide technology platform has been used to develop product candidates for diverse target classes including G-protein-coupled receptors, ion channels, transporters and cytokines for a variety of therapeutic areas.

In the future we may tackle other GI diseases and expand our delivery techniques to include other organ/tissue systems, such as the lung and eye, which will provide potential opportunities to pursue a variety of diseases.

In the future we may tackle other GI and blood disorders and expand our delivery techniques to include other organ/tissue systems, such as the lung and eye, which will provide potential opportunities to pursue a wider variety of diseases.

In addition, the gut may communicate with the immune, central nervous, and endocrine systems, providing the potential of our GI-restricted approach to treat metabolic, cancer and cardiovascular diseases.

Lastly, we intend to progress our platform to achieve systemic bioavailability with peptides, macrocyles and peptidomimetics, thereby enabling us to address systemic diseases.

Lastly, we intend to progress our platform to achieve systemic bioavailability and activity with oral peptides, macrocycles and peptidomimetics, thereby enabling us to address systemic diseases.

An example of this approach is our preclinical stage program to identify an orally active hepcidin mimetic as was recently reported at the American Society for Hematology’s virtual annual meeting in December 2020.

We believe this will be complementary to the injectable rusfertide for offering the best treatment options for polycythemia vera, hereditary hemochromatosis and other potential erythropoietic and iron imbalance disorders.

COVID-19 Business Update

We are continuing to closely monitor the impact of the ongoing global COVID-19 pandemic on our business and have taken and continue to take proactive efforts designed to protect the health and safety of our patients, study investigators, clinical research staff and employees, and to maintain business continuity.

Following guidance from federal, state and local authorities, we transitioned to a fully remote working environment for a portion of 2020.

As a result, our laboratories and office locations were closed for approximately two weeks.

Our facility partially re-opened in April 2020 for laboratory personnel and a small number of critical personnel to resume limited operations.

We have experienced relatively minor impacts on productivity overall, which were experienced primarily in as our personnel adjusted to working remotely in the early stages of the COVID-19 pandemic.

Enrollment in certain of our clinical studies has been adversely affected by the pandemic.

It is possible the pandemic will have a more significant negative impact on our business in the future, depending on the depth of the effects and the duration of the crisis.

We cannot predict whether these trends will continue or be exacerbated, or when we will return to a normal working model.

For information regarding the current and potential impacts of the effects of the COVID-19 pandemic on our business, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview” and elsewhere in this Form 10-K.

Material Agreements

Janssen License and Collaboration Agreement

In May 2017, we and Janssen entered into an exclusive license and collaboration agreement for the clinical development, manufacture and potential commercialization of PTG-200 and any second-generation compounds worldwide for the treatment of CD and UC (the “Janssen License and Collaboration Agreement”).

The Janssen License and Collaboration Agreement became effective on July 13, 2017 and was subsequently amended effective May 2019 (the “First Amendment”).

In May 2017, we and Janssen entered into an exclusive license and collaboration agreement for the clinical development, manufacture and potential commercialization of PTG-200 and certain related compounds worldwide for the treatment of CD and UC (the “Janssen License and Collaboration Agreement”).

The Janssen License and Collaboration Agreement became effective on July 13, 2017 and was subsequently amended effective May 2019 (the “First Amendment”).

The First Amendment expands the original collaboration by supporting efforts towards research and development of second-generation IL-23R antagonists.

During the third quarter of 2017, we received a non-refundable, upfront cash payment of $50.0 million from Janssen.

During the third quarter of 2017, we received a non-

refundable, upfront cash payment of $50.0 million from Janssen.

During the second quarter of 2019, we received a non-refundable cash payment of $25.0 million upon execution of the First Amendment.

During the first quarter of 2020, we received a milestone payment of $5.0 million triggered by the identification and nomination of a second-generation development candidate.

See “Item 7.

Management’s Discussion and Analysis –

Overview”

and Note 3 to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for additional information.

Management’s Discussion and Analysis – Overview” and Note 3 to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for additional information.

Research Collaboration and License Agreement with Zealand Pharma A/S

In June 2012, we entered into a Research Collaboration and License Agreement with Zealand Pharma A/S (“Zealand”) to identify, optimize and develop novel disulfide-rich peptides to discover a hepcidin mimetic.

We amended this agreement on February 28, 2014, at which point Protagonist assumed responsibility for the development program.

See “Item 7.

Management’s Discussion and Analysis –

Contractual Obligations and Other Commitments”

and Note 6 to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for additional information.

Legal Proceedings”, “Item 7.

Management’s Discussion and Analysis – Contractual Obligations and Other Commitments” and Note 7 and Note 11 to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for additional information.

The biotechnology and pharmaceutical industries are intensely competitive and subject to rapid and significant technological change.

While we believe that our product candidates, technology, knowledge and experience provide us with competitive advantages, we face competition from established and emerging pharmaceutical and biotechnology companies, academic institutions, governmental agencies and public and private research institutions, among others.

We believe our principal competition in the treatment of chronic iron overload disorders such as beta-thalassemia will be luspatercept (Acceleron/Celgene-BMS) and mitapivat (Agios).

Although gene therapy is potentially curative for

beta-thalassemia, we believe that Bluebird Bio’s LentiGlobin will have limited application due to safety risks associated with its required “pre-conditioning”

regimen, which is similar to allogeneic hematopoietic stem cell transplantation.

Hematopoietic stem cell transplantation is infrequently utilized in beta-thalassemia due to its risk benefit profile in a younger patient population.

Luspatercept and LentiGlobin have been approved in the United States and Europe, respectively, for TD beta-thalassemia, and are in Phase 3 development for beta-thalassemia, and mitapivat is in Phase 2 studies for beta-thalassemia.

An IND for Luspatercept has been filed in the United States for thalassemia and MDS.

There are currently no approved orally delivered peptide-based α4β7 or IL‑23R products for IBD.

While we believe that our product candidates, technology, knowledge and experience provide us with certain competitive advantages, we face competition from established and emerging pharmaceutical and biotechnology companies, academic institutions, governmental agencies and public and private research institutions, among others.

Ruxolitinib, marketed as Jakafi®, is currently the only branded product in the United States approved for PV.

O n June 4, 2020, the FDA accepted a Biologics License Application for ropeginterferon alfa-2b for use in treatment for patients with PV in the absence of symptomatic splenomegaly from PharmaEssentia Corporation, the manufacturer of the novel pegylated interferon.

A decision from the FDA on this application is expected in early 2021.

There are currently no approved orally delivered peptide-based α4β7 or IL-23R products for IBD.

We believe our principal competition in the treatment of IBD will come from companies with injectable agents in the anti-integrin class that are or will be approved by 2028, including:

Takeda’s Vedolizumab (Entyvio®) IV and SC (IV approved, SC Phase 3);

Roche’s Etrolizumab SC (Phase 3);

Shire’s SHP-647 SC (Phase 3;

divested as part of the Takeda acquisition of Shire - buyer to be determined).

In addition, orally delivered agents with novel mechanisms of action are approved or in development and may be approved for UC and/or CD prior to the launch of PTG-200 and PN-943.

● Takeda’s vedolizumab (Entyvio®) IV and SC;

● Abbvie’s risankizumab (Skyrizi®) SC (UC and CD Phase 3).

In addition, orally delivered agents with novel mechanisms of action are approved or in development and may be approved for UC and/or CD prior to the launch of our product candidates.

These include JAK inhibitors, pan-JAK tofacitinib (Xeljanz®) approved in UC and next-generation JAK1 inhibitors filgotinib and upadacitinib, as well as S1P inhibitors, ozanimod, amiselmod and etrasimod.

The anti-IL-23 antibodies are also demonstrating positive data in IBD.

Our clinical asset PTG-200 will compete as the only orally delivered IL-23R antagonist.

Our assets PTG-200, PN-235 and PN-232, if approved, will compete as the only orally delivered IL-23R antagonists.

Intellectual Property

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Our commercial success may depend in part on our ability to obtain and maintain patent and other proprietary protection for commercially important technology, inventions and know-how related to our business;

defend and enforce our patents;

defend and enforce

preserve the confidentiality of our trade secrets;

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We cannot be sure that patents will be granted with respect to any of our pending patent applications or with respect to any patent applications filed by us in the future, nor can we be sure that any of our existing patents or any patents that may be granted to us in the future will be commercially useful in protecting our commercial products and methods of manufacturing the same.

For more information, please see “Item 1A.

Risk Factors—Risks Related to Our Intellectual Property.”

For more information, please see “Item 1A.

Risk Factors—Risks Related to Our Intellectual Property.”

We own or co-own 20 issued U.S.

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Our proprietary intellectual property, including patent and non-patent intellectual property, is generally directed to, for example, peptide-based therapeutic compositions, methods of using these peptide-based therapeutic compositions to treat or prevent disease, methods of manufacturing peptide-based therapeutic compositions, and other proprietary technologies and processes related to our lead product development candidates.

Specific patents and patent applications are directed to compositions of α

4 β7 integrin peptides, IL-23R antagonist peptides, and hepcidin and enkephalin mimetics peptides, as well as methods of synthesizing and using these peptides to treat inflammatory disorders.

Applications are currently pending in the United States and other

major jurisdictions, including Australia, Canada, China, Japan, and Europe.

Specific patents and patent applications are directed to compositions of α 4 β7 integrin peptides, IL-23R antagonist peptides, and hepcidin and enkephalin mimetics peptides, as well as methods of synthesizing and using these peptides to treat inflammatory disorders.

Applications are currently pending in the United States and other major jurisdictions, including Australia, Canada, China, Japan, and Europe.

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).

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In most countries in which we file, the patent term is 20 years from the date of filing the non-provisional application.

In the United States, a patent’s term may be lengthened by patent term adjustment, which compensates a patentee for administrative delays by the U.S.

Patent and Trademark Office in granting a patent or may be shortened if a patent is terminally disclaimed over an earlier-filed patent.

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To the extent that our consultants, contractors or collaborators use intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions.

For more information, please see “Item 1A.

Risk Factors—Risks Related to Our Intellectual Property.”

For more information, please see “Item 1A.

Risk Factors—Risks Related to Our Intellectual Property.”

Manufacturing

We contract with third parties for the manufacturing of all of our product candidates for pre-clinical and clinical studies and eventually for commercial supplies, and intend to continue to do so in the future.

We contract with third parties for the manufacturing of our product candidates for pre-clinical and clinical studies and eventually for commercial supplies, and intend to continue to do so in the future.

We do not own or operate any manufacturing facilities and we have no plans to build any owned clinical or commercial scale manufacturing capabilities.

We believe that the use of contract manufacturing organization (“CMOs”) eliminates the need for us to directly invest in manufacturing facilities, equipment and additional staff.

Although we rely on contract manufacturers,

our personnel and consultants have extensive manufacturing and quality control experience overseeing CMOs.

We regularly consider second source or back-up manufacturers for both active pharmaceutical ingredient and drug product manufacturing.

To date, our third-party manufacturers have met the manufacturing requirements for the product candidates.

We expect third-party manufacturers to be capable of providing needed quantities of our product candidates to meet anticipated full-scale commercial demands, but we have not assessed these capabilities beyond the supply of clinical materials to date.

We currently engage CMOs on a “fee for services”

basis for our current development plans.

We plan to identify CMOs and enter into longer term contracts or commitments as we move our product candidates into Phase 3 clinical trials.

We believe that the use of contract manufacturing organizations (“CMOs”) eliminates the need for us to directly invest in manufacturing facilities, equipment and additional staff.

We have established a global supply chain for raw material, active pharmaceutical ingredients (“API”), drug product manufacturing and distribution.

We work with contract manufacturers in the United States, Europe and Asia.

Although we rely on contract manufacturers, our personnel and consultants have extensive manufacturing and quality control experience overseeing CMOs.

We regularly consider second source or back-up manufacturers for both API and drug product manufacturing.

To date, our third-party manufacturers have met the manufacturing requirements for our product candidates.

We expect third-party manufacturers to be capable of providing needed quantities of our product candidates to meet anticipated full-scale commercial demands, and we have selected CMOs that can manufacture our product candidates for our ongoing and planned clinical trials as well as commercial supplies.

We currently engage CMOs on a “fee for services” basis for our current development and clinical supplies.

We believe there are alternate sources of manufacturing that have been and could be engaged and enabled to satisfy our clinical and commercial requirements, however we cannot guarantee that identifying and establishing alternative relationships with such sources will be successful, cost effective, or completed on a timely basis without significant delay in the development or commercialization of our product candidates.

Government Regulation

The FDA and comparable regulatory authorities in state and local jurisdictions and in other countries impose substantial and burdensome requirements upon companies involved in the clinical development, manufacture, marketing and distribution of drugs, such as those we are developing.

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.

These agencies and other federal, state and local entities regulate, among other things, the research and development, testing, manufacture, quality control, safety, effectiveness, labeling, storage, record keeping, approval, advertising and promotion, distribution, post-approval monitoring and reporting, sampling and export and import of our product candidates.

Government Regulation

In the United States, the FDA regulates drugs under the Federal Food, Drug, and Cosmetic Act (“FDCA”) and its implementing regulations.

The process of obtaining regulatory approvals and the subsequent compliance with applicable federal, state, local and foreign statutes and regulations requires the expenditure of substantial time and financial resources.

In the United States, the FDA regulates drugs under the Federal Food, Drug, and Cosmetic Act (“FDCA”) and its implementing regulations.

The process of obtaining regulatory approvals and the compliance with applicable federal, state, local and foreign statutes and regulations requires the expenditure of substantial time and financial resources.

Failure to comply with the applicable U.S.

requirements at any time during the product development process, approval process or after approval, may subject an applicant to a variety of administrative or judicial sanctions, such as the FDA’s refusal to approve pending NDAs, withdrawal of an approval, imposition of a clinical hold, issuance of warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement or civil or criminal penalties.

requirements at any time during the product development process, approval process or after approval, may subject an applicant to a variety of administrative or judicial sanctions, such as the FDA’s refusal to approve pending new drug applications (“NDAs”), withdrawal of an approval, imposition of a clinical hold, issuance of warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement or civil or criminal penalties.

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 GLP regulations;

● completion of pre-clinical laboratory tests, animal studies and formulation studies in compliance with the FDA’s good laboratory practices regulations;

● submission to the FDA of an IND application, which must become effective before human clinical trials may begin;

approval by an independent institutional review board (“IRB”) at each clinical site before each trial may be initiated;

performance of adequate and well-controlled human clinical trials in accordance with good clinical practice (“GCP”) requirements to establish the safety and efficacy of the proposed drug product for each indication;

submission to the FDA of an NDA;

● 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 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;

● FDA review and approval of the NDA.

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Clinical Trials

Clinical trials involve the administration of the investigational new drug to human subjects under the supervision of qualified investigators in accordance with GCP requirements, which include the requirement that all research subjects provide their informed consent in writing for their participation in any clinical trial.

Clinical trials are conducted under protocols detailing, among other things, the objectives of the trial, the parameters to be used in monitoring safety, and the effectiveness criteria to be evaluated.

A protocol for each clinical trial and any subsequent protocol amendments must be submitted to the FDA as part of the IND (or equivalent submission ex-US).

In addition, an IRB or ethics committee (“EC”) at each institution participating in the clinical trial must review and approve the plan for any clinical trial before it commences at that institution.

Information about certain clinical trials must be submitted within specific timeframes to the National Institutes of Health (“NIH”) for public dissemination on their www.clinicaltrials.gov website.

In addition, an IRB or ethics committee (“EC”) must review and approve the plan for any clinical trial at each institution participating in the clinical trial before it commences at that site.

Human clinical trials are typically conducted in three sequential phases, which may overlap or be combined:

The drug is initially introduced into healthy human subjects or patients with the target disease or condition and tested for safety, dosage tolerance, absorption, metabolism, distribution, excretion and, if possible, to gain an early indication of its effectiveness.

The drug is administered to a limited patient population to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product for specific targeted diseases and to determine dosage tolerance and optimal dosage.

The drug is administered to an expanded patient population, generally at geographically dispersed clinical trial sites, in well-controlled clinical trials to generate enough data to statistically evaluate the efficacy and safety of the product for approval, to establish the overall risk-benefit profile of the product, and to provide adequate information for the labeling of the product.

The drug is administered to a limited patient population to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the investigational drug product for specific targeted diseases and to determine dosage tolerance and optimal dosage.

Progress reports detailing the results of the clinical trials must be submitted at least annually to the FDA and more frequently if serious adverse events occur.

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Furthermore, the FDA or the sponsor may suspend or terminate a clinical trial at any time on various grounds, including a finding that the research subjects are being exposed to an unacceptable health risk.

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.

Marketing Approval

Assuming successful completion of the required clinical testing, the results of the pre-clinical and clinical studies, together with detailed information relating to the product’s chemistry, manufacture, controls and proposed labeling, among other things, are submitted to the FDA as part of an NDA requesting approval to market the product for one or more indications.

In most cases, the submission of an NDA is subject to a substantial application user fee.

Under the Prescription Drug User Fee Act (“PDUFA”) guidelines that are currently in effect, the FDA has a goal of ten months from the date of “filing”

of a standard NDA for a new molecular entity to review and act on the submission.

This review typically takes twelve months from the date the NDA is submitted to FDA because the FDA has approximately two months to make a “filing”

In addition, under the Pediatric Research Equity Act of 2003 (“PREA”), as amended and reauthorized, certain NDAs or supplements to an NDA must contain data that are adequate to assess the safety and effectiveness of the drug for the claimed indications in all relevant pediatric subpopulations, and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective.

Under the Prescription Drug User Fee Act (“PDUFA”) guidelines that are currently in effect, the FDA has a goal of ten months from the date of “filing” of a standard NDA for a new molecular entity to review and act on the submission.

This review typically takes twelve months from the date the NDA is submitted to FDA because the FDA has approximately two months to make a “filing” decision.

The FDA may, on its own initiative or at the request of the applicant, grant deferrals for submission of some or all pediatric data until after approval of the product for use in adults, or full or partial waivers from the pediatric data requirements.

The FDA also may require submission of a risk evaluation and mitigation strategy (“REMS”) plan to ensure that the benefits of the drug outweigh its risks.

The REMS plan could include medication guides, physician communication plans, assessment plans, and/or elements to assure safe use, such as restricted distribution methods, patient registries, or other risk minimization tools.

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Once the submission is accepted for filing, the FDA begins an in-depth substantive review.

The FDA reviews an NDA to determine, among other things, whether the drug is safe and effective and whether the facility in which it is manufactured, processed, packaged or held meets standards designed to assure the product’s continued safety, quality and purity.

The FDA reviews an NDA to determine, among other things, whether the drug is safe and effective and whether the facility in which it is

manufactured, processed, packaged or held meets standards designed to assure the product’s continued safety, quality and purity.

The FDA may refer an application for a novel drug to an advisory committee.

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Even with submission of this additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval.

If and when those conditions have been met to the FDA’s satisfaction, the FDA will typically issue an approval letter.

An approval letter authorizes commercial marketing of the drug with specific prescribing information for specific indications.

Even if the FDA approves a product, it may limit the approved indications for use of the product, require that contraindications, warnings or precautions be included in the product labeling, require that post-approval studies, including Phase 4 clinical trials, be conducted to further assess a drug’s safety after approval, require testing and surveillance programs to monitor the product after commercialization, or impose other conditions, including distribution and use restrictions or other risk management mechanisms under a REMS, which can materially affect the potential market and profitability of the product.

The FDA may prevent or limit further marketing of a product based on the results of post-marketing studies or surveillance programs.

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The FDA will determine that 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 factors.

Fast track designation provides additional opportunities for interaction with the FDA’s review team and may allow for rolling review of NDA components before the completed application is submitted, if the sponsor provides a schedule for the submission of the sections of the NDA, the FDA agrees to accept sections of the NDA and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the NDA.

However, the FDA’s time period goal for reviewing an application does not begin until the last section of the NDA is submitted.

The FDA may decide to rescind the fast track designation if it determines that the qualifying criteria no longer apply.

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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, or if it affects more than 200,000 individuals in the United States, and there is no reasonable expectation that the cost of developing and marketing the product for this type of disease or condition will be recovered from sales in the United States.

Orphan designation must be requested before submitting a NDA or Biologics License Application (“BLA”).

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.

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Competitors, however, may receive approval of different products for the indication for which the orphan product has exclusivity or obtain approval for the same product but for a different indication for which the orphan product has exclusivity.

Orphan product exclusivity also could block the approval of one of our products for seven years if a competitor obtains approval of the same product as defined by the FDA or if our product candidate is determined to be contained within the competitor’s product for the same indication or disease.

If a drug or biological product designated as an orphan product receives marketing approval for an indication broader than what is designated, it may not be entitled to orphan product exclusivity.

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The FDA may impose a number of post-approval requirements as a condition of approval of an NDA.

For example, the FDA may require post-marketing testing, including Phase 4 clinical trials, and surveillance to further assess and monitor the product’s safety and effectiveness after commercialization.

In addition, drug manufacturers and other entities involved in the manufacture and distribution of approved drugs are required to register their establishments with the FDA and state agencies and are subject to periodic unannounced inspections by the FDA and these state agencies for compliance with cGMP requirements.

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Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may result in mandatory revisions to the approved labeling to add new safety information;

imposition of post-market studies or clinical trials to assess new safety risks;

or imposition of distribution or other restrictions under a REMS program.

imposition of post-market studies or clinical trials to assess new safety

or imposition of distribution or other restrictions under an REMS program.

Other potential consequences include, among other things:

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The FDA strictly regulates marketing, labeling, advertising and promotion of products that are placed on the market.

Drugs may be promoted only for the approved indications and in accordance with the provisions of the approved label.

Drugs may be promoted only for the approved indications and in accordance with the provisions of the approved prescribing information.

The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off-label uses may be subject to significant liability.

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These third-party payors are increasingly limiting coverage and/or reducing reimbursements for medical products and services by challenging the prices and examining the medical necessity and cost-effectiveness of medical products and services, in addition to their safety and efficacy.

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.

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.

There is no uniform policy requirement for coverage and reimbursement for drug products among third-party payors in the United States.

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The ACA also increased the Medicaid rebate rate and expanded the rebate program to include Medicaid managed care organizations.

It also contains substantial new provisions intended to broaden access to health insurance, reduce or constrain the growth of health care spending, enhance remedies against health care fraud and abuse, add new transparency requirements for the health care industry, impose new taxes and fees on pharmaceutical manufacturers, and impose additional health policy reforms, any or all of which may affect our business.

There remain judicial and Congressional challenges to certain aspects of the ACA, as well as efforts by the current administration to repeal or replace certain aspects of the ACA.

For example, since January 2017, the President has signed two Executive Orders and other directives designed to delay, circumvent, or loosen certain requirements mandated by the ACA.

Concurrently, Congress has considered legislation that would repeal or repeal and replace all or part of the ACA.

While Congress has not passed comprehensive repeal legislation, two bills affecting the implementation of certain taxes under the ACA were signed into law.

The Tax Cuts and Jobs Act of 2017 (the “Tax Act”) includes a provision repealing, effective January 1, 2019, the tax-based shared responsibility payment imposed by the ACA on certain individuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the “individual mandate”.

Additionally, the 2020 federal spending package permanently eliminated, effective January 1, 2020, the ACA-mandated “Cadillac”

tax on high-cost employer-sponsored health coverage and the medical device tax and, effective January 1, 2021, also eliminates the health insurance tax.

Further, the Bipartisan Budget Act of 2018, or the BBA, among other things, amends the ACA, effective January 1, 2019, to close the coverage gap in most Medicare drug plans, commonly referred to as the “donut hole”, and increase from 50% to 70% the point-of-sale discount that is owed by pharmaceutical manufacturers who participate in the Medicare Part D program.

It also contains substantial new

provisions intended to broaden access to health insurance, reduce or constrain the growth of health care spending, enhance remedies against health care fraud and abuse, add new transparency requirements for the health care industry, impose new taxes and fees on pharmaceutical manufacturers, and impose additional health policy reforms, any or all of which may affect our business.

There have been executive, judicial and Congressional challenges to certain aspects of the ACA.

For example, President Trump signed several Executive Orders and other directives designed to delay the implementation of certain requirements mandated by the ACA or otherwise circumvent some of the requirements for health insurance mandated by the ACA.

Concurrently, Congress considered legislation to repeal or repeal and replace all or part of the ACA.

While Congress has not passed comprehensive repeal legislation, several bills affecting the implementation of certain taxes under the ACA have been enacted.

The Tax Cuts and Jobs Act of 2017, or the Tax Act, included a provision repealing, effective January 1, 2019, the tax-based shared responsibility payment imposed by the ACA on certain individuals who fail to maintain qualifying health coverage for all or part of a year.

Additionally, the 2020 federal spending package permanently eliminated, effective January 1, 2020, the ACA-mandated “Cadillac” tax on high-cost employer-sponsored health coverage and the medical device tax and, effective January 1, 2021, also eliminated the health insurance tax.

On December 14, 2018, a Texas U.S.

District Court Judge ruled that the ACA is unconstitutional in its entirety because the “individual mandate”

was repealed by Congress as part of the Tax Act.

District Court Judge ruled that the ACA is unconstitutional in its entirety because the “individual mandate” was repealed by Congress as part of the Tax Act.

Additionally, on December 18, 2019, the U.S.

Court of Appeals for the 5th Circuit upheld the District Court ruling that the individual mandate was unconstitutional and remanded the case back to the District Court to determine whether the remaining provisions of the ACA are invalid as well.

It is unclear how this decision, future decisions, subsequent appeals, and other efforts to repeal and replace the ACA will impact the ACA and our business.

Other legislative changes have also been proposed and adopted since the ACA was enacted.

For example, the Budget Control Act of 2011 resulted in aggregate reductions in Medicare payments to providers of 2% per fiscal year,

which went into effect in 2013 and, following passage of subsequent legislation, including the BBA, will stay in effect through 2029 unless additional Congressional action is taken.

Additionally, the American Taxpayer Relief Act of 2012, among other things, reduced Medicare payments to several types of providers and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.

Supreme Court is currently reviewing this case, but it is unclear when a decision will be made.

Although the U.S.

Supreme Court has not yet ruled on the constitutionality of the ACA, on January 28, 2021, President Biden issued an executive order to initiate a special enrollment period from February 15, 2021 through May 15, 2021 for purposes of obtaining health insurance coverage through the ACA marketplace.

The executive order also instructs certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the ACA.

It is unclear how the Supreme Court ruling, other such legislation and the healthcare reform measures of the Biden administration will impact the ACA and our business.

In addition, other legislative changes have been proposed and adopted since the ACA was enacted.

These changes included aggregate reductions to Medicare payments to providers of 2% per fiscal year, which went into effect in April 2013 and, due to subsequent legislative amendments to the statute, including the BBA, will remain in effect through 2030 unless additional action is taken by Congress.

However, COVID-19 relief legislation suspended the 2% Medicare sequester from May 1, 2020 through March 31, 2021.

In January 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, further reduced Medicare payments to several types of providers and increased the statute of limitations period in which the government may recover overpayments to providers from three to five years.

New laws may result in additional reductions in Medicare and other health care funding.

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Such scrutiny has resulted in several recent Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for products.

At the federal level, the current administration’s budget proposal for fiscal year 2021 includes a $135 billion allowance to support legislative proposals seeking to reduce drug prices, increase competition, lower out-of-pocket drug costs for patients, and increase patient access to lower-cost generic and biosimilar drugs.

Further, the Trump administration released a “Blueprint”

to lower drug prices and reduce out of pocket costs of drugs that contains additional proposals to increase drug manufacturer competition, increase the negotiating power of certain federal healthcare programs, incentivize manufacturers to lower the list price of their products, and reduce the out of pocket costs of drug products paid by consumers.

The Department of Health and Human Services, or HHS, has solicited feedback on some of these measures and, at the same, has implemented others under its existing authority.

For example, in May 2019, CMS issued a final rule to allow Medicare Advantage plans the option to use step therapy for Part B drugs beginning January 1, 2020.

This final rule codified CMS’s policy change that was effective January 1, 2019.

While some measures may require additional authorization to become effective, Congress and the current administration have both stated that they will continue to seek new legislative and/or administrative measures to control drug costs.

At the federal level, the Trump administration used several means to propose or implement drug pricing reform, including through federal budget proposals, executive orders and policy initiatives.

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.

Further, on November 20, 2020, HHS finalized a regulation removing safe harbor protection for price reductions from pharmaceutical manufacturers to plan sponsors under Part D, either directly or through pharmacy benefit managers, unless the price reduction is required by law.

The implementation of the rule has been delayed by the Biden administration from January 1, 2022 to January 1, 2023 in

response to ongoing litigation.

The rule also creates a new safe harbor for price reductions reflected at the point-of-sale, as well as a new safe harbor for certain fixed fee arrangements between pharmacy benefit managers and manufacturers, the implementation of which have also been delayed pending review by the Biden administration until March 22, 2021.

On November 20, 2020, the Centers for Medicare & Medicaid Services (“CMS”) issued an interim final rule implementing President Trump’s Most Favored Nation executive order, which would tie Medicare Part B payments for certain physician-administered drugs to the lowest price paid in other economically advanced countries, effective January 1, 2021.

On December 28, 2020, the United States District Court in Northern California issued a nationwide preliminary injunction against implementation of the interim final rule.

At the state level, legislatures have become increasingly aggressive in passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.

We expect that additional state and federal healthcare reform measures will be adopted in the future, particularly in light of the new presidential administration, any of which could limit the amounts that federal and state governments will pay for healthcare therapies.

Further, it is possible that additional governmental action is taken in response to the COVID-19 pandemic.

It is uncertain whether and how future legislation, whether domestic or foreign, could affect prospects for our product candidates or what actions foreign, federal, state, or private payors for health care treatment and services may take in response to any such health care reform proposals or legislation.

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We will also be subject to health care regulation and enforcement by the federal government and the states and foreign governments in which we will conduct our business once our products are approved.

The laws that may affect our ability to operate include, but are not limited to, the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), as amended by the Health Information Technology for Economic and Clinical Health Act, which governs the conduct of certain electronic health care transactions and protects the security and privacy of protected health information;

the criminal health care fraud statutes under HIPAA also prohibits persons and entities from knowingly and willfully executing a scheme to defraud any health care benefit program, including private payors, or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for health care benefits, items or services;

the federal health care programs’

Anti-Kickback Statute, which prohibits, among other things, 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;

the federal health care programs’ Anti-Kickback Statute, which prohibits, among other things, 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, among other things, 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;

Department of Health and Human

Services information related to payments and other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, and ownership and investment interests held by physicians and their immediate family members and, beginning in 2022, applicable manufacturers also will be required to report such information regarding payments and transfers of value provided, as well as ownership and investment interests held, during the previous year to physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists and certified nurse-midwives.

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 physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, and ownership and investment interests held by physicians and their immediate family members and, beginning in 2022, applicable manufacturers also will be required to report such information regarding payments and transfers of value provided during the previous year to physician assistants, nurse practitioners, clinical nurse specialists, anesthesiologist assistants, certified nurse anesthetists and certified nurse-midwives.

The majority of states also have statutes or regulations similar to the aforementioned federal anti-kickback and false claims laws, which apply to items and services reimbursed under Medicaid and other state programs, or, in several states, apply regardless of the payor.

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.

In addition, we may be subject to reporting requirements under state transparency laws, as well as state laws that require pharmaceutical companies to comply with the industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government that otherwise restricts certain payments that may be made to health care providers and entities.

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.

In addition, certain states and local jurisdictions require the registration of pharmaceutical sales representatives.

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Whether or not we obtain FDA approval for a product, we must obtain the requisite approvals from regulatory authorities in foreign countries prior to the commencement of clinical studies or marketing of the product in those countries.

Certain countries outside of the United States have a similar process that requires the submission of a clinical study application much like the IND prior to the commencement of human clinical studies.

The requirements and process governing the conduct of clinical studies, product licensing, pricing and reimbursement vary from country to country.

Certain countries outside of the United States have a similar process that requires the submission and approval of a clinical trial application much like the IND but specific to a clinical trial prior to the commencement of the human clinical study.

The requirements and process governing the conduct of clinical studies, the protection of personal data, product licensing, pricing and reimbursement vary from country to country.

If we fail to comply with applicable foreign regulatory requirements, we may be subject to, among other things, fines, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions and criminal prosecution.

As of December 31, 2019, we had 73 full-time employees, 54 of whom were in research and development, of which three hold an M.D.

Human Capital

As of December 31, 2020, we had 79 full-time equivalent employees, 59 of whom were in research and development, of which one holds an M.D.

and 19 hold Ph.D.

The remaining 19 employees worked in finance, business development, human resources and administrative support, of which three hold a Ph.D.

The remaining 20 employees worked in finance, legal, business development, human resources and administrative support, of which three hold a Ph.D.

72 of our full-time equivalent employees are located in the United States and seven are located in Australia.

None of our employees are represented by a labor union or covered by a collective bargaining agreement.

We consider our relationship with our employees to be good.

We track and report internally on key talent metrics including workforce demographics, diversity data and the status of open positions.

Attracting, developing and retaining talented employees to support the growth of our business is an integral part of our human capital strategy and critical to our success.

We continue to seek additions to our staff, although the competition in our industry and in the San Francisco Bay Area where our headquarters is located is significant.

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.

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.

Safeguarding the health and safety of our employees is our top priority.

We are committed to providing a safe working environment for all of our employees.

In response to the COVID-19 pandemic, we implemented significant changes that we determined were in the best interest of our employees, as well as the communities in which we operate, and which comply with government regulations.

This includes having our non-laboratory employees work remotely at

least part-time, while implementing additional safety measures for laboratory and other employees continuing critical on-site work.

Corporate and Other Information

Protagonist Pty Limited (“Protagonist Australia”) was incorporated in Australia in September 2001.

We were incorporated as a Delaware corporation in 2006, under the name Protagonist Therapeutics, Inc., and became the parent of Protagonist Australia pursuant to a transaction in which all of the issued and outstanding capital stock of Protagonist

Australia was exchanged for shares of our common stock and Series A preferred stock.

Protagonist Pty Limited (“Protagonist Australia”) was incorporated in Australia in September 2001.

Our principal executive offices are located at 7707 Gateway Boulevard, Suite 140, Newark, California 94560.

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References to our website address do not constitute incorporation by reference of the information contained on the website, and the information contained on the website is not part of this document.

We make available, free of charge on our corporate website, copies of our Annual Reports on Form 10‑K, Quarterly Reports on Form 10‑Q, Current Reports on Form 8‑K, Proxy Statements, and all amendments to these reports, as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission pursuant to Section 13(a) or 15(d) of the Securities 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 Securities and Exchange Commission (“SEC”) pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (“Exchange Act”).

We also show detail about stock trading by corporate insiders by providing access to SEC Forms 3, 4 and 5.

This information may also be obtained from the SEC’s on-line database, which is located at www.sec.gov.

Our common stock is traded on the Nasdaq Stock Market under the symbol “PTGX.”

We are an “emerging growth company,”

as defined in the Jumpstart Our Business Startups Act of 2012.

This information may also be obtained from the SEC’s on-line database, which is located at www.sec.gov.

Our common stock is traded on the Nasdaq Stock Market under the symbol “PTGX.”

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012.

As such, we are eligible for exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 and reduced disclosure obligations regarding executive compensation.

We will remain an emerging growth company until the earlier of (1) December 31, 2021, (2) the last day of the first fiscal year in which our annual gross revenues are $1.0 billion or more, (3) the date on which we have, during the previous rolling three-year period, issued more than $1.0 billion in non-convertible debt securities, and (4) the date on which we are deemed to be a “large accelerated filer”

as defined in the Securities Exchange Act of 1934, as amended (Exchange Act).

We will remain an emerging growth company until December 31, 2021.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business