Protagonist Therapeutics, Inc 10-K

Item 8. Financial Statements and Supplementary Data ​ PROTAGONIST THERAPEUTICS, INC. ​ INDEX TO CONSOLIDATED FINANCIAL STATEMENTS ​ AAW Audited Consolidated Financial Statements Page Report of Independent Registered Public Accounting Firm (PCAOB ID: 42) ​ 74 Consolidated Balance Sheets ​ 76 Consolidated Statements of Operations ​ 77 Consolidated Statements of Comprehensive Loss ​ 78 Consolidated Statements of Stockholders’ Equity ​ 79 Consolidated Statements of Cash Flows ​ 80 Notes to the Consolidated Financial Statements ​ 81 ​ ​ ​ ​ 73 Table of Contents ​ Report of Independent Registered Public Accounting Firm ​ To the Stockholders and the Board of Directors of Protagonist Therapeutics, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Protagonist Therapeutics, Inc. (the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive loss, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 27, 2024 expressed an unqualified opinion thereon. ​ Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates. ​ 74 Table of Contents ​ ​ ​ ​ ​ Accrued clinical and research related expenses Description of the Matter ​ At December 31, 2023, the Company has accrued $11.8 million of clinical and research related expenses. As described in Note 2 to the consolidated financial statements, the Company records estimated costs of research and development activities conducted by third-party service providers, which include the conduct of pre-clinical studies and clinical trials, and contract manufacturing activities, based upon the estimated amount of services provided but not yet invoiced. The Company accrues for these costs based on factors such as estimates of the work completed and in accordance with agreements established with its third-party service providers. ​ Auditing management’s accounting for accrued clinical and research related expenses is especially challenging because the evaluation is dependent on a high volume of data exchanged between third-party service providers, internal clinical personnel, and the Company’s finance department. The accrued amounts are determined based on an evaluation of the unique terms and conditions set forth in each respective agreement. Additionally, due to the duration of clinical trial activities and the timing of invoices received from third parties, the calculation of the accrual for services incurred requires management to determine that they have complete and accurate information from its vendors. ​ How We Addressed the Matter in Our Audit ​ To test accrued clinical and research related expenses, our audit procedures included, among others, testing the accuracy and completeness of the inputs used in management’s analysis to determine costs incurred. We also inspected terms and conditions for selected research and development contracts and change orders and compared these to the cost models management used in tracking progress of service agreements. We met with the Company’s internal clinical personnel to understand the status of significant clinical activities. We evaluated accruals recorded for services incurred by third parties by understanding the terms and timeline of significant projects and evaluating management’s determination of work performed at the balance sheet date. Further, we inspected selected invoices received from third parties after the balance sheet date and evaluated whether services performed prior to the balance sheet date had been properly included in costs accrued. ​ /s/ Ernst & Young LLP We have served as the Company’s auditor since 2020. San Mateo, California February 27, 2024 ​ ​ 75 Table of Contents PR OTAGONIST THERAPEUTICS, INC. Consolidated Balance Sheets (In thousands, except share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2023 2022 Assets ​ ​ ​ ​ ​ ​ Current assets: ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 186,727 ​ $ 125,744 Marketable securities ​ ​ 154,890 ​ ​ 111,611 Receivable from collaboration partner ​ ​ 10,000 ​ ​ 10 Prepaid expenses and other current assets ​ ​ 3,960 ​ ​ 5,712 Total current assets ​ ​ 355,577 ​ ​ 243,077 Property and equipment, net ​ ​ 1,195 ​ ​ 1,565 Restricted cash - noncurrent ​ ​ 225 ​ ​ 225 Operating lease right-of-use asset ​ ​ 954 ​ ​ 3,061 Total assets ​ $ 357,951 ​ $ 247,928 Liabilities and Stockholders’ Equity ​ ​ ​ ​ ​ ​ Current liabilities: ​ ​ ​ ​ ​ Accounts payable ​ $ 772 ​ $ 3,640 Payable to collaboration partner ​ ​ 3 ​ ​ 69 Accrued expenses and other payables ​ ​ 19,358 ​ ​ 24,955 Operating lease liability - current ​ ​ 1,141 ​ ​ 2,515 Total current liabilities ​ ​ 21,274 ​ ​ 31,179 Operating lease liability - noncurrent ​ ​ — ​ ​ 1,141 Total liabilities ​ ​ 21,274 ​ ​ 32,320 Commitments and contingencies ​ ​ ​ ​ ​ ​ Stockholders’ equity: ​ ​ ​ ​ ​ ​ Preferred stock, $ 0.00001 par value, 10,000,000 shares authorized; no shares issued and outstanding ​ ​ — ​ ​ — Common stock, $ 0.00001 par value, 90,000,000 shares authorized; 57,708,613 and 49,339,252 shares issued and outstanding as of December 31, 2023 and 2022, respectively ​ ​ 1 ​ ​ — Additional paid-in capital ​ ​ 952,491 ​ ​ 752,722 Accumulated other comprehensive loss ​ ​ ( 105 ) ​ ​ ( 359 ) Accumulated deficit ​ ​ ( 615,710 ) ​ ​ ( 536,755 ) Total stockholders’ equity ​ ​ 336,677 ​ ​ 215,608 Total liabilities and stockholders’ equity ​ $ 357,951 ​ $ 247,928 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 76 Table of Contents PROTAGONIST THERAPEUTICS, INC. Consolidated Statements of Operations (In thousands, except share and per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 2022 2021 License and collaboration revenue ​ $ 60,000 ​ $ 26,581 ​ $ 27,357 Operating expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ Research and development ​ ​ 120,161 ​ ​ 126,215 ​ ​ 126,006 General and administrative ​ 33,491 ​ 31,739 ​ 27,196 Total operating expenses ​ 153,652 ​ 157,954 ​ 153,202 Loss from operations ​ ( 93,652 ) ​ ( 131,373 ) ​ ( 125,845 ) Interest income ​ 14,898 ​ ​ 4,060 ​ 443 Other expense, net ​ ​ ( 201 ) ​ ​ ( 80 ) ​ ​ ( 149 ) Net loss ​ $ ( 78,955 ) ​ $ ( 127,393 ) ​ $ ( 125,551 ) Net loss per share, basic and diluted ​ $ ( 1.39 ) ​ $ ( 2.60 ) ​ $ ( 2.71 ) Weighted-average shares used to compute net loss per share, basic and diluted ​ 56,763,559 49,042,232 46,322,910 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 77 Table of Contents PROTAGONIST THERAPEUTICS, INC. Consolidated Statements of Comprehensive Loss (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 2022 2021 Net loss ​ $ ( 78,955 ) ​ $ ( 127,393 ) ​ $ ( 125,551 ) Other comprehensive loss: ​ ​ ​ ​ ​ ​ ​ Gain (loss) on translation of foreign operations ​ 194 ​ ( 149 ) ​ ( 182 ) Unrealized gain (loss) on marketable securities ​ 60 ​ 89 ​ ( 145 ) Comprehensive loss ​ $ ( 78,701 ) ​ $ ( 127,453 ) ​ $ ( 125,878 ) ​ The accompanying notes are an integral part of these consolidated financial statements. ​ ​ 78 Table of Contents PROTAGONIST THERAPEUTICS, INC. Consolidated Statements of Stockholders’ Equity (In thousands, except share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ Other ​ ​ ​ Total ​ ​ Common ​ Paid-In ​ Comprehensive ​ Accumulated ​ Stockholders’ ​ ​ Stock Capital (Loss) Gain Deficit Equity ​ Shares Amount ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at December 31, 2020 ​ 43,745,465 $ — ​ $ 563,389 $ 28 ​ $ ( 283,811 ) $ 279,606 Issuance of common stock pursuant to public offerings, net of issuance costs ​ 3,503,311 ​ ​ — ​ ​ 123,804 ​ ​ — ​ ​ — ​ ​ 123,804 Issuance of common stock under equity incentive and employee stock purchase plans ​ 596,614 — ​ 6,283 — ​ — 6,283 Shares withheld for net settlement of tax withholding upon vesting of restricted stock units ​ ( 7,060 ) ​ ​ — ​ ​ ( 189 ) ​ ​ — ​ ​ — ​ ​ ( 189 ) Stock-based compensation expense ​ — — ​ 16,395 — ​ — 16,395 Other comprehensive income (loss) ​ — — ​ — ( 327 ) ​ — ( 327 ) Net loss ​ — — ​ — — ​ ( 125,551 ) ( 125,551 ) Balance at December 31, 2021 ​ 47,838,330 — ​ 709,682 ( 299 ) ​ ( 409,362 ) 300,021 Issuance of common stock pursuant to at-the-market offering, net of issuance costs ​ 422,367 ​ ​ — ​ ​ 14,553 ​ ​ — ​ ​ — ​ ​ 14,553 Issuance of common stock under equity incentive and employee stock purchase plans ​ 686,284 — ​ 4,448 — ​ — 4,448 Issuance of common stock upon exercise of Exchange Warrants ​ 399,997 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Shares withheld for net settlement of tax withholding upon vesting of restricted stock units ​ ( 7,726 ) ​ ​ — ​ ​ ( 188 ) ​ ​ — ​ ​ — ​ ​ ( 188 ) Stock-based compensation expense ​ — — ​ 24,202 — ​ — 24,202 Issuance costs related to prior period common stock offering ​ — — ​ ​ 25 ​ ​ — ​ — ​ ​ 25 Other comprehensive income (loss) ​ — — ​ — ( 60 ) ​ — ( 60 ) Net loss ​ — — ​ — — ​ ( 127,393 ) ( 127,393 ) Balance at December 31, 2022 ​ 49,339,252 — ​ 752,722 ( 359 ) ​ ( 536,755 ) 215,608 Issuance of common stock pursuant to public offerings, net of issuance costs ​ 5,750,000 ​ ​ — ​ ​ 107,798 ​ ​ — ​ ​ — ​ ​ 107,798 Issuance of common stock pursuant to at-the-market offering, net of issuance costs ​ 1,749,199 ​ ​ 1 ​ ​ 24,301 ​ ​ — ​ ​ — ​ ​ 24,302 Exercise of Warrants in exchange for issuance of Pre-Funded Warrants — — ​ 33,813 — ​ — 33,813 Issuance of common stock upon exercise of Warrants 44,748 — ​ 559 — ​ — 559 Issuance of common stock under equity incentive and employee stock purchase plans ​ 857,377 — ​ 4,774 — ​ — 4,774 Shares withheld for net settlement of tax withholding upon vesting of restricted stock units ​ ( 31,963 ) ​ ​ — ​ ​ ( 769 ) ​ ​ — ​ ​ — ​ ​ ( 769 ) Stock-based compensation expense ​ — — ​ 29,293 — ​ — 29,293 Other comprehensive income (loss) ​ — — ​ — 254 ​ — 254 Net loss ​ — — ​ — — ​ ( 78,955 ) ( 78,955 ) Balance at December 31, 2023 ​ 57,708,613 $ 1 ​ $ 952,491 $ ( 105 ) ​ $ ( 615,710 ) $ 336,677 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ ​ 79 Table of Contents PROTAGONIST THERAPEUTICS, INC. Consolidated Statements of Cash Flows (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 2022 2021 Cash Flows from Operating Activities ​ ​ ​ ​ Net loss ​ $ ( 78,955 ) ​ $ ( 127,393 ) ​ $ ( 125,551 ) Adjustments to reconcile net loss to net cash used in operating activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Stock-based compensation ​ ​ 29,293 ​ ​ 24,202 ​ ​ 16,395 Operating lease right-of-use asset amortization ​ ​ 2,335 ​ ​ 2,335 ​ ​ 1,962 (Accretion) amortization of discount/premium on marketable securities ​ ​ ( 4,569 ) ​ ​ ( 549 ) ​ ​ 1,830 Depreciation ​ ​ 977 ​ ​ 1,034 ​ ​ 813 Other ​ ​ 194 ​ ​ — ​ ​ — Changes in operating assets and liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Research and development tax incentive receivable ​ ​ — ​ ​ 2,686 ​ ​ ( 1,775 ) Receivable from collaboration partner ​ ​ ( 9,990 ) ​ ​ 1,556 ​ ​ 860 Prepaid expenses and other assets ​ ​ 1,753 ​ ​ 3,754 ​ ​ ( 3,227 ) Accounts payable ​ ​ ( 2,868 ) ​ ​ 2,045 ​ ​ ( 1,390 ) Payable to collaboration partner ​ ​ ( 66 ) ​ ​ ( 830 ) ​ ​ ( 1,833 ) Accrued expenses and other payables ​ ​ ( 5,597 ) ​ ​ ( 12,715 ) ​ ​ 19,097 Deferred revenue ​ ​ — ​ ​ ( 1,601 ) ​ ​ ( 12,876 ) Operating lease liability ​ ​ ( 2,743 ) ​ ​ ( 2,661 ) ​ ​ ( 2,049 ) Other liabilities ​ ​ — ​ ​ — ​ ​ ( 121 ) Net cash used in operating activities ​ ​ ( 70,236 ) ​ ​ ( 108,137 ) ​ ​ ( 107,865 ) Cash Flows from Investing Activities ​ ​ ​ ​ ​ ​ ​ ​ ​ Purchase of marketable securities ​ ​ ( 191,045 ) ​ ​ ( 214,874 ) ​ ​ ( 286,589 ) Proceeds from maturities of marketable securities ​ ​ 152,396 ​ ​ 307,137 ​ ​ 271,830 Purchases of property and equipment ​ ​ ( 609 ) ​ ​ ( 795 ) ​ ​ ( 1,101 ) Net cash (used in) provided by investing activities ​ ​ ( 39,258 ) ​ ​ 91,468 ​ ​ ( 15,860 ) Cash Flows from Financing Activities ​ ​ ​ ​ ​ ​ ​ ​ ​ Proceeds from public offering of common stock, net of issuance costs ​ ​ 107,798 ​ ​ — ​ ​ 123,829 Proceeds from at-the-market offering, net of issuance costs ​ ​ 24,302 ​ ​ 14,553 ​ ​ — Proceeds from exercise of Warrants in exchange for issuance of Pre-Funded Warrants ​ ​ 33,813 ​ ​ — ​ ​ — Proceeds from issuance of common stock upon exercise of Warrants ​ ​ 559 ​ ​ — ​ ​ — Proceeds from issuance of common stock upon exercise of stock options and purchases under employee stock purchase plan ​ ​ 4,774 ​ ​ 4,448 ​ ​ 6,283 Tax withholding payments related to net settlement of restricted stock units ​ ​ ( 769 ) ​ ​ ( 188 ) ​ ​ ( 189 ) Issuance costs related to prior period common stock offering ​ ​ — ​ ​ 25 ​ ​ — Net cash provided by financing activities ​ ​ 170,477 ​ ​ 18,838 ​ ​ 129,923 Effect of exchange rate changes on cash, cash equivalents and restricted cash ​ ​ — ​ ​ ( 90 ) ​ ​ ( 126 ) Net increase in cash, cash equivalents and restricted cash ​ ​ 60,983 ​ ​ 2,079 ​ ​ 6,072 Cash, cash equivalents and restricted cash, beginning of period ​ 125,969 ​ 123,890 ​ 117,818 Cash, cash equivalents and restricted cash, end of period ​ $ 186,952 ​ $ 125,969 ​ $ 123,890 Supplemental Disclosure of Non-Cash Financing and Investing Information: ​ ​ ​ ​ ​ ​ ​ ​ ​ Purchases of property and equipment in accounts payable and accrued liabilities ​ $ 61 ​ $ 19 ​ $ 143 Issuance costs related to common stock offering included in accrued liabilities and other payables ​ $ — ​ $ — ​ $ 25 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ ​ 80 Table of Contents PROTAGONIST THERAPEUTICS, INC. Notes to Consolidated Financial Statements Note 1. Organization and Description of Business Protagonist Therapeutics, Inc. (the “Company”) is headquartered in Newark, California. The Company is a biopharmaceutical company with peptide-based new chemical entities rusfertide and JNJ-2113 (formerly PN-235) in advanced stages of clinical development, both derived from the Company’s proprietary technology platform. The Company’s clinical programs fall into two broad categories of diseases: (i) hematology and blood disorders, and (ii) inflammatory and immunomodulatory diseases. The Company has one wholly owned subsidiary, Protagonist Pty Limited (“Protagonist Australia”), located in Brisbane, Queensland, Australia. Operating segments are components of an enterprise for which separate financial information is available and is evaluated regularly by the Chief Executive Officer, the Company’s chief operating decision maker, in deciding how to allocate resources and assessing performance. The Company operates and manages its business as one operating segment. The Company’s Chief Executive Officer reviews financial information on an aggregate basis for the purposes of allocating and evaluating financial performance. Substantially all of the Company’s long-lived assets are in the United States. Liquidity As of December 31, 2023, the Company had cash, cash equivalents and marketable securities of $ 341.6 million. The Company has incurred net losses from operations since inception and had an accumulated deficit of $ 615.7 million as of December 31, 2023. The Company’s ultimate success depends upon the outcome of its research and development and collaboration activities. The Company expects to incur additional losses in the future and anticipates the need to raise additional capital to continue to execute its long-range business plan. Since the Company’s initial public offering in August 2016, it has financed its operations primarily through proceeds from offerings of common stock and payments received under license and collaboration agreements. Risks and Uncertainties The Company is currently operating in a period of macroeconomic uncertainty and capital markets disruption, which has been impacted by domestic and global monetary and fiscal policy, geopolitical instability, including ongoing military conflicts between Russia and Ukraine and in Israel and surrounding areas, rising tensions between China and Taiwan, a recessionary environment, historically high domestic and global inflation, high interest rates and instability in banks and other financial institutions. The Company’s future results of operations and liquidity could be adversely impacted by outbreaks of disease, epidemics and pandemics, including potential further delays in existing and planned clinical trials, difficulty in recruiting patients for these clinical trials, delays in manufacturing and collaboration activities and supply chain disruptions. The conflict in Ukraine has exacerbated market disruptions, including significant volatility in commodity prices as well as supply chain interruptions, and has contributed to record inflation globally. The U.S. Federal Reserve and other central banks may be unable to contain inflation through more restrictive monetary policy and inflation may increase or continue for a prolonged period of time. Inflationary factors, such as increases in the cost of clinical supplies, interest rates, overhead costs and transportation costs may adversely affect the Company’s operating results. In addition, the failure of Silicon Valley Bank and other regional banks in the United States during the first half of 2023 has given rise to uncertainty in the security of amounts in deposit accounts uninsured by the Federal Deposit Insurance Corporation. The Company continues to monitor these events and the potential impact on its business. Although the Company does not believe that inflation has had a material adverse impact on its financial position or results of operations to date, its financial position or results of operations may be adversely affected in the future due to numerous factors, including global monetary and fiscal policy, supply chain constraints, the ongoing conflicts between Russia and Ukraine and in Israel and surrounding areas and other factors, and such factors may lead to increases in the cost of manufacturing for and delays in the initiation of studies in the Company’s product candidates. 81 Table of Contents Note 2. Summary of Significant Accounting Policies Basis of Presentation and Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Protagonist Australia, and have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”). All intercompany balances and transactions have been eliminated upon consolidation. Effective January 1, 2023, the financial statements of Protagonist Australia use the U.S. dollar as the functional currency, which reflects the expected nature of the ongoing operations of this subsidiary. The cumulative translation adjustment as of January 1, 2023 related to this subsidiary was not material. Prior to January 1, 2023, the financial statements of Protagonist Australia used the Australian dollar as the functional currency since the majority of expense transactions occurred in such currency. Foreign currency translation gains and losses are reported as a component of stockholders’ equity in accumulated other comprehensive loss on the consolidated balance sheets. Use of Estimates The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management evaluates its estimates, including those related to revenue recognition, accruals for research and development activities, stock-based compensation, income taxes, marketable securities and leases. Estimates related to revenue recognition include actual costs incurred versus total estimated costs of the Company’s deliverables to determine percentage of completion in addition to the application and estimates of potential revenue constraints in the determination of the transaction price under its license and collaboration agreements. Management bases these estimates on historical and anticipated results, trends and various other assumptions that the Company believes are reasonable under the circumstances, including assumptions as to forecasted amounts and future events. There has been uncertainty and disruption in the global economy and financial markets due to a number of factors, including geopolitical instability, inflationary pressures, high interest rates, a recessionary environment, domestic and global monetary and fiscal policy and other factors. The Company has taken into consideration any known impacts in its accounting estimates to date and is not aware of any additional specific events or circumstances that would require any additional updates to its estimates or judgments or a revision of the carrying value of its assets or liabilities as of the filing date of this Annual Report on Form 10-K. These estimates may change as new events occur and additional information is obtained. Actual results could differ materially from these estimates under different assumptions or conditions. Concentrations of Credit Risk Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash, cash equivalents and marketable securities. Substantially all of the Company’s cash is held by three financial institutions that management believes are of high credit quality. Such deposits generally exceed federally insured limits. The primary focus of the Company’s investment strategy is to preserve capital and to meet liquidity requirements. The Company’s cash equivalents and marketable securities are managed by external managers within the guidelines of the Company’s investment policy. The Company’s investment policy addresses the level of credit exposure by limiting concentration in any one corporate issuer and establishing a minimum allowable credit rating. To manage its credit risk exposure, the Company maintains its U.S. portfolio of cash equivalents and marketable securities in fixed income securities denominated and payable in U.S. dollars. Permissible investments of fixed income securities include obligations of the U.S. government and its agencies, money market instruments including commercial paper and negotiable certificates of deposit, and highly rated corporate debt obligations and money market funds. 82 Table of Contents Cash Equivalents Cash equivalents that are readily convertible to cash are stated at cost, which approximates fair value. The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Restricted Cash Restricted cash consists primarily of cash balances held as security in connection with a letter of credit related to the Company’s facility lease entered into in March 2017, as subsequently amended. The Company’s letter of credit balance was $ 0.2 million at December 31, 2021, 2022 and 2023 pursuant to the terms of the facility lease. Cash as Reported in Consolidated Statements of Cash Flows Cash as reported in the consolidated statements of cash flows includes the aggregate amounts of cash and cash equivalents and the restricted cash as presented on the consolidated balance sheets. Cash as reported in the consolidated statements of cash flows consisted of (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2023 2022 ​ 2021 Cash and cash equivalents ​ $ 186,727 ​ $ 125,744 ​ $ 123,665 Restricted cash - noncurrent ​ 225 ​ 225 ​ 225 Total cash reported on consolidated statements of cash flows ​ $ 186,952 ​ $ 125,969 ​ $ 123,890 ​ Marketable Securities All marketable securities have been classified as “available-for-sale” and are carried at estimated fair value as determined based upon quoted market prices or pricing models for similar securities. Management determines the appropriate classification of its marketable securities at the time of purchase and reevaluates such designation as of each balance sheet date. Short-term marketable securities have maturities greater than three months but not longer than 365 days as of the balance sheet date. Long-term marketable securities have maturities of 365 days or longer as of the balance sheet date. Unrealized gains and losses are excluded from earnings and are reported as a component of comprehensive income (loss). Realized gains and losses, if any, on available-for-sale securities are included in interest income. The cost of securities sold is based on the specific-identification method. Interest on marketable securities is included in interest income. Fair Value of Financial Instruments Fair value accounting is applied to all financial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis (at least annually). The carrying amount of the Company’s financial instruments, including cash equivalents, receivables from its collaboration partner, accounts payable, payables to its collaboration partner and accrued expenses and other payables approximate fair value due to their short-term maturities. See Note 4 to the Consolidated Financial Statements for additional information regarding the fair value of the Company’s other financial assets and liabilities. Investment Impairment ​ As of each reporting date, the Company assesses each of its investments in available-for-sale debt securities whose fair value is below its cost basis to determine if the investment’s impairment is due to credit-related factors or noncredit-related factors. Factors considered in determining whether an impairment is credit-related include the extent to which the investment’s fair value is less than its cost basis, declines in published credit ratings, issuer default on interest or principal payments, and declines in the financial condition and near-term prospects of the issuer. Credit-related impairments on available-for-sale debt securities are recognized as an allowance for credit losses with a corresponding adjustment to other 83 Table of Contents income (expense), net. The portion of the impairment that is not credit-related is recorded as a reduction of other comprehensive income (loss), net of applicable taxes. ​ Pursuant to Accounting Standard Update 2016-13, Financial Instruments - Credit Losses (Topic 326) (“ASU 2016-13”), the Company has elected to exclude accrued interest from both the fair value and the amortized cost basis of the available-for-sale debt securities for the purposes of identifying and measuring an impairment. The Company writes off accrued interest as a reduction of interest income when an issuer has defaulted on interest payments due on a security. Property and Equipment Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, ranging from three to five years . Leasehold improvements are amortized over the shorter of the lease term or the estimated useful lives of the assets. Maintenance and repairs are charged to expense as incurred. When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the consolidated balance sheet and any resulting gain or loss is reflected in operations in the period realized. Leases The Company determines if an arrangement is a lease at inception. Pursuant to Accounting Standards Codification Topic 842, Leases (“ASC 842”), operating leases are included in operating lease right-of-use (“ROU”) assets, operating lease liabilities, and noncurrent operating lease liabilities on the consolidated balance sheets. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. If the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on information available at the commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. Lease terms include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The Company records tenant improvement allowances as a reduction to the ROU asset with the impact of the decrease recognized prospectively over the remaining lease term. The leasehold improvements are amortized over the shorter of their useful life or the remaining term of the lease. Impairment of Long-Lived Assets The Company reviews long-lived assets, primarily comprised of property, equipment and operating lease ROU assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparison of the carrying amount to the future net cash flows which the assets are expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the projected discounted future net cash flows arising from the asset. There have been no such impairments of long-lived assets for any of the periods presented. ​ Comprehensive Loss Comprehensive loss includes net loss as well as other changes in stockholders’ equity that result from transactions and economic events other than those from stockholders. The Company’s foreign currency translation and unrealized gains and losses on available-for-sale securities represent the only components of other comprehensive loss that are excluded from reported net loss and that are presented in the consolidated statements of comprehensive loss. Income Taxes The Company uses the asset and liability method to account for income taxes in accordance with the authoritative guidance for income taxes. Under this method, deferred tax assets and liabilities are determined based on future tax 84 Table of Contents consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and tax loss and credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates applied to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized. ​ The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than a 50% likelihood of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest and penalties related to unrecognized tax benefits in income tax expense. To date, there have been no interest or penalties recorded in relation to unrecognized tax benefits. Revenue Recognition Under Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (“ASC 606”), the Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The Company applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, the Company assesses the goods or services promised within each contract, determines those that are performance obligations, and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligations when (or as) the performance obligations are satisfied. The Company constrains its estimate of the transaction price up to the amount (the “variable consideration constraint”) that a significant reversal of recognized revenue is not probable. ​ Licenses of intellectual property: If a license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in an arrangement, the Company recognizes revenue from non-refundable, upfront fees allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license. For licenses that are bundled with other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring proportional performance for purposes of recognizing revenue from non-refundable, upfront fees. The Company evaluates the measure of proportional performance each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition. ​ Milestone payments: At the inception of each arrangement or amendment that includes development, regulatory or commercial milestone payments, the Company evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in the transaction price. ASC 606 suggests two alternatives to use when estimating the amount of variable consideration: the expected value method and the most likely amount method. Under the expected value method, an entity considers the sum of probability-weighted amounts in a range of possible consideration amounts. Under the most likely amount method, an entity considers the single most likely amount in a range of possible consideration amounts. Whichever method used should be consistently applied throughout the life of the contract; however, it is not necessary for the Company to use the same approach for all contracts. The Company expects to use the most likely amount method for development and regulatory milestone payments. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within the control of the Company or the licensee, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. If there is more than one performance obligation, the transaction price is then allocated to each performance obligation on a relative stand-alone selling price basis. The Company recognizes revenue as or when the performance obligations under the contract are satisfied. At the end of each 85 Table of Contents subsequent reporting period, the Company re-evaluates the probability or achievement of each such milestone and any related constraint, and if necessary, adjusts its estimates of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenues and earnings in the period of adjustment. Any potential milestone payments that the Company determines are not associated with performance obligations as defined under the contract are excluded from the transaction price and are recognized as the triggering event occurs. Royalties: For arrangements that include sales-based royalties, including milestone payments based on the level of sales, where the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). Upfront payments and fees are recorded as deferred revenue upon receipt or when due and may require deferral of revenue recognition to a future period until the Company performs its obligations under these arrangements. Amounts payable to the Company are recorded as accounts receivable when the Company’s right to consideration is unconditional. Amounts payable to the Company and not yet billed to the collaboration partner are recorded as contract assets. The Company does not assess whether a contract has a significant financing component if the expectation at contract inception is such that the period between payment by the customer and the transfer of the promised goods or services to the customer will be one year or less. Contractual cost sharing payments made to a customer or collaboration partner are accounted for as a reduction to the transaction price if such payments are not related to distinct goods or services received from the customer or collaboration partner. Contracts may be amended to account for changes in contract specifications and requirements. Contract modifications exist when the amendment either creates new, or changes existing, enforceable rights and obligations. When contract modifications create new performance obligations and the increase in consideration approximates the standalone selling price for goods and services related to such new performance obligations, as adjusted for specific facts and circumstances of the contract, the modification is considered to be a separate contract. If a contract modification is not accounted for as a separate contract, the Company accounts for the promised goods or services not yet transferred at the date of the contract modification (the remaining promised goods or services) prospectively, as if it were a termination of the existing contract and the creation of a new contract, if the remaining goods or services are distinct from the goods or services transferred on or before the date of the contract modification. The Company accounts for a contract modification as if it were a part of the existing contract if the remaining goods or services are not distinct and, therefore, form part of a single performance obligation that is partially satisfied at the date of the contract modification. In such case the effect that the contract modification has on the transaction price, and on the entity’s measure of progress toward complete satisfaction of the performance obligation, is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) at the date of the contract modification (the adjustment to revenue is made on a cumulative catch-up basis). Research and Development Costs Research and development costs (“R&D”) are expensed as incurred, unless there is an alternate future use in other research and development projects or otherwise. Research and development costs include salaries and benefits, stock-based compensation expense, laboratory supplies and facility-related overhead, outside contracted services, including clinical trial costs, manufacturing and process development costs for both clinical and pre-clinical materials, research costs, development milestone payments under license and collaboration agreements, and other consulting services. The Company accrues for estimated costs of research and development activities conducted by third-party service providers, which include the conduct of pre-clinical studies and clinical trials and contract manufacturing activities. The Company records the estimated costs of research and development activities based upon the estimated services provided but not yet invoiced and includes these costs in accrued expenses and other payables in the consolidated balance sheets and within research and development expense in the consolidated statements of operations. The Company accrues for these costs based on various factors such as estimates of the work completed and in accordance with agreements 86 Table of Contents established with its third-party service providers. As actual costs become known, the Company adjusts its accrued liabilities. The Company has not experienced any material differences between accrued liabilities and actual costs incurred. However, the status and timing of actual services performed, the number of patients enrolled, the rate of patient enrollment and the number and location of sites activated may vary from the Company’s estimate and may result in adjustments to research and development expenses in future periods. Changes in these estimates that result in material changes to the Company’s accruals could materially affect the Company’s results of operations. Research and Development Tax Incentive The Company is eligible under the AusIndustry research and development tax incentive program to obtain either a refundable cash tax incentive or a taxable credit in the form of a non-cash tax incentive from the Australian Taxation Office. The refundable cash tax incentive is available to the Company on the basis of specific criteria with which the Company must comply. Specifically, the Company must have annual turnover of less than AUD 20.0 million and cannot be controlled by income tax exempt entities. The refundable cash tax incentive is recognized as a reduction to research and development expense when the right to receive has been attained and funds are considered to be collectible. The Company may alternatively be eligible for a taxable credit in the form of a non-cash tax incentive in years when the annual turnover exceeds the limit. The Company evaluates its eligibility under tax incentive programs as of each balance sheet date and makes accrual and related adjustments based on the most current and relevant data available. Stock-based Compensation The Company measures its stock-based awards made to its equity plan participants based on the estimated fair values of the awards as of the grant date. For stock option awards, the Company uses the Black-Scholes option-pricing model to estimate fair values. For restricted stock unit (“RSU”) awards, the estimated fair value is generally the fair market value of the underlying stock on the grant date. Stock-based compensation expense is recognized over the requisite service period and is based on the value of the portion of stock-based awards that is ultimately expected to vest. The Company recognizes forfeitures of stock-based awards as they occur. The Company has granted performance share units (“PSUs”) to certain executives of the Company. Stock-based compensation expense associated with PSUs is based on the fair value of the Company’s common stock on the grant date, which equals the closing price of the Company’s common stock on the grant date. The Company recognizes compensation expense on an accelerated basis over the vesting periods of the awards that are ultimately expected to vest when achievement of the related performance obligation becomes probable. The Company assesses the probability of achievement of the related performance obligation on a quarterly basis. If stock-based awards are granted in contemplation of or shortly before a planned release of material nonpublic information, and such information is expected to result in a material increase in the Company’s share price, the Company considers whether an adjustment to the observable market price is required when estimating fair values. Net Loss per Share Basic net loss per share is calculated by dividing the Company’s net loss by the weighted average number of shares of common stock, Exchange Warrants and Pre-Funded Warrants (as defined in Note 10. Stockholders’ Equity for details) outstanding during the period, without consideration of potentially dilutive securities. In accordance with Accounting Standards Codification Topic 260, Earnings Per Share (“ASC 260”), outstanding Exchange Warrants and Pre-Funded Warrants are included in the computation of basic net loss per share because the exercise price is negligible, and they are fully vested and exercisable after the original issuance date. Diluted net loss per share is the same as basic net loss per share for all periods presented since the effect of potentially dilutive securities is anti-dilutive given the net loss of the Company in each period. See Note 10. Stockholders’ Equity for additional information regarding the Exchange Warrants and Pre-Funded Warrants. 87 Table of Contents Recently Adopted Accounting Pronouncements In June 2016, the Financial Accounting Standard Board (“FASB”) issued ASU 2016-13. The guidance requires measurement and recognition of expected credit losses for financial assets at the time financial assets are initially recognized in the financial statements. The measurement of expected credit losses is based on historical credit loss information as well as current and future economic factors. ASU 2016-13 also eliminates the concept of “other-than-temporary” impairment when evaluating available-for-sale debt securities and instead focuses on determining whether any impairment is a result of credit loss or other factors. In November 2019, the FASB issued Accounting Standards Update 2019-10, Financial Instruments – Credit Losses (Topic 326): Effective Dates , which delayed the mandatory effective date of ASU 2016-13 for smaller reporting companies. The Company adopted ASU 2016-13 effective January 1, 2023. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements or related disclosures. Recently Issued Accounting Pronouncements as of December 31, 2023 In December 2023, the FASB issued Accounting Standards Update No. 2023-09 Income Taxes (Topic 740) – Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires public business entities to disclose specific categories in the income tax rate reconciliation annually and provide additional information for reconciling items that meet a qualitative threshold. ASU 2023-09 also requires that entities disclose annually additional information about income taxes paid and disaggregated information for certain items. ASU 2023-09 is effective for the Company beginning on January 1, 2025. The Company is currently evaluating the impact of the adoption of ASU 2023-09 on its financial position, results of operations and cash flows. In November 2023, the FASB issued Accounting Standards Update No. 2023-07 Segment Reporting (Topic 280) – Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires public entities to disclose incremental segment information on an annual and interim basis. ASU 2023-07 requires public entities with a single reportable segment to provide all the disclosures required by the amendments in ASU 2023-07 and all existing segment disclosures in Segment Reporting (Topic 280) . ASU 2023-07 is effective for the Company for fiscal years beginning on January 1, 2024, and interim periods within fiscal years beginning on January 1, 2025. The Company does not expect the adoption of ASU 2023-07 to have a material impact on its financial position, results of operations or cash flows. In August 2020, the FASB issued Accounting Standards Update No. 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. ASU 2020-06 also removes certain settlement conditions that are required for equity-linked contracts to qualify for the derivative scope exception, and it simplifies the diluted earnings per share calculation in certain areas. ASU 2020 - 06 is effective for the Company beginning on January 1, 2024. The Company does not expect the adoption of ASU 2020-06 to have a material impact on its financial position, results of operations or cash flows. ​ Note 3. License and Collaboration Agreement Agreement Terms On July 27, 2021, the Company entered into an Amended and Restated License and Collaboration Agreement (the “Restated Agreement”) with J&J Innovative Medicines (“JNJ”), formerly Janssen Biotech, Inc., which amended and restated the License and Collaboration Agreement, effective July 13, 2017, by and between the Company and JNJ (the “Original Agreement”), as amended by the first amendment, effective May 7, 2019 (the “First Amendment”). Prior to January 1, 2023, JNJ was a related party to the Company as Johnson & Johnson Innovation - JJDC, Inc. was a significant (greater than 5%) stockholder of the Company, and both companies are subsidiaries of Johnson & Johnson. Upon the effectiveness of the Original Agreement, the Company received a non-refundable, upfront cash payment of $ 50.0 million from JNJ. Upon the effectiveness of the First Amendment, the Company received a $ 25.0 million payment from JNJ in 2019. The Company received a $ 5.0 million payment triggered by the successful nomination of a second-generation oral Interleukin (“IL”)-23 receptor antagonist development compound (“second-generation compound”) during the first 88 Table of Contents quarter of 2020 and a $ 7.5 million payment triggered by the completion of data collection activities for the first Phase 1 clinical trial of a second-generation compound during the fourth quarter of 2021. The Company received a $ 25.0 million milestone payment in connection with the dosing of the third patient in the first Phase 2 clinical trial for a second-generation compound during the second quarter of 2022. The Company received a $ 50.0 million milestone payment in connection with the dosing of a third patient in the ICONIC-TOTAL Phase 3 clinical trial of JNJ-2113 in patients with moderate-to-severe psoriasis during the fourth quarter of 2023. The Company became eligible to receive a $ 10.0 million milestone payment upon t he dosing of the third patient in the ANTHEM Phase 2b trial in UC in December 2023. The Company has earned a total of $ 172.5 million in non-refundable payments from JNJ since the inception of the Restated Agreement in 2017 through the date of this report. The Restated Agreement relates to the development, manufacture and commercialization of oral IL-23 receptor antagonist drug candidates. The candidates nominated for initial development pursuant to the Restated Agreement included PTG-200 (JNJ-67864238), PN-232 (JNJ-75105186) and JNJ-2113 (JNJ-77242113) (formerly PN- 235). PTG-200 is an oral IL-23 receptor antagonist that was in Phase 2a development for the treatment of Crohn’s disease (“CD”). During the fourth quarter of 2021, a decision was made by JNJ to stop further development of both PTG-200 and PN-232 in favor of advancing JNJ-2113, based on its superior potency and overall pharmacokinetic and pharmacodynamic profile. JNJ is primarily responsible for the conduct of all future trials, including anticipated Phase 2 and Phase 3 trials, and the Company is primarily responsible for the conduct of the second-generation Phase 1 trials. ​ The Restated Agreement enables JNJ to develop collaboration compounds for multiple indications. Under the Restated Agreement, JNJ is required to use commercially reasonable efforts to develop at least one collaboration compound for at least two indications. Upcoming potential development milestones for second-generation compounds include: ● $ 115.0 million upon a Phase 3 clinical trial for a second-generation compound for any indication meeting its primary clinical endpoint; ● $ 35.0 million upon the filing of a New Drug Application (“NDA”) for a second-generation compound with the U.S. Food and Drug Administration (the “FDA”); ● $ 50.0 million upon FDA approval of an NDA for a second-generation compound; and ● $ 15.0 million upon the dosing of the third patient in a Phase 3 clinical trial for a second-generation compound for a second indication. Pursuant to the Restated Agreement, the Company remains eligible to receive tiered royalties on net product sales at percentages ranging from six percent to ten percent. The sales milestone payments in the Original Agreement also remain the same in the Restated Agreement. Pursuant to both the Original and Restated Agreements, payments to the Company for research and development services are generally billed and collected as services are performed or assets are delivered, including research activities and Phase 1 and Phase 2 development activities. JNJ bills the Company for its share of the PTG-200 Phase 2a development costs as expenses are incurred by JNJ. Milestone payments are received after the related milestones are achieved. JNJ retains exclusive, worldwide rights to develop and commercialize IL-23 receptor antagonist compounds derived from the research collaboration conducted under the Original Agreement, or JNJ’s further research under the Restated Agreement. Any further research and development will be conducted by JNJ. The Company will have the right to co-detail (for CD and ulcerative colitis (“UC”) indications) up to two of the IL-23 receptor antagonist compounds under the collaboration in the U.S. market. The Restated Agreement remains in effect until the royalty obligations cease following patent and regulatory expiry, unless terminated earlier. Upon a termination of the Restated Agreement, all rights revert back to the Company, and in 89 Table of Contents certain circumstances, if such termination occurs during ongoing clinical trials, JNJ would, if requested, provide certain financial and operational support to the Company for the completion of such trials. Revenue Recognition The Restated Agreement contains a single performance obligation for the development license; Phase 1 development services for PTG-200, PN-232 and JNJ-2113; the Company’s services associated with Phase 2a development for PTG-200 in CD; the initial year of second-generation compound research services; and all other such services that the Company may perform at the request of JNJ to support the development of PTG-200 through Phase 2a and PN-232 and JNJ-2113 through Phase 1. Under the Restated Agreement, development services performed by the Company for PTG-200 beyond Phase 2a and PN-232 and JNJ-2113 beyond Phase 1 are no longer required. The Company concluded that the remaining development services are not distinct from the partially delivered combined promise comprised under the agreement prior to the Restated Agreement of the development license and PTG-200, PN- 232 and JNJ-2113 services, including compound supply and other services. Therefore, the Restated Agreement is treated as if it were part of the Original Agreement. The Restated Agreement was accounted for as if it were a modification of services under the Original Agreement by applying a cumulative catch-up adjustment to revenue. As of the effective date of the Restated Agreement, the Company calculated the adjusted cumulative revenue under the Restated Agreement with primary updates to the transaction price, including the release of and update of prior constraints and fewer remaining services to be provided, resulting in a cumulative adjustment that increased revenue by $ 8.0 million for the year ended December 31, 2021. The contract duration is defined as the period in which parties to the contract have present enforceable rights and obligations. For revenue recognition purposes, the duration of the Restated Agreement for the identified single initial performance obligations began on the Original Agreement effective date of July 13, 2017 and ended upon the completion of Phase 1 clinical trials for PN-232 and JNJ-2113. Final activities related to these trials were completed as of June 30, 2022. The Company uses the most likely amount method to estimate variable consideration included in the transaction price. Variable consideration after the effective date of the Restated Agreement consisted of future milestone payments and cost sharing payments for agreed-upon services offset by development costs reimbursable to JNJ. Cost sharing payments from JNJ related to the agreed-upon services for development activities that the Company performed within the duration of the contract were included in the transaction price at the Company’s share of the estimated budgeted costs for these activities, including primarily internal full-time equivalent effort and third-party contract costs. Cost sharing payments to JNJ related to agreed-upon services for activities that JNJ performed within the duration of the contract are not a distinct service that JNJ transfers to the Company. Therefore, the consideration payable to JNJ was accounted for as a reduction in the transaction price. The transaction price of the initial performance obligation under the Restated Agreement was $ 131.7 million as of December 31, 2022, an increase of $ 25.2 million from the transaction price of $ 106.5 million at December 31, 2021 under the Restated Agreement. In order to determine the transaction price, the Company evaluated all payments to be received during the duration of the contract, net of development costs reimbursement expected to be payable to JNJ. The transaction price as of December 31, 2022 included $ 112.5 million of nonrefundable payments received to date, $ 17.9 million of reimbursement from JNJ for services performed for IL-23 receptor antagonist compound research and other services, and variable consideration consisting of $ 8.2 million of development cost reimbursement from JNJ, partially offset by $ 6.9 million of net cost reimbursement due to JNJ for services performed. The Company concluded that the variable consideration constraint was appropriately reflected in the transaction price as of December 31, 2022, and that the achievement of future milestones is subject to additional development and/or regulatory uncertainty and therefore it was not probable at December 31, 2022 that a material reversal of such revenues would not occur. JNJ also opted in for certain additional services to be performed by the Company that were outside the initial performance obligation. Revenue for these additional services was recognized as these services were performed. ​ The Company utilized a cost-based input method to measure proportional performance and to calculate the corresponding amount of revenue to recognize. In applying the cost-based input method of revenue recognition, the 90 Table of Contents Company used actual costs incurred relative to expected costs to fulfill the combined performance obligation. These costs consisted primarily of internal full-time equivalent effort and third-party contract costs. Revenue was recognized based on actual costs incurred as a percentage of total estimated costs as the Company completed its performance obligations. A cost-based input method of revenue recognition requires management to make estimates of costs to complete the Company’s performance obligations. The Company believes this is the best measure of progress because other measures do not reflect how the Company transfers its performance obligation to JNJ. For the year ended December 31, 2023, the Company recognized $ 60.0 million of license and collaboration revenue, which included a $ 50.0 million milestone payment earned in October 2023 in connection with the dosing of the third patient in the ICONIC-TOTAL Phase 3 trial of JNJ-2113 in patients with moderate-to-severe psoriasis, and a $ 10.0 million milestone payment earned in December 2023 upon the dosing of the third patient in the ANTHEM Phase 2b trial in UC. For the year ended December 31, 2022, the Company recognized $ 26.6 million of license and collaboration revenue, which was primarily related to the transaction price under the Restated Agreement recognized based on proportional performance. The Company completed its performance obligation under the collaboration as of June 30, 2022. For the year ended December 31, 2021 , the Company recognized $ 27.4 million of license and collaboration revenue. This amount included a cumulative catch-up adjustment increasing license and collaboration revenue by $ 8.0 million, and $ 18.6 million of license and collaboration revenue based on proportional performance following the contract modification for the Restated Agreement. In addition, the Company recorded $ 0.8 million of revenue related to additional services provided by the Company under the Restated Agreement. The following tables present changes in the Company’s contract assets and liabilities during the periods presented (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at ​ ​ ​ ​ ​ Balance at ​ ​ Beginning of ​ ​ ​ ​ ​ End of Year Ended December 31, 2023 Period ​ Additions Deductions Period Contract assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Receivable from collaboration partner ​ $ 10 ​ $ 60,041 ​ ​ ( 50,051 ) ​ $ 10,000 Contract liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Payable to collaboration partner ​ $ 69 ​ $ 11 ​ ​ ( 77 ) ​ $ 3 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at ​ ​ ​ ​ ​ ​ ​ Balance at ​ ​ Beginning of ​ ​ ​ ​ ​ End of Year Ended December 31, 2022 Period ​ Additions Deductions Period Contract assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Receivable from collaboration partner ​ $ 1,566 ​ $ 25,165 ​ $ ( 26,721 ) ​ $ 10 Contract liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Deferred revenue ​ $ 1,601 ​ $ 25,757 ​ $ ( 27,358 ) ​ $ — Payable to collaboration partner ​ $ 899 ​ $ 439 ​ $ ( 1,269 ) ​ $ 69 ​ During the year ended December 31, 2022, the Company recognized revenue of $ 0.9 million from amounts included in the deferred revenue balance at the beginning of the year. During the year ended December 31, 2021, the Company recognized revenue of $ 2.8 million from amounts included in the deferred revenue balance at the beginning of the year. None of the costs to obtain or fulfill the contract were capitalized. Note 4. Fair Value Measurements Financial assets and liabilities are recorded at fair value. The accounting guidance for fair value provides a framework for measuring fair value, clarifies the definition of fair value and expands disclosures regarding fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The accounting guidance establishes 91 Table of Contents a three-tiered hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value as follows: Level 1 —Inputs are unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date. Level 2— Inputs (other than quoted market prices included in Level 1) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life. Level 3 —Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. In determining fair value, the Company utilizes quoted market prices, broker or dealer quotations, or valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible and considers counterparty credit risk in its assessment of fair value. The following tables present the fair value of the Company’s financial assets determined using the inputs defined above (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 ​ Level 1 Level 2 Level 3 Total Assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Money market funds ​ $ 19,212 ​ $ — ​ $ — $ 19,212 Certificates of deposit ​ — ​ ​ 13,004 ​ — 13,004 Commercial paper ​ — ​ ​ 130,296 ​ — 130,296 Corporate debt securities ​ ​ — ​ ​ 7,672 ​ ​ — ​ ​ 7,672 U.S. Treasury and agency securities ​ ​ — ​ ​ 145,085 ​ ​ — ​ ​ 145,085 Total financial assets ​ $ 19,212 ​ $ 296,057 $ — $ 315,269 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 ​ Level 1 Level 2 Level 3 Total Assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Money market funds ​ $ 54,292 ​ $ — ​ $ — $ 54,292 Commercial paper ​ — ​ 110,227 ​ — 110,227 Corporate debt securities ​ — ​ 10,741 — 10,741 U.S. Treasury and agency securities ​ ​ — ​ ​ 57,242 ​ ​ — 57,242 Total financial assets ​ $ 54,292 ​ $ 178,210 $ — $ 232,502 ​ The Company’s certificates of deposit, commercial paper, corporate debt securities, and U.S. Treasury and agency securities, including U.S. Treasury bills, are classified as Level 2 as they were valued based upon quoted market prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques, for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets. The carrying amount of the Company’s remaining financial assets and liabilities, including cash, receivables and payables, approximates their fair value due to their short-term nature. 92 Table of Contents Note 5. Cash Equivalents and Marketable Securities Cash equivalents and marketable securities consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 ​ ​ Amortized ​ Gross Unrealized ​ ​ Cost Gains Losses Fair Value Money market funds ​ $ 19,212 ​ $ — ​ $ — ​ $ 19,212 Certificates of deposit ​ ​ 12,998 ​ ​ 6 ​ ​ — ​ 13,004 Commercial paper ​ 130,351 ​ ​ 5 ​ ​ ( 60 ) ​ 130,296 Corporate debt securities ​ ​ 7,678 ​ ​ — ​ ​ ( 6 ) ​ ​ 7,672 U.S. Treasury and agency securities ​ ​ 145,024 ​ ​ 63 ​ ​ ( 2 ) ​ ​ 145,085 Total cash equivalents and marketable securities ​ $ 315,263 ​ $ 74 $ ( 68 ) ​ $ 315,269 Classified as: ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash equivalents ​ ​ ​ ​ ​ ​ ​ $ 160,379 Marketable securities ​ ​ ​ ​ ​ ​ ​ 154,890 Total cash equivalents and marketable securities ​ ​ ​ ​ ​ ​ ​ $ 315,269 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 ​ ​ Amortized ​ Gross Unrealized ​ ​ Cost Gains Losses Fair Value Money market funds ​ $ 54,292 ​ $ — $ — ​ $ 54,292 Commercial paper ​ 110,257 ​ — ( 30 ) ​ 110,227 Corporate debt securities ​ 10,756 ​ — ( 15 ) ​ 10,741 U.S. Treasury and agency securities ​ ​ 57,251 ​ ​ 27 ​ ​ ( 36 ) ​ ​ 57,242 Total cash equivalents and marketable securities ​ $ 232,556 ​ $ 27 $ ( 81 ) ​ $ 232,502 Classified as: ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash equivalents ​ ​ ​ ​ ​ ​ ​ $ 120,891 Marketable securities ​ ​ ​ ​ ​ ​ ​ 111,611 Total cash equivalents and marketable securities ​ ​ ​ ​ ​ ​ ​ $ 232,502 ​ Marketable securities of $ 154.9 million and $ 111.6 million held as of December 31, 2023 and 2022, respectively, had contractual maturities of less than one year . The Company does not intend to sell its securities that are in an unrealized loss position, and it is not more likely than not that the Company will be required to sell its securities before recovery of their amortized cost basis, which may be at maturity. There were no material realized gains or realized losses on marketable securities for the periods presented. The Company evaluated securities with unrealized losses to determine whether such losses, if any, were due to credit-related factors and determined that there were no credit-related losses to be recognized as of December 31, 2023. ​ Note 6. Balance Sheet Components Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ 2023 ​ 2022 Prepaid insurance ​ $ 1,410 ​ $ 1,417 Prepaid clinical and research related expenses ​ ​ 649 ​ $ 2,746 Prepaid licenses ​ ​ 529 ​ ​ 489 Other prepaid expenses ​ 1,040 ​ 1,018 Other receivable ​ ​ 332 ​ ​ 42 Prepaid expenses and other current assets ​ $ 3,960 ​ $ 5,712 ​ 93 Table of Contents Property and Equipment, Net Property and equipment, net consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ 2023 ​ 2022 Laboratory equipment ​ $ 5,323 ​ $ 4,817 Furniture and computer equipment ​ 1,143 ​ 1,089 Leasehold improvements ​ 963 ​ 913 Total property and equipment ​ 7,429 ​ 6,819 Accumulated depreciation ​ ( 6,234 ) ​ ( 5,254 ) Property and equipment, net ​ $ 1,195 ​ $ 1,565 ​ Depreciation expense for the years ended December 31, 2023, 2022 and 2021, was $ 977,000 , $ 1,032,000 and $ 813,000 , respectively. As of December 31, 2023, 2022 and 2021, $ 56,000 , $ 156,000 and $ 262,000 , respectively, of the Company’s property and equipment, net, was located in Australia. The remainder of the Company’s property and equipment, net was located in the United States. Accrued Expenses and Other Payables Accrued expenses and other payables consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2023 ​ 2022 Accrued clinical and research related expenses ​ $ 11,841 ​ $ 19,109 Accrued employee related expenses ​ 6,786 ​ 4,967 Accrued professional service fees ​ ​ 632 ​ ​ 464 Other ​ 99 ​ 415 Total accrued expenses and other payables ​ $ 19,358 ​ $ 24,955 ​ ​ ​ Note 7. Research Collaboration and License Agreement The Company and Zealand Pharma A/S (“Zealand”) entered into a collaboration agreement in June 2012. In October 2013, Zealand abandoned the collaboration, and the collaboration agreement was terminated in 2014. The agreement provides for certain post-termination payment obligations to Zealand with respect to compounds related to the collaboration that meet specified conditions set forth in the collaboration agreement and which the Company elects to further develop following Zealand’s abandonment of the collaboration. The Company has the right, but not the obligation, to further develop and commercialize such compounds. The agreement provides for payments to Zealand for the achievement of certain development, regulatory and sales milestone events that occur prior to a partnering arrangement related to such compounds between the Company and a third party. The Company previously determined that rusfertide is a compound for which the post-termination payments described above are required under the collaboration agreement and has made three development milestone payments for an aggregate amount of $ 1.0 million under the agreement. However, upon reevaluation, the Company concluded in 2019 that rusfertide is not a compound requiring post-termination payments under the agreement and initiated an arbitration proceeding in January 2020. In August 2021, the Company and Zealand agreed to resolve the dispute and entered into an Arbitration Resolution Agreement. See Note 9. Commitments and Contingencies – Legal Proceedings for additional information on the results of arbitration proceedings related to this research and collaboration agreement. Milestone payments to collaboration partners are recorded as research and development expense in the period that the expense is incurred. For the year ended December 31, 2021, the Company recorded research and development 94 Table of Contents expense of $ 4.0 million under this agreement. No research and development expense were recorded under this agreement for the years ended December 31, 2023 or 2022. Note 8. Leases The Company applies ASC 842 to recognize assets and liabilities for leases with lease terms of more than 12 months on the balance sheet. The Company has elected to account for each separate lease component and non-lease components as one single component for all lease assets. Leases with terms of 12 months or less are not recorded on the balance sheet, and the related lease expenses are recognized on a straight-line basis over the lease term. ​ The Company has one operating lease agreement originally entered into in March 2017 for approximately 42,900 square feet for laboratory and office space located in Newark, California. In July 2021, the Company entered into a second amendment to its original facility lease agreement, as amended, for 15,000 square feet of additional office space in Newark, California (the “Second Amendment”). The Company commenced operations in the additional space in September 2021. Under the Second Amendment, the Company will pay additional base rent of approximately $ 1.5 million over the lease term, which expires in May 2024. As a result of this amendment, the Company recorded an additional right-of-use-asset and the related liability of $ 1.4 million as of December 31, 2021. ​ The Company provided the landlord with a $ 450,000 letter of credit collateralized by restricted cash as security deposit for the operating lease agreement, which expires in May 2024. The security deposit for the lease was later reduced to $ 225,000 in March 2021. No additional security deposit was required pursuant to the Second Amendment. Under the terms of the lease, as amended, the Company is responsible for its proportional share of operating expenses and tax obligations. ​ Balance sheet information related to operating leases is as follows for the periods presented (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, Operating Leases: ​ 2023 ​ 2022 Operating lease right-of-use asset ​ $ 954 ​ $ 3,061 ​ ​ ​ ​ ​ ​ ​ Operating lease liability - current ​ $ 1,141 ​ $ 2,515 Operating lease liability - noncurrent ​ ​ — ​ ​ 1,141 Total operating lease liabilities ​ $ 1,141 ​ $ 3,656 ​ ​ ​ ​ ​ ​ ​ Weighted-average remaining lease term (years) ​ ​ 0.4 ​ ​ 1.4 Weighted-average discount rate ​ ​ 10.4 % ​ ​ 10.4 % ​ Other information related to the Company’s operating leases is as follows for the periods presented (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 ​ 2022 ​ 2021 Operating lease cost ​ $ 2,335 ​ $ 2,335 ​ $ 1,962 Less: Sublease income ​ ​ ( 137 ) ​ ​ ( 123 ) ​ ​ ( 91 ) Total lease expense ​ $ 2,198 ​ $ 2,212 ​ $ 1,871 ​ Supplemental cash flow information is as follows for the periods presented (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 ​ 2022 ​ 2021 Operating cash flow used by operating leases ​ $ 2,743 ​ $ 2,661 ​ $ 2,049 New operating lease asset obtained in exchange for operating lease liability ​ $ — ​ $ — ​ $ 1,373 ​ 95 Table of Contents Future lease payments required under lease obligations as of December 31, 2023 are as follows (in thousands): ​ ​ ​ ​ Year Ending December 31: Amount 2024 ​ $ 1,160 2025 ​ ​ — 2026 ​ ​ — 2027 ​ ​ — Thereafter ​ — Total future minimum lease payments ​ ​ 1,160 Less: imputed interest ​ ​ ( 19 ) Present value of lease liabilities ​ $ 1,141 ​ ​ Note 9. Commitments and Contingencies Contract Service Providers In the normal course of business, the Company enters into agreements with contract service providers to assist in the performance of its research and development activities and clinical and commercial manufacturing activities. Subject to the required notice periods and the Company’s obligations under binding purchase orders, the Company can elect to discontinue the work under these agreements at any time. The Company expects to enter into additional clinical development, contract research, clinical and commercial manufacturing, supplier and collaborative research agreements in the future, which may require upfront payments and long-term commitments of capital resources. Indemnification Agreements In the ordinary course of business, the Company enters into agreements that may include indemnification provisions. Pursuant to such agreements, the Company may indemnify, hold harmless and defend an indemnified party for losses suffered or incurred by the indemnified party. Some of the provisions will limit losses to those arising from third-party actions. In some cases, the indemnification will continue after the termination of the agreement. The maximum potential amount of future payments the Company could be required to make under these provisions is not determinable. The Company has also entered into indemnification agreements with its directors and officers that may require the Company to indemnify its directors and officers against liabilities that may arise by reason of their status or service as directors or officers to the fullest extent permitted by law. The Company carries a directors’ and officers’ insurance policy. To date, the Company has not incurred material costs to defend lawsuits or settle claims related to the indemnification agreements. The Company believes that the fair value of these indemnification agreements is minimal and has not accrued any amounts for the obligations. Legal Proceedings The Company recognizes accruals for legal actions to the extent that it concludes that a loss is both probable and reasonably estimable. The Company accrues for the best estimate of a loss within a range; however, if no estimate in the range is better than any other, it accrues the minimum amount in the range. If the Company determines that a loss is reasonably possible and the loss or range of loss can be estimated, it discloses the possible loss. In January 2020, the Company initiated arbitration proceedings with the International Court of Arbitration of the International Chamber of Commerce against Zealand related to a collaboration agreement the Company and Zealand entered into in 2012 and terminated in 2014. The agreement provides for certain post-termination payment obligations to Zealand with respect to compounds related to the collaboration that the Company elects to further develop and meet specified conditions. In August, the Company and Zealand agreed to resolve the dispute and reached an Arbitration Resolution Agreement. Under the Arbitration Resolution Agreement, (1) the Company was required to make an additional payment of $ 1.5 million to Zealand in August 2022 with respect to rusfertide; (2) all development milestones with respect of rusfertide were reduced by 50 %, except that the Company agreed to pay in full within two business days after the 96 Table of Contents effective date of the Arbitration Resolution Agreement (and timely paid): (i) a $ 1.0 million milestone for initiation of a Phase 2b clinical trial; and (ii) a $ 1.5 million milestone for initiation of a Phase 3 clinical trial; (3) the royalty rates payable by the Company on net sales of rusfertide were reduced by 50 %; (4) all sales milestone payments on net sales of rusfertide were reduced by 50 %; (5) the parties agreed that each party will retain all payments previously made by the other party in connection with the original collaboration agreement; and (6) the parties released claims related to the original collaboration agreement, the abandonment agreement and the arbitration. In addition to the payments specified in items (1) and (2) above, the Company may also be required to pay Zealand up to $ 2.75 million in future development milestone payments relating to rusfertide. Those payments include up to $ 1.0 million in the aggregate for registrational proposals and up to $ 1.75 million in the aggregate for commercial launch in the three geographic territories specified in the original collaboration agreement. The Company considered the outcome of these arbitration proceedings as being related to its research and development project; therefore, payments or milestone payments were recorded as research and development expenses. Note 10. Stockholders’ Equity Public Offerings In June 2021, the Company completed an underwritten public offering of 3,046,358 shares of its common stock at a public offering price of $ 37.75 per share and issued an additional 456,953 shares of common stock at a price of $ 37.75 per share following the underwriters’ exercise of their option to purchase additional shares. Net proceeds, after deducting underwriting commissions and offering costs paid by the Company, were $ 123.8 million. In April 2023, the Company completed an underwritten public offering of 5,000,000 shares of its common stock at a public offering price of $ 20.00 per share and issued an additional 750,000 shares of common stock at a price of $ 20.00 per share following the underwriters’ exercise of their option to purchase additional shares. Net proceeds, after deducting underwriting commissions and offering costs paid by the Company, were $ 107.8 million. ​ ATM Offerings In November 2019, the Company entered into an Open Market Sale Agreement SM (the “Prior Sales Agreement”), pursuant to which the Company could offer and sell up to $ 75.0 million shares of its common stock from time to time in “at-the-market” offerings (the “2019 ATM Facility”). No shares were sold under the 2019 ATM Facility during the year ended December 31, 2021. During the year ended December 31, 2022, the Company sold 422,367 shares of its common stock under the 2019 ATM Facility for net proceeds of $ 14.6 million, after deducting issuance costs. The Prior Sales Agreement was terminated in connection with and replaced by the Sales Agreement in August 2022. In August 2022, the Company entered into an Open Market Sale Agreement SM , pursuant to which the Company may offer and sell up to $ 100.0 million shares of its common stock from time to time in “at-the-market” offerings (the “2022 ATM Facility”). During the three months ended March 31, 2023, the Company sold 1,749,199 shares of its common stock under the 2022 ATM Facility for net proceeds of $ 24.3 million, after deducting issuance costs. There were no sales of the Company’s common stock under the 2022 ATM Facility during the three months ended June 30, 2023, September 30, 2023 and December 30, 2023. There were no sales of the Company’s common stock under the 2022 ATM Facility during the year ended December 31, 2022. ​ Exchange Warrants In December 2018, the Company entered into an exchange agreement (the “Exchange Agreement”) with an investor and its affiliates (the “Exchanging Stockholders”), pursuant to which the Company exchanged an aggregate of 1,000,000 shares of the Company’s common stock, par value $ 0.00001 per share, owned by the Exchanging Stockholders for pre-funded warrants (the “Exchange Warrants”) to purchase an aggregate of 1,000,000 shares of common stock (subject to adjustment in the event of any stock dividends and splits, reverse stock split, recapitalization, reorganization or similar transaction, as described in the Exchange Warrants), with an exercise price of $ 0.00001 per share. The Exchange Warrants expired ten years from the date of issuance. The Exchange Warrants were exercisable at any time prior to 97 Table of Contents expiration except that the Exchange Warrants could not be exercised by the Exchanging Stockholders if, after giving effect thereto, the Exchanging Stockholders would beneficially own more than 9.99 % of the Company’s common stock, subject to certain exceptions. In accordance with Accounting Standards Codification Topic 505, Equity , the Company recorded the retirement of the common stock exchanged as a reduction of common stock shares outstanding and a corresponding debit to additional paid-in-capital at the fair value of the Exchange Warrants on the issuance date. The Exchange Warrants met the criteria for equity classification and the fair value of the Exchange Warrants was recorded as a credit to additional paid-in capital and was not subject to remeasurement. The Company determined that the fair value of the Exchange Warrants was substantially similar to the fair value of the retired shares on the issuance date due to the negligible exercise price for the Exchange Warrants. During the year ended December 31, 2022, Exchange Warrants to purchase 400,000 shares of the Company’s common stock were net exercised, resulting in the issuance of 399,997 shares of common stock. As of December 31, 2023, there were no outstanding Exchange Warrants. Pre-Funded Warrants In August 2018, the Company entered into a Securities Purchase Agreement with certain accredited investors (each, an “Investor” and, collectively, the “Investors”), pursuant to which the Company sold an aggregate of 2,750,000 shares of its common stock at a price of $ 8.00 per share for aggregate net proceeds of $ 21.7 million, after deducting offering expenses payable by the Company. In a concurrent private placement, the Company issued the Investors warrants to purchase an aggregate of 2,750,000 shares of its common stock (each, a “Warrant” and, collectively, the “Warrants”). Each Warrant was exercisable from August 8, 2018 through August 8, 2023 . Warrants to purchase 1,375,000 shares of the Company’s common stock had an exercise price of $ 10.00 per share and Warrants to purchase 1,375,000 shares of the Company’s common stock had an exercise price of $ 15.00 per share. The exercise price and number of shares of common stock issuable upon the exercise of the Warrants (the “Warrant Shares”) were subject to adjustment in the event of any stock dividends and splits, reverse stock split, recapitalization, reorganization or similar transaction, as described in the Warrants. Under certain circumstances, the Warrants were exercisable on a “cashless” basis. In connection with the issuance and sale of the common stock and Warrants, the Company granted the Investors certain registration rights with respect to the Warrants and the Warrant Shares. The common stock and Warrants met the criteria for equity classification and the net proceeds from the transaction were recorded as a credit to additional paid-in capital. In August 2023, prior to the expiration of the Warrants, the Company entered into certain agreements with the Investors and their affiliates under which the Company agreed to allow the Warrants to be exercised in exchange for pre-funded warrants representing the same number of Warrant Shares underlying the Warrants with an exercise price of $ 0.001 per share (the “Pre-Funded Warrants”). Subsequent to the execution of the agreements and prior to the expiration of the Warrants, all outstanding Warrants were exercised for gross proceeds of $ 34.4 million in exchange for 44,748 shares of the Company’s common stock and Pre-Funded Warrants to purchase 2,705,252 shares of common stock (subject to adjustment in the event of any stock dividends and splits, reverse stock split, recapitalization, reorganization or similar transaction, as described in the Pre-Funded Warrants) with an exercise price of $ 0.001 per share. The Pre-Funded Warrants will expire upon the day they are exercised in full. The Pre-Funded Warrants are exercisable at any time prior to expiration except that the Pre-Funded Warrants cannot be exercised by the Investors if, after giving effect thereto, the Investors would beneficially own more than 9.99 % of the Company’s common stock, subject to certain exceptions. The common stock and Pre-Funded Warrants met the criteria for equity classification and the net proceeds from the transaction were recorded as a credit to additional paid-in capital. In accordance with ASC 260, outstanding Pre-Funded Warrants are included in the computation of basic net loss per share because the exercise price is negligible, and they are fully vested and exercisable after the original issuance date. As of December 31, 2023, none of the Pre-Funded Warrants have been exercised. Note 11. Equity Plans Equity Incentive Plan In May 2007, the Company established the 2007 Stock Option and Incentive Plan (“2007 Plan”) which provided for the granting of stock options to employees and consultants of the Company. Options granted under the 2007 Plan were either incentive stock options (“ISOs”) or nonqualified stock options (“NSOs”). ISOs were granted only to Company employees. NSOs were granted to Company employees, non-employee members of the Company’s Board of Directors 98 Table of Contents (“Board”) and consultants. Options under the 2007 Plan have a term of ten years and generally vest over a four-year period. In July 2016, the Company’s Board and stockholders approved the 2016 Equity Incentive Plan (“2016 Plan”) to replace the 2007 Plan. Under the 2016 Plan, 1,200,000 shares of the Company’s common stock were initially reserved for the issuance of stock options, restricted stock units and other awards to employees, directors and consultants. Pursuant to the “evergreen” provision contained in the 2016 Plan, the number of shares reserved for issuance under the 2016 Plan automatically increases on January 1 of each year, starting on January 1, 2017 and continuing through (and including) January 1, 2026, by 4 % of the total number of shares of the Company’s capital stock outstanding on December 31 of the preceding fiscal year, or a lesser number of shares determined by the Company’s Board. Upon adoption of the 2016 Plan, no additional stock awards were issued under the 2007 Plan. Options granted under the 2007 Plan that were outstanding on the date the 2016 Plan became effective remain subject to the terms of the 2007 Plan. The number of options available for grant under the 2007 Plan was ceased and the number was added to the common stock reserved for issuance under the 2016 Plan. As of December 31, 2023, approximately 1,035,798 shares of common stock were available for issuance under the 2016 Plan. The 2016 Plan is administered by the Board, or a committee appointed by the Board, which determines the types of awards to be granted, including the number of shares subject to the awards, the exercise price and the vesting schedule. Options granted under the 2016 Plan expire no later than ten years from the date of grant. The exercise price of each option may not be less than 100 % of the fair market value of the common stock at the date of grant. Options may be granted to stockholders possessing more than 10 % of the total combined voting power of all classes of stocks of the Company at an exercise price at least 110 % of the fair value of the common stock at the date of grant and the options are not exercisable after the expiration of 10 years from the date of grant. Employee stock options generally vest over a period of approximately four years . Non-employee Board director initial stock options generally vest monthly over a period of approximately three years , and non-employee Board director annual refresher stock options generally vest over a period of approximately one year . Consultant awards generally vest over a period of approximately one year. Inducement Plan In May 2018, the Company’s Board approved the 2018 Inducement Plan, as subsequently amended. The 2018 Inducement Plan is a non-stockholder approved stock plan, under which awards options and restricted stock unit awards to persons that were not previously employees or directors of the Company, or following a bona fide period of non-employment, as an inducement material to such persons entering into employment with the Company, within the meaning of Rule 5635(c)(4) of the Nasdaq Listing Rules. The 2018 Inducement Plan is administered by the Board or the Compensation Committee of the Board, which determines the types of awards to be granted, including the number of shares subject to the awards, the exercise price and the vesting schedule. Awards granted under the 2018 Inducement Plan expire no later than ten years from the date of grant. Employee stock options granted under the 2018 Inducement Plan generally vest over a period of approximately four years . As of December 31, 2023, approximately 548,722 shares of common stock were available for issuance under the 2018 Inducement Plan, as amended. 99 Table of Contents Stock Options Stock option activity under the Company’s equity incentive and inducement plans is set forth below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted- ​ Weighted- ​ ​ ​ ​ ​ ​ Average ​ Average ​ ​ ​ ​ ​ ​ Exercise ​ Remaining ​ Aggregate ​ ​ Options ​ Price Per ​ Contractual ​ Intrinsic ​ Outstanding Share Life (years) Value (1) ​ ​ ​ ​ ​ ​ ​ ​ (in millions) Balances at December 31, 2022 6,240,509 $ 19.03 ​ ​ ​ Options granted 2,519,750 ​ ​ 13.07 ​ ​ Options exercised ( 345,407 ) ​ ​ 11.04 ​ ​ ​ Options forfeited ​ ( 492,809 ) ​ ​ 23.48 ​ ​ ​ ​ ​ Balances at December 31, 2023 7,922,043 $ 17.21 ​ 6.81 ​ $ 60.0 Options exercisable – December 31, 2023 ​ 5,082,646 $ 16.93 ​ 5.77 ​ ​ 39.4 Options vested and expected to vest – December 31, 2023 ​ 7,922,043 ​ $ 17.21 6.81 ​ $ 60.0 ____________________ (1) The aggregate intrinsic values were calculated as the difference between the exercise price of the options and the closing price of the Company’s common stock on December 31, 2023. The calculation excludes options with an exercise price higher than the closing price of the Company’s common stock on December 31, 2023. The aggregate intrinsic value of options exercised was $ 3.3 million, $ 5.4 million and $ 10.5 million for the years ended December 31, 2023, 2022 and 2021, respectively. During the years ended December 31, 2023, 2022 and 2021, the estimated weighted-average grant-date fair value of common stock underlying options granted was $ 10.81 , $ 17.52 and $ 21.94 per share, respectively. For the years ended December 31, 2023, 2022 and 2021, the aggregate fair value of stock options that vested during the year was $ 25.9 million, $ 23.3 million and $ 11.3 million, respectively. Stock Options Valuation Assumptions The fair value of stock option awards was estimated at the date of grant using a Black-Scholes option-pricing model with the following assumptions: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2023 ​ 2022 ​ 2021 Expected term (in years) 5.27 - 6.08 5.27 - 6.08 5.27 - 6.08 Expected volatility 105.7 % - 110.1 % ​ 96.3 % - 101.7 % ​ 87.4 % - 95.2 % Risk-free interest rate 3.57 % - 4.86 % ​ 1.64 % - 4.23 % ​ 0.11 % - 1.35 % Dividend yield — — — ​ In determining the fair value of the options granted, the Company uses the Black-Scholes option-pricing model and assumptions discussed below. Each of these inputs is subjective, and generally requires judgment to determine. Expected Term —The Company’s expected term represents the period that the Company’s options granted are expected to be outstanding and is determined using the simplified method (based on the mid-point between the vesting date and the end of the contractual term). The Company has limited historical exercise information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior for its stock option grants. Expected Volatility — Beginning January 1, 2023, the Company’s expected volatility is estimated based upon the volatility of the Company’s stock price over a period equal to the expected term of the stock option grants. For the year ended December 31, 2022, the Company’s expected volatility was estimated based upon a mix of 25 % of the average 100 Table of Contents volatility for comparable publicly traded biopharmaceutical companies over a period equal to the expected term of the stock option grants and 75 % of the volatility of the Company’s stock price since its initial public offering in August 2016. For the year ended December 31, 2021, the Company’s expected volatility was estimated based upon a mix of 50 % of the average volatility for comparable publicly traded biopharmaceutical companies over a period equal to the expected term of the stock option grants and 50 % of the volatility of the Company’s stock price since its initial public offering in August 2016. Risk-Free Interest Rate —The risk-free interest rate is based on the U.S. Treasury zero coupon issues in effect at the time of grant for periods corresponding with the expected term of the option. Expected Dividend —The Company has never paid dividends on its common stock and has no plans to pay dividends on its common stock. Therefore, the Company used an expected dividend yield of zero. RSUs An RSU is an agreement to issue shares of the Company’s common stock at the time of vesting. RSUs generally vest annually in equal installments over three or four years on approximately the anniversary of the grant date. RSUs granted to certain non-executive employees in 2022 vested 100 % on approximately the first anniversary of the grant date. RSUs granted to certain executives in 2021 vest 100 % on the third anniversary of the grant date. RSU activity under the Company’s equity incentive plans is set forth below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ Average ​ ​ Number of ​ Grant Date ​ Shares Fair Value Unvested RSUs at December 31, 2022 ​ 637,436 ​ $ 19.29 Granted ​ 415,775 ​ ​ 12.58 Vested ​ ( 302,582 ) ​ ​ 14.28 Forfeited ​ ( 86,138 ) ​ ​ 18.88 Unvested RSUs at December 31, 2023 ​ 664,491 ​ $ 18.40 ​ Stock-based compensation expense associated with RSUs is based on the fair value of the Company’s common stock on the grant date, which equals the closing market price of the Company’s common stock on the grant date. For RSUs, the Company recognizes compensation expense over the vesting period of the awards that are ultimately expected to vest. For the years ended December 31, 2023, 2022 and 2021, the aggregate fair value of RSUs that vested during the year was $ 5.9 million, $ 1.7 million and $ 0.8 million, respectively. PSUs PSU activity under the Company’s equity incentive plans is set forth below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ Average ​ ​ Number of ​ Grant Date ​ Shares Fair Value Unvested PSUs at December 31, 2022 ​ 199,500 ​ $ 14.59 Granted — ​ ​ — Vested ​ ( 114,000 ) ​ ​ 8.76 Forfeited ​ ( 10,000 ) ​ ​ 8.76 Unvested PSUs at December 31, 2023 ​ 75,500 ​ $ 23.57 ​ 101 Table of Contents The terms of the PSUs provide for 100 % of shares to be earned based on the achievement of certain pre-determined performance objectives, subject to the participant’s continued employment. The PSUs will vest, if at all, upon certification by the Compensation Committee of the Board of the actual achievement of the performance objectives, subject to specified change of control exceptions. Stock-based compensation expense associated with PSUs is based on the fair value of the Company’s common stock on the grant date, which equals the closing market price of the Company’s common stock on the grant date. The Company recognizes compensation expense over the vesting period of the awards that are ultimately expected to vest when the achievement of the related performance objective becomes probable. During the year ended December 31, 2023, the Compensation Committee of the Board certified the actual achievement of performance objectives related to certain PSUs. As a result, recipients earned a total of 114,000 shares of common stock. The total fair market value of PSUs at vest date during the year ended December 31, 2023 was $ 3.0 million. No PSUs vested during the years ended December 31, 2022 and 2021. The total fair value of grant date fair value of unvested PSUs outstanding as of December 31, 2023 was $ 1.8 million. As of December 31, 2023, the achievement of the related performance objectives was deemed not probable and, accordingly, no stock-based compensation expense for unvested PSUs has been recognized as of December 31, 2023. Employee Stock Purchase Plan In July 2016, the Company’s Board and stockholders approved the 2016 Employee Stock Purchase Plan (“2016 ESPP”). The 2016 ESPP is intended to qualify as an employee stock purchase plan under Section 423 of the Internal Revenue Code of 1986, as amended, and is administered by the Company’s Board and the Compensation Committee of the Board. Under the 2016 ESPP, 150,000 shares of the Company’s common stock were initially reserved for employee purchases of the Company’s common stock. Pursuant to the “evergreen” provision contained in the 2016 ESPP, the number of shares reserved for issuance automatically increases on January 1 of each year, starting on January 1, 2017 and continuing through (and including) January 1, 2026 by the lesser of (i) 1 % of the total number of shares of common stock outstanding on December 31 of the preceding fiscal year (ii) 300,000 shares, or (iii) such other number of shares determined by the Board. The 2016 ESPP allows eligible employees to purchase shares of the Company’s common stock at a discount through payroll deductions of up to 15 % of their eligible compensation. At the end of each offering period, eligible employees are able to purchase shares at 85 % of the lower of the fair market value of the Company’s common stock at the beginning of the offering period or at the end of each applicable purchase period. During the year ended December 31, 2023, a total of 95,388 shares of common stock were issued under the 2016 ESPP, and approximately 1,459,902 shares of common stock were available for issuance as of December 31, 2023. The fair value of the rights granted under the 2016 ESPP was calculated using the Black-Scholes option-pricing model with the following assumptions: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2023 2022 2021 Expected term (in years) ​ 0.50 ​ 0.50 ​ 0.50 Expected volatility ​ 82.6 % - 128.2 % ​ 117.5 % - 128.2 % ​ 50.9 % - 69.7 % Risk-free interest rate ​ 3.56 % - 5.17 % ​ 0.75 % - 3.56 % ​ 0.06 % Dividend yield ​ — — — ​ 102 Table of Contents Stock-Based Compensation Total stock-based compensation expense was as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 2022 2021 Research and development ​ $ 17,061 ​ $ 14,719 ​ $ 8,996 General and administrative ​ 12,232 ​ 9,483 ​ 7,399 Total stock-based compensation expense ​ $ 29,293 ​ $ 24,202 ​ $ 16,395 ​ As of December 31, 2023, total unrecognized stock-based compensation expense was approximately $ 45.4 million, which the Company expects to recognize over a weighted-average period of approximately 2.5 years. Note 12. 401(k) Plan The Company has a retirement and savings plan under Section of 401(k) of Internal Revenue Code (the “401(k) Plan”) covering all U.S. employees. The 401(k) Plan allows employees to make pre- and post-tax contributions up to the maximum allowable amount set by the Internal Revenue Service. The Company may make contributions to this plan at its discretion. The Company matched 50 % of each employee’s contribution up to a maximum of $ 4,000 for the years ended December 31, 2023 and 2022 and $ 3,500 for the year ended December 31, 2021, resulting in recognized expense of approximately $ 0.4 million for the year ended December 31, 2023 and $ 0.3 million for each of the years ended December 31, 2022 and 2021. Note 13. Income Taxes No income tax expense was recorded by the Company for the years ended December 31, 2023, 2022, and 2021. The Company’s effective income tax rate differed from the Company’s federal statutory rate of 21 %, primarily because its U.S. loss cannot be benefited due to the full valuation position and reduced by foreign taxes. The following table presents domestic and foreign components of net loss before income taxes (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 2022 2021 Domestic ​ $ ( 76,779 ) ​ $ ( 124,208 ) ​ $ ( 125,797 ) Foreign ​ ( 2,176 ) ​ ( 3,185 ) ​ 246 Total net loss before taxes ​ $ ( 78,955 ) ​ $ ( 127,393 ) ​ $ ( 125,551 ) ​ The federal, state and foreign components of the income tax expense are summarized as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2023 ​ 2022 ​ 2021 Current: ​ ​ ​ ​ ​ ​ ​ ​ ​ Federal ​ $ — ​ $ — ​ $ — State ​ ​ — ​ ​ — ​ ​ — Foreign ​ ​ — ​ ​ — ​ ​ — Total current tax expense ​ ​ — ​ ​ — ​ ​ — Deferred: ​ ​ ​ ​ ​ ​ ​ ​ ​ Federal ​ ​ — ​ ​ — ​ ​ — State ​ ​ — ​ ​ — ​ ​ — Foreign ​ ​ — ​ ​ — ​ ​ — Total deferred tax expense ​ ​ — ​ ​ — ​ ​ — Total income tax expense ​ $ — ​ $ — ​ $ — ​ 103 Table of Contents The effective tax rate of the provision for income taxes differs from the federal statutory rate as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 2022 2021 Federal statutory income tax rate 21.0 % 21.0 % 21.0 % State taxes, net of federal benefit 8.1 1.4 1.9 Research and development credits ​ 8.5 ​ 5.9 ​ 4.3 ​ Foreign tax rate difference 0.2 0.2 — Change in valuation allowance ( 34.4 ) ( 25.8 ) ( 28.0 ) Other ( 3.4 ) ( 2.7 ) 0.8 Provision for income taxes — % — % — % ​ The components of the deferred tax assets are as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2023 2022 Deferred tax assets: ​ ​ ​ ​ ​ Net operating loss carryforwards ​ $ 70,469 ​ $ 76,133 Depreciation ​ 950 ​ 893 Accruals/other ​ 12,202 ​ 8,304 Operating lease liability ​ ​ 265 ​ ​ 769 Research and development and foreign credits ​ ​ 38,759 ​ ​ 30,387 Section 174 capitalized R&D expenditure ​ 43,841 ​ 22,296 Total deferred tax assets ​ 166,486 ​ 138,782 Deferred tax liabilities: ​ ​ ​ ​ ​ ​ Operating right-of-use asset ​ ​ ( 221 ) ​ ​ ( 644 ) Total deferred tax liabilities ​ ​ ( 221 ) ​ ​ ( 644 ) Valuation allowance ​ ( 166,265 ) ​ ( 138,138 ) Net deferred tax assets ​ $ — ​ $ — ​ ASC 740 requires that the tax benefit of net operating losses, temporary differences and credit carryforwards be recorded as an asset to the extent that management assesses that realization is “more likely than not.” Realization of the future tax benefits is dependent on the Company’s ability to generate sufficient taxable income within the carryforward period. Because of the Company’s recent history of operating losses, management believes that recognition of the deferred tax assets arising from the above-mentioned future tax benefits is currently not likely to be realized and, accordingly, has provided a valuation allowance. The valuation allowance increased by approximately $ 28.1 million, $ 34.2 million and $ 32.0 million during the years ended December 31, 2023, 2022 and 2021, respectively. Federal and state laws impose substantial restrictions on the utilization of net operating loss and tax credit carryforwards in the event of an ownership change for tax purposes, as defined in Section 382 of the Internal Revenue Code. As a result of such ownership changes, the annual limitation may result in the expiration of net operating losses and credits before utilization. The Company performed a Section 382 analysis through December 31, 2023. The Company has experienced ownership changes in the past and in the current year. The ownership changes will not result in a limitation that will materially reduce the total amount of net operating loss carryforwards and credits that can be utilized. Subsequent ownership changes may affect the limitation in future years. As of December 31, 2023, the Company had $ 322.8 million of federal net operating loss carryforwards and $ 215.1 million of state net operating loss carryforwards. $ 52.3 million of the federal net operating loss carryforwards will begin to expire in 2036, if not utilized, and the remaining $ 270.5 million have no expiration date. The state net operating loss carryforwards will begin to expire in 2035, if not utilized. As of December 31, 2023, the Company did no t have any Australian tax loss carryforward. 104 Table of Contents As of December 31, 2023, the Company had $ 36.9 million of federal and $ 12.8 million of state research and development tax credit carryforwards available to reduce future income taxes. The federal research and development tax credits will begin to expire in 2035, if not utilized. The state research and development tax credits have no expiration date. As of December 31, 2023, the Company had AUD 5.2 million ($ 3.5 million) of Australian research and development tax credit carryforwards available to reduce future income taxes. The Australian research and development tax credits have no expiration date. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 2022 2021 Balance at beginning of year ​ $ 25,295 ​ $ 33,159 ​ $ 19,885 Decreases based on tax positions related to prior years ​ — ​ ( 10,779 ) ​ — Increases based on tax positions related to current year ​ 2,730 ​ 2,915 ​ 13,274 Balance at end of year ​ $ 28,025 ​ $ 25,295 ​ $ 33,159 ​ At December 31, 2023, the Company had unrecognized tax benefits of $ 28.0 million, which are subject to a valuation allowance and would not affect the effective tax rate if recognized. The Company does not anticipate that the total amount of unrecognized tax benefits will significantly increase or decrease in the next 12 months. The Company’s policy is to include interest and penalties related to unrecognized tax benefits within the provision for income taxes, as necessary. Management determined that no accrual for interest or penalties was required as of December 31, 2023, 2022 and 2021. The Company files income tax returns in the United States federal jurisdiction, the State of California, the State of Florida, and Australia. The Company is not currently under examination by income tax authorities in federal, state or other jurisdictions. The Company’s tax returns remain open for examination for all years. Protagonist Australia had an accumulated deficit at December 31, 2023 and, accordingly, no provision has been provided thereon for any unremitted earnings. The Company has elected to recognize any potential global intangible low-taxed income (“GILTI”) obligation as an expense in the period it is incurred. The Company has received orphan drug designation from the FDA for its clinical asset rusfertide (PTG-300) for the treatment of polycythemia vera and beta-thalassemia and may qualify for a related 25 % U.S. Federal income tax credit on qualifying clinical study expenditures. Tax Law Updates On December 22, 2017, the U.S. enacted comprehensive tax legislation (the “Tax Act”). The Tax Act made broad and complex changes to the U.S. tax code, including the imposition of a one-time mandatory deemed repatriation tax on certain earnings accumulated offshore since 1986 and the reduction of the corporate tax rate from 35 % to 21 % for U.S. taxable income, resulting in a one-time remeasurement of U.S. federal deferred tax assets and liabilities. The Tax Act also amended Internal Revenue Code Section 174 requiring capitalization of research and experimentation expenditures. The capitalized expenses are amortized over a period of five or fifteen years . On August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022, which includes an Alternative Minimum Tax based on the Adjusted Financial Statement Income of Applicable Corporations. Based on our initial evaluation, we do not believe the Inflation Reduction Act will have a material impact on our income tax provision and cash taxes. We continue to monitor the changes in tax laws and regulations to evaluate their potential impact on our business. ​ 105 Table of Contents Note 14. Net Loss per Share As the Company had a net loss for the each of the years ended December 31, 2023, 2022 and 2021, all potential weighted average dilutive common shares were determined to be anti-dilutive. The following table sets forth the computation of basic and diluted net loss per share (in thousands, except share and per share data): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 2022 2021 Numerator: ​ ​ ​ ​ ​ ​ ​ Net loss ​ $ ( 78,955 ) ​ $ ( 127,393 ) ​ $ ( 125,551 ) Denominator: ​ ​ ​ ​ ​ ​ ​ Weighted-average shares used to compute net loss per common share, basic and diluted ​ 56,763,559 49,042,232 46,322,910 Net loss per share, basic and diluted ​ $ ( 1.39 ) ​ $ ( 2.60 ) ​ $ ( 2.71 ) ​ The following outstanding shares of potentially dilutive securities have been excluded from diluted net loss per share computations for the periods presented because their inclusion would be anti-dilutive: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2023 2022 2021 Options to purchase common stock ​ 7,922,043 6,240,509 5,890,540 Common stock warrants ​ — ​ 2,750,000 ​ 2,750,000 Restricted stock units ​ 664,491 ​ 637,436 ​ 405,972 Performance stock units ​ 75,500 ​ 199,500 ​ 105,500 ESPP shares ​ 41,147 ​ 72,598 ​ 18,055 Total 8,703,181 9,900,043 9,170,067 ​ ​ exp Note 15. Subsequent Event In January 2024, the Company entered into a worldwide license and collaboration agreement for the development and commercialization of rusfertide with Takeda Pharmaceuticals USA, Inc. (“Takeda”), which is yet to become effective. Under the terms of the agreement, the Company expects to receive an upfront payment of $ 300 million and to be eligible to receive additional worldwide development, regulatory and commercial milestone payments of up to $ 330 million, as well as tiered royalties from 10 % to 17 % on ex-U.S. net sales. The Company expects to be responsible for research and development through the completion of the Phase 3 VERIFY trial and U.S. regulatory approval. Takeda is expected to have rights for ex-U.S. development and to be responsible for leading global commercialization activities. The Company and Takeda expect to also share equally in U.S. profits and losses ( 50 % to the Company and 50 % to Takeda). Further details related to the agreement, including the Company’s right to opt-out of the 50:50 U.S. profit and loss sharing arrangement in exchange for enhanced economics, are available on the Current Report on Form 8-K filed by the Company on January 31, 2024 with the SEC. The effectiveness of the agreement is dependent on and subject to the termination or expiration of any applicable waiting periods under the Hart-Scott-Rodino Act. ​ ​ 106 Table of Contents Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ​ None.