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Item 2. Management’s Discussion and Analysis

2025-05-06 compared with 2024-11-07 · 191 added, 261 removed, 136 unchanged (77% of the section changed)

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our estimates regarding expenses, capital requirements, and needs for additional financing and our ability to obtain additional capital;

our ability to retain the continued service of our key executives and to identify, hire, and retain additional qualified professionals, the impact of any future outbreaks of disease, epidemics and pandemics;

ongoing military conflicts, including between Ukraine and Russia and in Israel and surrounding areas;

our ability to retain the continued service of our key executives and to identify, hire, and retain additional qualified professionals;

the impact of any future outbreaks of disease, epidemics and pandemics;

changes in the U.S.

Food and Drug Administration (the “FDA”), and other government agencies;

ongoing military conflicts, including between Ukraine and Russia and in the Middle East;

rising tensions between China and Taiwan;

developments relating to our competitors and our industry, including competing product candidates and therapies;

inflationary pressure and the availability of credit .

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, changes in trade policies, including tariffs or other trade restrictions or the threat of such actions, and banking and other financial institution instability;

and other factors .

Forward-looking statements involve risks, uncertainties and assumptions that are beyond our ability to control or predict, including those risks, uncertainties and assumptions discussed in Part II, Item 1A, of this Quarterly Report.

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Also, forward-looking statements represent our estimates and assumptions only as of the date of this Quarterly Report.

Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, whether as a result of new information, future developments, changes in assumptions or otherwise.

Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results or outcomes could differ materially from those anticipated in any

forward-looking statements, whether as a result of new information, future developments, changes in assumptions or otherwise.

“Protagonist,” the Protagonist logo and other trademarks, service marks and trade names of Protagonist are registered and unregistered marks of Protagonist Therapeutics, Inc.

in the United States and other jurisdictions.

We are a late-stage biopharmaceutical company with two peptide-based new chemical entities, rusfertide and JNJ-2113, in advanced Phase 3 stages of development, both of which are derived from our proprietary discovery technology platform.

We are a discovery through late-stage development biopharmaceutical company focused on peptide therapeutics.

Our clinical programs fall into two broad categories of diseases:

(i) hematology and blood disorders, and (ii) inflammatory and immunomodulatory (“I&I”) diseases.

We also have a number of pre-clinical stage oral drug discovery programs addressing validated targets, including IL-17, hepcidin mimetic and anti-obesity programs.

(i) inflammatory and immunomodulatory (“I&I”) diseases, and (ii) hematology and blood disorders.

Two novel peptides derived from our proprietary discovery technology platform, icotrokinra (formerly known as JNJ-2113) and rusfertide, are currently in advanced Phase 3 clinical development, with New Drug Application (“NDA”) submissions to the U.S.

Food and Drug Administration (“FDA”) potentially in 2025.

Icotrokinra is a first-in-class investigational targeted oral peptide that selectively blocks the Interleukin-23 receptor (“IL-23R”) and is licensed to J&J Innovative Medicines (“JNJ”), formerly Janssen Biotech, Inc., a Johnson & Johnson company.

Following icotrokinra’s joint discovery by us and JNJ scientists pursuant to our IL-23R collaboration, we were primarily responsible for the development of icotrokinra through Phase 1, with JNJ assuming responsibility for development in Phase 2 and beyond.

Rusfertide, a first-in-class investigational injectable mimetic of the natural hormone hepcidin, is in Phase 3 development for treatment of the rare blood disorder polycythemia vera (“PV”).

Rusfertide is being co-developed and will be co-commercialized with Takeda Pharmaceuticals, Inc.

(“Takeda”), with the Company remaining primarily responsible for clinical development activities through a potential NDA filing.

We also have a number of pre-clinical stage oral drug discovery programs addressing biologically and commercially validated targets, including our IL-17 oral peptide antagonist PN-881, an oral hepcidin program, and an oral anti-obesity program.

Our Product Pipeline

Rusfertide, our injectable hepcidin mimetic partnered with Takeda Pharmaceuticals USA, Inc.

(“Takeda”), is in development for the treatment of polycythemia vera (“PV”).

VERIFY (ClinicalTrials.gov identifier NCT05210790) is a global double-blind, placebo-controlled Phase 3 clinical trial of rusfertide in PV for approximately 250 patients.

The trial evaluates the efficacy, symptom burden and safety of once-weekly, subcutaneously self-administered rusfertide in patients with uncontrolled hematocrit who are phlebotomy dependent despite standard of care treatment.

The trial enrolled patients across North and South America, Europe, Asia and Australia.

Enrollment for the VERIFY trial has been completed, and we expect to announce top-line data for the trial’s 32-week primary efficacy endpoint in the first quarter of 2025, potentially leading to a New Drug Application (“NDA”) filing in the fourth quarter of 2025.

By the end of 2024, we expect to receive the results of our ongoing two-year study evaluating the carcinogenicity potential of rusfertide when administered once weekly to rats.

Our rusfertide Phase 2 clinical trials include the following:

● REVIVE, a Phase 2 proof of concept (“POC”) trial, was initiated in the fourth quarter of 2019.

We completed enrollment of patients in the first quarter of 2022 and 70 patients were enrolled through the end of the randomized withdrawal portion of the trial, which was completed during the first quarter of 2023 and is continuing in an ongoing open-label extension (“OLE”);

● THRIVE, a Phase 2 long-term extension trial for REVIVE patients on years three through five of treatment;

● PACIFIC, another Phase 2 trial for rusfertide for patients diagnosed with PV and with routinely elevated hematocrit levels (>48%), was initiated during the first quarter of 2021, and the 52-week trial was completed during the second quarter of 2023.

In March 2023, we announced positive topline results from the blinded, placebo-controlled, randomized withdrawal portion of the REVIVE trial.

Subjects receiving rusfertide achieved statistically significant improvements versus placebo in the trial’s primary endpoint.

The double-blind, placebo-controlled, 12-week randomized withdrawal portion was included as Part 2 of the REVIVE trial to evaluate rusfertide in PV patients with frequent phlebotomy requirements.

In the REVIVE trial, subjects were initially enrolled in the 28-week open label dose-titration and efficacy evaluation Part 1 of the trial, followed by 1:1 randomization of 53 subjects to placebo versus rusfertide therapy for a subsequent duration of 12 weeks.

More subjects receiving rusfertide during the blinded randomized withdrawal portion of the REVIVE trial were responders compared with placebo (69.2% versus 18.5%, p=0.0003).

A trial subject was defined as a responder if the subject completed 12 weeks of double-blind treatment while maintaining hematocrit control without phlebotomy eligibility and without phlebotomy.

During the 12 weeks of the blinded randomized withdrawal, 92.3% of subjects on rusfertide (24 out of 26) were not phlebotomized.

Data from the REVIVE trial presented at the European Hematology Association (“EHA”) Congress in June 2023 suggested that rusfertide treatment results in highly statistically significant reduction in the need for therapeutic phlebotomy in phlebotomy-dependent patients, leading to rapid, sustained and durable control of hematocrit levels below 45%.

Rusfertide was well tolerated, with localized injection site reactions comprising the majority of adverse events.

Long-term follow up data from the REVIVE trial presented at the American Society of Hematology Annual Meeting in December 2023 showed durable hematocrit control, decreased phlebotomy use, long-term tolerability, and no new safety signals in patients with PV.

An analysis of the PACIFIC Phase 2 trial was also presented that indicated rusfertide improves markers of iron deficiency in patients with PV.

In addition, data was presented regarding the prevalence of thromboembolic events and secondary cancers in PV patients not treated with rusfertide.

In February 2024, the full Phase 2 REVIVE trial results, including efficacy and safety data, were published in the New England Journal of Medicine.

Updated long-term results from the REVIVE trial presented at the EHA Congress in June 2024 continued to show a durable positive effect on PV symptomology and other benefits including iron deficiency as well as an encouraging safety profile.

In January 2024, we entered into a worldwide license and collaboration agreement with Takeda for the development and commercialization of rusfertide (the “Takeda Collaboration Agreement”).

Under the terms of the agreement, we received a one-time, non-refundable upfront payment of $300.0 million in April 2024.

We are eligible to receive additional worldwide development, regulatory and commercial milestone payments for rusfertide of up to $330 million, inclusive of the following potential upcoming milestones:

● $25.0 million upon successful achievement of the primary endpoint in the Phase 3 VERIFY trial for rusfertide in PV;

● $50.0 million upon U.S.

Food and Drug Administration (the “FDA”) approval of NDA for rusfertide in PV (or $75.0 million if we exercise our full right to opt-out of the 50:50 U.S.

profit and loss sharing arrangement).

We are also eligible to receive tiered royalties from 10% to 17% on ex-U.S.

net sales of rusfertide and other specified second-generation injectable hepcidin memetic compounds (the “Licensed Products”).

We and Takeda also share equally in profits and losses (50% to us and 50% to Takeda of the Licensed Products in the United States).

See Note 3 to the condensed consolidated financial statements included elsewhere in this Quarterly Report for further details related to the agreement, including our right to opt-out of the 50:50 U.S.

profit and loss sharing arrangement.

Our Interleukin-23 receptor (“IL-23R”) antagonist compound JNJ-2113, partnered with J&J Innovative Medicines (“JNJ”), formerly Janssen Biotech, Inc., is an orally delivered investigational drug that is designed to block biological pathways currently targeted by marketed injectable antibody drugs.

Our IL-23R antagonist compound icotrokinra, licensed to JNJ, is an orally delivered drug that is designed to block biological pathways currently targeted by marketed injectable antibody drugs.

Our orally stable peptide approach may offer a targeted therapeutic approach for gastrointestinal and systemic compartments as needed.

We believe that, compared to antibody drugs, JNJ-2113 has the potential to provide clinical improvement in an oral medication with increased convenience and compliance and the opportunity for the earlier introduction of targeted oral therapy.

JNJ has initiated the following JNJ-2113 trials:

● ICONIC-LEAD (NCT06095115) – A 684-patient randomized, controlled Phase 3 trial to evaluate the safety and efficacy of JNJ-2113 compared with placebo in participants with moderate-to-severe plaque psoriasis, with PASI-90 (90% improvement in skin lesions as measured by the Psoriasis Area and Severity Index (“PASI”)) and Investigator’s Global Assessment (“IGA”) score of 0 (clear) or 1 (almost clear) as co-primary endpoints;

● ICONIC-TOTAL (NCT06095102) – A 311-patient randomized, controlled Phase 3 trial to evaluate the efficacy and safety of JNJ-2113 compared with placebo for the treatment of plaque psoriasis in participants with at least moderate severity affecting special areas (scalp, genital, and/or palms of the hands and soles of the feet) with overall IGA score of 0 or 1 as the primary endpoint;

● ICONIC-ADVANCE 1 (NCT06143878) – A 774-patient randomized, controlled Phase 3 trial to evaluate the effectiveness of JNJ-2113 in participants with moderate-to-severe plaque psoriasis compared to placebo and Sotyktu® (“deucravacitinib”).

We believe that, compared to antibody drugs, icotrokinra has the potential to provide clinical improvement in an oral medication with increased convenience and compliance and the opportunity for the earlier introduction of targeted oral therapy.

JNJ has initiated the following icotrokinra trials:

● ICONIC-LEAD (NCT06095115) – A 684-patient randomized, controlled Phase 3 trial to evaluate the safety and efficacy of icotrokinra compared with placebo in participants with moderate-to-severe plaque psoriasis, with PASI-90 (90% improvement in skin lesions as measured by the Psoriasis Area and Severity Index (“PASI”)) and Investigator’s Global Assessment (“IGA”) score of 0 (clear) or 1 (almost clear) as co-primary endpoints;

● ICONIC-TOTAL (NCT06095102) – A 311-patient randomized, controlled Phase 3 trial to evaluate the efficacy and safety of icotrokinra compared with placebo for the treatment of plaque psoriasis in participants with at least moderate severity affecting special areas (scalp, genital, and/or palms of the hands and soles of the feet) with overall IGA score of 0 or 1 as the primary endpoint;

● ICONIC-ADVANCE 1 (NCT06143878) – A 774-patient randomized, controlled Phase 3 trial to evaluate the effectiveness of icotrokinra in participants with moderate-to-severe plaque psoriasis compared to placebo and Sotyktu® (“deucravacitinib”).

The trial’s primary co-endpoints are PASI-90 and IGA score of 0 or 1;

● ICONIC-ADVANCE 2 (NCT06220604) – A 731-patient Phase 3 trial similarly designed to ICONIC ADVANCE 1 in participants with moderate-to-severe plaque psoriasis;

● Pustular/Erythrodermic Psoriasis (NCT06295692) – A 19-patient open label Phase 3 trial to evaluate the effectiveness of JN-2113 in participants with pustular or erythrodermic psoriasis;

● ANTHEM-UC (NCT06049017) – A 252-patient Phase 2b randomized, controlled trial to evaluate the safety and effectiveness of JNJ-2113 compared with placebo in participants with moderate-to-severely active ulcerative colitis (“UC”).

Topline results for the ICONIC-LEAD and ICONIC-TOTAL trials are expected in the fourth quarter of 2024.

Topline results for the ANTHEM trial are expected in the first quarter of 2025.

Topline results for the ICONIC-ADVANCE 1, ICONIC-ADVANCE 2, and pustular/erythrodermic psoriasis trials are expected the second quarter of 2025.

All of the trials in the ICONIC program will use the 200 mg q.d.

immediate release formulation of JNJ-2113 from the previously completed FRONTIER 1 trial.

JNJ initiated FRONTIER 1, a 255-patient Phase 2b clinical trial of JNJ-2113 in moderate-to-severe plaque psoriasis, which was completed in December 2022.

FRONTIER 1 was a randomized, multicenter, double-blind, placebo-controlled trial that evaluated three once-daily dosages and two twice-daily dosages of JNJ-2113 taken orally.

The primary endpoint of the trial was the proportion of patients achieving PASI-75 (75% improvement in skin lesions as measured by the PASI) at 16 weeks.

In July 2023, we announced updated positive topline results from the trial, which were presented by JNJ at the World Congress of Dermatology in Singapore.

JNJ-2113 achieved the trial’s primary and secondary efficacy endpoints.

A statistically significant greater proportion of patients who received JNJ-2113 achieved PASI-75 as well as PASI-90 and PASI-100 (100% improvement in skin lesions as measured by the PASI) responses compared to placebo at week 16 in all five of the trial’s treatment groups.

A clear dose response was observed across an eight-fold dose range.

Treatment was well tolerated, with no meaningful difference in frequency of adverse events across treatment groups versus placebo.

Phase 2 trials of JNJ-2113 include the SUMMIT trial for the treatment of moderate-to-severe plaque psoriasis and FRONTIER 2, a long-term extension study, both of which were completed by JNJ in 2023.

At JNJ’s Enterprise Business Review in December 2023, JNJ highlighted JNJ-2113 as a potential first- and best-in class targeted oral IL-23 peptide antagonist with potential across multiple indications, including plaque psoriasis, psoriatic arthritis and inflammatory bowel disease, with potential peak year sales projection of $5.0 billion plus.

JNJ IL-23 monoclonal antibody drugs Stelara and Tremfya generated approximately $14.0 billion in revenues in 2023.

In February 2024, the JNJ-2113 Phase 2b FRONTIER 1 trial results in adults living with moderate-to-severe plaque psoriasis were published in the New England Journal of Medicine.

In March 2024, data presented at the American Academy of Dermatology 2024 Annual Meeting showed that, in Phase 2b FRONTIER 2, JNJ-2113 maintained high rates of skin clearance through 52 weeks in adults with moderate-to-severe plaque psoriasis.

In August 2024, positive pre-clinical and clinical pharmacokinetic, pharmacodynamic and safety data for JNJ-2113 was published in the journal Scientific Reports.

Three company-sponsored poster presentations and one company-sponsored oral presentation were delivered at the 2024 European Academy of Dermatology and Venereology Congress in September 2024.

Data from FRONTIER 1 and FRONTIER 2 continue to demonstrate that JNJ-2113 has promising efficacy and safety through one year of treatment in patients with moderate-to-severe plaque psoriasis.

On July 17, 2021, we entered into an Amended and Restated License and Collaboration Agreement with JNJ, which amended and restated the License and Collaboration Agreement, effective July 13, 2017, by and between the Company and JNJ, as amended by the first amendment, effective May 7, 2019 (together, the “JNJ License and Collaboration Agreement”).

Under the JNJ License and Collaboration Agreement, we earned a $50.0 million milestone payment upon dosing of the third patient in the ICONIC-TOTAL Phase 3 trial in late October 2023, which we received in December 2023.

We earned a $10.0 million milestone payment upon the dosing of the third patient in the ANTHEM Phase 2b trial in UC in December 2023, which we received in January 2024.

To date, we have earned $172.5 million in non-refundable payments from JNJ.

We are eligible for up to approximately $795.0 million in future development and sales milestone payments, inclusive of the following potential upcoming milestones:

● $115.0 million milestone payment upon JNJ-2113 meeting the co-primary endpoints in any one of the four ICONIC program Phase 3 trials;

● $35.0 million milestone payment upon the filing of an NDA for JNJ-2113 with the FDA;

● $50.0 million milestone payment upon approval of the NDA by the FDA;

● $15.0 million milestone payment upon the advancement of JNJ-2113 into a Phase 3 trial in a second indication.

We also remain eligible to receive upward tiering royalties on net product sales at percentages ranging from six percent to ten percent, with ten percent applicable for net sales over $4.0 billion.

● Pustular/Erythrodermic Psoriasis (NCT06295692) – A 19-patient open label Phase 3 trial to evaluate the effectiveness of icotrokinra in participants with pustular or erythrodermic psoriasis;

● ICONIC-PsA1 (NCT06807424) – A 540-patient randomized, controlled Phase 3 trial to evaluate the efficacy and safety of icotrokinra compared with placebo in biologic-naive patients with active psoriatic arthritis;

● ICONIC-PsA2 (NCT06807424) – A 750-patient randomized, controlled Phase 3 trial to evaluate the efficacy and safety of icotrokinra compared with placebo in biologic-experienced patients with active psoriatic arthritis;

● ANTHEM-UC (NCT06049017) – A 252-patient Phase 2b randomized, controlled trial to evaluate the safety and effectiveness of icotrokinra compared with placebo in participants with moderate-to-severely active ulcerative colitis (“UC”).

ICONIC Program

Data from the Phase 3 ICONIC-LEAD trial presented at the 2025 American Academy of Dermatology Annual Meeting in March 2025 showed that once daily icotrokinra demonstrated significant skin clearance and a favorable safety profile in adults and adolescents 12 years of age and older with moderate-to-severe plaque psoriasis.

Key findings from the ICONIC-LEAD trial are summarized below:

● At Week 24, nearly half of patients treated with icotrokinra achieved completely clear skin;

46% reached IGA 0 and 40% reached PASI 100 (100% improvement in skin lesions as measured by PASI).

● Nearly two-thirds (65%) of patients treated with once daily icotrokinra achieved an IGA score of 0 or 1 (clear or almost clear skin) and 50% achieved a PASI 90 response, compared to 8% and 4% receiving placebo, respectively (P<0.001 for both endpoints), at Week 16.

● Continued skin clearance improvement was reported at Week 24, with 74% of patients treated with icotrokinra achieving IGA 0/1 and 65% achieving PASI 90.

● Similar proportions of patients experienced adverse events between icotrokinra (49%) and placebo groups (49%), with no new safety signals identified.

Additionally, topline results from the icotrokinra versus deucravacitinib Phase 3 ICONIC-ADVANCE 1 and ICONIC-ADVANCE 2 trials are summarized below:

● The trials met their co-primary endpoints of IGA 0/1 and PASI 90 versus placebo at Week 16.

● The trials also met all key secondary endpoints at Weeks 16 and 24 that measured superiority to deucravacitinib in patients with moderate-to-severe plaque psoriasis.

Based on the positive outcomes of the ICONIC ADVANCE-1 and ADVANCE-2 trials, JNJ is initiating the Phase 3 ICONIC-ASCEND trial, the first-ever head-to-head study seeking to demonstrate the superiority of icotrokinra, an oral pill, compared to ustekinumab, an injectable biologic.

In April 2025, results from a subgroup analysis of the ICONIC-LEAD trial evaluating icotrokinra in the adolescent population presented at the 2025 World Congress of Pediatric Dermatology showed adolescents treated with once daily icotrokinra achieved higher rates of clear or almost clear skin at Week 16 compared to patients receiving placebo, with no new safety signals identified.

In March 2025, we announced positive topline results from the Phase 2b Anthem-UC trial of icotrokinra in adults with moderately-to-severely active UC.

The trial, conducted by JNJ, met its primary endpoint of clinical response in all icotrokinra dose groups evaluated.

Additionally, the trial demonstrated clinically meaningful differences versus placebo in key secondary endpoints of clinical remission, symptomatic remission and endoscopic improvement at Week 12.

Key findings from the ANTHEM-UC trial are summarized below:

● All three doses of once daily icotrokinra met the primary endpoint of clinical response at Week 12.

● A response rate of 63.5% for patients treated with the highest dose of icotrokinra was achieved at Week 12 versus 27.0% for placebo (p<0.001).

● 30.2% of patients treated with the highest dose of icotrokinra demonstrated clinical remission at Week 12 versus 11.1% of patients who received placebo (p<0.001).

● Clinical remission and response rates continued to improve through Week 28.

Icotrokinra was well tolerated with the proportions of participants reporting one or more adverse events being similar between the icotrokinra dose groups and the placebo group.

Comprehensive results from the ANTHEM-UC trial are being prepared for presentation at upcoming medical congresses by JNJ.

Additional clinical studies of icotrokinra in UC and Crohn’s disease are planned.

JNJ License and Collaboration Agreement

In July 2021, we entered into an Amended and Restated License and Collaboration Agreement with JNJ, which amended and restated the License and Collaboration Agreement, effective July 2017, by and between the Company and JNJ, as amended in May 2019 (together, the “JNJ License and Collaboration Agreement”) for the development and commercialization of icotrokinra.

The JNJ License and Collaboration Agreement was further amended in November 2024 to:

● increase the milestone payment for a Phase 3 clinical trial of any licensed product for any indication meeting its primary endpoint by $50.0 million from $115.0 million to $165.0 million;

● eliminate the $35.0 million milestone payment previously due for the acceptance of an NDA filing by the FDA for a licensed product for any indication;

● eliminate the $15.0 million milestone payment previously due for the dosing of the third patient in the first Phase 3 clinical trial of a licensed product for a second indication.

We earned the $165.0 million milestone payment described above during the fourth quarter of 2024.

We have earned a total of $337.5 million in non-refundable payments from JNJ from inception in 2017 through March 31, 2025.

We are eligible to receive up to $630.0 million in future development and sales milestone payments, inclusive of the following potential upcoming milestones:

Upcoming potential milestones under the JNJ License and Collaboration Agreement include:

● $50.0 million upon approval of an NDA for icotrokinra in any indication;

● $25.0 million upon acceptance of an NDA for icotrokinra in a second indication;

● $45.0 million upon approval of an NDA for icotrokinra in a second indication;

● $35.0 million upon acceptance of an NDA for icotrokinra in a third indication;

● $50.0 million upon approval of an NDA for icotrokinra in a third indication.

We also remain eligible to receive upward tiering royalties on net product sales at percentages ranging from 6% to 10% with 10% applicable for net sales over $4.0 billion.

See Note 3 to the condensed consolidated financial statements included elsewhere in this Quarterly Report for additional information.

In the fourth quarter of 2024, we announced the selection of PN-881, a potential best-in-class oral peptide IL-17 antagonist, as a development candidate for the treatment of immune-mediated skin diseases.

PN-881 targets three IL-17 dimers (IL-17 AA, AF and FF), which may offer potential treatment options for plaque psoriasis, psoriatic arthritis, h idradenitis suppurativa and spondyloarthritis.

Investigational New Drug (“IND”), or foreign equivalent, enabling studies are ongoing, and we expect to initiate a PN-881 Phase 1 study in the fourth quarter of 2025.

Rusfertide is currently in Phase 3 development for the treatment of PV.

VERIFY (ClinicalTrials.gov identifier NCT05210790) is a global double-blind, placebo-controlled Phase 3 clinical trial of rusfertide in PV with 293 patients enrolled.

The trial enrolled patients across North and South America, Europe, Asia and Australia.

In March 2025, we announced positive top-line data for the trial’s 32-week primary efficacy endpoint, potentially leading to an NDA filing in the fourth quarter of 2025.

Key findings from the VERIFY trial are summarized below:

● The primary endpoint of the study was met, with a significantly higher proportion of clinical responders among rusfertide-treated patients with PV (77%) compared to those who received the placebo (33%) during weeks 20-32;

The primary endpoint of the study was the proportion of patients achieving a response, which was defined as the absence of phlebotomy eligibility.

● The first key secondary endpoint, which is the pre-specified primary endpoint for European Union regulators, was also met, with a mean of 0.5 phlebotomies per patient in the rusfertide arm compared to 1.8 phlebotomies per patient in the placebo arm during weeks 0-32;

● The other three pre-specified key secondary endpoints, namely hematocrit control and patient-reported outcomes using PROMIS Fatigue SF-8a, a questionnaire that measures patient-reported fatigue symptoms and their impact on daily life, and Myeloproliferative Neoplasm-Symptom Assessment Form TSS-7, were also achieved with statistical significance.

● Rusfertide was generally well tolerated in the Phase 3 VERIFY trial, and safety was in line with previous rusfertide clinical studies.

No new safety findings were observed in the study.

The majority of adverse events were grade 1-2 injection site reactions, and all serious adverse events reported were deemed to be not drug related.

There was no evidence of an increased risk of cancer in rusfertide-treated patients compared to those on the placebo.

THRIVE (NCT06033586), our Phase 2 long-term open-label extension (“OLE”) trial for REVIVE Phase 2 trial patients on years three through five of treatment, remains ongoing.

An abstract titled “Results From VERIFY, a Phase 3, Double-Blind, Placebo (PBO)-Controlled Study of Rusfertide for Treatment of Polycythemia Vera” was accepted for presentation at the Plenary Session at the American Society of Clinical Oncology Annual Meeting in June 2025.

Takeda Collaboration Agreement

In January 2024, we entered into a worldwide license and collaboration agreement for rusfertide with Takeda (the “Takeda Collaboration Agreement”).

In March 2025, we and Takeda agreed, pursuant to the provisions of the Takeda Collaboration Agreement, as amended, that Takeda will assume responsibility for leading and implementing the regulatory strategy and associated activities for the preparation of an NDA related to rusfertide in PV, which is expected to be submitted to the FDA.

We are primarily responsible for the clinical development of rusfertide through a potential NDA filing.

Under the terms of the agreement, we received a one-time, non-refundable upfront payment of $300.0 million in April 2024, and the achievement of a $25.0 million milestone was deemed probable in March 2025 following positive topline results from the Phase 3 VERIFY trial of rusfertide in PV.

We are eligible to receive additional worldwide development, regulatory and commercial milestone payments for rusfertide of up to $305.0 million.

Upcoming potential milestones under the Takeda Collaboration Agreement include:

● $50.0 million upon FDA approval of an NDA for rusfertide in PV (or $75.0 million if we exercise our Full Opt-out Right);

● $15.0 million upon first regulatory approval for rusfertide in PV in three European countries, after pricing and reimbursement approval;

● $10.0 million upon first regulatory approval for rusfertide in PV in Japan.

We are also eligible to receive tiered royalties from 10% to 17% on ex-U.S.

net sales of rusfertide and other specified second-generation injectable hepcidin memetic compounds (the “Licensed Products”).

We and Takeda also share equally in profits and losses (50% to us and 50% to Takeda of the Licensed Products in the United States) if approved.

If we exercise our right to opt-out of the profit and loss sharing arrangement, we will receive royalties of 14% to 29% on annual worldwide net sales.

In addition, we will be eligible for up to an aggregate of $975.0 million in development, regulatory and commercial milestone payments, and $400.0 million in payments for exercising the opt-out right.

See Note 3 to the condensed consolidated financial statements included elsewhere in this Quarterly Report for further details related to the agreement, including our opt-out right.

Discovery Platform

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

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

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

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

Our discovery pipeline has strategically focused on i) hematology and blood disorders, ii) I&I diseases and iii) metabolic diseases, including obesity.

In January 2024, we announced a new oral Interleukin-17 (“IL-17”) peptide antagonist program targeting three IL-17 dimers (IL-17 AA, AF and FF) which may offer potential treatment options for hidradenitis suppurativa, spondyloarthritis, plaque psoriasis and psoriatic arthritis.

We expect to nominate a development candidate ready for Investigational New Drug (“IND”) enabling studies, or foreign equivalents, by the end of 2024.

We have a pre-clinical stage program to identify an orally active hepcidin mimetic or small molecule ferropotin blocker, which we believe to be complementary to the injectable rusfertide for offering the best treatment options for PV and other potential erythropoietic and iron imbalance disorders, and we expect progression towards a development candidate during the first half of 2025.

We also have an oral peptide-based program for obesity and expect progression towards a development candidate during the first half of 2025.

Our discovery pipeline has strategically focused on (i) I&I diseases, (ii) hematology and blood disorders and (iii) metabolic diseases, including obesity.

We have a pre-clinical stage program to identify an orally administered hepcidin mimetic or ferroportin inhibitor, which we believe to be complementary to the injectable rusfertide for offering the best treatment options for PV and other potential erythropoietic and iron imbalance disorders, and we expect to nominate a development candidate in the fourth quarter of 2025.

We also have an oral peptide-based anti-obesity program focused on validated targets and including mono- and poly-incretin and non-incretin agonists and we expect to nominate a development candidate by the end of the second quarter of 2025.

Risks and Uncertainties

1 unchanged sentence

“Risk Factors” herein.

We have incurred cumulative net losses from inception through September 30, 2024 of $472.2 million.

We have incurred cumulative net losses from inception through March 31, 2025 of $352.2 million.

Substantially all of our net losses have resulted from costs incurred in connection with our research and development programs and from general and administrative costs associated with our operations.

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Our management’s discussion and analysis of our financial condition and results of operations is based on our unaudited condensed consolidated financial statements, which have been prepared in accordance with U.S.

generally accepted accounting principles.

generally accepted accounting principles (“GAAP”).

The preparation of these unaudited condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the unaudited condensed consolidated financial statements, as well as the reported revenue generated and expenses incurred during the reporting periods.

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Actual results may differ from these estimates under different assumptions or conditions.

Revenue Recognition

Topic 606 requires us to allocate the arrangement consideration on a relative standalone selling price basis for each performance obligation after determining the transaction price of the contract and identifying the performance obligations to which that amount should be allocated.

The relative standalone selling price is defined as the price at which an entity would sell a promised good or service separately to a customer.

If other observable transactions in which we have sold the same performance obligation separately are not available, we estimate the standalone selling price of each performance obligation.

Key assumptions to determine the standalone selling price may include forecasted revenues, development timelines, reimbursement rates for personnel costs, discount rates and probabilities of technical and regulatory success.

Whenever we determine that goods or services promised in a contract should be accounted for as a combined performance obligation over time, we determine the period over which the performance obligations will be performed and revenue will be recognized.

Revenue is recognized using either the proportional performance method or on a straight-line basis if efforts will be expended evenly over time.

Costs incurred or labor hours are typically used as the measure of performance.

Management’s judgment is required in determining the level of effort required under an

arrangement and the period over which we expect to complete our performance obligations.

If we determine that the performance obligation is satisfied over time, any upfront payment received is initially recorded as deferred revenue on our consolidated balance sheets.

Certain judgments affect the application of our revenue recognition policy.

For example, we record short-term and long-term deferred revenue based on our best estimate of when such revenue will be recognized.

Short-term deferred revenue consists of amounts that are expected to be recognized as revenue in the next 12 months, and long-term deferred revenue consists of amounts that we do not expect will be recognized in the next 12 months.

This estimate is based on our current operating plan and, if our operating plan should change in the future, we may recognize a different amount of deferred revenue over the next 12-month period.

There have been no other material changes to our critical accounting policies during the nine months ended September 30, 2024, as compared to those disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” in our Annual Report for the year ended December 31, 2023 filed with the SEC on February 27, 2024.

There have been no material changes to our critical accounting policies during the three months ended March 31, 2025, as compared to those disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” in our Annual Report for the year ended December 31, 2024 filed with the SEC on February 21, 2025.

Components of Our Results of Operations

License and Collaboration Revenue

Our license and collaboration revenue is derived from payments we receive under our license and collaboration agreements with Takeda and JNJ.

Our license and collaboration revenue is derived from payments we receive under our license and collaboration agreements with JNJ and Takeda.

See Note 3 to the condensed consolidated financial statements included elsewhere in this Quarterly Report for additional information.

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● employee-related expenses, which include salaries, benefits and stock-based compensation;

● laboratory vendor expenses related to the preparation and conduct of pre-clinical and non-clinical studies and clinical trials;

● costs related to production of clinical supplies and non-clinical materials, including fees paid to contract manufacturers;

● laboratory vendor expenses related to the preparation and conduct of pre-clinical studies and clinical trials;

● costs related to production of clinical supplies and pre-clinical materials, including fees paid to contract manufacturers;

● license fees and milestone payments under license and collaboration agreements;

● facilities and other allocated expenses, which include expenses for rent and maintenance of facilities, information technology, depreciation and amortization expense and administrative and other supplies.

We recognize the amounts related to our Australian research and development refundable cash tax incentive that are not subject to refund provisions as a reduction of research and development expenses.

The research and development tax incentives are recognized when there is reasonable assurance that the incentives will be received, the relevant expenditure has been incurred and the amount of the consideration can be reliably measured.

We evaluate our eligibility under the tax incentive program as of each balance sheet date and make accruals and related adjustments based on the most current and relevant data available.

We may alternatively be eligible for a taxable credit in the form of a non-cash tax incentive.

We recognize the amounts from grants under government programs as a reduction of research and development expenses when the related research costs are incurred.

We recognize the amounts related to our Australian research and development refundable tax offset that are not subject to refund provisions as a reduction in research and development expenses.

The research and development tax offsets are recognized when there is reasonable assurance that the offset will be received, the relevant expenditure has been incurred, and the amount of the consideration can be reliably measured.

We evaluate our eligibility under the tax offset program as of each balance sheet date and make accruals and related adjustments based on the most current and relevant data available.

We may alternatively be eligible for a nonrefundable tax offset.

We allocate direct costs and indirect costs incurred to product candidates when they enter clinical development.

For product candidates in clinical development, direct costs consist primarily of clinical, pre-clinical, and drug discovery costs, costs of supplying drug substance and drug product for use in clinical and pre-clinical studies, including clinical manufacturing costs, contract research organization fees, and other contracted services pertaining to specific clinical trials and pre-clinical studies.

Indirect costs allocated to our product candidates on a program-specific basis include research and development employee salaries, benefits, and stock-based compensation, and indirect overhead and other administrative support costs.

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As such, we do not provide financial information regarding the costs incurred for early-stage pre-clinical and drug discovery programs on a program-specific basis prior to the clinical development stage.

We expect our research and development expenses to increase in the near term as compared to the prior year period as we continue to focus our resources on (i) progressing our rusfertide program in later stage clinical trials and preparing for regulatory filings and commercialization and (ii) advancing our pre-clinical and drug discovery research programs, including our expected nomination of a development candidate from our discovery platform for IND-enabling studies, or foreign equivalents, by the end of 2024.

We expect our research and development expenses to increase in the near term as compared to the prior year period as we continue to focus our resources toward (i) preparing for regulatory filings and commercialization for our rusfertide program and (ii) advancing our pre-clinical and drug discovery research programs, including progressing our recently nominated product development candidate PN-881 through IND-enabling studies, or foreign equivalents.

The process of conducting research, identifying potential product candidates, conducting pre-clinical studies and clinical trials necessary to obtain regulatory approval and commencing pre-commercialization activities is costly and time intensive.

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The probability of success of our product candidates may be affected by numerous factors, including pre-clinical data, clinical data, competition, manufacturing capability, our cost of goods to be sold, our ability to receive, and the timing of, regulatory approvals, market conditions, and our ability to successfully commercialize our products if they are approved for marketing.

As a result, we are unable to determine the duration and completion costs of our research and development projects or when and to what extent we will generate revenue from the commercialization and sale of any of our product candidates.

As a result, we are unable to determine the duration and completion costs of our research and development projects or when and to what extent we will be able to generate revenue from the commercialization and sale of any of our product candidates.

Our research and development programs are subject to change from time to time as we evaluate our priorities and available resources.

General and Administrative Expenses

General and administrative expenses consist of personnel costs, allocated facilities costs and other expenses for outside professional services, including legal, human resources, audit and accounting services, and pre-commercialization expenses, including selling and marketing costs.

General and administrative expenses consist of personnel costs, allocated costs and other expenses for outside professional services, including legal, human resources, audit and accounting services, and pre-commercialization expenses, including selling and marketing costs.

Personnel costs consist of salaries, benefits and stock-based compensation.

Allocated expenses consist of expenses for rent and maintenance of facilities, information technology, depreciation and amortization expense and other administrative supplies.

We expect to continue to incur expenses supporting our continued operations as a public company, including expenses related to compliance with the rules and regulations of the SEC and those of the national securities exchange on which our securities are traded, insurance expenses, investor relations expenses, audit fees, professional services and general overhead and administrative costs.

Allocated costs consist of expenses for rent and maintenance of facilities, information technology, depreciation and amortization expense and other administrative supplies.

We expect to continue to incur expenses to support our continued operations as a public company, including expenses related to compliance with the rules and regulations of the SEC and those of the national securities exchange on which our securities are traded, insurance expenses, investor relations expenses, audit fees, professional services and general overhead and administrative costs.

Interest Income

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Other Income (Expense), Net

Other income (expense), net consists primarily of amounts related to foreign exchange gains and losses and related items.

Other income (expense), net consists primarily of amounts related to foreign exchange gains and losses, realized gains and losses on sale of marketable securities and related items.

Results of Operations

Comparison of the Three Months Ended September 30, 2024 and 2023

Three Months Ended

September 30,

(Dollars in thousands)

License and collaboration revenue

Operating expenses:

Research and development (1)

General and administrative (2)

Total operating expenses

Loss from operations

Interest income

Other income (expense), net

Loss before income tax benefit

Income tax benefit

*Percentage not meaningful.

(1) Includes $5.2 million and $3.8 million of non-cash stock-based compensation expense for the three months ended September 30, 2024 and 2023, respectively.

(2) Includes $5.0 million and $3.0 million of non-cash stock-based compensation expense for the three months ended September 30, 2024 and 2023, respectively.

License and Collaboration Revenue

License and collaboration revenue increased from $0 for the three months ended September 30, 2023 to $4.7 million for the three months ended September 30, 2024, and consisted of $4.7 million of the $300.0 million transaction price for the Takeda Collaboration Agreement allocated to development services provided by us during the period based on the cost-based input method.

For the three months ended September 30, 2023, we did not recognize any license and collaboration revenue.

Research and Development Expenses

Comparison of the Three Months Ended March 31, 2025 and 2024

Three Months Ended

September 30,

(Dollars in thousands)

Clinical and development expense — rusfertide

Clinical and development expense — PN-943

Clinical and development expense — other

Pre-clinical and drug discovery research expense

Total research and development expenses

Research and development expenses increased $5.3 million, or 17%, from $30.7 million for the three months ended September 30, 2023 to $36.0 million for the three months ended September 30, 2024.

The increase was primarily

due to (i) an increase of $4.1 million in pre-clinical and drug discovery research program expense and ii) an increase of $1.4 million rusfertide clinical and development expense, partially offset by (iii) a decrease of $0.3 million in expenses for the PN-943 program as further development work was de-prioritized in 2023.

We expect to nominate a development candidate from our discovery platform ready for IND-enabling studies, or foreign equivalents, by the end of 2024.

We had 98 and 84 full-time equivalent research and development employees as of September 30, 2024 and 2023, respectively.

Research and development personnel-related expenses for the three months ended September 30, 2024 increased by $3.0 million as compared to the three months ended September 30, 2023, including increases of $1.5 million in personnel-related expenses and $1.5 million in stock-based compensation expense.

General and Administrative Expenses

General and administrative expenses increased $2.5 million, or 33%, from $7.7 million for the three months ended September 30, 2023 to $10.2 million for the three months ended September 30, 2024.

This increase was primarily due to a $2.0 million increase in stock-based compensation expense and a $0.7 million increase in personnel-related expenses.

We had 28 and 27 full-time equivalent general and administrative employees as of September 30, 2024 and 2023, respectively.

Interest Income

Interest income increased $3.4 million, or 81%, from $4.3 million for the three months ended September 30, 2023 to $7.7 million for the three months ended September 30, 2024.

This increase was primarily due to higher invested balances, including the $300.0 million one-time, non-refundable upfront payment received under the Takeda Collaboration Agreement in April 2024.

Income Tax Benefit

Income tax benefit was $0.4 million and $0 for the three months ended September 30, 2024 and 2023, respectively.

Income tax benefit for the three months ended September 30, 2024 was a result of our net loss position for the period.

The effective tax rate was 1.25% and 0% for the three months ended September 30, 2024 and 2023, respectively.

Comparison of the Nine Months Ended September 30, 2024 and 2023

Nine Months Ended

September 30,

(Dollars in thousands)

License and collaboration revenue

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Total operating expenses

Income (loss) from operations

(Loss) income from operations

Interest income

Other income (expense), net

Income (loss) before income tax expense

(Loss) income before income tax expense

Income tax expense

Net income (loss)

Net (loss) income

*Percentage not meaningful.

(1) Includes $15.6 million and $13.2 million of non-cash stock-based compensation expense for the nine months ended September 30, 2024 and 2023, respectively.

(2) Includes $12.9 million and $9.5 million of non-cash stock-based compensation expense for the nine months ended September 30, 2024 and 2023, respectively.

(1) Includes $8.0 million and $5.3 million of non-cash stock-based compensation expense for the three months ended March 31, 2025 and 2024, respectively.

(2) Includes $5.8 million and $4.1 million of non-cash stock-based compensation expense for the three months ended March 31, 2025 and 2024, respectively.

License and Collaboration Revenue

License and collaboration revenue increased from $0 for the nine months ended September 30, 2023 to $263.8 million for the nine months ended September 30, 2024.

The Takeda Collaboration Agreement included a one-time, non-refundable upfront payment of $300.0 million, of which we recognized $255.0 million during the three months ended March 31, 2024.

License and collaboration revenue for the three months ended March 31, 2025 of $28.3 million related to the Takeda Collaboration Agreement was comprised of i) $22.8 million related to the proportional recognition of the $25.0 million milestone deemed probable of being achieved due to the Phase 3 VERIFY trial of rusfertide in PV meeting its primary endpoint and (ii) $5.5 million related to the initial transaction price for development services provided by us during the period.

Revenue recognition for the $25.0 million milestone, which is payable upon completion of the VERIFY clinical study report, was allocated based on the allocation of the initial standalone selling price of each performance obligation under the agreement.

The remaining $2.2 million in revenue related to the $25.0 million milestone will be recognized through the conclusion of the development services performance obligation.

License and collaboration revenue for the three months ended March 31, 2024 of $255.0 million included $254.1 million of the $300.0 million upfront cash payment allocated to the delivery of the rusfertide license to Takeda upon effectiveness of the Takeda Collaboration Agreement in March 2024, and $0.9 million allocated to development services provided by us during the period based on the cost input method.

The remaining $45.0 million was recorded as deferred revenue to be recognized over time as we satisfy our performance obligation to complete the ongoing Phase 3 VERIFY trial for rusfertide.

License and collaboration revenue for the nine months ended September 30, 2024 of $263.8 million included $254.1 million of the $300.0 million upfront cash payment allocated to the delivery of the rusfertide license to Takeda upon effectiveness of the Takeda Collaboration Agreement in March 2024, and $9.7 million allocated to development services provided by us during the period based on the cost input method.

For the nine months ended September 30, 2023, we did not recognize any license and collaboration revenue.

We do not have any commercialized products, and our revenue is derived from licensing and collaboration agreements.

Revenue from licensing and collaboration agreements, by its very nature, is highly variable and dependent upon factors such as the timing of when regulatory and sales milestones are achieved, if at all, and the accounting for any upfront payments and performance obligations associated with any existing or new agreements.

Our revenue for the year ended December 31, 2024 was significantly higher than in prior years due to the partial recognition of an upfront payment of $300.0 million upon execution of the Takeda Collaboration Agreement and the achievement of a $165.0 million milestone pursuant to the terms of the amended JNJ License and Collaboration Agreement.

Our revenue for the year ended December 31, 2025 is expected to be comprised of (i) the proportionate

recognition of the $30.6 million recorded in deferred revenue as of December 31, 2024, and (ii) any milestones achieved during the year, which are expected to be substantially lower than in 2024.

Accordingly, revenue in 2025 is expected to reduce significantly, which will also impact our net income.

Research and Development Expenses

Nine Months Ended

September 30,

Three Months Ended

(Dollars in thousands)

Clinical and development expense — rusfertide

Clinical and development expense — PN-943

Clinical and development expense — other

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Total research and development expenses

Research and development expenses increased $12.0 million, or 13%, from $91.3 million for the nine months ended September 30, 2023 to $103.2 million for the nine months ended September 30, 2024.

The increase was primarily due to (i) an increase of $12.9 million in pre-clinical and drug discovery research program expense partially offset by (ii) a decrease of $1.4 million in expenses for the PN-943 program as further development work was de-prioritized in 2023.

We expect to nominate a development candidate from our discovery platform for IND-enabling studies, or foreign equivalents, by the end of 2024.

We had 98 and 84 full-time equivalent research and development employees as of September 30, 2024 and 2023, respectively.

Research and development personnel-related expenses for the nine months ended September 30, 2024 increased by $6.9 million as compared to the nine months ended September 30, 2023, including increases of $4.5 million in personnel-related expenses and $2.4 million in stock-based compensation expense.

Research and development expenses increased $2.2 million, or 6%, from $33.7 million for the three months ended March 31, 2024 to $35.9 million for the three months ended March 31, 2025.

The increase was primarily due to an increase of $5.3 million in pre-clinical and drug discovery research program expenses, including costs related to PN-881, our recently nominated IL-17 development candidate, partially offset by a decrease of $3.1 million in rusfertide expenses related to our Phase 3 VERIFY clinical trial.

We had 97 full-time equivalent research and development employees for both the three months ended March 31, 2025 and 2024.

Research and development personnel-related expenses for the three months ended March 31, 2025 increased by $2.2 million as compared to the three months ended March 31, 2024, primarily driven by an increase in stock-based compensation expense related to annual refresher awards granted in January 2025 and recognition of expense related to performance stock units (“PSUs”).

General and Administrative Expenses

General and administrative expenses increased $9.1 million, or 36%, from $25.4 million for the nine months ended September 30, 2023 to $34.5 million for the nine months ended September 30, 2024.

This increase was primarily due to a $4.6 million increase in advisory and legal fees related to the Takeda Collaboration Agreement, a $3.3 million increase in stock-based compensation expense and a $2.0 million increase in personnel-related expenses, partially offset by a $0.9 million decrease in market research, consulting and outside services and other general expenses.

We had 28 and 27 full-time equivalent general and administrative employees as of September 30, 2024 and 2023, respectively.

General and administrative expenses decreased $3.2 million, or 21%, from $14.9 million for the three months ended March 31, 2024 to $11.7 million for the three months ended March 31, 2025.

This decrease was primarily due to a $4.6 million decrease in one-time advisory and legal fees incurred in the three months ended March 31, 2024 related to the Takeda Collaboration Agreement, partially offset by a $1.7 million increase in stock-based compensation expense related to annual refresher awards granted in January 2025 and recognition of PSU expense.

We had 27 full-time equivalent general and administrative employees for both the three months ended March 31, 2025 and 2024.

Interest Income

Interest income increased $8.8 million, or 83%, from $10.6 million for the nine months ended September 30, 2023 to $19.5 million for the nine months ended September 30, 2024.

This increase was primarily due to higher invested balances, including the $300.0 million one-time, non-refundable upfront payment received under the Takeda Collaboration Agreement in April 2024.

Interest income increased by $3.2 million, or 73%, from $4.4 million for the three months ended March 31, 2024 to $7.6 million for the three months ended March 31, 2025.

This increase was primarily due to higher invested balances, including milestone payments received from our collaboration partners.

Income Tax Expense

Income tax expense was $2.2 million and $0 for the nine months ended September 30, 2024 and 2023, respectively.

Income tax expense for the nine months ended September 30, 2024 was a result of taxable income from the recognition of revenue in connection with the Takeda Collaboration Agreement.

The effective tax rate was 1.53% and 0% for the nine months ended September 30, 2024 and 2023, respectively.

Income tax expense was zero and $3.3 million for the three months ended March 31, 2025 and 2024, respectively.

Income tax expense for the three months ended March 31, 2024 was a result of taxable income from the recognition of revenue in connection with the Takeda Collaboration Agreement.

The effective tax rate was 1.54% for the three months ended March 31, 2024.

Liquidity and Capital Resources

Sources of Liquidity

We had $583.3 million and $341.6 million in cash, cash equivalents and marketable securities as of September 30, 2024 and December 31, 2023, respectively.

We had $697.9 million and $559.2 million in cash, cash equivalents and marketable securities as of March 31, 2025 and December 31, 2024, respectively.

Historically, we have funded our operations primarily from net proceeds from the sale of shares of our common stock and the receipt of payments under collaboration agreements.

Proceeds from Sales of Our Common Stock

In April 2023, we completed an underwritten public offering of 5,000,000 shares of our 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 us, were $107.8 million.

In August 2022, we entered into an Open Market Sale Agreement SM , pursuant to which we may offer and sell up to $100.0 million shares of our common stock from time to time in “at-the-market” offerings (the “2022 ATM Facility”).

There were no sales of our common stock under the 2022 ATM Facility during the three and nine months ended September 30, 2024.

During the nine months ended September 30, 2023, we sold 1,749,199 shares of our common stock under the 2022 ATM Facility for net proceeds of $24.3 million, after deducting issuance costs.

There were no sales of our common stock under the 2022 ATM Facility during the three months ended September 30, 2023.

Pre-Funded Warrants

In August 2018, we entered into a Securities Purchase Agreement with certain accredited investors (each, an “Investor” and, collectively, the “Investors”), pursuant to which we sold an aggregate of 2,750,000 shares of our common stock at a price of $8.00 per share, for aggregate net proceeds of $21.7 million, after deducting offering expenses payable by us.

In a concurrent private placement, we issued the Investors warrants to purchase an aggregate of 2,750,000 shares of our 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 our common stock had an exercise price of $10.00 per share and Warrants to purchase 1,375,000 shares of our common stock had an exercise price of $15.00 per share.

In August 2023, prior to the expiration of the Warrants, we entered into certain agreements with the Investors and their affiliates under which we 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 our 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 our common stock, subject to certain exceptions.

The common stock and Pre-Funded Warrants were recorded as a credit to additional paid-in capital.

In accordance with Accounting Standards Codification Topic 260, Earnings Per Share , 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.

No Pre-Funded warrants were exercised during the three months ended September 30, 2024.

During the nine months ended September 30, 2024, Pre-Funded Warrants to purchase 84,992 shares were net exercised, resulting in the issuance of 84,989 shares of common stock.

No Pre-Funded Warrants were exercised during the three and nine months ended September 2023.

As of September 30, 2024, Pre-Funded Warrants to purchase 2,620,260 were outstanding.

Receipt of Payments Under Collaboration Agreements

In March 2024, we earned a $300.0 million one-time, non-refundable upfront payment from Takeda upon the closing of the Takeda Collaboration Agreement, which we received in April 2024.

Pursuant to the Takeda Collaboration Agreement, we may be eligible to receive clinical development, regulatory and sales milestones, if and when achieved.

Upcoming potential development milestones under the Takeda Collaboration Agreement include:

● $25.0 million upon successful achievement of the primary endpoint in the Phase 3 VERIFY trial for rusfertide in PV;

● $50.0 million upon FDA approval of an NDA for rusfertide in PV (or $75.0 million if we exercise our full right to opt-out of the 50:50 U.S.

profit and loss sharing arrangement in exchange for enhanced economics).

Under the JNJ License and Collaboration Agreement, we earned a $50.0 million milestone payment upon the dosing of the third patient in the ICONIC-TOTAL Phase 3 trial in late October 2023, which we received in December 2023.

We earned a $10.0 million milestone payment upon the dosing of the third patient in the ANTHEM Phase 2b trial in UC in December 2023, which we received in January 2024.

We have earned a total of $172.5 million in non-refundable payments from JNJ from the inception of the JNJ License and Collaboration Agreement in 2017 through September 30, 2024.

We have also received payments for services provided under the collaboration agreement, and we may make in-kind payment reimbursements to JNJ for certain costs they have incurred pursuant to the cost sharing terms of the agreement.

The JNJ License and Collaboration Agreement was amended in November 2024 to:

● increase the milestone payment for a Phase 3 clinical trial of any licensed product for any indication meeting its primary endpoint by $50.0 million, from $115.0 million to $165.0 million;

● eliminate the $35.0 million milestone payment previously due for the acceptance of an NDA filing by the FDA for use of licensed product for any indication;

● eliminate the $15.0 million milestone payment previously due for the dosing of the third patient in the first Phase 3 clinical trial of a licensed product for a second indication.

We earned the $165.0 million milestone payment described above during the fourth quarter of 2024, which we received in January 2025.

We have received a total of $337.5 million in non-refundable payments from JNJ from the inception of the JNJ License and Collaboration Agreement in 2017 through March 31, 2025.

We have also received payments for services provided under the collaboration agreement, and we have made in-kind payment reimbursements to JNJ for certain costs they have incurred pursuant to the cost sharing terms of the agreement.

Pursuant to the JNJ License and Collaboration Agreement, we may be eligible to receive clinical development, regulatory and sales milestones, if and when achieved.

Upcoming potential development and regulatory milestones under the Janssen License and Collaboration Agreement 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 an NDA for a second-generation compound with the FDA;

● $50.0 million upon FDA approval of an NDA for a second-generation compound;

● $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.

Upcoming potential milestones under the JNJ License and Collaboration Agreement include:

● $50.0 million upon approval of an NDA for icotrokinra in any indication;

● $25.0 million upon acceptance of an NDA for icotrokinra in a second indication;

● $45.0 million upon approval of an NDA for icotrokinra in a second indication;

● $35.0 million upon acceptance of an NDA for icotrokinra in a third indication;

● $50.0 million upon approval of an NDA for icotrokinra in a third indication.

In March 2024, we earned a $300.0 million one-time, non-refundable upfront payment from Takeda upon the closing of the Takeda Collaboration Agreement, which we received in April 2024.

In March 2025, the achievement of a $25.0 million milestone was deemed probable based upon positive topline results for the Phase 3 VERIFY trial for rusfertide in PV.

This milestone is payable upon the completion of the VERIFY clinical study report.

Pursuant to the Takeda Collaboration Agreement, we may be eligible to receive additional clinical development, regulatory and sales milestones, if and when achieved.

Upcoming potential milestones under the Takeda Collaboration Agreement include:

● $50.0 million upon FDA approval of an NDA for rusfertide in PV (or $75.0 million if we exercise our Full Opt-out Right);

● $15.0 million upon first regulatory approval for rusfertide in PV in three European countries, after pricing and reimbursement approval;

● $10.0 million upon first regulatory approval for rusfertide in PV in Japan.

Capital Requirements

As of September 30, 2024, we had $583.3 million in cash, cash equivalents and marketable securities and an accumulated deficit of $472.2 million.

Our capital expenditures were $1.0 million and $0.6 million for the nine months ended September 30, 2024 and the year ended December 31, 2023, respectively.

As of March 31, 2025, we had $697.9 million in cash, cash equivalents and marketable securities and an accumulated deficit of $352.2 million.

Our capital expenditures were $0.5 million and $1.4 million for the three months ended March 31, 2025 and the year ended December 31, 2024, respectively.

Our primary uses of cash are to fund our operating expenses, including our research and development expenditures and general and administrative costs.

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● our ability to successfully commercialize our current product candidates with our collaboration partners and any other product candidates we may identify and develop;

● the success of our existing or future collaboration with third parties;

● the success of our existing or future collaborations with third parties;

● the selling and marketing costs associated with rusfertide, which is being co-developed and co-commercialized with Takeda under the Takeda Collaboration Agreement, and any other product candidates we may identify and develop, including the costs and timing of expanding our sales and marketing capabilities;

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Such additional funding may come from various sources, including raising additional capital, seeking access to debt, and seeking additional collaborative or other arrangements with partners, but such funding may not be available on terms acceptable to us, if at all.

As discussed in Part II, Item 1A.

“Risk Factors,” we are currently operating in a period of economic uncertainty and capital markets disruption, which has been significantly impacted by domestic and global monetary and fiscal policy, geopolitical instability, inflationary pressures and high interest rates, among other factors.

We are currently operating in a period of economic uncertainty and capital markets disruption, which has been significantly impacted by domestic and global monetary and fiscal policy, changes in trade policies, including tariffs or other restrictions or the threat of such actions, geopolitical instability, inflationary pressures

and high interest rates and banking and other financial institution instability, among other factors.

A future recession or market correction, including those due to significant geopolitical or macroeconomic events, could materially affect our business and our access to credit and financial markets.

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Because of the numerous risks and uncertainties associated with the development and commercialization of our product candidates, we are unable to fully estimate the amounts of increased capital outlays and operating expenditures associated with our current and anticipated product development programs.

For additional information, see Part II, Item 1A.

“Risk Factors” – “Risks Related to our Financial Position and Capital Requirements.”

The following table summarizes our cash flows for the periods indicated:

Nine Months Ended

September 30,

Three Months Ended

Condensed Consolidated Statements of Cash Flows Data:

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Cash Provided by (Used in) Operating Activities

Cash provided by operating activities for the nine months ended September 30, 2024 was $213.3 million and consisted primarily of our net income of $143.5 million, $28.5 million of stock-based compensation and a change of $45.1 million in net operating assets and liabilities.

The change in net operating assets and liabilities was driven primarily by a change of $36.2 million in deferred revenue related to the Takeda Collaboration Agreement and a change of $10.0 million in receivable from collaboration partner related to a milestone payment under the Janssen License and Collaboration Agreement.

The $300.5 million increase in cash provided by operating activities during the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, was primarily due to the receipt of a $300.0 million one-time, non-refundable upfront payment related to the Takeda Collaboration Agreement.

Cash provided by operating activities for the three months ended March 31, 2025 was $125.4 million and consisted primarily of a net change of $124.7 million in operating assets and liabilities and $13.8 million of stock-based compensation expense, partially offset by a net loss of $11.7 million during the period.

The change in net operating assets and liabilities was driven primarily by a $165.0 million milestone payment received under the JNJ License and Collaboration Agreement in January 2025, partially offset by the recognition of a $22.8 million contract asset related to the Takeda Collaboration Agreement, a $5.5 million change in deferred revenue and a $11.8 million change in accrued expenses and other payables.

The $152.8 million increase in cash provided by operating activities during the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, was primarily due to the receipt of a $165.0 million milestone payment from JNJ in January 2025.

Cash (Used in) Provided by Investing Activities

Cash used in investing activities for the nine months ended September 30, 2024 was $290.8 million and consisted primarily of purchases of marketable securities of $507.3 million, partially offset by proceeds from maturities of marketable securities of $217.6 million.

The $312.8 million increase in cash used in investing activities for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, was primarily related to the investment of a portion of the proceeds related to the Takeda Collaboration Agreement.

Cash used in investing activities for the three months ended March 31, 2025 was $94.4 million and consisted primarily of purchases of marketable securities of $214.0 million and purchases of property and equipment of $0.5 million, partially offset by proceeds from maturities and sales of marketable securities of $120.2 million.

The $100.5 million increase in cash used in investing activities for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, was primarily related to investments made with a portion of the proceeds from the $165.0 million milestone payment received from JNJ in January 2025.

Purchases of property and equipment were primarily related to laboratory equipment and furniture and fixtures.

Cash Provided by Financing Activities

Cash provided by financing activities for the nine months ended September 30, 2024 was $21.8 million and consisted of net cash proceeds of $22.4 million from the issuance of common stock upon exercises of stock options and purchases of stock under our employee stock purchase plan (“ESPP”), partially offset by $0.6 million in tax withholding payments related to net settlement of restricted stock units.

The $148.1 million decrease in cash provided by financing activities for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, was primarily due to $107.9 million of proceeds received from a public offering of our common

stock in April 2023 and a $24.3 million decrease in ATM sales of our common stock, partially offset by a $18.2 million increase in proceeds from the issuance of common stock upon exercise of options and purchases of common stock under the ESPP.

Cash provided by financing activities for the three months ended March 31, 2025 was $11.4 million and consisted of net cash proceeds of $11.9 million from the issuance of common stock upon exercises of stock options and purchases of stock under our employee stock purchase plan (“ESPP”), partially offset by $0.5 million in tax withholding payments related to the net settlement of restricted stock units.

The $4.2 million increase in cash provided by financing activities for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, was primarily due to a $4.1 million increase in proceeds from the issuance of common stock upon exercise of options and purchases of common stock under the ESPP.

Contractual Obligations and Other Commitments

Takeda Collaboration Agreement

Under the Takeda Collaboration Agreement, we are responsible for expenditures related to completion of our Phase 3 clinical trial for rusfertide in PV and, if successful, for expenditures related to an NDA filing with the FDA.

The timing and actual amounts of these payments may vary from estimates depending on numerous factors, some of which are outside of our control and some of which are contingent upon the success of certain development and regulatory activities.

The timing and amount of such payments are not determinable as of the date of this Quarterly Report on Form 10-Q.

Lease Agreement

Our contractual obligations include minimum lease payments under our operating lease obligations.

In May 2024, we entered into a third amendment to our facility lease agreement dated as of March 2017 to extend the term for our existing office and laboratory space and lease additional office space in Newark, California.

See Note 7 to the condensed consolidated financial statements elsewhere in this report for additional information.

Except as described above, during the nine months ended September 30, 2024 there were no other material changes to our material cash requirements, including commitments for capital expenditures, described under Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 27, 2024.

During the three months ended March 31, 2025, there were no material changes to our material cash requirements, including commitments for capital expenditures, described under Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on February 21, 2025.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis