What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-06 compared with 2025-05-06 · 156 added, 100 removed, 227 unchanged (53% of the section changed)

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

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;

uncertainty and disruption in the global economy and financial markets due to a number of factors, including but not limited to geopolitical instability, high interest rates, and changes in trade policies, including tariffs or other trade restrictions or the threat of such actions and retaliatory actions;

and other factors .

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

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.

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(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.

Two novel peptides derived from our proprietary discovery technology platform, icotrokinra and rusfertide, are currently in advanced Phase 3 clinical development, with one New Drug Application (“NDA”) submitted to the FDA in July 2025 and a second NDA filing expected in the fourth quarter of 2025.

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”).

In July 2025, an NDA was submitted by JNJ seeking the first approval of icotrokinra for the treatment of adults and pediatric patients 12 years of age or older with moderate-to-severe plaques psoriasis.

Rusfertide, a first-in-class investigational injectable mimetic of the natural hormone hepcidin, is currently in Phase 3 development for the 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

(“Takeda”), with the Company remaining primarily responsible for clinical development activities through a potential NDA filing in the fourth quarter of 2025.

We also have a number of pre-clinical stage drug discovery programs addressing biologically and commercially validated targets, including IL-17 oral peptide antagonist PN-881, obesity triple agonist peptide PN-477, and oral hepcidin.

Our Product Pipeline and Expected Key Milestones

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.

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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 icotrokinra in participants with pustular or erythrodermic psoriasis;

ICONIC Program

JNJ’s NDA submission to the FDA in July 2025 included data from four pivotal Phase 3 trials conducted as part of the ICONIC clinical development program, including ICONIC-LEAD (ClinicalTrials.gov identifier NCT06095115), ICONIC-TOTAL (NCT06095102), ICONIC-ADVANCE 1 (NCT06143878) and ICONIC-ADVANCE 2 (NCT06220604).

Treatment with icotrokinra met all primary and co-primary endpoints across the development program among adults and pediatric patients 12 years of age and older with moderate-to-severe plaque psoriasis, demonstrating significant skin clearance and a favorable safety profile in a once-daily pill.

Results from the ICONIC-ADVANCE 1 & 2 trials show icotrokinra achieved co-primary endpoints and showed superiority to deucravacitinib in moderate-to-severe plaque psoriasis.

Across all studies, pooled safety data showed a similar proportion of patients experienced adverse events between icotrokinra (49.1%) and placebo (51.9%) groups, with no new safety signals identified to date.

Data submitted to the FDA as part of the NDA included:

● Results from the Phase 3 ICONIC-LEAD trial, presented as a late-breaking abstract at the 2025 American Academy of Dermatology Annual Meeting in March 2025, showed that icotrokinra successfully met the co-primary endpoints of Investigator's Global Assessment (“IGA”) score of 0/1 (clear or almost clear skin) and Psoriasis Area and Severity Index (“PASI”) 90 (90% improvement in skin lesions as measured by PASI) compared to placebo at Week 16.

● A subgroup analysis of ICONIC-LEAD, presented at the 2025 World Congress of Pediatric Dermatology in April 2025, which demonstrated that pediatric patients 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.

● Data from the Phase 3 ICONIC-TOTAL trial, presented at the 2025 Society for Investigative Dermatology (“SID”) Annual Meeting in May 2025, which highlighted the potential of icotrokinra as a treatment for patients with difficult-to-treat scalp and genital psoriasis.

● Results from the Phase 3 ICONIC-ADVANCE 1 & ICONIC-ADVANCE 2 trials that further reinforced the overall efficacy profile of icotrokinra, which met co-primary endpoints of IGA 0/1 and PASI 90 versus placebo at Week 16.

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

Comprehensive results are being prepared for presentation at a future medical meeting.

● Long-term data from the ICONIC development program, including at least 52 weeks of treatment for ICONIC-LEAD and ICONIC-TOTAL, and the results from a randomized withdrawal analysis evaluating the durability of response, are being prepared for presentation at a future medical meeting.

Ongoing Phase 3 clinical trials in the ICONIC program include the following:

● 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.

● ICONIC-ASCEND (NCT06934226) – A 675-patient randomized, controlled Phase 3 trial to evaluate the effectiveness of icotrokinra in patients with moderate-to-severe plaque psoriasis compared to placebo and ustekinumab, an injectable biologic.

ICONIC-ASCEND is the first-ever head-to-head study seeking to demonstrate the superiority of an oral pill compared to an injectable biologic, representing an important step forward in psoriasis research.

In March 2025, we announced positive topline results from the ANTHEM-UC (NCT06049017) trial, a 252-patient randomized, controlled Phase 2b trial of icotrokinra in adults with moderately-to-severely active ulcerative colitis.

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

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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 have earned a total of $337.5 million in non-refundable payments from JNJ from inception in 2017 through June 30, 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:

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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.

Pre-clinical data for PN-881 was presented at the SID Annual Meeting in May 2025.

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.

Results of the PN-881 Phase 1 study are expected to inform the design and dosing in a subsequent dose-ranging psoriasis trial.

Rapid expansion into other IL-17 mediated diseases is expected based on results observed in psoriasis studies.

We believe an IL-17 antagonist peptide like PN-881 may offer an attractive therapeutic option as an oral targeted therapy for patients, with broad opportunity for multiple indications in addition to psoriasis.

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.

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

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.

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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.

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

The VERIFY study met its primary endpoint, which was the proportion of patients achieving a clinical response, defined as the absence of phlebotomy eligibility during study Weeks 20-32.

Study results demonstrated 76.9% of patients treated with rusfertide plus the current standard of care achieved a clinical response, compared to 32.9% in

the placebo plus the current standard of care group (p<0.0001).

The response observed in the rusfertide arm was consistent across subgroups, regardless of risk status or type of concurrent cytoreductive therapy.

In addition, all key secondary endpoints met statistical significance in favor of the rusfertide arm compared to the placebo arm in the VERIFY study, as follows:

● The mean number of phlebotomies was 0.5 phlebotomies per patient for those treated with rusfertide plus the current standard of care compared to 1.8 phlebotomies per patient for those treated with placebo plus the current standard of care during Weeks 0-32 (p<0.0001).

Only 27% of patients treated with rusfertide plus the current standard of care required phlebotomy between Weeks 0-32, compared to 78% of patients who received placebo plus the current standard of care.

The mean number of phlebotomies during Weeks 0-32 in the rusfertide arm was reduced across subgroups, including risk status and use of concurrent cytoreductive therapy, versus the placebo arm.

● 62.6% of patients treated with rusfertide plus the current standard of care maintained hematocrit levels below 45% versus 14.4% of patients treated with placebo plus the current standard of care (p<0.0001).

● Rusfertide also showed statistically significant improvements in mean change from baseline to Week 32 in PROMIS Fatigue SF-8, a questionnaire that measures patient-reported fatigue symptoms and their impact on daily life (p<0.03), and the Myeloproliferative Neoplasm-Symptom Assessment Form TSS-7, a questionnaire used to evaluate the severity of symptoms in patients with myeloproliferative neoplasm (p<0.03).

Rusfertide is the first investigational therapy to prospectively demonstrate a statistically significant improvement in these patient-reported outcomes of fatigue and symptom burden in patients with PV.

Rusfertide was generally well tolerated.

The majority of adverse events were low grade and non-serious, and no serious adverse events considered related to rusfertide were reported.

There was no evidence of increased risk of cancer in patients treated with rusfertide plus the current standard of care compared to patients treated with placebo plus the current standard of care at the time of the primary analysis.

Cancer events were reported in one patient in the rusfertide arm (0.7%) and in seven patients in the placebo arm (4.8%).

The most common treatment-emergent adverse events were localized injection site reactions (55.9%), anemia (15.9%) and fatigue (15.2%).

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

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.

In March 2025, we and Takeda agreed, pursuant to the provisions of the Takeda Collaboration Agreement, as amended, that Takeda would 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 in the fourth quarter of 2025.

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

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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.

In June 2025, we announced the selection of PN-477, a potential best-in-class glucagon-like peptide-1 (“GLP-1”), glucose-dependent insulinotropic peptide (“GIP”) and glucagon (“GCG”) receptor triple agonist peptide with oral and subcutaneous routes of administration, as a development candidate for the treatment of obesity.

The triple agonist PN-477 is designed to offer an optimal combination of total body weight loss, improved gastrointestinal tolerability and fat to lean mass ratio, with the dosing convenience of a once-daily oral agent and the added optionality of a once-weekly subcutaneous administration.

PN-477 has completed extensive pre-clinical evaluation, including oral and metabolic stability, potency, pharmacokinetics and pharmacodynamics studies, and has demonstrated effects in preclinical models of obesity and glycemic control.

PN-477 has shown potent in vitro activity in activating the GLP-1, GIP, and GCG receptors.

PN-477 also demonstrated robust preclinical proof-of-concept in various animal studies, including the diet induced obesity preclinical mouse model, normal dogs, and cynomolgus monkeys.

Overall, we believe PN-477 has the right balance of potency, oral and in-vivo stability, and pharmacokinetic properties to enable parallel development both as a once-daily oral and once-weekly injectable treatment options.

IND-enabling studies of PN-477 are underway and the initiation of Phase 1 clinical studies is anticipated in the second quarter of 2026.

Discovery Platform

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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.

Tax Legislation

On July 4, 2025, the One Big Beautiful Bill (“OBBB”) Act, which includes comprehensive U.S.

corporate tax legislation, was enacted.

The legislation includes the extension and modification of provisions originally introduced under the Tax Cuts and Jobs Act of 2017 and the introduction of new provisions.

Key provisions include the restoration of bonus depreciation allowances, changes to the limitations on deductibility of business interest expense, and the

reintroduction of immediate expensing of U.S.

research and development costs.

The impact of the tax law changes on current and deferred taxes is reported in continuing operations in the interim period that includes the enactment date.

The Company is currently evaluating the potential impact, if any, of the new legislation on its consolidated financial statements.

Risks and Uncertainties

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“Risk Factors” herein.

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

We have incurred cumulative net losses from inception through June 30, 2025 of $386.9 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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Actual results may differ from these estimates under different assumptions or conditions.

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.

There have been no material changes to our critical accounting policies during the six months ended June 30, 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

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In instances where we enter into agreements with third parties to provide research and development services to us, costs are expensed as services are performed.

Amounts due under such arrangements may be either fixed fee or fee for service and may include upfront payments, monthly payments, and payments upon the completion of milestones or the receipt of deliverables.

Amounts due under such arrangements may be either fixed fee or fee for service and

may include upfront payments, monthly payments, and payments upon the completion of milestones or the receipt of deliverables.

Research and development expenses consist primarily of the following:

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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 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.

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 candidates PN-881 and PN-447 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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Interest income consists of interest earned on our cash, cash equivalents and marketable securities, which is comprised of contractual interest, premium amortization and discount accretion.

Other Income (Expense), Net

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.

Other Income, Net

Other income, 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 March 31, 2025 and 2024

Comparison of the Three Months Ended June 30, 2025 and 2024

Three Months Ended

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Total operating expenses

Loss from operations

Interest income

Other income, net

Loss before income tax expense (benefit)

Income tax expense (benefit)

*Percentage not meaningful.

(1) Includes $6.3 million and $5.1 million of non-cash stock-based compensation expense for the three months ended June 30, 2025 and 2024, respectively.

(2) Includes $4.6 million and $3.8 million of non-cash stock-based compensation expense for the three months ended June 30, 2025 and 2024, respectively.

License and Collaboration Revenue

License and collaboration revenue for the three months ended June 30, 2025 of $5.5 million related to the Takeda Collaboration Agreement was comprised of (i) $5.0 million related to the initial transaction price for development services provided by us during the period based on the cost-based input method and (ii) $0.5 million related to the proportional recognition of the $25.0 million milestone deemed probable of being achieved due to the Phase 3 VERIFY trial meeting its primary endpoint.

License and collaboration revenue for the three months ended June 30, 2024 of $4.2 million related to the Takeda Collaboration Agreement was comprised of $4.2 million allocated to development services provided by us during the period based on the cost-based input method.

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.

Research and Development Expenses

Three Months Ended

(Dollars in thousands)

Clinical and development expense — rusfertide

Clinical and development expense — other

Pre-clinical and drug discovery research expense

Total research and development expenses

Research and development expenses increased $3.5 million, or 10%, from $33.5 million for the three months ended June 30, 2024 to $37.0 million for the three months ended June 30, 2025.

The increase was primarily due to an increase of $4.5 million in pre-clinical and drug discovery research program expenses, including costs related to recently nominated development candidates PN-881, our IL-17 oral peptide antagonist, and PN-477, our obesity triple agonist peptide, partially offset by a decrease of $1.0 million in rusfertide expenses related to our Phase 3 VERIFY trial.

We had 100 and 97 full-time equivalent research and development employees as of June 30, 2025 and 2024, respectively.

Research and development personnel-related expenses for the three months ended June 30, 2025 increased by $0.9 million as compared to the three months ended June 30, 2024 and included an increase of $1.2 million in stock-based compensation expense, partially offset by a decrease of $0.3 million in personnel-related expenses.

General and Administrative Expenses

General and administrative expenses increased $1.1 million, or 12%, from $9.4 million for the three months ended June 30, 2024 to $10.5 million for the three months ended June 30, 2025.

This increase was primarily due to an increase in personnel-related expenses, including stock-based compensation expense.

We had 30 and 28 full-time equivalent general and administrative employees as of June 30, 2025 and 2024, respectively.

Income Tax Expense (Benefit)

Income tax expense was $0.2 million and income tax benefit was $0.7 million for the three months ended June 30, 2025 and 2024, respectively.

Income tax expense for the three months ended June 30, 2025 consisted of adjustments to estimated taxes paid during the period.

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

The effective tax rate was 0% and 2.16% for the three months ended June 30, 2025 and 2024, respectively.

Comparison of the Six Months Ended June 30, 2025 and 2024

Six Months Ended

(Dollars in thousands)

License and collaboration revenue

Operating expenses:

Research and development (1)

General and administrative (2)

Total operating expenses

(Loss) income from operations

Interest income

Other income (expense), net

Other income, net

(Loss) income before income tax expense

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Net (loss) income

*Percentage not meaningful.

(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.

(1) Includes $14.3 million and $10.4 million of non-cash stock-based compensation expense for the six months ended June 30, 2025 and 2024, respectively.

(2) Includes $10.4 million and $7.9 million of non-cash stock-based compensation expense for the six months ended June 30, 2025 and 2024, respectively.

License and Collaboration Revenue

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.

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

License and collaboration revenue for the six months ended June 30, 2025 of $33.9 million related to the Takeda Collaboration Agreement was comprised of (i) $23.4 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) $10.5 million related to the initial transaction price for development services provided by us during the period based on the cost-based input method.

License and collaboration revenue for the six months ended June 30, 2024 of $259.1 million included (i) $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 (ii) $5.0 million allocated to development services provided by us during the period based on the cost-based input method.

The remaining $40.9 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.

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.

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) the recognition of additional 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

Three Months Ended

Six Months Ended

(Dollars in thousands)

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Total research and development expenses

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”).

Research and development expenses increased $5.7 million, or 8%, from $67.3 million for the six months ended June 30, 2024 to $72.9 million for the six months ended June 30, 2025.

The increase was primarily due to an increase of $9.8 million in pre-clinical and drug discovery research program expenses, including costs related to our recently nominated development candidates PN-881, our IL-17 oral peptide antagonist, and PN-477, our obesity triple agonist peptide, partially offset by a decrease of $4.1 million in rusfertide expenses related to our Phase 3 VERIFY trial.

We had 100 and 97 full-time equivalent research and development employees as of June 30, 2025 and 2024, respectively.

Research and development personnel-related expenses for the six months ended June 30, 2025 increased by $3.2 million as compared to the six months ended June 30, 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 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.

General and administrative expenses decreased $2.1 million, or 8%, from $24.4 million for the six months ended June 30, 2024 to $22.3 million for the six months ended June 30, 2025.

This decrease was primarily due to $4.6 million in one-time advisory and legal fees incurred during the six months ended June 30, 2024 related to the Takeda Collaboration Agreement, partially offset by a $2.5 million increase in stock-based compensation expense related to annual refresher awards granted in January 2025 and recognition of expense related to PSUs.

We had 30 and 28 full-time equivalent general and administrative employees as of June 30, 2025 and 2024, respectively.

Interest Income

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.

Interest income increased by $3.2 million, or 27%, from $11.8 million for the six months ended June 30, 2024 to $15.0 million for the six months ended June 30, 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 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.

Income tax expense was $0.2 million and $2.7 million for the six months ended June 30, 2025 and 2024, respectively.

Income tax expense for the six months ended June 30, 2025 consisted of adjustments to estimated taxes paid during the period.

Income tax expense for the six months ended June 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 0% and 1.48% for the six months ended June 30, 2025 and 2024, respectively.

Liquidity and Capital Resources

Sources of Liquidity

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.

We had $673.0 million and $559.2 million in cash, cash equivalents and marketable securities as of June 30, 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.

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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 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 June 30, 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.

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Capital Requirements

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.

As of June 30, 2025, we had $673.0 million in cash, cash equivalents and marketable securities and an accumulated deficit of $386.9 million.

Our capital expenditures were $1.4 million for both the six months ended June 30, 2025 and the year ended December 31, 2024.

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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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.

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.

We are currently operating in a period of economic uncertainty and capital markets disruption, which has been significantly impacted by geopolitical instability, high interest rates, and changes in trade policies, including tariffs or other restrictions or the threat of such actions and retaliatory actions, among other factors.

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.

Any failure to raise capital as and when needed could have a negative impact on our financial condition and on our ability to pursue our business plans and strategies.

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

Three Months Ended

Six Months Ended

Condensed Consolidated Statements of Cash Flows Data:

(Dollars in thousands)

Cash provided by (used in) operating activities

Cash (used in) provided by investing activities

Cash provided by operating activities

Cash used in investing activities

Cash provided by financing activities

Stock-based compensation

Deferred revenue

Cash Provided by (Used in) Operating Activities

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 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.

Change in deferred revenue

Cash Provided by Operating Activities

Cash provided by operating activities for the six months ended June 30, 2025 was $96.6 million and consisted primarily of a net change of $120.8 million in operating assets and liabilities and $24.7 million of stock-based compensation expense, partially offset by a net loss of $46.4 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, partially offset by the recognition of a $22.3 million contract asset related to the Takeda Collaboration Agreement, a $10.5 million change in deferred revenue, a $8.4 million change in accrued expenses and other payables and a $2.7 million change in income taxes payable.

The $144.6 million decrease in cash provided by operating activities during the six months ended June 30, 2025, as compared to the six months ended June 30, 2024, was primarily due to the receipt of a $300.0 million upfront payment upon the effectiveness of the Takeda Collaboration Agreement in 2024, partially offset by the receipt of a $165.0 million milestone payment in 2025.

Cash Used in Investing Activities

Cash used in investing activities for the six months ended June 30, 2025 was $39.6 million and consisted primarily of purchases of marketable securities of $281.2 million and purchases of property and equipment of $1.4 million, partially offset by proceeds from maturities and sales of marketable securities of $243.0 million.

The $42.5 million decrease in cash used in investing activities for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024, was primarily related to investments made with a portion of the proceeds from the $300.0 million upfront payment received from Takeda in April 2024.

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 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.

Cash provided by financing activities for the six months ended June 30, 2025 was $14.4 million and consisted of net cash proceeds of $14.8 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 $4.6 million increase in cash provided by financing activities for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024, was primarily due to a $4.5 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

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.

During the six months ended June 30, 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