Truist Securities has taken a bullish stance on Protagonist Therapeutics (PTGX), initiating coverage with a Buy rating and a $60 price target. The firm’s optimism stems from the company’s impressive pipeline of first-in-class lead assets, including rusfertide and JNJ-2113, which have shown encouraging results in clinical trials.
Rusfertide, Protagonist’s lead asset for treating a rare form of blood cancer, has garnered attention for its compelling Phase 2 data. Truist projects peak end-user sales of $2.8 billion for rusfertide, significantly exceeding the consensus estimate of $2 billion. This translates to an estimated $660 million in adjusted peak revenues for Protagonist, factoring in profit-sharing arrangements in the US and royalties outside the US.
Furthermore, Protagonist’s strategic partnerships with pharmaceutical giants like Takeda Pharmaceutical Co Ltd (TAK) and Johnson & Johnson (JNJ) reinforce the potential of its assets. JNJ-2113, an oral IL-23 inhibitor, is particularly noteworthy. This innovative treatment offers a significant advantage over existing IL-23 inhibitors due to its oral administration, providing patients with greater convenience and flexibility. Phase 2 trial data for psoriasis demonstrated improved efficacy compared to other oral treatments and IL-23 inhibitors, including Johnson & Johnson’s Tremfya and Stelara.
Truist highlights a significant unmet need in Inflammation & Immunology (I&I), specifically for oral IL-23 treatments. The firm believes JNJ-2113 could expand market opportunities and potentially lead to a shift away from other oral therapies. The analyst models peak unadjusted end-user sales of $4 billion for JNJ-2113 in psoriasis, translating to approximately $300 million in peak adjusted royalties for Protagonist. The company also sees potential for JNJ-2113 in ulcerative colitis, but is awaiting data from a trial expected in the fourth quarter of 2024 before assigning any value.
In summary, Truist’s bullish outlook on Protagonist Therapeutics is driven by the company’s promising lead assets, strategic partnerships, and significant market potential. The firm’s analysis suggests that Protagonist could be well-positioned for substantial growth in the years to come.
