Protagonist Therapeutics, Inc 10-Q for FY2020 Q3

Protagonist Therapeutics, Inc (PTGX)

10-Q 2020-11-04 For: 2020-09-30

Added on April 07, 2026

About this 10-Q

Protagonist Therapeutics, Inc filed this 10-Q on November 4, 2020, covering the quarter ended September 30, 2020 (FY2020 Q3).

Headline figures

Quarter ended September 30, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Net loss: $7.76M; compared with a net loss of $16.41M a year earlier

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Delaware		98-0505495
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

7707 Gateway Boulevard, Suite 140 Newark, California 94560-1160		(510) 474-0170
(Address, including zip code, of registrant’s principal executive offices)		(Telephone number, including area code, of registrant’s principal executive offices)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.00001	PTGX	The Nasdaq Stock Market, LLC



Large accelerated filer	◻	Accelerated filer	☒
		Smaller reporting company	☒
Non-accelerated filer	◻	Emerging growth company	☒


		Page

PART I	FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements (unaudited)
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations	2
	Condensed Consolidated Statements of Comprehensive Loss	3
	Condensed Consolidated Statements of Stockholders’ Equity	4
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	40
Item 4.	Controls and Procedures	40

PART II	OTHER INFORMATION

Item 1.	Legal Proceedings	41
Item 1A.	Risk Factors	41
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	83
Item 3.	Defaults Upon Senior Securities	83
Item 4.	Mine Safety Disclosure	83
Item 5.	Other Information	83
Item 6.	Exhibits	83
	SIGNATURES	85


	September 30,		December 31,
	2020		2019
Assets
Current assets:
Cash and cash equivalents	$	83,625	$	33,006
Marketable securities		110,349		100,011
Restricted cash - current		10		10
Receivable from collaboration partner and contract asset - related party		2,789		6,755
Research and development tax incentive receivable		535		—
Prepaid expenses and other current assets		6,843		5,529
Total current assets		204,151		145,311
Marketable securities - noncurrent		6,025		—
Property and equipment, net		1,459		1,681
Restricted cash - noncurrent		450		450
Operating lease right-of-use asset		5,235		6,042
Deferred tax asset		—		1,433
Total assets	$	217,320	$	154,917
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	2,797	$	2,790
Payable to collaboration partner - related party		2,077		1,262
Accrued expenses and other payables		15,518		12,360
Deferred revenue - related party - current		16,765		17,738
Operating lease liability - current		1,406		1,256
Total current liabilities		38,563		35,406
Long-term debt, net		—		9,794
Deferred revenue - related party - noncurrent		4,112		23,792
Operating lease liability - noncurrent		4,885		5,961
Other liability - noncurrent		170		—
Total liabilities		47,730		74,953
Commitments and contingencies (Note 10)
Stockholders’ equity:
Preferred stock, $0.00001 par value, 10,000,000 shares authorized; no shares issued and outstanding		—		—
Common stock, $0.00001 par value, 90,000,000 shares authorized; 37,314,873 and 27,206,447 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively		—		—
Additional paid-in capital		434,603		297,846
Accumulated other comprehensive loss		(88)		(221)
Accumulated deficit		(264,925)		(217,661)
Total stockholders’ equity		169,590		79,964
Total liabilities and stockholders’ equity	$	217,320	$	154,917


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
License and collaboration revenue - related party	$	13,114	$	4,141	$	22,978	$	(2,488)
Operating expenses:
Research and development		15,995		17,293		55,020		49,092
General and administrative		4,891		4,015		13,644		11,642
Total operating expenses		20,886		21,308		68,664		60,734
Loss from operations		(7,772)		(17,167)		(45,686)		(63,222)
Interest income		87		762		820		2,134
Interest expense		(19)		—		(471)		—
Loss on early repayment of debt		—		—		(585)		—
Other expense, net		(59)		(106)		(37)		(145)
Loss before income tax benefit (expense)		(7,763)		(16,511)		(45,959)		(61,233)
Income tax benefit (expense)		—		102		(1,305)		1,547
Net loss	$	(7,763)	$	(16,409)	$	(47,264)	$	(59,686)
Net loss per share, basic and diluted	$	(0.21)	$	(0.61)	$	(1.45)	$	(2.36)
Weighted-average shares used to compute net loss per share, basic and diluted		37,386,881		26,956,957		32,647,524		25,315,512


						Accumulated
				Additional		Other				Total
	Common			Paid-In		Comprehensive		Accumulated		Stockholders'
	Stock			Capital		Gain (Loss)		Deficit		Equity
Three months ended September 30, 2020	Shares	Amount
Balance at June 30, 2020	36,802,139	$	—	$	424,855	$	(208)	$	(257,162)	$	167,485
Issuance of common stock pursuant to public offering, net of issuance costs	—		—		(3)		—		—		(3)
Issuance of common stock pursuant to at-the-market offering, net of issuance costs	333,047		—		6,368		—		—		6,368
Issuance of common stock under equity incentive and employee stock purchase plans	179,687		—		1,495		—		—		1,495
Stock-based compensation expense	—		—		1,888		—		—		1,888
Other comprehensive gain (loss)	—		—		—		120		—		120
Net loss	—		—		—		—		(7,763)		(7,763)
Balance at September 30, 2020	37,314,873	$	—	$	434,603	$	(88)	$	(264,925)	$	169,590


	Nine Months Ended September 30,
	2020		2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(47,264)	$	(59,686)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation		5,932		6,193
Change in deferred tax asset		1,404		(1,548)
Operating lease right-of-use asset amortization		1,331		1,347
Loss on early repayment of debt		585		—
Depreciation and amortization		601		501
Amortization of debt issuance costs and accretion of debt discount		22		—
Accretion of discount on marketable securities, net of premium amortization		(155)		(397)
Changes in operating assets and liabilities:
Research and development tax incentive receivable		(517)		1,237
Receivable from collaboration partner - related party		3,966		2,642
Prepaid expenses and other assets		(1,566)		(1,586)
Accounts payable		32		(4,165)
Payable to collaboration partner - related party		815		(41)
Accrued expenses and other payables		3,130		(781)
Deferred revenue - related party		(20,653)		(1,409)
Operating lease liability		(1,450)		30,455
Other liability		170		—
Net cash used in operating activities		(53,617)		(27,238)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturities of marketable securities		131,383		77,400
Purchase of marketable securities		(147,600)		(117,807)
Purchases of property and equipment		(346)		(749)
Net cash used in investing activities		(16,563)		(41,156)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from public offering of common stock, net of issuance costs		105,478		—
Proceeds from at-the-market offering, net of issuance costs		23,219		34,492
Proceeds from issuance of common stock upon exercise of stock options and purchases under employee stock purchase plan		2,486		1,765
Issuance costs related to long-term debt		(14)		—
Early repayment of long-term debt		(10,524)		—
Net cash provided by financing activities		120,645		36,257
Effect of exchange rate changes on cash, cash equivalents and restricted cash		154		99
Net increase (decrease) in cash, cash equivalents and restricted cash		50,619		(32,038)
Cash, cash equivalents and restricted cash, beginning of period		33,466		82,693
Cash, cash equivalents and restricted cash, end of period	$	84,085	$	50,655
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING AND INVESTING INFORMATION:
Issuance costs related to at-the-market offering of common stock included in prepaid expenses and other assets at the end of the previous year	$	191	$	—
Issuance costs related to public offering of common stock included in prepaid expenses and other assets at the end of the previous year	$	125	$	—
Purchases of property and equipment in accounts payable and accrued liabilities	$	27	$	157
Issuance costs related to public offering of common stock included in accrued liabilities and other payables	$	25	$	—
Issuance costs related to at-the-market offering of common stock included in accrued liabilities and other payables	$	17	$	—


	Balance at						Balance at
	Beginning of						End of
Nine Months Ended September 30, 2020	Period		Additions		Deductions		Period
Contract assets:
Receivable from collaboration partner - related party	$	5,955	$	5,284	$	(8,450)	$	2,789
Contract asset - related party	$	800	$	342	$	(1,142)	$	—
Contract liabilities:
Deferred revenue - related party	$	41,530	$	3,500	$	(24,153)	$	20,877
Payable to collaboration partner - related party	$	1,262	$	2,114	$	(1,299)	$	2,077


	Balance at						Balance at
	Beginning of						End of
Nine Months Ended September 30, 2019	Period		Additions		Deductions		Period
Contract assets:
Receivable from collaboration partner - related party	$	2,042	$	30,882	$	(31,905)	$	1,019
Contract asset - related party	$	2,545	$	926	$	(2,545)	$	926
Contract liabilities:
Deferred revenue - related party	$	8,223	$	36,441	$	(5,986)	$	38,678
Payable to collaboration partner - related party	$	1,061	$	1,226	$	(1,267)	$	1,020


	September 30, 2020
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	45,337	$	—	$	—	$	45,337
Commercial paper		—		41,683		—		41,683
Corporate debt securities		—		21,434		—		21,434
U.S. Treasury and agency securities		—		87,205		—		87,205
Total financial assets	$	45,337	$	150,322	$	—	$	195,659


	December 31, 2019
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	12,964	$	—	$	—	$	12,964
Commercial paper		—		44,282		—		44,282
Corporate debt securities		—		33,662		—		33,662
U.S. Treasury and agency securities		—		40,810		—		40,810
Total financial assets	$	12,964	$	118,754	$	—	$	131,718


	September 30, 2020
	Amortized		Gross Unrealized
	Cost		Gains		Losses		Fair Value
Money market funds	$	45,337	$	—	$	—	$	45,337
Commercial paper		41,683		—		—		41,683
Corporate debt securities		21,435		3		(4)		21,434
U.S. Treasury and agency securities		87,195		10		—		87,205
Total cash equivalents and marketable securities	$	195,650	$	13	$	(4)	$	195,659
Classified as:
Cash equivalents							$	79,285
Marketable securities - current								110,349
Marketable securities - noncurrent								6,025
Total cash equivalents and marketable securities							$	195,659


	Annual	September 30,		December 31,
	Interest Rate	2020		2019
Term loan (matures October 1, 2023)	7.85%	$	—	$	10,000
Debt issuance costs, net of amortization			—		(222)
Accrued final payment fee			—		16
Long-term debt, net		$	—	$	9,794



		Weighted-		Weighted-
		Average		Average
		Exercise		Remaining	Aggregate
	Options	Price Per		Contractual	Intrinsic
	Outstanding	Share		Life (years)	Value (1)
					(in millions)
Balances at December 31, 2019	3,681,521	$	11.64	7.78
Options granted	1,370,600		10.32
Options exercised	(257,714)		7.34
Options forfeited	(197,588)		11.88
Balances at September 30, 2020	4,596,819	$	11.47	7.81	$	38.8
Options exercisable – September 30, 2020	2,464,699	$	12.15	6.82	$	19.6
Options vested and expected to vest – September 30, 2020	4,596,819	$	11.47	7.81	$	38.8


	Three Months Ended September 30,		Nine Months Ended September 30,
	2020	2019	2020	2019
Expected term (in years)	5.27 - 6.08	5.00 - 6.08	5.27 - 6.08	5.00 - 6.08
Expected volatility	84.5% - 85.1%	61.0% - 63.4%	72.1% - 85.1%	61.0% - 63.4%
Risk-free interest rate	0.23% - 0.40%	1.42% - 1.90%	0.23% - 1.44%	1.42% - 2.58%
Dividend yield	—	—	—	—


		Weighted
		Average
	Number of	Grant Date
	Shares	Fair Value
Unvested at December 31, 2019	278,482	$	10.08
Granted	142,000		7.80
Vested	(131,147)		9.52
Forfeited	(26,727)		8.97
Unvested at September 30, 2020	262,608	$	9.24


	September 30,
	2020	2019
Options to purchase common stock	4,596,819	3,709,631
Common stock warrants	2,750,000	2,750,000
Restricted stock units	262,608	284,445
ESPP shares	28,618	41,263
Total	7,638,045	6,785,339


	Three Months Ended
	September 30,				Dollar		%
	2020		2019		Change		Change

	(Dollars in thousands)
License and collaboration revenue - related party	$	13,114	$	4,141	$	8,973	217
Operating expenses:
Research and development ⁽¹⁾		15,995		17,293		(1,298)	(8)
General and administrative ⁽²⁾		4,891		4,015		876	22
Total operating expenses		20,886		21,308		(422)	(2)
Loss from operations		(7,772)		(17,167)		9,395	(55)
Interest income		87		762		(675)	(89)
Interest expense		(19)		—		(19)	100
Other expense, net		(59)		(106)		47	(44)
Loss before income tax benefit		(7,763)		(16,511)		8,748	(53)
Income tax benefit		—		102		(102)	(100)
Net loss	$	(7,763)	$	(16,409)	$	8,646	(53)


	Nine Months Ended
	June 30,				Dollar		%
	2020		2019		Change		Change

	(Dollars in thousands)
License and collaboration revenue - related party	$	22,978	$	(2,488)	$	25,466	(1,024)
Operating expenses:
Research and development ⁽¹⁾		55,020		49,092		5,928	12
General and administrative ⁽²⁾		13,644		11,642		2,002	17
Total operating expenses		68,664		60,734		7.930	13
Loss from operations		(45,686)		(63,222)		17,536	(28)
Interest income		820		2,134		(1,314)	(62)
Interest expense		(471)		—		(471)	100
Loss on early repayment of debt		(585)		—		(585)	100
Other expense, net		(37)		(145)		108	74
Loss before income tax (expense) benefit		(45,959)		(61,233)		15,274	(25)
Income tax (expense) benefit		(1,305)		1,547		(2,852)	(184)
Net loss	$	(47,264)	$	(59,686)	$	12,422	(21)


Exhibit		Incorporation By Reference
Number	Exhibit Description	Form	SEC File No.	Exhibit	Filing Date
3.1	Amended and Restated Certificate of Incorporation	8-K	001-37852	3.1	8/16/2016
3.2	Amended and Restated Bylaws	S-1/A	333-212476	3.2	8/1/2016
10.1*	Severance Agreement, dated August 4, 2020, by and between Protagonist Therapeutics, Inc. and Don Kalkofen	10-Q	001-37852	10.1	8/6/2020
31.1+	Certification of Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2+	Certification of Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1+**	Certification of Chief Executive Officer and Chief Financial Officer, as required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350), as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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	PROTAGONIST THERAPEUTICS, INC.


Date: November 4, 2020	By:	/s/ Dinesh V. Patel, Ph.D.
`		Dinesh V. Patel, Ph.D.
		President, Chief Executive Officer and Director
		(Principal Executive Officer)

Date: November 4, 2020	By:	/s/ Don Kalkofen
		Don Kalkofen
		Chief Financial Officer
		(Principal Financial and Accounting Officer)