Stifel starts Protagonist Therapeutics at buy; PT $32

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Stifel launched coverage of Protagonist Therapeutics (NASDAQ:PTGX) with a “buy” rating and a $32 target price. The stock closed at $19.23 on Jan. 26.

Protagonist is leveraging its proprietary peptide technology platform to develop first-in-class, oral and injectable peptide therapeutics. Three clinical programs include two oral peptide products, targeting the multibillion-dollar inflammatory bowel disease (IBD) market (PTG-100 and PTG-200), and one injectable peptide, targeting rare iron overload disorders (PTG-300).

“We believe near-term interim Phase 2b results (go/no go decision based on the data monitoring committee recommendation) for proprietary PTG-100 in moderate-to-severe ulcerative colitis will drive shares higher (if positive), and we see a relatively low hurdle for success,” writes analyst Adam Walsh.

“We expect the Street will view a go-forward data monitoring committee recommendation as highly positive, and for the shares to react accordingly,” he added. Final Phase 2b results are expected in the fourth quarter of 2018.

Janssen, a world leader in IBD, provided significant validation for PTG-200 when it inked a lucrative partnership for the oral drug last May. Janssen already markets Stelara, an injectable antibody for Crohn’s disease that works by a highly similar mechanism as PTG-200. A Phase 1 study is ongoing with results expected in the second quarter of 2018.

With a sub-$400-million market cap, three unique pipeline assets in the clinic targeting potential $1-billion-plus market opportunities, and cash through 2019, “Protagonist appears poised for upside, in our opinion,” Mr. Walsh said.