Swinging for the Fences with Protagonist Therapeutics Inc (NASDAQ:PTGX)

Protagonist Therapeutics Inc (NASDAQ:PTGX)

Protagonist Therapeutics Inc (NASDAQ:PTGX) shares were up over 80% as the market opened. Protagonist shares closed Friday at $8.22 and gapped up to open today at $12.28 before hitting $14.85 in the first fifteen minutes of trading. After that high was hit in the first fifteen minutes, PTGX shares did not see a print over $13 for the rest of the day. Volumes for the thinly traded micro-cap have exploded to epic levels. PTGX has a 30-day, average daily volume figure of barely more than 26,000. Today PTGX shares exchanged hands over 3.2 million times. That is an increase of over 123 times normal.

Protagonist Therapeutics Inc (NASDAQ:PTGX)
daily 15 minute candle chart

So what caused all of this price and volume activity? This morning, Protagonist Therapeutics Inc (NASDAQ:PTGX) announced that it had entered into a global license and collaboration agreement with Janssen Biotech – a subsidiary of Johnson & Johnson (NYSE:JNJ). The deal surrounds the development and commercialization of PTG-200 – Protagonist’s lead drug candidate. PTG200 is an oral peptide IL-23 receptor antagonist for all indications including inflammatory bowel disease (IBD). Protagonist’s President and Chief Executive Officer Dinesh Patel PhD., stated in the press release that he believes PTG200 will compliment Johnson & Johnson’s drug portfolio addressing IBD.

Terms of the deal include a payment to Protagonist Therapeutics Inc (NASDAQ:PTGX) of $50 million. In the future an additional $940 million in payments may be forthcoming based on development, regulatory, and sales milestones. $940 million in potential milestone payments is an eye-popping figure when you consider that Protagonist Therapeutics Inc (NASDAQ:PTGX) began the day with a market capitalization of less than $145 million. Additionally, upon the successful development and commercialization of PTG200, Protagonist Therapeutics Inc (NASDAQ:PTGX) will be eligible to receive double digit tiered royalties on net product sales.

News of the licensing and collaboration deal likely have some investors breathing sighs of relief. PTYGX shares have been on a slide ever since the beginning of the year and have dumped over 60% of their value. Still, all three analysts that cover PTGX shares have them rated as a ”Strong Buy” with a consensus price target of $23. That is a pretty aggressive price target for a firm that has shed over 60% of its value in less than 100 days and has yet to post any sales – ever. However biotechnology firms are known for their “swing for the fences” risk/reward investment characteristics. No doubt Protagonist Therapeutics Inc (NASDAQ:PTGX) certainly qualifies.

Protagonist Therapeutics Inc (NASDAQ:PTGX)
ptgx 6-month chart

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Marc has a degree in economics and a MSc. in Finance. Over his 20-year career, Marc has worked for global investment firms in Europe and the United States as an analyst, fund manager, and consultant.

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Marc has a degree in economics and a MSc. in Finance. Marc worked for global investment firms in Europe and the United States as an analyst, fund manager, and consultant.

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