Protagonist, Janssen Ink Development Deal for Crohn’s Disease Drug

Xconomy San Francisco — 

Protagonist Therapeutics’ work developing an inflammatory bowel disease drug that can be taken as a pill, rather than injected, now has fresh cash and the backing of a large pharmaceutical partner.

Newark, CA-based Protagonist (NASDAQ: PTGX) has entered a partnership with Janssen Biotech to develop and commercialize its drug, PTG-200. Janssen is paying Protagonist $50 million up front, with a commitment for up to $940 million more tied to development, regulatory, and sales milestones. Janssen, a subsidiary of New Brunswick, NJ-based Johnson & Johnson (NYSE: JNJ), would receive worldwide rights to the drug and Protagonist would get royalties on sales of a commercialized product.

Originally founded in Australia, Protagonist focuses on peptides, chains of amino acids that are smaller and more fragile than proteins. While peptide drugs have made their way to the market, Protagonist is one of a few companies developing a peptide drug that can be swallowed rather than injected. The company focused on inflammatory bowel disease (IBD), a chronic condition that causes the body’s immune system to attack the lining of the intestines. Protagonist is led by president and CEO Dinesh Patel (pictured above).

In 2013, Johnson & Johnson Development Corp., the investing arm of the pharma company, led a $14 million Series B round of investment in Protagonist. Two years later, Protagonist raised $40 million in a Series C round of funding to support clinical testing of PTG-100, a peptide drug developed to treat ulcerative colitis, a form of IBD that affects the colon. That drug is now in a Phase 2b clinical trial.

Protagonist plans to test PTG-200 as a potential treatment for Crohn’s disease, a form of IBD that affects the entire gastrointestinal tract. The company plans to begin enrolling a Phase 1 clinical trial testing that drug in the second half of the year.

The agreement with Janssen, which covers all uses of the drug, including ulcerative colitis and Crohn’s disease, calls for the two companies to jointly develop PTG-200 through Phase 2 clinical trials. Janssen would be responsible for funding further clinical testing and, if all goes well, commercialization of the drug. If the drug does reach the market, Protagonist would keep some rights to co-sell it to physicians in the United States using its own sales force.

Protagonist and Janssen expect to close the deal in the third quarter.