Dive Brief:

• Protagonist Therapeutics, a biotechnology company focused on peptide drugs, is teaming up with Takeda Pharmaceutical on an experimental, injectable medicine for a rare blood disorder.
• Per terms of the deal announced Wednesday, Takeda will pay Protagonist $300 million upfront as well as royalties and extra cash for reaching certain milestones. In exchange, the Japan-based drugmaker will gain all rights to the drug outside the U.S., while Protagonist has the option to co-promote the product in the U.S. and share profits there equally.
• The medicine, known scientifically as rusfertide, is currently in Phase 3 testing for polycythemia vera, which triggers the body to produce excess red blood cells and affects an estimated 100,000 to 160,000 people in the U.S. Protagonist will continue to be responsible for the trial and for U.S. regulatory approval.

Dive Insight:

The agreement gives Protagonist cash to advance its pipeline, including bringing compounds at the earlier stages of research into human testing. Additionally, it gives the company an experienced hand in Takeda, which expects to record almost 4 trillion yen, or roughly $27 billion, in revenue in its current fiscal year and has recently bolstered its hematology business with the approval of a new drug called Adzynma.

In a statement, Protagonist’s CEO Dinesh Patel said the deal will allow his company to focus on completing late-stage testing of its drug “while leveraging Takeda’s exceptional global commercialization capabilities to immediately commence pre-commercial activities.” Importantly, it also “mitigates the inherent execution risks of a first-time commercial launch” for Protagonist.

A so-called hepcidin mimetic peptide, rusfertide offers a new way to treat polycythemia vera and potentially minimize the life-threatening risks of the disease. Researchers believe the drug works by regulating the body’s absorption, storage and distribution of iron.

In addition to rusfertide, the deal with Takeda includes rights to second-generation hepcidin mimetic compounds.

As part of the agreement, Protagonist can opt out of the U.S. profit-sharing arrangement entirely during a certain period after filing the approval application for rusfertide with the Food and Drug Administration. That would trigger as much as $1.38 billion in additional payments for reaching certain milestones, plus worldwide royalties of 14-29%. Otherwise, Protagonist would be eligible for $330 million in milestone payments and royalties of 10-17% outside the U.S. in addition to half the profits inside the U.S.

The opt-out math puts the floor value of the drug at $1.7 billion, according to Jefferies analyst Roger Song. “We think this is a good deal, as rusfertide has been well underappreciated by the Street,” he wrote in a note to clients.

Protagonist executives are currently leaning toward opting into the profit-sharing arrangement but have plenty of time to evaluate the best path forward, Song added.