Protagonist Therapeutics, Inc (PTGX) stock intrinsic value fair value estimate & owner earnings analysis

Protagonist Therapeutics discovers oral peptide drugs and then licenses them out. It does not sell products itself. Its two proven assets are now both FDA-approved and sold by large partners. Icotyde (icotrokinra) is an oral pill for moderate-to-severe plaque psoriasis, approved March 18, 2026 and marketed by Johnson & Johnson. Protagonist receives royalties of 6% to 10% on worldwide sales, a weighted 7.25% on the first $4 billion a year. Rusfertide (now MIMRYLO) treats erythrocytosis in polycythemia vera. FDA approved it on August 28, 2026, and Takeda sells it. Protagonist chose to step out of the US profit-share and receives royalties of 14% to 29% on worldwide net sales. The company has never had steady earnings. Revenue is milestone payments. It was $26.6 million in 2022, $60.0 million in 2023, $434.4 million in 2024 (including a $165 million Johnson & Johnson milestone and Takeda's upfront payment) and $46.0 million in 2025. Operating expenses run about $204 million a year, so most years show a loss. On our owner-earnings measure (operating cash flow, less working-capital swings, less stock compensation, less maintenance capital spending), the 2020 to 2025 results per diluted share are -$1.80, -$2.63, -$2.56, -$1.41, +$4.14 and -$2.14. That series is too lumpy and too negative to serve as a level for the future. It describes a development-stage business, not the royalty business that exists after the two approvals. We therefore built each case from the contracts and the cash on hand rather than from historical earnings. What is secured. Protagonist ended 2025 with $646 million in cash and securities, and $849.5 million by June 30, 2026, after receiving a $200 million Takeda payment and a $50 million Johnson & Johnson milestone in the second quarter. The August rusfertide approval triggers a further $200 million opt-out payment plus a $75 million approval milestone under the Takeda contract, which the company has not yet reported receiving. After an allowance for tax (only about $238 million of federal losses are available to shelter income) and the second-half spending, we estimate roughly $1.04 billion of cash, about $14.60 per diluted share on about 71 million shares. Every case starts from that cash and then subtracts the cost of running the company, because the company spent about $205 million in 2025 including stock compensation. That spending is treated as a real cost. What we credited and what we left out. Both drugs are approved and launched, which is why royalty income is credited at all. Johnson & Johnson reported over 18,000 Icotyde prescriptions and about 11,000 patient starts in its first 90 days, though it has not disclosed dollar sales. Because sales are undisclosed, the sales levels below are our own judgement, set well under Johnson & Johnson's stated peak view of more than $5 billion, which we treat as a management target. We gave no value to the earlier-stage pipeline (oral IL-17 PN-881, the obesity peptides, oral hepcidin PN-8047), to further milestones that depend on new trials, or to any sales beyond 2036. That year is where the filing supports no clear patent horizon, and we could not locate an Icotyde patent-expiry date in the annual report. Rusfertide's remaining sales milestones were also left out. Bear case, $2.84 per share. Icotyde reaches only about $0.7 billion in annual sales and rusfertide about $0.15 billion, giving royalties of about $66 million a year from 2030. Spending stays near $205 million through 2029 and then drops to about $150 million. Royalties never cover costs, and most of the cash is consumed by 2036. Base case, $12.18 per share. Icotyde reaches about $2 billion in annual sales (royalty about $145 million) and rusfertide about $0.5 billion (royalty about $80 million) by 2031, held there through 2036. Spending is flat at about $205 million. The company burns cash in 2027 to 2029, roughly breaks even in 2030 and earns a small surplus after that. The value is the cash minus about $175 million of present-value burn. Bull case, $29.0 per share. Icotyde reaches about $4 billion in sales and rusfertide about $1 billion by 2031, for royalties near $480 million a year. Two further Icotyde approvals for additional indications pay $25 million and $45 million milestones in 2028 and 2029. Spending is flat, and profits are taxed at 21% after the loss carryforwards are used up. What could make this wrong. Sales could ramp faster than we credited. Icotyde is an oral drug entering a large psoriasis market with a partner that already has a proven IL-23 franchise. Our figures deliberately value only what can be evidenced today. The pipeline, which has already produced two approved drugs from the same discovery platform, could add value we have excluded. In the other direction, the company has tax and spending decisions ahead. It could also cut research spending, which would lift the bear case, though we did not assume it. Icotyde's net price and the ramp of rusfertide's launch could not be established from the filings.