Protagonist Therapeutics (PTGX.US): Royalties Funding Repeatability - Initiate at Buy

We initiate coverage of Protagonist Therapeutics (PTGX) with a Buy rating and $184 PT. We see three potential drivers of outperformance over the next 12 months: 1) underappreciated commercial potential of PN-881 ("oral Bimzelx"), which we view as PTGX's most important pipeline value driver; 2) potential upward revisions to the Mimrylo royalty, where our 2027/2028 estimates are 89% and 27% above consensus; 3) pipeline optionality from PN-477 (oral/injectable GGG) and PN-8047 (oral hepcidin), neither of which is reflected in our valuation and will have Phase 1 data in 2027. By contrast, we see less potential for near-term upward revisions of the Icotyde royalty. We are more constructive than consensus on PN-881 (we model $5.3B unadjusted 2035 sales vs $2.1B consensus), and we forecast peak Mimrylo sales of $3.8B (vs $2.5B PTGX consensus) and royalty revenue of ~$978M versus ~$687M consensus, reflecting a more constructive view on penetration among eligible PV patients. Our KOL work sugge