Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with our Unaudited Condensed Consolidated Financial Statements and related notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q (the "Quarterly Report") and with our Audited Consolidated Financial Statements and related notes thereto for the year ended December 31, 2025, included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the "SEC") on February 25, 2026.

Forward-Looking Statements

This Quarterly Report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All statements other than statements of historical fact, including statements concerning our plans, objectives, goals, strategies, future events, future revenues or performance, financing needs, expectations, plans or intentions relating to clinical development, product candidates, the regulatory approval process, products and markets, and business trends and other information referred to under the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," are forward-looking statements. These statements are subject to substantial known and unknown risks, uncertainties and other factors that may cause our actual results, outcomes, performance or achievements, or the timing of such results, outcomes, performance or achievements, to be materially different from any results, outcomes, performances or achievements expressed or implied by the forward-looking statements. In some cases, you can identify forward-looking statements by terms such as "anticipates," "assumes," "believes," "commitments," "could," "estimates," "expects," "forecasts," "intends," "may," "plans," "potential," "predicts," "projects," "should," "targets," "will," "would," "seeks" and similar expressions intended to identify forward-looking statements. Forward-looking statements reflect our current views with respect to future events, are based on assumptions, and are subject to risks, uncertainties and other important factors, including, among other things, the commercial acceptance and success of ICOTYDE and MIMRYLO, which depends on the efforts of our collaboration partners; the timing and amount of royalty and milestone payments we receive from our ICOTYDE and MIMRYLO collaborations; the results of ICOTYDE and MIMRYLO clinical trials; the potential for our programs; the timing, initiation, progress and expected results of our clinical trials and research and development programs, including enrollment, data, costs and regulatory submissions and approvals; our cash runway; our ability to advance product candidates into, and successfully complete, non-clinical studies and clinical trials; our eligibility for, and any expected benefits of, any U.S. Food and Drug Administration ("FDA") programs or special designations; the potential for eventual regulatory approval and commercialization of our product candidates; the commercialization of our product candidates, if approved; our ability and the potential to successfully manufacture and supply our product candidates for clinical trials and for commercial use, if approved; the pricing, coverage, and reimbursement of our product candidates, if approved; future operating results; our ability and that of our collaboration partners to generate sales, income or cash flow; our estimates regarding expenses, capital requirements, and potential needs for additional financing and our ability to obtain additional capital; our ability to retain the continued service of our key executives and to identify, hire, and retain additional qualified professionals; developments relating to our competitors and our industry, including competing product candidates and therapies; uncertainty and disruption in the global economy and financial markets due to a number of factors, including but not limited to geopolitical instability, such as the ongoing military conflicts between Russia and Ukraine and in the Middle East and rising tensions between China and Taiwan, elevated and sustained inflation, high oil and other commodity prices and changes in trade policies, including tariffs or other trade restrictions or the threat of such actions and retaliatory actions; the availability of credit; and other factors. Forward-looking statements involve risks, uncertainties and assumptions that are beyond our ability to control or predict, including those risks, uncertainties and assumptions discussed in Part II, Item 1A, of this Quarterly Report, Part 1. Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025 and in our other filings with the SEC. These statements are based on information available to us as of the date of this Quarterly Report and, while we believe such information provides a reasonable basis for these statements, the information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. Given these risks, uncertainties and other important factors, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our estimates and assumptions only as of the date of this Quarterly Report. Except as required by law, we

assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results or outcomes could differ materially from those anticipated in any forward-looking statements, whether as a result of new information, future developments, changes in assumptions or otherwise. We caution investors that our business and financial performance are subject to substantial risks and uncertainties.

"Protagonist," the Protagonist logo and other trademarks, service marks and trade names of Protagonist are registered and unregistered marks of Protagonist Therapeutics, Inc. in the United States and other jurisdictions. Other registered and unregistered trademarks, service marks and trade names are the property of their respective owners.

Overview

We are a biopharmaceutical company built on a proprietary peptide technology platform. Our development products and discovery programs fall into three broad therapeutic areas: (i) inflammation and immunology ("I&I"), (ii) hematology and (iii) metabolic diseases. Our aim is to develop medicines for biologically and commercially validated targets which demonstrate a strong differentiation compared to existing therapies.

ICOTYDE^® (icotrokinra)

ICOTYDE^® (icotrokinra) was approved in the United States in March 2026 for the treatment of moderate-to-severe plaque psoriasis in adults and pediatric patients 12 years of age or older who weigh at least 40 kg and are candidates for systemic therapy or phototherapy. ICOTYDE is the first and only targeted oral peptide that precisely blocks the Interleukin-23 receptor ("IL-23R"), which underpins the inflammatory response in psoriasis and offers potential in other IL-23-mediated diseases. ICOTYDE is licensed to Janssen Biotech, Inc., a Johnson & Johnson company ("JNJ"), under a license and collaboration agreement initially entered into in 2017. Following ICOTYDE's joint discovery by Protagonist and JNJ scientists, we were primarily responsible for the development of ICOTYDE through Phase 1, with JNJ assuming responsibility for further development and commercialization. In September 2026, the European Commission granted approval of JNJ's marketing application for ICOTYDE for the treatment of adults and pediatric patients 12 years of age and older with moderate-to-severe plaque psoriasis. ICOTYDE has also received regulatory approval in Japan and China. ICOTYDE is in Phase 3 development for additional immune-mediated diseases, including psoriatic arthritis, ulcerative colitis and Crohn's disease.

In October 2026 JNJ submitted an abstract accepted for presentation at the American College of Rheumatology Convergence 2026 outlining Week 24 results from a Phase 3, randomized, double-blind, placebo-controlled study evaluating icotrokinra in biologic-naïve participants with active psoriatic arthritis. The publicly released abstract reported that in biologic-naïve patients with active psoriatic arthritis, once-daily ICOTYDE 200 mg demonstrated both joint and skin improvements versus placebo at Week 16, with 400 mg showing no additional benefit beyond the 200 mg dose. Continued improvements were observed through Week 24 for both joint and skin responses. Adverse event profiles were comparable across groups with no new safety signals identified.

In November 2026, JNJ disclosed the following results from the Phase 3 ICONIC-ASCEND study evaluating ICOTYDE in adult and pediatric patients 12 years of age and older with moderate-to-severe plaque psoriasis versus placebo and ustekinumab:

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MIMRYLO™ (rusfertide)

MIMRYLO™ (rusfertide), a subcutaneously delivered first-in-class hepcidin mimetic, was approved in the United States in August 2026 for the treatment of erythrocytosis in adults with the rare blood disorder polycythemia vera ("PV"). On September 30, 2026, MIMRYLO was also approved in the United Arab Emirates. MIMRYLO, the first and only hepcidin mimetic approved for PV, a blood cancer characterized by the excessive production of red blood cells, demonstrated key efficacy outcomes of response rate and hematocrit control as well as fatigue improvement. We discovered MIMRYLO, advanced it into Phase 3 development, and entered into a license and collaboration agreement with Takeda Pharmaceuticals, Inc. ("Takeda") in January 2024 (the "Takeda Collaboration Agreement"). We remained primarily responsible for clinical development activities through MIMRYLO's New Drug Application ("NDA") filing for the treatment of erythrocytosis in patients with PV, which we and Takeda submitted in December 2025, and Takeda is responsible for further development and commercialization. In September 2026, MIMRYLO was added as a Category 1 treatment option for both low- and high-risk PV in the National Comprehensive Cancer Network's updated guidelines. MIMRYLO previously received Orphan Drug designation, which qualifies sponsors for various incentives, including the potential for extended market exclusivity.

IL-17 Program

PN-881. We are developing PN-881, a potential best-in-class oral peptide IL-17 antagonist, for the treatment of immune-mediated skin diseases. PN-881 targets three IL-17 dimers (IL-17 AA, AF and FF), and may offer potential treatment options for plaque psoriasis, psoriatic arthritis, hidradenitis suppurativa, and spondyloarthritis.

In October 2025, the first human subject was dosed in our Phase 1 trial of PN-881 (ClinicalTrials.gov identifier NCT07153146) evaluating its safety, tolerability, pharmacokinetics and pharmacodynamics in healthy adults. We believe data from our completed Phase 1 study supports our decision to advance PN-881 into a comprehensive Phase 2b psoriasis program, with initiation of a dose range-finding study in patients with plaque psoriasis expected in early first quarter 2027. Phase 1 data are expected to be presented at a future medical meeting.

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Obesity Program

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PN-477. In June 2025, we nominated PN-477, a potential best-in-class novel triple GLP-1, GIP and GCG receptor agonist peptide, as a development candidate for the treatment of obesity. In the subcutaneously administered PN-477sc single ascending dose study, we observed positive dose-related pharmacokinetic, pharmacodynamic and clinical activity. Based on these highly encouraging findings, we have made a strategic decision to prioritize the orally administered PN-477o clinical development program. The initiation of a Phase 1 study of PN-477o is anticipated in the first half of 2027.

PN-458. In December 2025, we nominated PN-458, a potential best-in-class novel dual GLP-1 and GIP receptor agonist peptide, as a development candidate for the treatment of obesity. IND-enabling studies are ongoing, with the initiation of a Phase 1 study for the PN-458 oral formulation anticipated in the second half of 2027.

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Oral Hepcidin Program

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PN-8047. In December 2025, we nominated development candidate PN-8047, an orally administered small molecule hepcidin functional mimetic, which we believe may be complementary to the injectable MIMRYLO for offering the best treatment options for PV. IND-enabling studies for PN-8047 are ongoing, with the initiation of a Phase 1 study anticipated in the first quarter of 2027.

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Other Programs

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We also have pre-clinical stage drug discovery programs addressing biologically and commercially validated targets, including an oral IL-4R alpha antagonist for the treatment of atopic dermatitis and moderate-to-severe asthma, and amylinR-based mono- and poly-agonists for the treatment of obesity.

Significant Cash Resources

We ended the third quarter of 2026 with cash, cash equivalents and marketable securities of approximately $834.6 million, as compared to cash, cash equivalents and marketable securities of approximately $646.0 million as of December 31, 2025. For the remainder of 2026 and beyond, we are eligible to receive significant milestone, royalty and other payments from our collaborations with JNJ and Takeda, as described below.

License and Collaboration Agreements

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JNJ License and Collaboration Agreement

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We and JNJ are parties to a license and collaboration agreement related to the development and commercialization of ICOTYDE. We entered into the agreement in July 2017, and amended it in May 2019, July 2021 and November 2024 (as amended, the "JNJ License and Collaboration Agreement"). Pursuant to the JNJ License and Collaboration Agreement, we were primarily responsible for the discovery, IND-enabling studies, and the initial Phase 1 study for ICOTYDE, and JNJ is responsible for conducting all further development.

In March 2026, we earned a $50.0 million milestone payment upon FDA approval of ICOTYDE for the treatment of moderate-to-severe plaque psoriasis in adults and pediatric patients 12 years of age or older who weigh at least 40 kg and are candidates for systemic therapy or phototherapy. As of September 30, 2026, we have earned a total of $387.5 million in non-refundable upfront and milestone payments from JNJ under the agreement. We are eligible to receive up to $580.0 million in future development and sales milestone payments, including the following potential milestones:

We are also eligible to receive upward tiered royalties on net worldwide ICOTYDE product sales at percentages ranging from 6% to 10%. Our weighted-average royalty rate on the first $4.0 billion in annual net sales is 7.25%, and the rate on net sales over $4.0 billion is 10%. The ultimate magnitude of our royalty stream, along with the achievement of development and commercial milestones, will depend upon ICOTYDE's commercial launch success and market trajectory, which depends on the efforts of our collaboration partner, as well as the successful clinical development, regulatory approval, and commercialization of ICOTYDE in the additional indications currently being studied.

Takeda Collaboration Agreement

In January 2024, we entered into the Takeda Collaboration Agreement related to MIMRYLO (and specified second-generation injectable hepcidin mimetic compounds developed and commercialized under the agreement that are not currently in development). In December 2025, we and Takeda submitted an NDA to the FDA for MIMRYLO in PV, which was approved in August 2026. We were primarily responsible for the clinical development of MIMRYLO through NDA filing and remain primarily responsible for conducting ongoing MIMRYLO long-term extension studies. Under the terms of the agreement, we received an upfront payment of $300.0 million in April 2024 and a $25.0 million milestone payment in September 2025 upon completion of the Phase 3 VERIFY clinical trial (NCT05210790) report.

Effective April 28, 2026, we exercised our right to opt out of the U.S. profit and loss sharing arrangement (50% to us and 50% to Takeda) under the Takeda Collaboration Agreement. The opt-out election triggered a $200.0 million payment to us, which we received in the second quarter of 2026. In August 2026, we earned an additional $200.0 million opt-out payment and a separate $75.0 million milestone upon FDA approval of MIMRYLO, which were received in October 2026. Following the opt-out, Takeda has an exclusive worldwide license to develop and commercialize MIMRYLO, and we are eligible to receive tiered royalties ranging from 14% to 29% on annual worldwide net sales,

with an approximate weighted-average royalty rate of 21% at $1.5 billion in annual net sales and a rate of 29% for incremental annual net sales over $1.5 billion. In addition, under the agreement, we are eligible to receive up to $800.0 million in potential development and sales milestones for MIMRYLO in PV as follows:

The receipt of future royalties and commercial milestones is contingent upon the relevant products achieving a successful commercial launch, which depends on the efforts of our collaboration partner.

Risks and Uncertainties

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We describe the respective risks, uncertainties and assumptions that could affect our business, financial condition or results of operations in Part II, Item 1A. "Risk Factors" herein, Part II, Item 1A. "Risk Factors" in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2026 and in Part I, Item 1A. "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2025.

Operations

We have incurred cumulative net losses from inception through September 30, 2026 of $84.0 million. Substantially all of our net losses have resulted from costs incurred in connection with our research and development programs and from general and administrative costs associated with our operations. We expect to continue to incur significant research and development expenses, and other expenses related to our ongoing operations, clinical development and pre-clinical discovery programs.

Critical Accounting Policies and Estimates

Our management's discussion and analysis of our financial condition and results of operations is based on our unaudited condensed consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP"). The preparation of these unaudited condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the unaudited condensed consolidated financial statements, as well as the reported revenue generated and expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, and the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

There have been no material changes to our critical accounting policies during the three and nine months ended September 30, 2026, as compared to those disclosed in "Management's Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies and Estimates" in our Annual Report for the year ended December 31, 2025 filed with the SEC on February 25, 2026.

Components of Our Results of Operations

License and Collaboration Revenue

Our license and collaboration revenue is derived from payments we receive from our collaboration partners under the JNJ License and Collaboration Agreement and the Takeda Collaboration Agreement. See Note 3 to the condensed consolidated financial statements included elsewhere in this Quarterly Report for additional information.

Early in a product launch, prescription volume and recognized royalty revenue may not move in parallel. Commercial launches often include access-support initiatives, such as starter packs and bridge programs designed to help patients initiate therapy while reimbursement pathways are established. As a result, prescription activity can serve as a leading indicator of strong adoption, while associated royalty revenue may lag in the near term as prescriptions convert into reimbursed, recurring product sales.

Cost of Revenue

Cost of revenue represents costs incurred pursuant to a collaboration agreement entered into in June 2012 and a related arbitration resolution agreement entered into in August 2021 between us and Zealand Pharma A/S ("Zealand"). We are obligated to pay Zealand certain milestone and royalty payments for MIMRYLO. These payments are recorded as cost of revenue in the period in which they are incurred. As of September 30, 2026, remaining potential payments under the agreement include: (i) up to $1.65 million in development milestone payments; (ii) a 1% royalty on worldwide net sales of MIMRYLO; and (iii) sales milestone payments on achievement of specified annual net sales amounts in specified geographies.

Research and Development Expenses

Research and development expenses represent costs incurred to conduct research, such as the discovery and development of our product candidates. We recognize all research and development costs as they are incurred unless there is an alternative future use in other research and development projects or otherwise. Non-refundable advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received rather than when payment has been made. In instances where we enter into agreements with third parties to provide research and development services to us, costs are expensed as services are performed. Amounts due under such arrangements may be either fixed fee or fee for service and may include upfront payments, monthly payments, and payments upon the completion of milestones or the receipt of deliverables.

Research and development expenses consist primarily of the following:

We allocate direct and indirect costs incurred to product candidates when they enter clinical development. For product candidates in clinical development, direct costs consist primarily of clinical, pre-clinical, and drug discovery costs, costs of supplying drug substance and drug product for use in clinical and pre-clinical studies, including clinical manufacturing costs, contract research organization fees, and other contracted services pertaining to specific clinical and pre-clinical studies. Indirect costs allocated to our product candidates on a program-specific basis include research and development employee salaries, benefits, and stock-based compensation, and indirect overhead and other administrative support costs. Program-specific costs are unallocated when the related expenses are incurred for our early-stage research and drug discovery projects as our internal resources, employees and infrastructure are not tied to any one research or drug discovery project and are typically deployed across multiple projects. As such, we do not provide financial information regarding the costs incurred for early-stage pre-clinical and drug discovery programs on a program-specific basis prior to the clinical development stage.

The process of conducting research, identifying potential product candidates, conducting pre-clinical studies and clinical trials necessary to obtain regulatory approval and commencing pre-commercialization activities is costly and time intensive. We may never succeed in achieving marketing approval for our current or future product candidates regardless of our costs and efforts. The probability of success of our product candidates may be affected by numerous factors, including pre-clinical data, clinical data, competition, manufacturing capability, our cost of goods to be sold, our ability to receive, and the timing of, regulatory approvals, market conditions, and our ability to successfully commercialize our products if they are approved for marketing. As a result, we are unable to determine the duration and completion costs of our research and development projects or when and to what extent we will be able to generate revenue from the commercialization and sale of any of our current or future product candidates. Our research and development programs are subject to change from time to time as we evaluate our priorities and available resources.

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General and Administrative Expenses

General and administrative expenses consist of personnel costs, allocated costs and other expenses for outside professional services, including legal, human resources, audit and accounting services. Personnel costs consist of salaries, benefits and stock-based compensation. Allocated costs consist of expenses for rent and maintenance of facilities, information technology, depreciation and amortization expense and administrative supplies. We expect to continue to incur expenses to support our continued operations as a public company, including expenses related to compliance with the rules and regulations of the SEC and those of the national securities exchange on which our securities are traded, insurance expenses, investor relations expenses, audit fees, professional services and general overhead and administrative costs.

Interest Income

Interest income consists of interest earned on our cash, cash equivalents and marketable securities, which is comprised of contractual interest, premium amortization and discount accretion.

Other (Expense) Income, Net

Other (expense) income, net consists primarily of amounts related to foreign exchange gains and losses, realized gains and losses on sale of marketable securities and related items.

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Results of Operations

Comparison of the Three Months Ended September 30, 2026 and 2025

*Percentage not meaningful.

License and Collaboration Revenue

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Our revenue is derived from licensing and collaboration agreements and is highly variable and dependent upon factors such as the timing of when regulatory and sales milestones are achieved, if at all, commercial launch efforts by our collaboration partners, and the accounting for any upfront payments associated with any existing or new agreements.

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For the three months ended September 30, 2026, we recognized license and collaboration revenue of $274.4 million. This revenue was primarily driven by the proportional recognition of $266.6 million related to the $275.0 million in total opt-out and milestone payments earned under the Takeda Collaboration Agreement during the period, ongoing development services, and other revenues.

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License and collaboration revenue for the three months ended September 30, 2025 was $4.7 million and was related to the Takeda Collaboration Agreement for development services provided by us during the period based on the cost-based input method.

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Cost of Revenue

For the three months ended September 30, 2026, we recorded cost of revenue of $1.1 million for a milestone payment due to Zealand upon the FDA's approval and the commercial launch of MIMRYLO. No expense was recorded for cost of revenue for the three months ended September 30, 2025.

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Research and Development Expenses

Research and development expenses increased $1.3 million, as detailed in the table below:

*Percentage not meaningful.

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We had 111 and 99 full-time equivalent research and development headcount as of September 30, 2026 and 2025, respectively. Research and development personnel-related expenses for the three months ended September 30, 2026 increased by $0.6 million as compared to the three months ended September 30, 2025, primarily driven by increases in wages, benefits and stock-based compensation.

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We expect research and development expenses to increase for the remainder of the year as compared to the prior quarters in 2026. The increase is expected to be driven primarily by the advancement of PN-881 into a comprehensive Phase 2b psoriasis program, planned investments in clinical manufacturing and related activities, including at-risk expenditures to ensure readiness for other programs as they advance to clinical development (PN-477o, PN-458, PN-8047), additional pre-clinical discovery programs, and increases in headcount and stock-based compensation expense. The timing and magnitude of these expenses will vary depending on the progress of our programs, including the initiation and pace of clinical trials and related development activities.

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General and Administrative Expenses

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General and administrative expenses increased $2.6 million, or 23%, from $11.1 million for the three months ended September 30, 2025 to $13.7 million for the three months ended September 30, 2026. The increase was primarily due to an increase in personnel-related expenses driven by increases in wages, benefits and stock-based compensation.

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We had 38 and 29 full-time equivalent general and administrative headcount as of September 30, 2026 and 2025, respectively.

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Interest Income

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Interest income increased by $1.2 million, or 17%, from $7.0 million for the three months ended September 30, 2025 to $8.2 million for the three months ended September 30, 2026 primarily due to higher average investment balances as compared to the prior period.

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Income Tax Expense

Income tax expense was $6.6 million and zero for the three months ended September 30, 2026 and 2025, respectively. The increase in income tax expense for the three months ended September 30, 2026 was primarily due to pretax income recorded as compared to a pretax loss for the prior year period. The effective tax rate was 2.9% and 0% for the three months ended September 30, 2026 and 2025, respectively.

Comparison of the Nine Months Ended September 30, 2026 and 2025

*Percentage not meaningful.

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License and Collaboration Revenue

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Our revenue is derived from licensing and collaboration agreements and is highly variable and dependent upon factors such as the timing of when regulatory and sales milestones are achieved, if at all, commercial launch efforts by our collaboration partners, and the accounting for any upfront payments associated with any existing or new agreements.

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For the nine months ended September 30, 2026, we recognized license and collaboration revenue of $544.3 million. This revenue was primarily driven by proportional recognition of $460.5 million related to the $475.0 million in total opt-out and milestone payments earned under the Takeda Collaboration Agreement during the period, ongoing development services, and other revenues, and (ii) a $50.0 million milestone payment related to the JNJ License and Collaboration Agreement, and other revenues.

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License and collaboration revenue for the nine months ended September 30, 2025 was $38.6 million and was related to the Takeda Collaboration Agreement, which consisted of (i) $21.3 million representing a portion of the $25.0 million milestone payment received in September 2025 that was allocated to the MIMRYLO license delivery performance obligation under the agreement and (ii) $17.3 million for development services provided by us during the period based on the cost-based input method.

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Cost of Revenue

For the nine months ended September 30, 2026, we recorded cost of revenue of $1.1 million for a milestone payment due to Zealand upon the FDA's approval and the commercial launch of MIMRYLO. No expense was recorded for cost of revenue for the nine months ended September 30, 2025.

Research and Development Expenses

Research and development expenses increased $17.1 million, as detailed in the table below:

*Percentage not meaningful.

We had 111 and 99 full-time equivalent research and development headcount as of September 30, 2026 and 2025, respectively. Research and development personnel-related expenses for the nine months ended September 30, 2026 increased by $5.4 million as compared to the nine months ended September 30, 2025, primarily driven by increases in wages, benefits and stock-based compensation.

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We expect research and development expenses to increase for the remainder of the year as compared to the prior quarters in 2026. The increase is expected to be driven primarily by the advancement of PN-881 into a comprehensive Phase 2b psoriasis program, planned investments in clinical manufacturing and related activities, including at-risk expenditures to ensure readiness for other programs as they advance to clinical development (PN-477o, PN-458, PN-8047), additional pre-clinical discovery programs, and increases in headcount and stock-based compensation expense. The timing and magnitude of these expenses will vary depending on the progress of our programs, including the initiation and pace of clinical trials and related development activities.

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General and Administrative Expenses

General and administrative expenses increased $6.2 million, or 19%, from $33.4 million for the nine months ended September 30, 2025 to $39.6 million for the nine months ended September 30, 2026. The increase was primarily due to an increase in personnel-related expenses, primarily driven by increases in wages, benefits and stock-based compensation.

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We had 38 and 29 full-time equivalent general and administrative headcount as of September 30, 2026 and 2025, respectively.

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Interest Income

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Interest income decreased by $1.5 million, or 7%, from $22.0 million for the nine months ended September 30, 2025 to $20.6 million for the nine months ended September 30, 2026 primarily due to lower average investment balances as compared to the prior year period.

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Income Tax Expense

Income tax expense was $7.3 million and $0.2 million for the nine months ended September 30, 2026 and 2025, respectively. The increase in income tax expense for the nine months ended September 30, 2026 was primarily due to pretax income recorded as compared to a pretax loss for the prior year period. The effective tax rate was 1.9% and 0% for the nine months ended September 30, 2026 and 2025, respectively.

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Liquidity and Capital Resources

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Sources of Liquidity

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We had $834.6 million and $646.0 million in cash, cash equivalents and marketable securities as of September 30, 2026 and December 31, 2025, respectively. Historically, we have funded our operations primarily from receipt of payments under collaboration agreements, as discussed in "License and Collaboration Agreements" above, and net proceeds from the sale of shares of our common stock.

Capital Requirements

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As of September 30, 2026, we had $834.6 million in cash, cash equivalents and marketable securities and an accumulated deficit of $84.0 million. Our capital expenditures were $0.6 million and $1.6 million for the nine months ended September 30, 2026 and the year ended December 31, 2025, respectively. Our primary uses of cash are to fund our costs and operating expenses, including our cost of revenue, research and development expenditures and general and administrative costs. We expect that our existing cash, cash equivalents and marketable securities will be sufficient to fund our operations for at least the next twelve months from the date of this Quarterly Report based on current operating plans and financial forecasts.

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We do not currently anticipate a need for additional funding in the near term. However, we may require additional funding in the future to advance our discovery pipeline and to develop, acquire, or in-license other potential product candidates. Our future funding requirements will depend on many factors, including those described in Part II, Item 1A, "Risk Factors" herein, Part II, Item 1A. "Risk Factors" in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2026 and in Part I, Item 1A, "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2025. Such additional funding may come from various sources, including raising additional capital, seeking access to debt, and seeking additional collaborative or other arrangements with partners, but such funding may not be available on terms acceptable to us, if at all.

Stock Repurchase Program

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On September 8, 2026, we announced that our board of directors authorized a stock repurchase program under which the Company may repurchase up to $300.0 million of its outstanding common stock (the "Repurchase Program"). The Repurchase Program has no fixed expiration, does not obligate us to repurchase any specific number of shares and may be modified, suspended or discontinued at any time without prior notice. We intend to fund repurchases from our cash, cash equivalents and marketable securities, as well as royalties and other payments received under our collaboration arrangements with Takeda related to MIMRYLO and JNJ related to ICOTYDE. The timing and amount of any repurchases will depend on market conditions, alternative capital deployment opportunities and other factors. During the three months ended September 30, 2026, we repurchased 40,560 shares of our common stock under the Repurchase Program for an aggregate purchase price of $5.8 million, which are held as Treasury shares. As of September 30, 2026, $294.2 million remained available and authorized for repurchase under the Repurchase Program.

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Cash Flows

The following table summarizes our cash flows for the periods indicated:

Cash Provided by Operating Activities

Cash provided by operating activities for the nine months ended September 30, 2026 was $146.9 million and consisted primarily of net income of $386.6 million and certain non-cash items, including $42.9 million of stock-based compensation expense, partially offset by a net change of $282.1 million in net operating assets and liabilities. The $52.2 million increase in cash provided by operating activities during the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025, was primarily due to a $472.4 million increase in net income related to opt-out and milestone payments earned during the period, a $20.3 million increase in deferred revenue and a $6.9 million increase in income taxes payable, partially offset by a $448.1 million change in receivable from collaboration partner.

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Cash Provided by (Used in) Investing Activities

Cash provided by investing activities for the nine months ended September 30, 2026 was $181.9 million and consisted primarily of proceeds from maturities and sales of marketable securities of $395.1 million, partially offset by purchases of marketable securities of $212.6 million and purchases of property and equipment of $0.6 million. The $280.0 million increase in cash provided by investing activities for the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025, was primarily related to the investment of payments received from collaboration partners in 2026. Purchases of property and equipment were primarily related to laboratory equipment and furniture and fixtures.

Cash Provided by Financing Activities

Cash provided by financing activities for the nine months ended September 30, 2026 was $41.1 million and consisted of net cash proceeds of $46.9 million from the issuance of common stock upon exercises of stock options and purchases of stock under our employee stock purchase plan ("ESPP"), partially offset by $5.8 million in stock repurchases. The $21.1 million increase in cash provided by financing activities for the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025, was primarily due to a $26.4 million increase in proceeds from the issuance of common stock upon exercise of options and purchases of common stock under the ESPP, partially offset by $5.8 million in stock repurchases.

Contractual Obligations and Other Commitments

During the nine months ended September 30, 2026, there were no material changes to our material cash requirements, including commitments for capital expenditures, described under Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on February 25, 2026.

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