BMO Capital Lifts Protagonist Therapeutics Target On J&J Deal Hopes — Retail Traders Pile In

The research firm said its higher target better reflects the value of Protagonist’s key drug assets, Rusfertide and Icotrokinra.

BMO Capital raised its price target on Protagonist Therapeutics to $112 from $72 and maintained an 'Outperform' rating, citing reports that Johnson & Johnson may acquire the biotech firm. 

In a note to investors, the firm said its updated model better reflects the potential value of Protagonist’s two key drug assets, Rusfertide and Icotrokinra, for an acquirer, and that the market is “underpricing what Protagonist could be worth.”

Protagonist Therapeutics’ stock fell 9% to $79.17 on Monday, marking its worst trading session in more than three months, before edging up 0.1% in after-hours trade.

J&J is reportedly in talks to buy Protagonist in a deal that would strengthen its existing partnership on an oral therapy for immune diseases such as plaque psoriasis and ulcerative colitis, for which J&J already holds exclusive commercialization rights. The healthcare giant also owns nearly 4% of Protagonist’s shares, The Wall Street Journal reported last week.

An acquisition would give J&J access to Rusfertide, which has shown promise in late-stage trials for polycythemia vera, a rare blood cancer. Both Rusfertide and Icotrokinra would complement J&J’s existing portfolio of immune and oncology treatments.

Meanwhile, J&J is seeking acquisitions to offset declining sales of its blockbuster immune-disease drug Stelara, now facing biosimilar competition.

On Stocktwits, retail sentiment was ‘bullish’ for Protagonist Therapeutics with ‘extremely high’ message volume, while sentiment toward Johnson & Johnson was ‘extremely bullish’ amid normal activity.

One user called the pullback in Protagonist a “great buying opportunity,” arguing that retail investors were mistaken to think the company would sell for less than $5 billion. 

On the other hand, another user predicted the potential deal could value Protagonist shares at around $35.

So far this year, Protagonist shares have more than doubled in value, while Johnson & Johnson shares have gained about 35%.

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