Note 3. License and Collaboration Agreements

JNJ License and Collaboration Agreement

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In November 2024, the Company entered into an Amended and Restated License and Collaboration Agreement with JNJ, which amended and restated the License and Collaboration Agreement, effective July 2017, by and between the Company and JNJ, as amended in May 2019 and July 2021 (together, the “JNJ License and Collaboration Agreement”). The JNJ License and Collaboration Agreement relates to the development, manufacture and commercialization of oral IL-23R antagonist drug candidates and enables JNJ to develop collaboration compounds for multiple indications. Under the JNJ License and Collaboration Agreement, JNJ is required to use commercially reasonable efforts to develop at least one collaboration compound for at least two indications.

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During the first quarter of 2026, the Company 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. The Company has earned a total of $387.5 million in non-refundable upfront and milestone payments from JNJ under the JNJ License and Collaboration Agreement from inception in 2017 through June 30, 2026.

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Upcoming potential development milestones under the JNJ License and Collaboration Agreement include:

Pursuant to the agreement, the Company is eligible to receive future sales milestone payments and tiered royalties on net product sales at percentages ranging from 6% to 10%. In addition, the Company remains eligible to receive sales milestones of up to $425.0 million.

Takeda Collaboration Agreement

In January 2024, the Company entered into a worldwide license and collaboration agreement for rusfertide with Takeda, which became effective in March 2024, and was amended in March 2025 (the “Takeda Collaboration Agreement”).

Pursuant to the Takeda Collaboration Agreement, the Company and Takeda agreed to jointly develop and commercialize rusfertide and potentially other specified second-generation injectable hepcidin mimetic compounds (the “Licensed Products”) in the United States (the “Profit-Share Territory”). Takeda was solely and exclusively responsible for the development and commercialization of the Licensed Products in all other countries (the “Takeda Territory”). The Company and Takeda shared the costs of the development, manufacture and commercialization activities for the Licensed Products in the Profit-Share Territory, provided that (i) the Company led, and was solely responsible for its costs associated with, completion of the ongoing Phase 3 VERIFY trial evaluating rusfertide for the treatment of PV; (ii) Takeda led, and was solely responsible for its costs associated with, U.S. regulatory and pre-commercialization activities related to rusfertide in the Profit-Share Territory; and (iii) Takeda led commercialization of rusfertide in the Profit-Share Territory, though the Company held an option to co-detail. Takeda was solely responsible for all costs for the development, manufacture and commercialization of the Licensed Products in the Takeda Territory. The Company granted Takeda a non-transferable, sublicensable and, except for certain specified exceptions, exclusive license to certain intellectual property of the Company to exercise its rights and perform its obligations under the Takeda Collaboration Agreement. In March 2025, the Company and Takeda agreed, pursuant to the provisions of the Takeda Collaboration Agreement, as amended, that Takeda would assume responsibility for leading and implementing the regulatory strategy and associated activities for preparation of the NDA related to rusfertide in PV, which was submitted to the FDA in December 2025. The Company was primarily responsible for clinical development activities through the NDA filing and for conducting ongoing rusfertide long-term extension studies.

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Pursuant to the Takeda Collaboration Agreement, the Company received a one-time, non-refundable upfront payment of $300.0 million in April 2024 and a $25.0 million milestone payment in September 2025.

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On April 28, 2026, the Company announced that it exercised its right to opt out of the U.S. profit and loss sharing arrangement (50% to the Company and 50% to Takeda) under the Takeda Collaboration Agreement. Following the Company’s exercise of the opt-out right, the Company has agreed to transition applicable development and commercial activities to Takeda, and Takeda has the right to assume sole operational and financial responsibility for such activities in the United States. The opt-out election triggered a $200.0 million payment, with an additional $200.0 million opt-out fee and a separate $75.0 million milestone due upon FDA approval of rusfertide. Following the opt-out, the Company is also eligible to receive up to $775.0 million in sales milestone payments and tiered royalties ranging from 14% to 29% on annual net worldwide sales, with an approximate 21% weighted-average royalty rate at $1.5 billion in annual net sales and a 29% tier applying to incremental annual net sales above $1.5 billion.

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Upcoming potential development milestones under the Takeda Collaboration Agreement include:

The Company is obligated to perform certain wind-down activities during the three-month opt-out wind-down period which includes transferring the VERIFY trial and other projects to Takeda, overseeing vendors and development activities until such activities are fully transferred to Takeda, and continuing to perform the rusfertide open label extension. Such costs during the wind-down period (from April 28, 2026 to July 27, 2026) are shared (50%) with Takeda and the Company aims to transfer the majority of the activities to Takeda by July 27, 2026. As agreed upon with Takeda, Protagonist will continue work for the rusfertide open-label extension after the wind-down period until completion, which is expected in the first quarter of 2027. Costs incurred by Protagonist for any remaining wind-down activities and rusfertide open-label extension after July 27, 2026 will be fully reimbursed by Takeda.

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The Company initially evaluated the Takeda Collaboration Agreement and concluded that it had elements that were within the scope of ASC Topic 606 and ASC Topic 808. As of the effective date of the Takeda Collaboration Agreement, the Company identified two distinct performance obligations: (i) the rusfertide license delivered upon the effectiveness of the Takeda Collaboration Agreement and (ii) certain development services to be provided prior to the opt-out period, including certain of the Company’s responsibilities to complete the VERIFY Phase 3 clinical trial in PV and associated manufacturing services. Following the completion of the wind-down period on July 27, 2026, the Takeda Collaboration Agreement will no longer meet the definition of a collaborative arrangement under ASC Topic 808.

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The Company determined that the initial transaction price totaled $300.0 million, which was comprised of the upfront payment. The Company initially excluded any future estimated milestones or royalties from this transaction price, all of which were either constrained or subject to the sales-and usage-based royalty exception. As part of the Company’s evaluation of this variable consideration constraint, it determined that the potential payments were contingent upon developmental and regulatory milestones that were uncertain and were highly susceptible to factors outside of its control. The Company allocated $254.1 million of the initial transaction price to the license and $45.9 million to the development services based upon the relative standalone selling price of each performance obligation. The estimate of standalone selling price for the license was determined based on discounted cash flows for the expected development and commercialization of rusfertide and included assumptions for forecasted revenues, development timelines and expenses, discount rates, and probabilities of technical and regulatory success. The estimate of standalone selling price for the development services was determined based on forecasted costs and expenses over the expected development period. For the license of rusfertide, the Company determined that Takeda could benefit from the license at the time the license was granted and therefore, the related performance obligation was satisfied at that point in time.

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The amount allocated to the license, which represents functional intellectual property that was transferred at a point in time, was satisfied upon transfer of the license to Takeda. The amount allocated to development services will be recognized over time based on a measure of the Company’s efforts toward satisfying the performance obligation relative to the total expected efforts or inputs to satisfy the performance obligation (e.g., costs incurred compared to total budget). As of the opt-out date, the development services performance obligation remained partially unsatisfied.

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The exercise of the opt-out right results in a contract modification under ASC Topic 606 because it changes the enforceable rights and obligations of the parties under the Takeda Collaboration Agreement. As a result, the remaining unconstrained consideration was allocated to the remaining development services performance obligation, and the modification was accounted for as part of the existing contract.

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Revenue Recognition

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For the three months ended June 30, 2026, the Company recognized license and collaboration revenue of $213.5 million. This included $202.5 million under the Takeda Collaboration Agreement using the cost-based input method for development services, consisting of (i) $192.4 million related to the proportional recognition of the $200.0 million opt-out payment, (ii) $5.7 million related to cost reimbursement for post opt-out wind-down services provided by the Company, $3.4 million of which was recorded as a contract asset, and (iii) $4.4 million related to the initial upfront payment and milestones received to date. In addition, the Company recognized revenue during the period of $11.0 million for rusfertide clinical supplies under the Takeda Collaboration Agreement and other revenues. The remaining $7.6 million in revenue related to the $200.0 million opt-out payment under the Takeda Collaboration Agreement was recorded as deferred revenue on the Company’s condensed consolidated balance sheet and is expected to be recognized through the conclusion of the development services performance obligation.

For the six months ended June 30, 2026, the Company recognized license and collaboration revenue of $269.8 million. This included $205.7 million under the Takeda Collaboration Agreement using the cost-based input method for development services, consisting of (i) $192.4 million related to the proportional recognition of the $200.0 million opt-out payment, (ii) $5.7 million related to cost reimbursement for post opt-out wind-down services provided by the Company, $3.4 million of which was recorded as a contract asset, and (iii) $7.6 million related to the initial upfront payment and milestones received to date. In addition, the Company recognized a $50.0 million milestone payment related to the JNJ License and Collaboration Agreement, which was earned upon FDA approval of ICOTYDE for the treatment of moderate-to-severe plaque psoriasis, and $14.1 million for rusfertide clinical supplies under the Takeda Collaboration Agreement and other revenues.

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For the three and six months ended June 30, 2026, the Company recognized $4.4 million and $7.6 million of revenue, respectively, that was included in the deferred revenue balance at the beginning of the period. None of the costs to obtain or fulfill the contracts were capitalized.