What happened

Shares of Protagonist Therapeutics (PTGX 1.63%) rose by 23.3% for the week, as of Thursday afternoon, according to data provided by S&P Global Market Intelligence. The clinical-stage biotech company's stock closed last week at $18.74 and rose to as high as $23.74 on Thursday. So far this year, its shares are up 118%. 

So what

Protagonist's stock jumped a bit because of increased interest in biotech stocks this week, particularly clinical-stage biotechs with promising therapies. Larger pharmaceutical companies that are facing patent cliffs for their drugs later this decade are looking for new drugs. Johnson & Johnson (JNJ 0.47%), through its subsidiary Janssen Biotech, already has a relationship with Protagonist and could see it as a potential buyout target.

Protagonist uses its peptide technology platform to create new treatments for blood disorders and inflammatory and immunomodulatory diseases. The company's lead therapy, rusfertide, is coming off promising results recently to treat polycythemia vera (PV), a type of chronic cancer characterized by the overproduction of red blood cells. The cancer can cause a variety of symptoms, from severe itching and shortness of breath to poor concentration. According to the study, rusfertide led to a response rate of 69.2% compared to 18.5% with a placebo in patients with PV. While the study took place in March, it has recently been more widely publicized in medical publications. The drug is now in a phase 3 study. Rusfertide has already received Food and Drug Administration (FDA) and European Union orphan designation and FDA fast track designation.

Now what

The company has another pipeline candidate that could soon pay off. JNJ-2113 is in a phase 3 study to treat plaque psoriasis. If the therapy meets its primary endpoint in the study, that would mean milestone payments of $50 million and $115 million from Janssen, with whom it is collaborating on the therapy. Protagonist remains eligible for up to $855 million in various milestone payments and tiered royalties based on worldwide net drug sales.