PGNX: Progenics Pharmaceuticals Analysis and Research Report

2018-07-02 - by Asif , Contributing Analyst - 131 views

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Business Overview

The company develop innovative medicines and other technologies to target and treat cancer. The company's pipeline includes: (1) therapeutic agents designed to precisely target cancer (AZEDRA, 1095, and PSMA TTC); (2) prostate-specific membrane antigen (“PSMA”) targeted imaging agents for prostate cancer (1404 and PyLTM); and (3) imaging analysis technology. The company's first commercial product, RELISTOR (methylnaltrexone bromide) for opioid-induced constipation, is partnered with Salix Pharmaceuticals, Inc. (a wholly-owned subsidiary of Valeant Pharmaceuticals International, Inc. (“Valeant”)).

On October 31, 2017, the company completed the rolling submission of its NDA for AZEDRA. The FDA has accepted its NDA for review, granted its request for Priority Review, and set an initial action date of April 30, 2018 under the PDUFA, which was extended in March by three months to July 30, 2018. Progenics Pharmaceuticals is developing AZEDRA as a treatment for patients with malignant, recurrent, and/or unresectable pheochromocytoma and paraganglioma, which are rare neuroendocrine tumors. There are currently no approved therapies in the U.S. for the treatment of these ultra-rare diseases. While AZEDRA has received Breakthrough Therapy, Orphan Drug, and Fast Track designations from the FDA, there can be no assurance that its NDA will be approved.

Progenics Pharmaceuticals has licensed RELISTOR to Valeant, and have partnered other internally-developed or acquired compounds and technologies with third parties. The company continue to consider opportunities for strategic collaborations, out-licenses and other arrangements with biopharmaceutical companies involving proprietary research, development and clinical programs, and may in the future also in-license or acquire additional oncology compounds and/or programs.

Pipeline

The company's goal is to become a preeminent, patient-centric oncology company and the company intend to make a difference in how patients with prostate cancer, pheochromocytoma, and paraganglioma are diagnosed and treated. The company's pipeline includes the following products and product candidates:

Product / CandidateDescriptionStatus
Ultra-Orphan
AZEDRATreatment of malignant and/or recurrent and/or unresectable pheochromocytoma and paragangliomaNew Drug Application ("NDA") submitted and accepted by the U.S. Food and Drug Administration ("FDA"); target action date of July 30, 2018 under the Prescription Drug User Fee Act ("PDUFA")
Expanded Access Program in progress
Prostate Cancer
1404Technetium-99m PSMA-targeted SPECT/CT imaging agent for prostate cancerCompleted enrollment in Phase 3 trial
PyLFlourine-18 PSMA-targeted PET/CT imaging agent for prostate cancerPhase 2/3 trial in progress
1095Iodine-131 PSMA-targeted small molecule therapeutic for treatment of metastatic prostate cancerPhase 1 trial in progress
PSMA TTC (Targeted Thorium Conjugate)Thorium-227 PSMA-targeted antibody conjugate therapeutic for treatment of metastatic prostate cancerPreclinical development in progress
[antibody licensed to Bayer]
PSMA CADxAutomated reading of PSMA PET/SPECT/CT images based on artificial intelligence (AI) and deep learningDevelopment in progress based on 1404 Phase 2 study
automated bone scan index ("aBSI")Software that quantifies the hotspots on bone scans and automatically calculates the bone scan index valueSold in Japan
[licensed to Fuji]
Opioid-Induced Constipation ("OIC") Treatment
RELISTOR Subcutaneous InjectionTreatment of OIC in adults with chronic non-cancer pain and treatment of OIC in advanced-illness adult patients receiving palliative care when laxative therapy has not been sufficientSold in the U.S., European Union, and Canada
[licensed to Valeant]
RELISTOR TabletsTreatment of OIC in adults with chronic non-cancer pain

The company continue to consider opportunities for strategic collaborations, out-licenses, and other arrangements with biopharmaceutical companies involving proprietary research, development, clinical, and commercialization programs, and may in the future also in-license or acquire additional oncology compounds and/or programs.

Valeant Agreement

Under its agreement with Valeant, the company received a development milestone of $40.0 million upon U.S. marketing approval for subcutaneous RELISTOR in non-cancer pain patients in 2014, and a development milestone of $50.0 million for the U.S. marketing approval of an oral formulation of RELISTOR in 2016. Progenics Pharmaceuticals is also eligible to receive up to $200.0 million of commercialization milestone payments upon first achievement of specified U.S. sales targets in any single calendar year. The following table summarizes the commercialization milestones (in thousands):

Calendar Year Net Sales LevelPayment
In excess of $100 million10000
In excess of $150 million15000
In excess of $200 million20000
In excess of $300 million30000
In excess of $750 million50000
In excess of $1 billion75000
200000

Each commercialization milestone payment is payable one time only, regardless of the number of times the condition is satisfied, and all six payments could be made within the same calendar year. Progenics Pharmaceuticals is also eligible to receive royalties from Valeant and its affiliates based on the following royalty scale: 15% on worldwide net sales up to $100 million, 17% on the next $400 million in worldwide net sales, and 19% on worldwide net sales over $500 million each calendar year, and 60% of any upfront, milestone, reimbursement or other revenue (net of costs of goods sold, as defined, and territory-specific research and development expense reimbursement) Valeant receives from sublicensees outside the U.S.

Valeant has also entered into license and distribution agreements to expand its sales channels outside of the U.S. for RELISTOR.

Bayer Agreement

Under its April 2016 agreement with a subsidiary of Bayer AG (“Bayer”) granting Bayer exclusive worldwide rights to develop and commercialize products using its PSMA antibody technology, the company received an upfront payment of $4.0 million and milestone payments totaling $3.0 million and could receive up to an additional $46.0 million in potential clinical and regulatory development milestones. Progenics Pharmaceuticals is also entitled to single digit royalties on net sales, and potential net sales milestone payments up to an aggregate total of $130.0 million as well as royalty payments.

Liquidity and Capital Resources

The company's current principal sources of revenue from operations are royalties, development and commercial milestones, and sublicense revenue-sharing payments. The company's principal sources of liquidity are its existing cash and cash equivalents. As of March 31, 2018, the company had cash and cash equivalents of approximately $83.4 million, a decrease of $7.2 million from $90.6 million at December 31, 2017. The company will continue to have significant cash requirements to support product development activities and the potential commercial launch of AZEDRA if approved by the FDA. The amount and timing of its cash requirements will depend on the progress and success of its clinical development programs, regulatory and market acceptance, and the resources the company devote to research and commercialization activities. The amount of cash on-hand will depend on the progress of various clinical programs, the timing of its commercialization effort scale-up, and the achievement of various milestones and royalties under its existing license agreements.

The company believe that its current cash and cash equivalents, which includes $14.5 million of net proceeds received through March 31, 2018 from the sale of its stock in at-the-market transactions under a controlled equity offering sales agreement (see Shelf Registration section below for additional details), together with the net proceeds of approximately $7.5 million received from additional at-the-market transactions in April 2018, will be sufficient to fund its operations for at least the next twelve months. The company expect to fund its operations going forward with existing cash resources, anticipated revenues from its existing license agreements, and cash that the company may raise through future capital raising and other financing transactions.

If the company do not realize sufficient royalty or milestone revenue from its license agreements, or are unable to enter into favorable collaboration, license, asset sale, additional capital raising, or other financing transactions, the company will have to reduce, delay, or eliminate spending on certain programs, and/or take other economic measures.

Shelf Registration

During the first quarter of 2017, the company filed a $250.0 million replacement shelf registration statement, which was declared effective as of January 19, 2017. In addition, the company also entered into a controlled equity offering sales agreement (“Sales Agreement”) with Cantor Fitzgerald & Co. (“Cantor”), as sales agent, pursuant to which the company may offer and sell through Cantor, from time to time, shares of its common stock up to an aggregate offering price of $75.0 million. This Sales Agreement may be terminated by Cantor or it at any time upon ten (10) days’ notice, or by Cantor at any time in certain circumstances, including the occurrence of a material adverse change in its business or financial condition.

During the first quarter of 2018, the company sold a total of 1,537,528 shares of its common stock in at-the-market transactions under the Sales Agreement for net proceeds, after deducting commissions, of approximately $9.5 million at an average selling price of $6.33 per share. At March 31, 2018, the company had 103,100 shares of its common stock subscribed in at-the-market transactions under the Sales Agreement for net proceeds, after deducting commissions, of approximately $0.8 million at an average selling price of $7.50 per share. Accordingly, Progenics Pharmaceuticals has recorded a subscription receivable of $0.8 million as a reduction of stockholders’ equity in its consolidated balance sheet at March 31, 2018. Subsequent to the close of the quarter, in April 2018, the company sold an additional 953,601 shares of its common stock in at-the-market transactions under the Sales Agreement for net proceeds, after deducting commissions, of approximately $6.8 million at an average selling price of $7.32 per share. Together with the subscription receivable, the company received net proceeds of approximately $7.5 million in April 2018.


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