Progenics (PGNX) has been dumped by biotech investors since Oct. 14 when the company announced that Wyeth (WYE) -- soon to merge with Pfizer (PFE) -- decided to return the rights to the drug, Relistor. The drug is approved to treat constipation caused by opioid pain relievers (OIC's) in patients with advanced illnesses. With the prospects of little competition for Relistor after Adolor (ADLR) and GlaxoSmithKline (GSK) were forced to leave the OIC marketplace because of concerns for long term patient safety, Relistor appeared at the time to be the survivor in a lucrative field. Progenics ran to $17 in July 2008 after the drug was apprived by the Food and Drug Administration and recommended for approval in Europe. However, with total sales of a very disappointing $5.1 million in the past two quarters, Wyeth pulled the plug.
But is this setback areal reason for PGNX to stay below $4.00/share?
WIth $3.37 per share in cash on hand, it would seem that a closer look may be in order.
First, Wyeth does not just walk away. Progenics will receive $10 million from Wyeth to compensate for the costs of returning the rights and for ongoing clinical development programs. PGNX also will receive a license (without royalties) on all the clinical work conducted during the partnership. In installments through January 2011, Wyeth will support further development by manufacturing and selling Relistor and conducting clinical trials and handling the regulatory requirements for the subcutaneous delivery of the drug. The drug is already approved in the U.S., Canada, and European Union nations totaling 30 countries with other country market launches anticipated in 2009 and 2010.
And there is more. Wyeth is contributing a maximum of $14.5 million for the development of Relistor in a multi-dose pen delivery system for chronic pain and for pediatric clinical trials.
What may be very helpful on the future sales front with Relistor is the possibility of introducing pre-filled syringes designed to ease the preparation and administration for patients and caregivers. Applications for the new syringe delivery system have been submitted to the U.S. Food and Drug Administration and the European Union European Medicines Agency, which, if approved, could be available to patients with advanced illness in the U.S. and Europe, possibly as early as the first half of 2010.
In addition, Progenics has positive clinical data on Relistor from a Phase III study in chronic pain and has an ongoing safety study being conducted so the company can file for an expanded FDA approval in the late 2010 to early 2011 time frame.
Not to be overlooked is the fact that Progenics has an out-license for the injectable Relistor to Ono Pharmaceuticals that is still in force in the potentially lucrative Japanese market,
Beyond Relistor, Progenics presented positive data from a Phase II study of methylnaltrexone treatment during rehabilitation following orthopedic surgery at the annual meeting of the American Academy of Physical Medicine and Rehabilitation. There were no serious side effects reported. Patient data from this study will support the safety section of the New Drug Application (NDA) for chronic pain which is planned to be submitted to the FDA by early 2011.
So, yes, the termination of the Wyeth collaboration was a shock to many investors but, apparently not to all. After a quick look at PGNX's chart prior to the announcement, it is clear that cautious investors were exiting. Most likely, the low sales of Relistor were a concern for many industry watchers and that concern resulted in the stock weakening all year. But with the news now out, the replacement of many investors with a more speculative holder now and the probability that PGNX management will be proactive in communicating progress with its shareholders, we may have seen the bottom for PGNX.
Disclosure: Long PGNX