Progenics Pharmaceuticals' (PGNX) CEO Mark Baker on Q1 2014 Results - Earnings Call Transcript

|
 |  About: Progenics Pharmaceuticals Inc. (PGNX)
by: SA Transcripts

Operator

Good day, ladies and gentlemen, and welcome to the Progenics Pharmaceuticals First Quarter 2014 Results. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. (Operator instructions)

As a reminder, this conference is being recorded. I would now like to turn the call over to our host, Ms. Amy Martini. You may begin.

Amy Martini

Thank you, Amanda. On today’s call, we will review first quarter 2014 financial results and provide a business update. Speaking on the call today are Mark Baker, CEO and Angelo Lovallo, Vice President, Finance and Treasurer.

Before we begin, I will remind you that remarks made on this call that are not historical in nature may be forward-looking statements and are subject to a number of risks and uncertainties. Our actual results may differ materially. Such remarks may include, but are not limited to, those involving regulatory actions, clinical, developmental and other matters relating to PSMA ADC; Relistor and our other product candidates, our business and commercialization strategies and expectations of future growth, revenues and assessments of our competitive position. Please see our Form 10-Q and other filings with the U.S. Securities and Exchange Commission for additional information on the risks that could cause our actual results to differ. As a reminder, statements we make today are as of May 9th only.

I will now turn the call over to Chief Executive Officer, Mark Baker. Mark?

Mark Baker

Thank you, Amy, and good morning to everyone joining us today. Let’s jump right in and update you on some of our recent accomplishments.

First, I’m certain many of you are wondering about the status of the Advisory Committee meeting for Relistor. It’s currently our understanding that this Committee meeting is being scheduled for June 11th and 12th. Once that’s published in the federal register, it’s our sign that the dates are considered final. We do not have guidance from FDA regarding the questions that will be asked of the Advisory Committee yet, but we do believe that focus is likely to be broadly on the class of mu-opioid-receptor antagonists.

Moving on to our oncology pipeline, I was pleased that we completed enrolments of 36 chemotherapy naïve patients in the PSMA ADC Phase 2 trial, bringing enrolments in this trial to a close. I want to congratulate the team for getting this trial done so quickly. You may recall on our last quarterly call we were just talking with you about getting this cohort going and completing it in the first half of this year. I also want to take a moment to extend our thanks to the patients who are participating in the trial and to their families.

Following completion of dosing in all patients and subsequent data analysis, we plan to present data at a scientific conference. We anticipate that this could happen later this year or early next.

On our last call, I had also updated you on Azedra, letting you know that we are resuming the registrational trial that is under an SPA. I also told you that patient entailment will continue once we’ve established the drug supply. We have since announced the selection of CPDC, an innovative manufacturer of radionuclides based at McMaster University in Ontario, Canada. With this arrangement in place, we expect drug supply will be available by the end of this year and the registrational trial can resume patient enrolment early next.

Let me tell you a little bit about our excitement over the arrangement we have with CPDC. One of the things that attracted us to this team was their flexibility and their ability to manufacture in small back sizes. We expect this capability will help us keep our costs in line which is critical to the successful commercialization of an ultra-orphan drug.

As you all recall, we’re developing Azedra as a treatment for pheochromocytoma and paraganglioma, two orphan oncology indications for which there are currently no FDA approved medications. This is a made-to-order drug that cannot be stockpiled on any given day when say only one patient needs this medicine. We need to be able to supply that dose on demand.

Circling back to Relistor for a moment, we are very excited that Salix and we have completed the submission to the EMA for the use of Relistor sub-Q injection for OIC and patients with chronic pain and that this submission has been accepted for review. It’s great to see Relistor were used by chronic pain patients advancing through the regulatory process in Europe.

With that, I’ll turn the call over to Angelo for a discussion of our financial results from the past quarter.

Angelo Lovallo

Thanks, Mark. You can review details of our financials in the press release we issued this morning and in our 10-Q, but I will highlight some key points for you now.

Net loss for the quarter was $9.3 million or $0.15 diluted per share compared to a net loss of $11.3 million or $0.22 diluted per share in the 2013 period. The decreased loss was primarily due to a decline in both R&D and G&A expenses. First quarter R&D expenses decreased by $1.8 million compared to the 2013 period. This was largely the result of lower compensation expenses, partially offset by higher PSMA ADC clinical expenses and 1404 and Azedra contract manufacturing expense. First quarter revenue totaled $1.8 million, down from $2.2 million in 2013 primarily due to lower Relistor royalties.

Royalty income for the quarter was $0.7 million compared to $1.2 million in the first quarter of 2013. Royalty income is based primarily on Relistor net sales as reported by Salix. Relistor global net sales decreased 75% from the fourth quarter and 37% in the prior year period. Global gross sales decreased 65% as compared to the fourth quarter, and decreased 23% versus first quarter 2013.

As we mentioned in the press release, Salix attributed lower sales in this first quarter. The wholesale is adjusting their inventory levels as a result of higher sales achieved last quarter. We ended the quarter with cash, cash equivalents and securities of $96.2 million, an increase of $28.1 million for the quarter.

Thank you for your attention. Now we would like to take your questions. Operator?

Question-and-Answer Session

Operator

Thank you. (Operator instructions) Our first question comes from Chad Messer with Needham & Company. Your line is now open.

Chad Messer – Needham & Company

Great, thanks for taking my question. I apologize if I missed this but any update on 1095, your PSMA radiopharmaceutical? I know you filed an IND a couple of months ago. Where does that fit in?

Mark Baker

Well, Chad, as you will recall, we indicated in our announcement that we were working with Sloan Kettering to get that trial up and running. And so the update is that that work continues to move forward nicely and we’re hoping that the trial of 1095 will begin later this year.

Chad Messer – Needham & Company

Great, thank you.

Operator

Thank you. Our next question comes from the line of Jonathan Aschoff with Brean Capital. Your line is open.

Jonathan Aschoff – Brean Capital LLC

Thank you. Mark, are you guys going to have any data at ASCO of any kind?

Mark Baker

We are making presentations at ASCO but I don’t think you’ll see any significant new data at ASCO this year.

Jonathan Aschoff – Brean Capital LLC

But what products will they involve, just whatever you can say?

Mark Baker

We’ll be having presentations around our PSMA ADC program.

Jonathan Aschoff – Brean Capital LLC

Okay. And the Azedra, it sounded like it was ahead of schedule when I was reading the press release because the press release says fourth quarter, you said early next year to dose the first patients. So which is it?

Mark Baker

Well, we’re definitely going to try to get this trial up and running by the end of the year. And so far, the progress looks great, Jonathan, so I’m hopeful that we get this up and running. The patients have been waiting for the drug since the time that Molecular Insight has stopped the trial several years ago. So we’re definitely feeling the pressure of the needs of the patients and of course our own internal pressures to want to get that program back started again. So I know the team is quite focused on it and we’re hoping to overperform.

Jonathan Aschoff – Brean Capital LLC

And wouldn’t the fourth quarter fall under the realm of kind of ahead of schedule?

Mark Baker

Yes. If the team can pull that off, they will have done I think an excellent job and I know they’re aiming for it.

Jonathan Aschoff – Brean Capital LLC

Okay. Should the trial go well and the drug’s approved about 30 days later, what lies ahead before you file with oral Relistor you think?

Mark Baker

Clearly, what lies ahead is a discussion with the FDA about the oral filing which we have not had while we’ve been working through these issues associated with the FDA’s concern on opioid withdrawal. So I would think the next step with a positive outcome for the class and for Relistor sub-Q would be a meeting with the FDA on the oral program.

Jonathan Aschoff – Brean Capital LLC

And then what can you say that they’ve said to you in terms of feedback when you lay it out for them that there’s very little absorption of the oral? Don’t they kind of connect the dots that the chances of that being less safe or very, very, very low?

Mark Baker

Yes, but I would caution, Jonathan, our discussions with the agency on the oral were several years ago. They came at a time before the FDA’s concern on opioid withdrawal arose. So I don’t think that I want to rely too much on past conversations with the FDA. And obviously, what will happen at the ad board will have a significant influence on FDA thinking is our view and so it’s a little hard to judge that until we get past the ad com.

Jonathan Aschoff – Brean Capital LLC

Okay, thanks, Mark.

Operator

Thank you. Our next question comes from the line of Samuel Koenig with Delta Analytics. Your line is open.

Samuel Koenig – Delta Analytics

Good morning, gentlemen.

Mark Baker

Good morning.

Samuel Koenig – Delta Analytics

I was just wondering first of all if you would go into meeting or financing in in the next year or so. And secondly, I wanted to know, didn’t you mention a while back something kind of a diagnostic test and is there any progress on that for detecting prostate cancer? Thank you.

Mark Baker

Yes. In terms of financing, we completed the financing in the first quarter. And at the end of this quarter, we stood with – Angelo, $96 million in cash?

Angelo Lovallo

That’s correct, yes.

Mark Baker

So I think that from our point of view, we’re not looking certainly in the short term at financing. And then your second question was on the diagnostic for prostate cancer. And we’ve seen excellent progress with our imaging agent for prostate cancer, the 1404 agent. We completed the Phase II trial of that compound and we’re now in planning to take it into its Phase III final trial before submitting it for approval.

And it’s just been very gratifying to see with the imaging agent the response to it. And key opinion leaders, they are so excited to be able to really get an image of cancer, a picture of cancer. And I know that it can make a big difference for patients and their families as they face difficult decisions about how to treat prostate cancer. So we’re looking forward to continuing the development of that compound.

And it’s really an important part of our view of the targeted treatments of cancer and in particular the marrying of diagnostics imaging agents with therapeutics so that we can both see the target and then attack the target, hopefully having a positive impact on patients.

Operator

(Operator instructions) Our next question comes from the line of Brian Klein with Stifel. Your line is open.

Brian Klein – Stifel, Nicolaus & Co., Inc.

Great, thank you for taking my questions. And so first in regards to Relistor in Europe, can you just clarify will the regulatory process here involve the oral formulation of Relistor in terms of the label expansion or is this just focused on the subcutaneous form?

Mark Baker

Good morning, Brian. No, it’s just the sub-Q and the submission is to broaden the label in Europe from the current approved label which is very similar to the U.S. label of advanced illness to a broader label of all chronic pain patients. And so it’s a very similar step to the step that we have in front of the FDA and will be in front of the ad com in June. And it does not involve the oral at this point.

Brian Klein – Stifel, Nicolaus & Co., Inc.

And so what’s the gating factor for the oral form relation in Europe?

Mark Baker

I think that it’s just a matter of moving that forward and I think that the view of Salix has been, let’s get the oral on track here in the U.S. and then we’ll follow in Europe. So I would expect with the decision from the ad com and then discussions with the FDA to see clarity around the path forward for oral Relistor in the U.S. and then I would expect that that would translate, Brian, into action in Europe as well.

Brian Klein – Stifel, Nicolaus & Co., Inc.

Okay. I guess that’s not clear to me since you have already a Phase III data from the oral in hand. Why bother delaying for the U.S. regulatory path to be clarified? Why not just go straight ahead in Europe? Can you provide a little bit more color on that please?

Mark Baker

I think that from our point of view, we’ve been developing this drug in the United States and in Europe. We’ve tried to follow a similar path in both jurisdictions. Salix has, to their credit, moved the sub-Q form ahead in Europe. And I was very pleased to see that. And I think the thinking is that they would like to get the U.S. picture into focus for making another submission in Europe. And to me, that makes a great deal of sense.

Brian Klein – Stifel, Nicolaus & Co., Inc.

Okay. Thank you for taking my questions.

Mark Baker

Thanks, Brian.

Operator

I’m seeing no further questions. I would now like to turn the call back to Mark Baker for any further remarks.

Mark Baker

As you can see, we continue to push our pipeline forward on multiple fronts. And I know we’ll have a lot to talk about in our next quarterly call. Even as we’ve successfully made the transition to an oncology focus, I do expect the coming months will bring a significant focus to Relistor. And I know that’s been a long time coming. We continue to value the contribution Relistor makes to patient care and comfort and we’re eager to see Relistor through this next regulatory milestone.

Again, for that backdrop, I continue to be pleased by the increase in sales Salix has reported for Relistor from 2011 to 2012 to 2013 as their topnotch sales force continues to develop this poorly served market.

Thank you for your time and attention and for your ongoing support of our mission. Operator, this brings us to the end of today’s call. Thank you.

Operator

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude today’s program. You may all disconnect. Everyone have a great day.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!