There are few events that can move a stock as much as FDA decisions. In previous articles (linked to the words articles and written), I have written about how we can use the timing of FDA decisions in order to profit from the increase in share price heading into regulatory decisions. However, I rarely write about what happens after an Advisory Committee (Adcom) makes a decision. In the case of Progenics (NASDAQ:PGNX), I believe that the Adcom has just handed down a significant decision that will help the company (should the FDA adopt it) for years to come.
The FDA advisory committee on Anesthetic and Analgesic Drug Products was asked to provide guidance on the cardiovascular risks associated with products in the class of peripherally-active opioid receptor antagonists. The committee was specifically supposed to help answer the question as to the necessity, timing, design, and size of the cardiovascular outcome trials needed to support approval in the class of drugs that are typically taken by patients for the treatment of opioid-induced constipation in patients with chronic pain.
Now if this seems like a bunch of jumble to you, you are not alone. In lay terms: the committee was supposed to decide for a certain class of drugs, whether or not a cardiovascular outcomes study was needed for approval. If so, the committee needed to determine what this study would look like and when it would have to take place (for those of you unfamiliar, a cardiovascular outcomes study monitors patients for an increased risk of heart attack and other ailments having to do with the heart). This decision was potentially very important, as cardiovascular outcomes trials are typically very large and very time-consuming, as well as cost a large amount of money to conduct.
The vote breakdown was: 12 committee members voted to not require cardiovascular outcome studies at all for the class of drugs, seven members voted to require the studies for all of the drugs, and five voted to have the requirements apply to certain drugs. It should be noted, however, that in the post-discussion, five of the members who voted to require cardiovascular outcome studies indicated that they were confused by the question and meant to vote against the need for a cardiovascular outcome study.
The need for this advisory committee came about after Progenics and Salix Pharmaceuticals (NASDAQ:SLXP) received a Complete Response Letter from the FDA regarding the need to conduct a cardiovascular outcomes trial for Relistor. After submitting the request to review the companies' application again, the FDA convened the advisory committee to obtain further guidance on whether a cardiovascular outcomes trial would be necessary.
Why this is important?
If you include in your analysis the members of the panel who voted against requiring cardiovascular outcomes studies, then the panel voted against the study as a requirement for approval. Should the FDA apply this interpretation, it will help Progenics in its sNDA for its drug, Relistor.
Progenics and its marketing partner Salix Pharmaceuticals are currently marketing Relistor for the treatment of constipation caused by the use of opioids in patients with advanced illness. The sNDA would expand the label for Relistor to include opioid-induced constipation in patients taking opioids for chronic pain. While this difference may seem miniscule, the expanded label for Relistor would help to increase the amount of patients that are able to take the drug.
Progenics receives royalties on sales of the drugs, and will receive milestones if Relistor hits certain sales milestones. While the drug has yet to hit any milestones, having an increased amount of patients able to take the drug should help Progenics to move closer towards hitting its sales milestones, which would be very lucrative for the company (and help its rather rapidly dwindling cash pile). This would also be important for Salix, as it would help Salix to increase its revenue generated from Relistor.
It is also important to note that this would shave years off of the development timeline for Relistor. It would take probably a year to recruit the requisite patients (optimistically) for the cardiovascular outcomes trial, and then the companies would probably have to wait until the trial has progressed to a certain point before being able to even get an interim analysis of the data. This would add years onto the development of Relistor, and would cost millions of dollars. Should the FDA say that the trial is not required, it will save Progenics and Salix time and money.
If the FDA does not require any sort of cardiovascular outcomes trial, it would help to preserve cash for both companies and would bolster the case for the expanded label for Relistor. If the FDA decides to make it a post-approval requirement, it could get tricky for the companies, as the trials are expensive, not to mention time-consuming.
It is important to note that the FDA is not bound to follow the advice of its advisory panels. However, the fact that the FDA called an advisory panel in the first place is telling, it would suggest that the FDA is open to advice on the matter. The FDA could have simply rejected the sNDA again and essentially sent back the same CRL, asking for additional clinical trials. Instead it asked for additional input... which came back in favor of Progenics and Salix. If the FDA adopts the recommendation to not require a cardiovascular outcomes trial, it would save years of development and millions of dollars for both Progenics and Salix. It would also help to bolster the case to expand Relistor's label, which should help to increase sales of the drug. The advisory committee decision was positive for both Progenics and Salix, and will hopefully lead to the FDA adopting the mindset that there should not be a requirement for a cardiovascular outcomes trial for approval.
Disclosure: The author is long PGNX. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.