Progenics Pharmaceuticals' (PGNX) CEO Mark Baker on Q2 2014 Results - Earnings Call Transcript

Progenics Pharmaceuticals (NASDAQ:PGNX)

Q2 2014 Earnings Call

August 08, 2014 8:30 am ET

Executives

Betty Manocchi -

Mark R. Baker - Chief Executive Officer, Director and Member of Science & Strategy Committee

Angelo William Lovallo - Principal Financial Officer, Principal Accounting Officer, Vice President of Finance and Treasurer

Analysts

Jonathan M. Aschoff - Brean Capital LLC, Research Division

Brian Klein - Stifel, Nicolaus & Company, Incorporated, Research Division

Chad J. Messer - Needham & Company, LLC, Research Division

Operator

Good day, ladies and gentlemen, and welcome to the Progenics Pharmaceuticals Second Quarter 2014 Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

I would now turn the call over to host, Betty Manocchi. Please go ahead.

Betty Manocchi

Thank you, Stephanie. On behalf of Progenics' management team, thank you for joining our conference call. Today, we will review the second quarter 2014 financial results and provide a business update. Speaking on the call are Mark Baker, Chief Executive Officer; and Angelo Lovallo, Vice President, Finance and Treasurer.

Before we begin, I'll 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 related to Relistor, PSMA ADC, Azedra 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 August 8 only.

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

Mark R. Baker

Thank you, Betty, and good morning to everybody [ph] joining us today. Let's jump right in and update you on some of our recent accomplishments. First, regarding Relistor. It was gratifying to see the FDA indicate last month that the sNDA for subcutaneous Relistor in OIC patients with chronic non-cancer pain can be approved. To gain final approval, the FDA directed Salix to submit certain information. And on July 25, Salix submitted all the requested information. We anticipate a response within the next 2 months. Upon approval, we will receive a $40 million milestone payment from Salix. Salix also intends to meet with the FDA as soon as possible to discuss a path forward for Relistor oral for chronic non-cancer pain patients. You're hearing a sigh of relief from Tarrytown here with that great news.

Next, regarding our oncology pipeline. We are working diligently with CPDC to get manufacturing of Azedra up and running by year end. We are planning for the Azedra trial restart in early 2015 and aiming to complete enrollment by year end. The results from our pivotal Phase II trial of Azedra thus far will be presented at the September 20 International Symposium of Pheochromocytoma in Kyoto, Japan. Dr. Daniel Prima [ph] from the University of Pennsylvania will give the late-breaking oral presentation.

For 1095, our targeted small molecule therapeutic, we are ramping up the manufacturing process of CPDC and to plan to file an IND by year end. We previously announced the completion of the Phase II trial of our PSMA imaging agent, 1404, and are pleased to announce that results from this trial will be featured at an oral session of the European Association of Nuclear Medicine meeting in Gothenburg, Sweden in October. Dr. Dabasi of Hungary will present the complete study results.

Lastly, we announced the completion of enrollment of a cohort of chemotherapy-naïve patients in our PSMA ADC Phase II trial. We expect to report data from this cohort at an upcoming conference.

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

Angelo William Lovallo

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

Net loss for the quarter was $11.1 million or $0.17 diluted per share compared to net loss of $12.3 million or $0.24 diluted per share in the 2013 period. Net loss for the current 6 months was $20.4 million or $0.31 diluted per share compared to $23.5 million or $0.46 diluted per share in 2013.

Second quarter R&D expenses decreased by $1.7 million compared to the prior year period, due to lower rent and compensation expenses, partially offset by an increase in the clinical trial expenses for PSMA ADC and contract manufacturing expenses for Azedra and 1404. Year-to-date R&D expenses decreased by $3.5 million compared to the prior year period.

Second quarter revenue totaled $1.5 million, down from $1.8 million in 2013 due to decreased collaboration revenue from $0.4 million and increased royalty income of $0.2 million. Royalty income for the quarter was $1.4 million compared to $1.2 million in the 2013 period, as based on Relistor net sales as reported by Salix.

Current year first half revenues were $3.3 million, down from $4 million in 2013, partially due to lower royalty and collaboration revenues. Net Relistor sales increased to $9.1 million in the current quarter as compared to $4.8 million in the previous quarter. Salix attributed the higher sales in the second quarter to wholesaler demand and lower returns compared to the first quarter of 2014.

Progenics ended the quarter with cash, cash equivalents and securities of 86 -- $87.6 million, a decrease of $8.7 million in the quarter and an increase of $19.5 million from 2013 year-end, reflecting first quarter public offering proceeds.

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

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from Jonathan Aschoff with Brean Capital.

Jonathan M. Aschoff - Brean Capital LLC, Research Division

I was wondering, Mark, can you give us any idea of the amount of time required to deschedule a drug? Notably, this would be relevant to Relistor's chief competitor. I can recall, Arena, Eisai took quite a while to schedule BELVIQ. Any idea about descheduling?

Mark R. Baker

Well, we went through the process of descheduling Relistor prior to its launch. And that process took us, from start to finish, about 2.5 years, Jonathan.

Jonathan M. Aschoff - Brean Capital LLC, Research Division

Okay, that's a long time. About your -- the chemo-naïve data, do we have any sense as to when the chemo-naïve data is going to come out?

Mark R. Baker

No. We're looking for a good venue for it. And we think we'll be ready to do it this fall, but we haven't yet established the spot for it. I think that if we're not able to find a good conference to do it at this fall, it would be ASCO GU early next year.

Jonathan M. Aschoff - Brean Capital LLC, Research Division

Okay, and the strong desire is still to partner that prior to a pivotal trial, correct?

Mark R. Baker

Yes. Those partnering discussions are going on now and as I've said many times, I do feel that there would be a good advantage in putting PSMA ADC, which, of course, would have broad utility in prostate cancer, if approved, in the hands of a commercial partner with the capability to do that. I definitely have a view that Progenics should become a commercial company, but I think that our products like Azedra, the ultra-orphan drug, and our 1404 imaging agent are much more suited to the type of commercial effort that I'm thinking is appropriate for Progenics.

Jonathan M. Aschoff - Brean Capital LLC, Research Division

Lastly, Mark, do you actually have in hand the pre-chemo data?

Mark R. Baker

Yes.

Jonathan M. Aschoff - Brean Capital LLC, Research Division

Okay, so you're just waiting for a venue. Got it.

Operator

Our next question comes from Brian Klein with Stifel.

Brian Klein - Stifel, Nicolaus & Company, Incorporated, Research Division

First, on Relistor. I just want to understand, you guys mentioned you expect a response or something from the FDA within 2 months. Is that an official PDUFA date? Or how exactly does it work? And how confident are you that you'll get your answer 2 months after the recent submission?

Mark R. Baker

So I don't believe it's confirmed yet, but it's an official PDUFA date, but we do expect, based on discussions with the FDA, a 2 months review. And I think that our chances are very good. It does seem like the advisory board led to unblocking of the concerns that the FDA had around the entire mu-opioid receptor antagonist class, Relistor being one of the members of that class. And in particular, their statements to us that the application is approvable based on current data and that they accepted the recommendation made by the sponsor companies at the advisory board that there be a post-approval observational review. It seems fine, and I think Salix has put in front of them an excellent proposal. So Salix submitted on July 25 all of the information that the FDA had asked for and, as we said and as Salix said in their earnings release yesterday, we expect that the review period would be 2 months. 2 months from July 25, when the information was submitted, would be September 25, and we know that there's a PDUFA date on the Nektar AZ drug, I believe, of September 16. So we see all of this coming together, Brian.

Brian Klein - Stifel, Nicolaus & Company, Incorporated, Research Division

Great. In terms of any potential post-marketing requirements, would we also learn that at that time?

Mark R. Baker

Presumably, yes.

Brian Klein - Stifel, Nicolaus & Company, Incorporated, Research Division

Okay. And then in terms of a potential commercial launch into the broader indication, how prepared are you and Salix to supply the market? And can you discuss any additional marketing efforts that are being planned or expansion to the sales force size?

Mark R. Baker

Yes, I don't think that it's appropriate for me to comment on their sales force plans at this time. I know they're working a way on that. And obviously, we want to coordinate that with Salix as they come to their decisions. In terms of their preparedness, I think it's very high. Having spoken to Salix and their people over the past year, 2 years while we've been waiting for this decision, I know that they've been chomping at the bit, feeling that this is a great market for Relistor. And so we have great confidence in that Salix commercial team, who has done so well with Relistor to date in the much more difficult market of advanced illness patients. So I would ask you, Brian, to stay tuned as they put their plans -- finalize their plans. And of course, we'll be talking to you about that information as it is finalized.

Brian Klein - Stifel, Nicolaus & Company, Incorporated, Research Division

Great. And then just one final question on Azedra. Are you still prepared to start dosing patients in the first half of '15?

Mark R. Baker

Yes. We expect to have the manufacturing up and running by the end of the year. Our guidance is for the trial to start early next year because I don't think you ever want to guide that you can get a trial up and running toward -- in December. But there is a possibility we'll get it done this year. I know the team is working on that. But the guidance we're providing is early next year. And by early, we mean right after the new year.

Operator

[Operator Instructions] Our next question comes from Chad Messer with Needham & Company.

Chad J. Messer - Needham & Company, LLC, Research Division

Yes. Most of my questions have been asked. But Mark, were there anything noteworthy in terms of the label? I know that it had been mostly negotiated, but that was one of the items that needed -- that Salix needed to submit to the FDA.

Mark R. Baker

Yes. So Chad, we're expecting that, that won't present issues, that Salix submitted the final labeling with the other information. Obviously, the FDA can comment on it, but I think that, that was pretty much done when we got the Complete Response Letter. So I'm not anticipating problems in the labeling, and I think that we are pleased with where the labeling stands.

Operator

And I'm showing no further questions. I will now turn the call back over to Mark Baker for closing remarks.

Mark R. Baker

Thank you, Stephanie. As you can see, we have a lot planned for the second half of 2014, and I look forward to updating you on our next quarterly call.

We continue to value the contribution Relistor makes to patient care and comfort, and we are excited with the prospect of it being available to a broader patient base. In turn, we plan to leverage any increased revenue from Relistor sales and upcoming milestone payments to advance our oncology pipeline. As always, we thank you for your continuing support of our mission.

Stephanie, this brings us to the end of today's call. Thank you very much.

Operator

Thank you. Ladies and gentlemen, that does conclude today's conference. You may all disconnect and everyone, have a great day.

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