David Greene's  Instablog

Yesterday (Nov. 18), Progenics Pharmaceutical's (PGNX), received some good news in the form of a Reuters story stating that the widely-used painkiller drug, morphine, may actually accelerate cancer growth in patients. Researchers in the US have results from two studies that show that morphine could be on the wrong side of the fight against cancer. But PGNX's drug, Relistor, has shown promise in reversing some of the tumor-generating effects in mice and, significantly, in lung cancer cells.

The article also quoted Patrick SIngleton of the University of Chicago Medical Center, who remarked on the findings of two studies at a Oncology meeting recently, as saying, "This drug might actually inhibit the progression of lung cancer,"

The potential for Relistor and PGNX could be huge. Singleton went on to say that a number of studies have indicated that opiate-based pain medications stimulate cancer cell growth and encourage the spread of cancers.

The latest studies focused on the effects of Relistor (methylnaltrexone) on the interfering or blocking of opiate receptors on cancer cells. Lung tumor cells in laboratory dishes did not spread when methylnaltrexone was introduced to the dishes. Also,studies on mice produced impressive results with the drug reducing the spread of cancer by 90 percent.

The potential significance for PGNX cannot be understated. With an obvious incentive to pursue this surprise indication for Relistor, PGNX should have no problem in either attracting another partner or finding the investors to "go it alone".

PGNX has not issued a press release yet on these findings yet (for the traders out there).
Disclosure: Long PGNX

Competitive Technologies, Inc. (NYSE Amex: CTT) trading at $2.03 as of 17 Nov.. may be poised to report a rapidly increasing revenue stream from their non-invasive chronic pain management medical device (Calmare TT) which received 501-k clearance from the FDA for marketing in the US recently. Compared to a Fiscal 2009 year with minimal revenue, CTT's 2010 revenue promises to be significantly higher, catapulting the company back to profitability. (CTT could see over 300% Quarter to Quarter unit sales growth from last quarter to this quarter). 

It is just during this "sweet spot" time period, when a company basically goes from pre-significant revenue to substantial revenue growth, that an early investor realizes the quickest and best investment return. Investors of Integra Life Sciences (Nasdaq:IART), Affymetrix Inc. (Nasdaq: AFFX) and Cantel Medical (NYSE:CMN) all have benefited from their early recognition that significant revenues were coming from the introduction of a new medical device.

When will CTT report the first of the substantial revenues from  its pain management device?  By December 15.

 But, first, here are a few quick investment highlights for those attention challenged investors:

• CTT has only 10.12 Million shares outstanding, giving the company a market cap of only $20.5 Million
• Five (5) corporate insiders--the CEO and four directors-- added to their CTT stock positions two weeks ago
• Institutional Ownership (mutual and pension funds and money managers) of CTT has risen to 8.9% of the shares outstanding
• Company signed a contract with a U.S. distributor which brings over $1 Million in payments over the next 8 months (from August, 2009)
• A sales contract announced last month obligates the customer to purchase a minimum of 20 of CTT's pain therapy medical devices over the next 13 months
• CTT shipped 17 units last quarter with another 53 units on order and to be shipped most likely in this quarter (ending Jan. 31, 2010)--which would  represent a 311% quarter to quarter growth in sales
• Clinical data from patients suffering from Chemotherapy-Induced Peripheral Neurapathy (CIPN) that use CTT's medical device is expected soon, offering more media coverage opportunities for the company

What is this new medical technology?  CTT's proprietary Calmare TT medical device is for the treatment of chronic pain and the revenues are just beginning to come in.  CTT's 2009 fiscal year ended July 31, with revenue from only one medical device unit booked for the entire year. However, the very next quarter (first quarter, 2010 ended Oct. 31) the company announced orders for 70 units with revenue from 17 units that were shipped to be reported in that first quarter. And the first quarter, 2010 financials will be filed by December 15. The remaining 53 units already ordered, but yet to be shipped, may all ship in the current quarter.

As the company expands its marketing push with the recent announcement of the retention of a RF Binder, a Public Relations firm focused on the healthcare industry, CTT is expected to announce more orders, both domestically and internationally. CTT will not be an undiscovered stock for much longer. The company is also expecting clinical data very soon from a study being conducted by the influential Massey Center, a National Cancer Institute- designated Cancer Center (www.massey.vcu.edu/discover/?pid=1900).

The Pain Management systems utilizes a biophysical rather than a biochemical approach, through the use of a multi-processor to simultaneously treat multiple pain areas by applying surface electrodes to the skin. The device has  European CE mark certification which is necessary for any medical device to be distributed and sold throughout Europe and makes it eligible for approval for distribution and sales in many other global markets. The all-important FDA approval is just beginning to impact not only sales in the U.S., but also the overseas markets that often await our FDA's verdict.

In July 2009, CTT signed an agreement with Innovative Medical Therapies, Inc. (IMS) granting them exclusive distribution rights to CTT's pain therapy medical device in the United States and related territories excluding the Department of Defense and Veteran's Administration, which another distributor is already in place. The IMS contract provides for minimum monthly cash payments to CTT totaling over $1 million for the first eight months. These minimum monthly payments increase each year throughout the term of the agreement with, for example, the fourth year minimum payments reaching $9 million and eighth year minimum payments of $21 million. IMS will receive shipments of CTT's pain therapy medical device in return for these payments

Cognizant of the difficult economy, CTT has an agreement with Americorp Financial, LLC (AFS) to provide financing of sales of the pain therapy medical device for 24 - 60 month lease terms to hospitals, clinics and medical practices in the U.S.  CTT will receive the full retail sales price of the device upon execution of each lease with AFS holding the lease.  Basically, with the lease option, most potential CalmareTT customers can easily afford the medical device.

What makes CTT even more intriguing is the very real possibilty for positive surprises beyond the revenue ramp up already happening with the company's Calmare TT device.  Competitive Technologies' immediate revenue generator may be the Calmare TT, but the company has the potential to receive milestone payments and royalties from a number of other licensed technologies:

• Nanotechnology bone cement biomaterial with a broad range of potential applications, including dental, spinal and other bone related applications. Exclusively licensed  by CTT to Soteira Inc. for human spinal applications (a private company which has received $23 Million from its VC partner over the past 15 months);

• Sunless tanning agent, a skin-pigment enhancer being researched as a skin cancer preventative, and therapeutic for vitiligo, albinism and psoriasis, CTT exclusively licensed the technology to Clinuvel Pharmaceuticals, Ltd. (Australia);

• CTT has a 50/50 joint venture with XION Corporation for the research, development and commercialization of CTT's patented melanocortin analogue compounds which have shown potential in treating sexual dysfunction and obesity

• Lupus Diagnostic and Monitoring technology, a cost-effective scalable testing platform used to detect and monitor the autoimmune disease, Lupus

•  Encryption technology that operates at high speeds with low memory requirements to secure applications used on the Internet, telecommunications, smart cards and e-commerce;

• Video and audio signal processing technology licensed in the Motion Picture Electronics Group visual patent portfolio pool (MPEG 4 Visual), and used in streaming video products for personal computers and wireless devices, including mobile phones;

• Structural Steel Fissure Detection Paint contains a built-in, self-activating, crack-indicating or warning capability effective coincident with application of the paint to the structure, and requiring minimum training for its use.

In summary, Competitive Technologies can be considered an undiscovered investment idea for those willing to invest prior to the broad dissemination of the unfolding rapid revenue growth to be seen over the next year. CTT currently has a very low average daily trading volume, which does dissuade some investors from participating initially.  But, as the saying goes, "Higher volume begets even higher volume" as the investment world discovers an undervalued investment story. Judging by the recent increases in institutional ownership (including one capital management firm, Prescott Group, initiating a position with 312,000 shares purchased), the point of CTT's discovery by the investment world-at-large may be at hand.

Long CTT

Progenics (Nasdaq:PGNX) has been dumped by biotech investors since Oct. 14 when the company announced that Wyeth (NYSE:WYE)--soon to merge with Pfizer (NSYE: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 (Nasdaq:ADLR) and GlaxoSmithKline (NYSE:GSK) were forced to leave the OIC marketplace because of cited concerns for long term safety for patients, 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 that iProgenics 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.

Long PGNX

CTT is begining to see revenues generated as a result of  the FDA approval of their very promising chronic pain mangement medical device.  The company has already announced orders for 70 units and will recognize revenue for 17 units shipped in the past quarter (ending Oct. 31).

Five insiders, including the CEO, took advantage of the permitted window for insider purchaes last week and added to their holdings, despite the stock's 80% appreciation YTD.

CTT is also on the screens of mutual funds and money managers, with 6% of the shares outstanding held by institutions--enough to know that a few investment professionals are aware of CTT, but are clearly not fully invested should CTT exhibit progress in their business plan of expanding the market for their newly approved device.  In other words, there is alot more room for adding to their positions with their holdings representing a very modest 6% now, than if the institutions were holding 60% of the shares O/S.

CTT's  medical technology involves a non-invasive method for the rapid treatment of intese oncologic and neuropathic pain, including pain resistant to morphine and other traditional pain management drugs. CTT's device is currently in clinical trials for chemotherapy-induced pain and expects to be able to announce the results of the patient trials in the near future. 

Investos should monitor CTT for future news on sales, increases in institutional ownership and trading volume increases. With only 10.24 Million shares outstanding, any increased exposure to the investment world could result in a dramatic increase in the stock's price as new investors take a position.

Disclosure: Long CTT