Progenics Talks Commercialization, Pipeline, And Milestones

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About: Progenics Pharmaceuticals Inc. (PGNX)
by: John Engle
Summary

On April 9, Progenics presented at an investor conference in Monaco.

The presentation covered the ongoing developments in commercialization planning for the launch of Azedra.

Pipeline developments were also discussed.

Little time was given to the subject of the PDUFA date extension; Azedra will face the FDA voteon July 30, instead of the previously scheduled April 30.

Approval prospects remain very high; the current market valuation fails to appreciate the potential of Azedra or Progenics’ pipeline.

On April 9th, Progenics Pharmaceuticals (PGNX) delivered a presentation at the H.C. Wainwright Global Life Sciences Conference in Monte Carlo, Monaco.

CEO Mark Baker used his presentation time to discuss major developments in the company, especially the ongoing commercialization preparations for the launch of Azedra, an ultra-orphan drug candidate for the treatment of pheochromocytoma and paraganglioma two extremely rare and lethal adrenal cancers. He also spent significant time on the pipeline, especially 1404, an imaging agent currently in Phase 3 trials for non-invasive identification and diagnosis of prostate cancers, and 1095, a targeted small molecule radiotherapeutic that can prevent tumor growth and bone degradation in patients suffering late-stage prostate cancer.

The presentation gave some welcome color to the company’s outlook and to the potential of its remarkable product candidates. With an FDA decision on Azedra approval scheduled for July 30th, and Phase 3 data from the Phase 3 1404 trial expected in the third quarter, Progenics has several major catalysts inbound.

The next six months will be decisive for Progenics’ value proposition. Let’s take a look at what the latest investor event can tell us about the company’s outlook.

Commercial Preparation Forges Ahead

Mark Baker was eager to dive into a discussion of the commercialization preparations actively underway at Progenics to get Azedra into the market as rapidly as possible after approval. We have heard in previous conferences and earnings calls about the concentrated patient population, which will make the cost of patient acquisition low and necessitate only a small salesforce.

Adding further color to that outlook, Baker addressed the extremely important question of access:

“A very important element of our commercial effort will be around access, as we want all of the patients who suffer from these terrible cancers to have access to the drug. So working with the payers under their plans to ensure access.”

Progenics is currently making active efforts to raise awareness at the major medical centers where pheochromocytoma and paraganglioma are treated. Speaking of the physicians they have been communicating with, Baker described their general attitude as positive: “Physicians are saying to us that they see the utility of Azedra; the efficacy and safety profile is well supported by our data.”

Getting physicians onboard is, of course, just part of the challenge. The harder ask is getting the payers to cough up for the treatment. In their case, too, it seems that Azedra is receiving a relatively warm response:

“They recognize that [Azedra] is addressing an unmet need and the clinical data is strong and convincing, and they also recognize that there is no FDA-approved therapy. And so, for them, each of the insurance plans will have a relatively small number of patients. They see it as an unmet need and one they are prepared to support.”

There is also an ongoing effort to raise awareness about pheochromocytoma and paraganglioma among physicians, since they remain highly undiagnosed. In fact, as few as one in ten pheochromocytoma may be properly diagnosed. That represents a huge patient population suffering and dying, as well as an expanded market opportunity for Azedra.

The Elephant in the Room

There was some market upset when it was announced in late March that the FDA had extended its PDUFA deadline for Azedra to July 30th. It had previously been expected to render its verdict on April 30th, and the new date had the unsurprising result of sending shares down a fair bit. However, they have since stabilized above $7 per share. That is a ways below where it was before, but that is to be expected in the wake of short-term players heading for the exits. Their absence should prove temporary, however, and we should expect them to begin accumulating again during the summer.

The changed date was something of an elephant in the room at the H.C. Wainwright conference, and got little to no mention. While one might interpret that as a worrying sign on its own, taken in conjunction with the broad confidence displayed in the company’s announcements and its ongoing commercial planning it looks more benign. Indeed, the underlying facts have not changed. Azedra remains the only treatment on the cusp of approval for these nasty cancers, and the FDA is not likely to throw it under the bus for that reason alone.

Furthermore, Azedra has met its necessary endpoints. From a clinical standpoint, the case for approval is very strong. The issues involving manufacturing a radio-therapy drug have been the problem in recent months. Yet it appears that Progenics has provided substantial additional data and materials to the FDA to allay any concerns on that score.

Pipeline Progress

With all the focus on Azedra, it is very easy to lose track of the value creation going on further down the pipeline. We have discussed 1404 and its blockbuster potential in previous articles, but it is worth addressing once again in brief. It has the potential to replace many of the current surgical diagnostic procedures for prostate cancer. Even taking a relatively minor piece of that market could yield big rewards. With Phase 3 trial data expected in the third quarter of 2018, investors should look to seeing a lot more attention paid to this candidate.

Other developments in the pipeline offer further exciting prospects. 1095, the PSMA-targeted thorium conjugate that is aimed at the treatment of late-stage prostate cancer, is especially interesting. In his presentation, Mark Baker discussed the development of a partnership with Bayer (OTCPK:BAYRY), which will be handling the costs of the soon-to-commence human trials. The deal is solid, with Bayer footing the bill for the trials and providing Progenics with $49 million in potential development milestones, $130 million in sales milestone, and single-digit royalties on net sales. For a study in such early stages, Progenics is already set up nicely.

Investor’s-Eye View

So what should investors make of all this? The news at the conference was not terribly exciting, but it offers some useful color around the subject of commercialization and the market’s readiness to adopt it as a standard of care. It appears that the physicians are onboard and that the insurers will also play ball. Now the big question is approval. That seems extremely likely, given the clinical data and clear need for a treatment. We should expect the FDA to give the go-ahead in July, and for the share price to improve significantly in the wake of the news. The company should also enjoy substantial tailwinds from the development of 1404 and the launch of trials for 1095.

With about $90 million in cash on the books and increasing revenues from its already approved drug Relistor, Progenics’ cash burn is of little concern. The company could probably operate for a couple years without any need to tap capital markets, even excluding income from Azedra in the relative near-term.

Right now, Progenics is trading substantially below its fair value. Investors should consider adding it to their portfolios.

Disclosure: I am/we are long PGNX. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.