On Tuesday afternoon at 2:30PM ET, Progenics (PGNX) and Salix Pharmaceuticals (SLXP) announced that an FDA advisory committee weighing the Supplemental New Drug Application for Relistor (methylnaltrexone bromide) for opioid-induced constipation (OIC) in patients with chronic pain will convene on March 10-11 of next year. The stock spiked from $4.90 to $5.28 in intra-day trading before sloughing off through the rest of the session to close the day down by 5% at $4.76.
Here’s what we wrote to PropThink Premium subscribers on August 23.
-Own PGNX for oncology candidates, keeping powder dry for addition later in the year as oncology read-outs approach.
Progenics (PGNX) last week revisited $4.40 briefly, the price at which the company recently completed a secondary offering, before beginning trend higher on increasing volume. We’ve established a position in the stock in advance of some forthcoming inflectional events and will get more involved later in the year as two key oncology read-outs approach.
Long-time biotech investors will be familiar with Progenics for the development of Relistor, a subcutaneous treatment for opioid-induced constipation (OIC) in patients with advanced illness who are receiving palliative care, when laxatives have not been sufficient. Relistor sales in the last few years have been less than exciting given that use is limited to a small subset of OIC patients. Amitiza from Sucampo Pharmaceuticals (SCMP), for instance, is approved for the treatment of opioid-induced constipation in adults with chronic, non-cancer pain.
A supplemental NDA for Relistor in the chronic use setting was submitted to the FDA in 2011, but was met with a Complete Response Letter (CRL) in July of 2012 due to safety concerns. The FDA has since agreed to an advisory panel review before finalizing its go-forward requirements for the Relistor sNDA in chronic pain – most expect the agency to require a long-term cardiovascular safety study. Progenics and partner Salix Pharmaceuticals (SLXP) are waiting for scheduling from the FDA for the advisory panel, and for clarification on the discipline mix of the advisory panel (gastric, cardiorenal, etc.). The companies expect the FDA to reveal the adcom date within the next few weeks.
In the weeks that followed our note, PGNX climbed from $4.62 to a high of $6.29 before making a round trip to close Tuesday’s trading session at $4.75.
The initial run was fueled by fund- and catalyst-chasers – the Baker Brothers increased their position in PGNX to 4.2M shares in the second quarter, a 350% increase. Today’s sell-off immediately following the announcement for the advisory committee is a result of traders exiting the stock given that this event is still nearly 6 months away.
Given the rapid share price appreciation, which caught us by surprise, we traded out of $PGNX when the stock touched resistance around $6.30, just below its 52-week highs of $6.47. Nevertheless, we like the longterm prospects at PGNX. Here’s the rest of our August note:
. . . But Relistor isn’t why we’re interested. Progenics’ operates a targeted oncology program that focuses on the exploration of Prostate-Specific Membrane Antigen (PSMA), a membrane glycoprotein used as a marker for prostate cancer. The three-part program examines a PSMA targeting antibody as an imaging compound, a PSMA-targeting ADC therapeutic, and a small molecule radiotherapeutic. PSMA is a protein found on the surface of over 95% of all prostate cancer cells, and expression of PSMA increases with tumor aggressiveness, androgen-independence, metastatic disease, and disease recurrence; it’s a well-documented targeting pathway. Here’s a brief summary of each of the three programs:
1. PSMA-Targeted Imaging Agent – Progenics has developed a monoclonal antibody that effectively binds to the PSMA protein. Called 1404, the mAB is labeled with Technetium 99m, allowing for detailed SPECT imaging of the prostate cancer to provide insight into the patient’s cancer stage, prognosis, and response to future treatments. Progenics acquired the program from Molecular Insights and expects Phase II data early next year.
2. PSMA ADC Therapeutic – Similar to the imaging compound, Progenics conjugated its PSMA-targeting antibody to vcMMAE, or vedotin. MMAE is a synthetic antineoplastic agent with potent effects on the cell division process. As such, its innate toxicity is unsuitable as a systemic cancer treatment. Roughly a quarter of all ADC products utilize MMAE as an antineoplastic agent, including Seattle Genetics’ (SGEN) Adcetris. Currently in a 75-patient Phase II study, data is expected early in the second half of 2014.
3. PSMA-Targeting Small Molecule Therapeutic – The company’s last PSMA-targeting program is a radiotherapeutic. The small molecule is intended to deliver meaningful doses of ionizing radiation to metastatic prostate cancer through combination with the monoclonal antibody. The therapeutic is still preclinical, and although few details have been released, based on the CEO’s comments at the most recent investor day, we believe the asset is an iodine-labeled compound with a forthcoming Phase I initiation.
With shares trading at just over $4.40, where the company priced an equity offering on June 20, we’ve initiated a small position, with plans to add in advance of developments from the oncology program. The PSMA-targeting ADC is a lower-risk asset than similar ADC programs given the well-understood target and payload.
PGNX is again approaching the previous $4.40 offering price, and we plan to weigh a new position as the stock firms up – Tuesday was a heavy selling day. We’ll keep subscribers up to date, but would keep an eye on $4.40; it’s always attractive to buy where secondary-participants got involved.
