Thursday, November 17, 2016

Aegis Capital Supports ‘Buy’ Rating, Higher Stock Price Target for Progenics (PGNX) Following Strong Q3 Results

Progenics Pharmaceuticals, Inc. (NASDAQ: PGNX), a company focused on the development of innovative treatments and therapies for cancer, in particular prostate cancer, recently released its financial results for the third quarter of 2016, reporting higher revenue and net income compared to the third quarter of 2015. The growth can be primarily attributed to the FDA approval and U.S. commercial launch of its flagship product, oral Relistor®, for the treatment of opioid induced constipation in patients suffering from chronic non-cancer pain, according to an Aegis Capital Corp. analysis (http://dtn.fm/8EJce) released on November 8, one day after the Q3 results.

The Aegis report underlines that the strong Q3 results warrant the designation of a ‘Buy’ rating for Progenics and a higher stock price target of $11, compared to the current $5.71. In the third quarter, Progenics reported $53.9 million in revenue, compared to $1.4 million in Q3 2015, which reflects the significantly higher royalty income of $3.3 million from Relistor®, compared to $1.2 million during the same reporting period of 2015. Relistor®, in its tablet form, was approved by the Food and Drug Administration in July of this year, which triggered a $50 million milestone from the company’s commercialization partner, Valeant Pharmaceuticals International, Inc. (NYSE: VRX), along with subsequent royalties and the potential of sales milestones of up to $200 million. This was followed by the launch of oral Relistor® on the U.S. market in September. Total Relistor® sales (for both the oral and the subcutaneous versions of the product) amounted to $22.1 million, which resulted in $3.3 million in royalties.

In addition to the higher revenue, Progenics also announced a $50 million royalty-backed loan from HealthCare Royalty Partners. The loan matures on June 30, 2025, and will be repaid exclusively from royalties on future Relistor® sales, with a 9.8% per annum interest rate. Any future sales milestones from Valeant are excluded from the agreement. The loan helped Progenics end the quarter with $98.9 million in cash and cash equivalents, which is $24.8 million higher than the figure reported at the end of last year.

According to Aegis Capital, this loan will allow Progenics to have a cash balance large enough to support the launch of its next pipeline product Azedra®, a late-stage candidate being evaluated for the treatment of rare sympathetic nervous system tumors (pheochromocytoma and paragangliomas). Currently undergoing registration trials for the treatment, Progenics expects topline results in the first quarter of 2017. If the results are encouraging and the Azedra® trial meets the requirements of the Special Protocol Assessment, Progenics plans to submit a new drug application to the FDA in the first half of next year, with approval likely to happen by the end of 2017.

The Aegis report also mentions that, with its current cash balance and the expected Relistor® sales royalties, Progenics will be able to continue development of its oncology pipeline, which includes PSMA (prostate specific membrane antigen)-targeted imaging agents such as 1404 (SPECT/CT imaging agent currently undergoing a phase III study of 450 prostate cancer patients), PyL™ (a PET/CT agent that will begin to undergo phase II/III trials by the end of the year) and 1095 (with a phase I study in metastatic prostate cancer patients set to begin in the fourth quarter of 2016).

For more information, visit the company’s website at www.progenics.com

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