On November 7, 2016 Progenics Pharmaceuticals, Inc. (Nasdaq:PGNX) reported financial results for the third quarter 2016 and business update (Press release, Progenics Pharmaceuticals, NOV 7, 2016, View Source [SID1234516354]).

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"In recent months, we have realized $100 million in non-dilutive funding from RELISTOR, first with the $50M RELISTOR oral approval milestone in July, followed by the $50 million of proceeds from the non-recourse loan secured by future RELISTOR royalties announced today," said Mark Baker, Chief Executive Officer of Progenics. "With our strong balance sheet, we have the resources to advance our programs through key milestones. We expect to report registrational topline data, in early 2017, for our ultra-orphan radiotherapeutic candidate AZEDRA, for the treatment of pheochromocytoma and paraganglioma, rare tumors of the adrenal gland, and are beginning to build our commercial infrastructure to support a potential launch. In addition, we are continuing to advance our innovative portfolio of imaging agents and therapeutic candidates which have the potential to transform how we find, fight and follow prostate cancer."

Key Business Highlights

RELISTOR, treatment for opioid-induced constipation (partnered with Valeant Pharmaceuticals International, Inc.)

Announced Food and Drug Administration (FDA) Approval and Commercial Launch of Oral RELISTOR for the Treatment of Opioid Induced Constipation in Adults with Chronic Non-Cancer Pain. The approval triggered a $50 million milestone payment on July 25 from Progenics’ commercialization partner, Valeant, as well as subsequent royalties and the potential of up to $200 million in sales milestones.

RELISTOR (SC and Oral) Net Sales for the Third of 2016 Totaled $22.1 million. The third quarter 2016 sales, as reported to Progenics by Valeant, translated to $3.3 million in royalty revenue for the quarter.
AZEDRA, Ultra-orphan radiotherapeutic candidate

AZEDRA Topline Results Expected First Quarter 2017. In early 2017, Progenics expects to report topline results from its ongoing registrational trial of AZEDRA. If the AZEDRA trial meets the endpoints of the Special Protocol Assessment (SPA), Progenics expects to submit a New Drug Application (NDA) to the FDA during the first half of 2017.
PSMA-Targeted Prostate Cancer Pipeline

Enrollment in Pivotal Phase 3 Study of 1404 is Ongoing. The study will enroll up to 450 patients with newly-diagnosed or low-grade prostate cancer who are candidates for active surveillance. Progenics plans for an interim analysis by the end of this year, to assess futility and evaluate the need for a sample size re-estimation, remain unchanged.

On Track to Initiate Phase 2/3 Trial of PyL Imaging Agent. Progenics remains on-track to initiate a Phase 2/3 trial of PyL by year-end. The study is designed to assess the diagnostic accuracy of PyL PET/CT imaging in patients with high risk and/or metastatic prostate cancer.

PyL Research Access ProgramTM. At the recent Prostate Cancer Foundation Scientific Retreat, Progenics announced a new PyL research access program that will make limited doses of PyL available to researchers beginning January 1, 2017. Progenics will be able to use the data generated from the access program to support its registration efforts for PyL and advance the development of algorithms designed to analyze and interpret the scans.

Company Remains On-Track to Initiate a Phase 1 Trial of 1095 in the Fourth Quarter of 2016. The Phase 1 Study of 1095, a PSMA-Targeted Therapeutic for Metastatic Prostate Cancer, will be conducted at Memorial Sloan Kettering Cancer Center.
Corporate

Announced $50 Million RELISTOR Royalty-Backed Non-Dilutive Debt Financing with HealthCare Royalty Partners. In a separate press release issued today, Progenics announced that it has entered into a $50 million non-recourse, term loan agreement secured by and to be repaid from royalties on future sales of RELISTOR. Any future sales milestones received under Valeant agreement are excluded from the transaction and would not be used to repay interest or principal on the loan. Progenics and HealthCare Royalty Partners may mutually elect to include a second tranche of an additional $50 million within twelve months of the closing date.

Appointed Biopharmaceutical Industry Veteran Bryce V. Tenbarge as Vice President of Commercial. Mr. Tenbarge brings to Progenics over fifteen years of experience in biopharmaceutical marketing, most recently as Vice President of Marketing and Commercialization at Celldex Therapeutics.
Third Quarter 2016 Financial Results

Third quarter revenue totaled $53.9 million, up from $1.4 million in the third quarter of 2015, reflecting RELISTOR royalty income of $3.3 million compared to $1.2 million in the corresponding period of 2015. Valeant’s reported net sales include a non-recurring favorable sales return adjustment and launch of oral RELISTOR. The increase in revenue was primarily attributable to milestone revenue of $50 million for the July 19 approval of RELISTOR Tablets.

Third quarter and year-to-date research and development expenses increased by $2.8 million and $6.7 million, respectively, compared to the corresponding prior year periods, resulting from higher clinical trial and contract manufacturing expenses for 1404, AZEDRA, PyL and 1095. Third quarter general and administrative expenses increased by $2.6 million compared to the corresponding prior year period, primarily attributable to an accrual for front pay compensation related to litigation with a former employee, and higher consulting and market research expenses. Year-to-date general and administrative expenses increased by $4.2 million compared to the corresponding period in 2015, primarily due to higher depreciation expense as a result of a reduction in the remaining useful lives of our leasehold improvements at our Tarrytown, NY location, and higher compensation, consulting and market research expenses. Progenics also recorded a non-cash charge of $0.6 million in the third quarter related to an increase in the fair value estimate of the contingent consideration liability.

Net income attributable to Progenics for the quarter was $36.3 million or $0.52 per diluted share, compared to a net loss of $10.0 million or $0.14 per diluted share in the corresponding 2015 period. Progenics ended the quarter with cash and cash equivalents of $98.9 million, an increase of $24.8 million compared to cash and cash equivalents as of December 31, 2015.