Progenics Pharmaceuticals Inc. (PGNX)

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Progenics Pharma (PGNX): Profitability Could Come In '17 - Needham

Needham & Company analyst, Chad Messer, reiterated his Buy on Progenics Pharmaceuticals (NASDAQ: PGNX) after taking the management team on the road to meet with investors. The team offered insight into the company's three lines of business: Relistor for opioid-induced constipation (OIC), Azedra for malignant pheochromocytoma, and PSMA targeted therapies and diagnostic for prostate cancer.

Relistor - The recent Relistor launch received positive commentary. Partner Valeant recently launched oral Relistor for OIC, setting a list price at a substantial premium to competitor Movantik's current $11.52/pill. While some investors appeared concerned that the substantially higher price could harm Relistor's position on formularies, management reported that oral Relistor is considered by many payers to be a line extension to the subcutaneous formulation and already has broader reimbursement than Movantik despite the latter drug's 1+ year head start.

Azendra - The combination of Relistor royalties and profits from wholly owned Azedra could bring Progenics to positive cash flow. For the first time management voiced this possibility as a "goal" (although not as formal guidance). Pivotal Azedra data is expected in 1Q17. The company is already working on the NDA and plans for submission by mid-2017. With fast track review, approval could come before YE17. Progenics anticipates being able to market Azedra by itself in the US with 3-4 MSLs. The analyst estimates 2018 US sales of $52M growing to $185M in 2024 assuming management's rather conservatively guided $150,000 per patient cost.

PSMA- Progenics is developing multiple therapeutic and diagnostic agents to "find, fight, and follow" prostate cancer using the PSMA target. The first of these expected to make it to market is 1404, a PSMAtargeted SPECT/CT imaging agent for early monitoring of prostate cancer. 1404 is on track for an interim analysis in 2H16 after 1/3 of patients are treated. The interim contains a futility analysis as well as an opportunity to resize the trial (larger or smaller). Final Phase III data are expected in 2H17. Progenics expects to launch 1404 in 2018 with a price at ~$1,000, intentionally cheaper than MRI, which 1404 bested on accuracy of diagnosis in Phase II.

No change to the price target of $11.