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Edited Transcript of PGNX earnings conference call or presentation 2-Nov-17 12:30pm GMT

Thomson Reuters StreetEvents

Q3 2017 Progenics Pharmaceuticals Inc Earnings Call

Tarrytown Dec 10, 2017 (Thomson StreetEvents) -- Edited Transcript of Progenics Pharmaceuticals Inc earnings conference call or presentation Thursday, November 2, 2017 at 12:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Mark R. Baker

Progenics Pharmaceuticals, Inc. - CEO and Director

* Melissa Downs

* Patrick Fabbio

Progenics Pharmaceuticals, Inc. - CFO and SVP

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Conference Call Participants

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* Chad Jason Messer

Needham & Company, LLC, Research Division - Senior Analyst

* Jonathan Aschoff

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Presentation

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Operator [1]

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Good day, ladies and gentlemen, and welcome to the Progenics Pharmaceuticals Third Quarter 2017 Results Conference Call. (Operator Instructions) As a reminder, this conference call may be recorded. I would now like to introduce your host for today's conference, Ms. Melissa Downs, Senior Manager, Investor Relations. Ma'am, you may begin.

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Melissa Downs, [2]

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Thank you, operator. On behalf of Progenics' management team, thank you for joining our conference call to review our third quarter 2017 financial results and provide a business update. Joining the call today are Mark Baker, Chief Executive Officer; and Pat Fabbio, Senior Vice President and Chief Financial Officer.

Before we begin, I'll remind you that remarks made on this call that are not historical in nature may be forward-looking statements and are subject to a number of risks and uncertainties. Our actual results may differ materially. Such remarks may include, but are not limited to, those involving regulatory actions, clinical development and other matters related to our prostate cancer pipeline, AZEDRA, RELISTOR and our product -- and our other product candidates; our business and commercialization strategies and expectations of future growth, revenues and assessments of our competitive position. Please see our most recent Forms 10-Q, 10-K and other filings with the U.S. Securities and Exchange Commission for additional information on the risks that could cause our actual results to differ. As a reminder, statements we make today are as of November 2, 2017, only.

I will now turn the call over to Chief Executive Officer, Mark Baker. Mark?

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Mark R. Baker, Progenics Pharmaceuticals, Inc. - CEO and Director [3]

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Thank you, Melissa, and good morning to everybody joining us today. I'll start with an update on AZEDRA, our radiotherapeutic candidate. This morning, we announced that we've completed our rolling new drug application for AZEDRA for the treatment of malignant recurrent or unresectable pheochromocytoma and paraganglioma, an ultra-orphan indication. This represents a significant milestone for our growing company and our AZEDRA program, and we're excited to continue to advance the regulatory process for this important therapy. We're confident in the high-quality application we submitted to the FDA and believe that if approved, we are well positioned to deliver AZEDRA to these pheo and para patients who are in desperate need of an approved treatment option.

As a reminder, AZEDRA holds breakthrough therapy and orphan drug statuses as well as Fast Track designation. Our NDA is supported by positive data from the pivotal Phase IIb open-label, multicenter trial conducted under a special protocol assessment, or SPA agreement, with the FDA. Over the last few months, we've presented additional efficacy data from the pivotal study at a number of leading medical meetings. Most recently, the AZEDRA data was presented during an oral session at the Annual Congress of the European Association of Nuclear Medicine, or EANM, where our abstract was ranked as one of the best communications of all submitted papers. We received positive feedback from investigators on the totality of the data set, which represents, we believe, their largest prospective clinical trial in pheo and para to date.

I'd like to briefly review some of the data we've presented at these meetings. The primary end point of that study evaluated the proportion of patients who achieved a 50% or greater reduction in all antihypertensive medication for at least 6 months, and achievement of the end point was determined by the lower limit of the 2-sided 95% confidence interval, which needed to be above 10%. This meant that a minimum of 12 of the total 68 evaluable patients needed to meet this objective. We were excited to report that the trial met the primary end point by an impressive margin, with 17 patients meeting the objective, translating to a 95% confidence interval lower limit of 16.15%.

The trial also demonstrated favorable outcomes with respect to tumor response as measured by RECIST criteria, a key secondary end point. As we have reported previously, of the 64 RECIST evaluable patients who received at least one therapeutic dose of AZEDRA, 23% achieved a partial response and 69% had stable disease. Combined, this suggested 92% of subjects achieved disease control. And of those patients who received 2 therapeutic doses, 30% achieved a partial response and 68% had stable disease, for a notable combined 98% disease control.

In terms of safety, AZEDRA was generally well tolerated. The most common treatment-emergent adverse events were nausea, thrombocytopenia, anemia, fatigue, leukopenia and neutropenia, all of which are consistent with what we observed in prior AZEDRA studies. Yesterday, the results for the Phase I study of AZEDRA were published online in the Journal of Clinical Endocrinology and Metabolism. Results from this study created the foundation for AZEDRA's clinical efficacy and were central to the design of the pivotal study. Between the Phase I and pivotal Phase IIb studies, we believe that the totality of data presented to date provides a strong rationale for the use of AZEDRA in this underserved patient population.

Pheo and para can be dangerous tumors that can result in high morbidity and mortality rates. They are neuroendocrine tumors that produce catecholamines, meaning morbidity among patients is driven not only by tumor burden but also the damage these compounds cause to the cardiovascular and other systems. Pheo and para often go undiagnosed, a trend compounded by the lack of treatment options, with over 50% of pheochromocytomas found at autopsy, not clinically suspected. Given this lack of understanding about the disease, we will be launching a disease awareness campaign in the coming weeks to help educate key stakeholders in the signs and symptoms of these rare tumors.

As we look forward to potential acceptance of our NDA and subsequent approval, we will continue ramping up our strategic commercial planning activities, including building our internal and field-facing teams, center of excellence site profiling, readying our commercial systems and working to help ensure a pathway to access for patients. These strategic investments will leave us well positioned to execute a successful commercial launch if approved.

Turning now to our portfolio of prostate cancer theranostics. Here, we're leveraging our Find, Fight and Follow strategy which centers on improving detection, monitoring and treatment of prostate cancer. These products are designed with a precision medicine rationale, and we believe they represent the future of oncology. Our most advanced candidate is 1404, a SPECT/CT radiopharmaceutical which we continue to progress through a Phase III study. We recently presented data from 2 studies of 1404 and an oral session at EANM.

EANM was a very exciting meeting. I was struck by the very high percentage of presentations focused on PSMA-targeted imaging agents and therapeutics, including many presentations which highlighted our agents. We believe the volume of study in this area indicates immense excitement among KOLs for PSMA products and underscores the encouraging feedback we've received about our agents. This is especially true among experts in Europe who have expressed strong interest in 1404, largely because of its potential to expand prostate cancer diagnosis beyond health care facilities equipped with expensive PET machines to those more broadly that conducts -- and conducts SPECT/CT scans. Beyond 1404, our Phase II/III study for PyL, a PSMA-targeted PET/CT imaging agent designed to help physicians identify early evidence of metastatic and/or recurrent prostate cancer, remains ongoing. And finally, 1095, a small molecule therapeutic that selectively binds to PSMA continues to be evaluated in a Phase I dose-ranging trial.

Our robust pipeline of oncology products continues to be supported by our strong cash position and royalty revenues from the RELISTOR franchise which Pat will now discuss in greater depth as well as review our financials. Pat?

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Patrick Fabbio, Progenics Pharmaceuticals, Inc. - CFO and SVP [4]

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Thanks, Mark. You can review details of our financials in the press release we issued this morning and in the 10-Q that we will file later today.

Let me now discuss our third quarter financial results. Third quarter revenue totaled $2.7 million compared to $53.9 million in the prior year, reflecting RELISTOR royalty income of $2.6 million compared to $3.3 million in the corresponding period of 2016, which included a nonrecurring favorable sales return adjustment. The 2016 period also included a $50 million milestone payment related to RELISTOR. I thought it was a great quarter for RELISTOR, with oral scripts up 40% over the preceding quarter 1 year after launch, reflecting sales force expansion, with now over 500 reps selling RELISTOR. We expect to see this translate into higher sales as subcutaneous cannibalization tapers off and oral continues to grow.

Third quarter research and development expenses increased by approximately $0.5 million dollars compared to the corresponding period in 2016, resulting primarily from higher clinical trial costs for PyL, partially offset by lower manufacturing scale-up costs for 1095.

Third quarter general and administrative expenses decreased by $1.3 million compared to 2016. Partially offsetting this decrease were higher costs associated with building commercial capabilities in preparation for a potential AZEDRA approval and launch.

Net loss for the quarter was $15.4 million or $0.22 per diluted share. We ended the quarter with cash and cash equivalents of $98.3 million. This robust financial position will enable us to advance development of AZEDRA as well as our pipeline of prostate cancer products.

And now I'll turn the call back over to Mark to conclude.

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Mark R. Baker, Progenics Pharmaceuticals, Inc. - CEO and Director [5]

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Thanks, Pat. The next few months are expected to be busy here at Progenics, starting with the potential notification of NDA acceptance anticipated this quarter, followed by a possible approval decision. In the meantime, we will continue to invest in the infrastructure necessary to support a launch of AZEDRA at approval while continuing clinical development of our prostate cancer theranostics.

With that, I'll open the call for questions. Operator?

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Questions and Answers

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Operator [1]

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(Operator Instructions) And our first question comes from the line of Chad Messer from Needham & Company.

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Chad Jason Messer, Needham & Company, LLC, Research Division - Senior Analyst [2]

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Let me just start by congratulating the whole Progenics team on the AZEDRA NDA filing. Obviously, a big moment for the company. If I may ask, actually, a couple questions on some external events that both we and investors we think are pretty germane as to what's going on at Progenics. So first of all, earlier in the week, we learned about Advanced Accelerator Applications is being acquired by Novartis, $3.9 billion. Obviously, the closest comp out there to AZEDRA is their Lutathera. Both companies have other things going on. Just wondering what you think about that. And then also, Endocyte and their acquisition of another radiopharmaceutical targeting PSMA, that's obviously an area of great interest to what's going on at Progenics as well. Just your thoughts on that transaction and the interest it shows in the area and then having Endocyte as a competitor and colleague in the field.

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Mark R. Baker, Progenics Pharmaceuticals, Inc. - CEO and Director [3]

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Yes, thanks. Yes, the Endocyte's in-licensing of a PSMA-targeted radiotherapeutic garnered a lot of attention and created good value at that company. And totally consistent, as I was saying in my remarks to what we saw at EANM, which is that the focus of the whole field on PSMA-targeted imaging agents and therapeutics has been extremely strong. And one of the sessions at EANM was entitled PSMA, the Future of Nuclear Medicine. So it was good to see the validation of this target, which we've been working on for so long and which I feel we, yes, we have got a -- the strongest position in, getting great attention. And then, yes, the AAA deal with Novartis, a major pharmaceutical company stepping in and recognizing the value of a neuroendocrine treatment radiopharmaceutical, and Lutathera for a different indication of neuroendocrine tumors mid-gut but -- and AZEDRA for pheo and paras. But a major pharmaceutical company seeing the potential for radiopharmaceuticals to treat these difficult-to-treat cancers. And then they highlighted in their press release -- in the bullets in their press release the compound that AAA has that's PSMA targeted. And so I feel like we're seeing strong validation of the targets that we've been working with and a falling away of some trepidation perhaps among major pharmaceuticals that radiopharmaceuticals are not a space they want to be in. We saw that first with our partner Bayer, where we're partnered for a antibody-targeted PSMA asset, and of course, they acquired Algeta, who originally developed Xofigo for multiple millions. So what we see and we're encouraged by is big pharma recognizing the value here and willing to make strong investments to acquire these assets. So that's been encouraging to us.

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Chad Jason Messer, Needham & Company, LLC, Research Division - Senior Analyst [4]

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And then maybe one more on another recent development. So our channel checks have come back, and Symproic, now a third drug for opioid-induced constipation, is definitely out there and being detailed. Any impact on the market for RELISTOR that's getting back to you through your partner Valeant on that drug?

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Mark R. Baker, Progenics Pharmaceuticals, Inc. - CEO and Director [5]

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No, I think they have priced and launched, but what we hear is that they'll have a period of time in order to gain proper reimbursement from the health care system. So I think the first quarter or 2 may be somewhat muted. The view of the commercial team at Valeant is that Symproic seems like MOVANTIK, the other drug in the marketplace, both in terms of its mode of action and its benefit to the patients. And also, it seems, in the pricing, going with the low-cost pricing, whereas we continue to see the strengths of RELISTOR being with its quick onset of action and its ability to provide relief, particularly in MOVANTIK failures. So the Valeant team, thinking that Symproic will have the biggest impact on MOVANTIK and thinking that RELISTOR will continue to have its unique commercial position. We do see RELISTOR taking increasing share of the oral market from MOVANTIK. Will Symproic divide a static pie or will the launch of Symproic boost the opioid-induced constipation market and with Symproic being marketed by Purdue sales teams, we now have a company with a strong presence in the opioid market also marketing an OIC product. So my personal feeling is we're going to see the market grow with an additional entrant, and while our share of the market may come down, we think that total sales will continue to grow and highly encouraged by this script data that we're seeing with continued double-digit increases in oral scripts quarter-over-quarter. And it does seem that Valeant's making a very strong investment in the area, over 500 reps detailing RELISTOR. And they pointed out, in particular, the strong performance of the pain sales force, which is focused with RELISTOR first in the bag as one of the strongest elements that they're seeing in the commercial side of RELISTOR. So it's a very positive story. It's taking a little while for that to translate into actual net sales, but the trends to us are super encouraging.

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Operator [6]

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(Operator Instructions) And our next question comes from the line of Jonathan Aschoff from Opus National Capital Markets.

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Jonathan Aschoff, [7]

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I was wondering if you could give us any sense of data release timing for the 3 trials that you have or at least some sense of where the enrollment is. And the second question is, aren't you coming up to the expiration of the ability to borrow that second $50 million? And I was just kind of curious what you were thinking about that.

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Mark R. Baker, Progenics Pharmaceuticals, Inc. - CEO and Director [8]

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So with the 1404 trial, we've been guiding to a completion of enrollment of that trial by year-end, and it seems like that's proceeding fine so we're staying with that guidance. With respect to the PyL program, I think we're close to finalizing our discussions with the FDA regarding that program, so I think we'll be providing the market with a update soon once that's completed with how we're seeing that clinical development program. So stay tuned for that. With the 1095 agent, we're in Phase I and it's a dose-ranging trial, so much more difficult to predict when that trial will reach its conclusion but so far, so good. And then with the Bayer antibody compound, Bayer indicating to us that they see the strong potential to get that drug into the clinic next year, and I'm thinking it's likely to be earlier in the year than later in the year based on their comments. So we see all of those elements moving forward, and as I mentioned before, at EANM, these things were being watched very closely and being commented on widely. From the point of view of the royalty financing, we did have and do have an arrangement with the royalty financing group that we use for them to take down another $50 million. We're in close contact with them, and so I'm thinking that, that amount could be -- is available but requires mutual consent. Both of us must agree. At this point, we don't have a particular focus on using it, but of course, we evaluate our financing alternatives continually. And I think what we liked about that transaction -- continue to like, is the fact that it didn't dilute the shareholders in terms of it issuing additional shares. So as we see the continued strength in the RELISTOR market, I think it's an opportunity that remains available to us. Pat, what would you say about that?

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Patrick Fabbio, Progenics Pharmaceuticals, Inc. - CFO and SVP [9]

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Yes, I think so. I mean, particularly with the growth in RELISTOR and the oral scripts, Jonathan, I think -- we have close to $100 million of cash at the end of the quarter. We came off a great 2016, raising $100 million. So we -- like other biotechs, we think about our financing options, and that certainly is always one of them.

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Operator [10]

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Thank you. And this concludes today's Q&A session. I would now like to turn the call back over to Mark Baker, Chief Executive Officer, for closing remarks.

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Mark R. Baker, Progenics Pharmaceuticals, Inc. - CEO and Director [11]

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Thank you all again for joining us this morning to review our continued progress, financial results and upcoming milestones. I'd also like to thank the entire Progenics team for their persistent dedication and hard work, most recently to complete what we're confident is a high-quality NDA for AZEDRA. Throughout the rest of 2017, we look forward to providing further updates on our progress, particularly the regulatory and commercial activities for AZEDRA.

Additionally, we will be participating in multiple investor conferences in November, including Credit Suisse, Stifel and Jefferies in London. In the meantime, please do not hesitate to reach out to the team here if you have additional questions. Thank you very much.

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Operator [12]

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Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program, and you may all disconnect. Everyone, have a great day.