PROGENICS PHARMACEUTICALS, INC. The following Management's Discussion and Analysis of Financial Condition and
Results of Operations ("MD&A") is intended to assist the reader in understanding
the business of
Note Regarding Forward-Looking Statements
This document and other public statements we make may contain statements that do
not relate strictly to historical fact, any of which may be forward-looking
statements within the meaning of the
We are also subject to risks and uncertainties associated with the actions of our corporate, academic and other collaborators and government regulatory agencies, including risks from market forces and trends; potential product liability; intellectual property, litigation and other dispute resolution, environmental and other risks; a potential inability to obtain sufficient capital, recruit and retain employees, enter into favorable collaborations, transactions, or other relationships, or the risk that existing or future relationships or transactions may not proceed as planned; the potential for cybersecurity breaches of our systems and information technology; the risk that current and pending patent protection for our products may be invalid, unenforceable or challenged, or fail to provide adequate market exclusivity, or that our rights to in-licensed intellectual property may be terminated for our failure to satisfy performance milestones; the risk of difficulties in, and regulatory compliance relating to, manufacturing products; and the uncertainty of our future profitability.
Risks and uncertainties to which we are subject also include general economic
conditions, including interest and currency exchange-rate fluctuations and the
availability of capital; changes in generally accepted accounting principles;
the impact of legislation and regulatory compliance; the highly regulated nature
of our business, including government cost-containment initiatives and
restrictions on third-party payments for our products; trade buying patterns;
the competitive climate of our industry; and other factors set forth in this
document and other reports filed with the
We do not have a policy of updating or revising forward-looking statements and, except as expressly required by law, we disclaim any intent or obligation to update or revise any statements as a result of new information or future events or developments. It should not be assumed that our silence over time means that actual events are bearing out as expressed or implied in forward-looking statements.
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Table of Contents Overview Business
We are an oncology company focused on the development and commercialization of innovative targeted medicines and artificial intelligence to find, fight and follow cancer. Our pipeline includes therapeutic agents designed to precisely target cancer (AZEDRA, 1095 and PSMA TTC), as well as a prostate-specific membrane antigen ("PSMA") targeted imaging agents for prostate cancer (PyL and 1404).
Our business strategy requires us to manage our business to provide for the continued development, manufacturing and potential commercialization of our proprietary and partnered product candidates. This includes advancing our pipeline by identifying product candidates, technologies and businesses for acquisition and in-licensing that we believe are a strategic fit with our existing business. Our strategy also calls for us to undertake increased research and development activities and to manage an increasing number of relationships with partners and other third parties, while simultaneously managing the capital necessary to support this strategy.
COVID-19 Trends and Uncertainties
We have taken steps in response to the impact of the COVID-19 pandemic on our business and to protect the health and safety of our employees.
With respect to AZEDRA, our first quarter sales totaled approximately
Additionally, as the clinical community is facing challenges in trial conduct
due to the COVID-19 pandemic, we are committed to ensuring adequate safety
monitoring of the ARROW Phase 2 study in mCRPC subjects and maintaining the
integrity of the trial in alignment with government, regulatory and public
health recommendations. As such, Progenics has paused new enrollment for several
months in the Phase 2 trial of
As a result, the Company has decided to curtail promotional spending and furlough a portion of the clinical, commercial and medical employees to support cost-saving measures as the Company continues to navigate through the changing COVID-19 environment. Progenics continues to assess this emerging situation and will make any relevant adjustments in alignment with government mandates when necessary.
We have not experienced any disruptions in our preparations to file a New Drug
Application ("NDA") for PyL with the
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We are closely monitoring the impact of COVID-19 on all aspects of our business.
The extent to which the COVID-19 pandemic impacts our business, our business
partners, results of operations, and financial condition will depend on future
developments, which are highly uncertain and difficult to predict; these
developments include, but are not limited to, the duration and spread of the
outbreak, the severity of its effects, the actions to contain the virus or
address its impact,
Pending Merger with Lantheus Holdings
On
On
On
In addition, on
Corporate Updates
On
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On
Bridge Loan Agreement
On
Product Pipeline Product / Candidate Description Status Market Rights
Ultra-Orphan
Theranostic
AZEDRA (iobenguane Unresectable, locally Approved
advanced or metastatic
555 MBq/mL pheochromocytoma or
injection paraganglioma
Prostate Cancer
Theranostics
PyL (18F-DCFPyL) PSMA-targeted PET/CT Positive Phase Worldwide Progenics
imaging agent for prostate 3 topline (ex. EU,
cancer results AU, & NZ)
PyL (18F-DCFPyL) PSMA-targeted PET/CT Discussions
imaging agent for prostate with EMA
cancer
1095 (I 131 1095) PSMA-targeted small Phase 2 Worldwide Progenics
molecule therapeutic for
treatment of metastatic
prostate cancer
PSMA TTC (BAY PSMA-targeted antibody Phase 1 Worldwide Bayer
2315497) conjugate therapeutic for
treatment of metastatic
prostate cancer
1404 Technetium-99m Discussions Europe ROTOP
PSMA-targeted SPECT/CT with EMA
imaging agent for prostate
cancer
Digital Technology
PSMA AI Imaging analysis technology Investigational Worldwide Progenics
that uses artificial Use Only
intelligence and machine
learning to quantify and
automate the reading of
PSMA targeted imaging
Automated Bone Scan Automated reading and Approved in the Worldwide Progenics
Index (aBSI) quantification of bone U.S. and E.U. (ex. Japan)
scans of prostate cancer 510(k) cleared
patients using artificial in the U.S. CE
intelligence and deep marked (E.U.
learning countries)
Automated Bone Scan Automated reading and Approved Japan FUJIFILM
Index (BONENAVI) quantification of bone
scans of prostate cancer
patients using artificial
intelligence and deep
learning
Other Programs
RELISTOR OIC in adults with chronic Approved Worldwide Bausch
Subcutaneous non-cancer pain or
Injection advanced-illness adult
(methylnaltrexone patients
bromide)
RELISTOR Tablets OIC in adults with chronic Approved U.S. Bausch
(methylnaltrexone non-cancer pain
bromide)
Leronlimab (PRO HIV Infection BLA Submitted U.S. CytoDyn
140) to FDA
Ultra-Orphan Theranostic:
AZEDRA
AZEDRA® (iobenguane I 131) is a radiotherapeutic, approved for the treatment of adult and pediatric patients 12 years and older with iobenguane scan positive, unresectable, locally advanced or metastatic pheochromocytoma or paraganglioma who require systemic anticancer therapy. AZEDRA is the first and only FDA-approved therapy for this indication.
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Updated long-term follow up efficacy and safety data from the pivotal Phase 2
study of AZEDRA in patients with pheochromocytoma or paraganglioma were
published as an abstract in the
Prostate Cancer Theranostics:
PyL
PyL (also known as 18F-DCFPyL) is a fluorinated PSMA-targeted PET imaging agent that enables visualization of both bone and soft tissue metastases, with potential high clinical utility in the detection of recurrent and/or metastatic prostate cancer, as well as staging of high risk disease. We announced positive topline data in the pivotal Phase 3 trial evaluating the diagnostic performance and clinical impact of PyL in men with biochemical recurrence of prostate cancer.
We completed two successful pre-NDA meetings with the FDA in
Several abstracts pertaining to PyL were published in the
Curium has licensed exclusive rights to develop and commercialize PyL in
1095
1095 (also known as
PSMA TTC
PSMA TTC is a thorium-227 labeled PSMA-targeted antibody therapeutic. PSMA TTC is designed to deliver a dose of alpha radiation directly to prostate cancer cells with minimal impact on the surrounding healthy tissues. Bayer AG ("Bayer") has exclusive worldwide rights to develop and commercialize products using our PSMA antibody technology in combination with Bayer's alpha-emitting radionuclides. Bayer is conducting a Phase 1 trial of PSMA TTC in patients with metastatic castration-resistant prostate cancer.
1404
1404 is a technetium-99m labeled small molecule which binds to PSMA and is used
as a SPECT/CT imaging agent to diagnose and detect localized prostate cancer as
well as soft tissue and bone metastases. ROTOP has exclusive rights to develop,
manufacture and commercialize 1404 in
Digital Technology: PSMA AI
PSMA AI is an imaging analysis technology that uses artificial intelligence and machine learning to quantify and automate the reading of PSMA-targeted imaging. We recently completed a performance study of our automated segmentation algorithms with PyL/CT images from our PyL research access initiative. The study demonstrated the efficiency and effectiveness of our fully automated segmentation algorithm of the 49 bones and 12 soft tissue regions of the whole body from PyL-PSMA PET/CT images. The deep learning algorithms demonstrated a Sørensen-Dice score of 0.90 or higher in segmenting anatomical structures in the low dose CT portion of a PyL PET/CT. This work provides automated generation of lesion quantification, localization and staging, therefore leading to highly contextualized assessments of disease burden.
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Table of Contents Automated Bone Scan Index
Automated Bone Scan Index ("aBSI") calculates the disease burden of prostate
cancer by quantifying the hotspots on bone scans and automatically calculating
the bone scan index value, representing the disease burden of prostate cancer
shown on the bone scan. This quantifiable and reproducible calculation of the
bone scan index value is intended to aid in the diagnosis and treatment of men
with prostate cancer and may have utility in monitoring the course of the
disease. The Japanese rights to the stand-alone aBSI have been transferred and
sold to
Other Programs: RELISTOR
RELISTOR® (methylnaltrexone bromide) is a treatment for opioid-induced
constipation ("OIC") that addresses its underlying mechanism of OIC and
decreases the constipating side effects induced by opioid pain medications such
as morphine and codeine without diminishing their ability to relieve pain.
RELISTOR is approved in two forms: a subcutaneous injection (12 mg and 8 mg) and
an oral tablet (450 mg once daily). Any references herein to RELISTOR do not
imply that any other form or possible use of the drug has received approval.
RELISTOR subcutaneous injection is being sold in the
Leronlimab (PRO 140)
Leronlimab (PRO 140) is an investigational humanized IgG4 mAb that blocks CCR5,
a cellular receptor that is important in HIV infection, tumor metastases, and
other diseases including NASH. It is owned by CytoDyn Inc. ("CytoDyn") pursuant
to our agreement with CytoDyn, as described below. In
Strategic partnerships: Bausch Agreement
Under our agreement with
(In thousands)
In excess of $150 million 15,000
In excess of $200 million 20,000
In excess of $300 million 30,000
In excess of $750 million 50,000
In excess of $1 billion 75,000
$ 190,000
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Each commercialization milestone payment is payable one time only, regardless of
the number of times the condition is satisfied, and all six payments could be
made within the same calendar year. We are also eligible to receive royalties
from Bausch and its affiliates based on the following royalty scale: 15% on
worldwide net sales up to
Bayer Agreement
Under our
CytoDyn Agreement
Leronlimab (PRO 140) is an investigational humanized IgG4 mAb that blocks CCR5, a cellular receptor that is important in HIV infection, tumor metastases, and other diseases including NASH.
We sold Leronlimab to CytoDyn in 2012, which sale included milestone and royalty
payment obligations to us. Under our 2012 agreement with CytoDyn, CytoDyn is
responsible for all development, manufacturing and commercialization efforts.
Pursuant to such agreement, we have received
ROTOP Agreement
In
Under the terms of the collaboration, ROTOP is responsible for the development,
regulatory approvals and commercialization of 1404 in
FUJIFILM Agreement
In
Under the terms of the transfer agreement, FUJIFILM acquired, by a combination
of purchase and license, the Japanese software, source code, supporting data and
all Japanese patents associated with the aBSI product from Progenics for use in
Results of Operations
The following table is an overview of our results of operations (in thousands, except percentages):
Three Months Ended
March 31,
2020 2019
Total revenue $ 6,248 $ 4,281
Operating expenses $ 22,134 $ 22,516
Operating loss $ (15,886 ) $ (18,235 )
Net loss $ (16,801 ) $ (18,735 )
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Table of Contents Revenue
Our sources of revenue include AZEDRA product sales, royalties and license fees from Bausch and other collaborators. The following table is a summary of our worldwide revenue (in thousands, except percentages):
Three Months Ended
March 31,
Source 2020 2019 Change
AZEDRA product sales $ 1,359 $ - N/A
Royalty income 4,789 4,161 15 %
License and other revenue 100 120 (17 %)
Total revenue $ 6,248 $ 4,281 46 %
AZEDRA product sales. We began commercial product sales of AZEDRA in the
Royalty income. We recognized royalty income primarily based on the below net
sales of RELISTOR, as reported to us by Bausch (in thousands, except
percentages).
Three Months Ended
March 31,
2020 2019 Change
U.S. $ 31,100 $ 26,400 18 %
Outside U.S. 800 1,300 (38 %)
Worldwide net sales of RELISTOR $ 31,900 $ 27,700 15 %
Royalty income increased by
License and other revenue. The license and other revenue decreased by
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Operating Expenses
The following table is a summary of our operating expenses (in thousands, except
percentages):
Three Months Ended
March 31,
Operating Expenses 2020 2019 Change
Cost of goods sold $ 1,558 $ - N/A
Research and development 10,367 12,392 16 %
Selling, general and administrative 10,509 9,224 (14 %)
Change in contingent consideration liability (300 ) 900 133 %
Total operating expenses $ 22,134 $ 22,516 2 %
Cost of Goods Sold
Cost of goods sold includes cost of direct materials and labor and indirect
expenses used in the manufacturing of AZEDRA beginning with the first commercial
sale in
Research and Development ("R&D")
We do not track fully burdened R&D costs separately for each of our product candidates. We review our R&D expenses by focusing on external and internal development costs. External development costs consist of costs associated with our clinical trials, including pharmaceutical development and investments in manufacturing. Included in other costs are external corporate overhead costs that are not specific or allocated to any one program. Internal costs consist of salaries and wages, share-based compensation and benefits, which are not tracked by program as several of our departments support multiple development programs. The following table summarizes the external costs attributable to each program and internal costs (in thousands):
Three Months Ended March 31,
2020 2019
External Costs
PyL $ 2,361 $ 3,152
AZEDRA 334 3,711
1404 20 127
1095 3,154 878
PSMA AI 305 307
Other 786 645
Total External Costs $ 6,960 $ 8,820
Internal Costs 3,407 3,572
Total R&D Costs $ 10,367 $ 12,392 R&D expenses decreased by
Selling, General and Administrative
Selling, general and administrative expenses increased by
Change in Contingent Consideration Liability
The decrease in the contingent consideration liability of
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Other (Expense) Income
The following table is a summary of our other (expense) income (in thousands,
except percentages):
Three Months Ended
March 31,
2020 2019 Change
Interest (expense) income, net $ (854 ) $ (429 ) (99 %)
Other (expense) income, net (61 ) (71 ) 14 %
Other (expense) income $ (915 ) $ (500 ) (83 %)
Total other (expense) income, net increased by
Liquidity and Capital Resources
The following table is a summary of selected financial data (in thousands):
March 31, December 31,
2020 2019
Cash and cash equivalents $ 29,531 $ 42,049
Accounts receivable, net $ 6,190 $ 15,976
Total assets $ 98,344 $ 119,470
Working capital $ 21,447 $ 41,664 Our current principal sources of revenue are AZEDRA sales, royalties, and
development and commercial milestones from strategic partnerships. Our principal
sources of liquidity are our existing cash and cash equivalents. As of
On
While we strongly believe that the proposed merger with Lantheus Holdings
represents the best path forward for the Company, if the proposed merger is not
ultimately consummated, we will operate on a stand-alone basis and will continue
to have significant cash requirements to support product development activities,
commercialization of AZEDRA and pre-launch activities for PyL. The amount and
timing of our cash requirements will depend on the progress and success of our
clinical development programs, regulatory and market acceptance, and the
resources we devote to research and commercialization activities. Additionally,
under specified circumstances, we may be required to pay Lantheus Holdings a
termination fee of
On
Consistent with regular practice for a growth-stage pharmaceutical or
biotechnology company, and as we have done in the past, we anticipate the need,
and are exploring options for, additional financing in order to meet our cash
requirements if the proposed merger with Lantheus Holdings is not consummated
and we believe we have a viable strategy to do so. However, there can be no
assurances that we will be able to obtain additional capital on acceptable terms
and in the amounts necessary to fully fund our current operating expenses or
reduced operating expenses reflecting delays or reductions in the scope of our
product development programs beyond one year from the date this annual report is
issued. As such, we believe there is substantial doubt regarding our ability to
continue as a going concern within one year after the date this Quarterly Report
on Form 10-Q is filed with the
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Table of Contents Cash Flows
The following table is a summary of our cash flow activities (in thousands):
Three Months Ended
March 31,
2020 2019
Net cash used in operating activities
Operating Activities
Net cash used in operating activities during the three months ended
Investing Activities
Net cash used in investing activities during the three months ended
Financing Activities
Net cash used in financing activities during the three months ended
Off-Balance Sheet Arrangements and Guarantees
We have no obligations under off-balance sheet arrangements and do not guarantee the obligations of any other unconsolidated entity.
Critical Accounting Policies
We prepare our financial statements in conformity with accounting principles
generally accepted in the
There have been no changes to our critical accounting policies and estimates as
of and for the three months ended
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Recent Accounting Developments
Refer to our discussion of recently adopted accounting pronouncements and other recent accounting pronouncements in Note 2. New Accounting Pronouncements to the accompanying unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
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