PROGENICS PHARMACEUTICALS INC (PGNX) SPO
|Company Name||PROGENICS PHARMACEUTICALS INC|
|Company Address||777 OLD SAW MILL RIVER ROAD
TARRYTOWN, NY 10591
|CEO||Mark R. Baker|
|Employees (as of 12/31/2011)||105|
|State of Inc||DE|
|Fiscal Year End||12/31|
|Exchange||Nasdaq National Market|
|Shares Over Alloted||0|
|Shareholder Shares Offered||--|
|Lockup Period (days)||180|
|Quiet Period Expiration||1/9/2013|
We estimate that the net proceeds from the sale of the 11,000,000 shares of common stock that we are offering will be approximately $20.2 million, or approximately $23.3 million if the underwriter exercises in full its option to purchase 1,650,000 additional shares of common stock, based on the public offering price of $2.00 per share and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. We intend to use the net proceeds from this offering for research and development and general corporate purposes. We may also use a portion of the net proceeds to acquire or invest in businesses, products and technologies that are complementary to our own. We regularly consider such opportunities, but are not currently negotiating any such transactions. The amounts and timing of these expenditures will depend on a number of factors, such as the timing, scope, progress and results of our research and development efforts, the timing and progress of any partnering or other transaction efforts, and the competitive environment for our product candidates. As of the date of this prospectus supplement, we cannot specify with certainty all of the particular uses of the proceeds from this offering. Accordingly, we will retain broad discretion over the use of such proceeds. Pending the application of the net proceeds as described above, we may invest the net proceeds in short-term, interest-bearing instruments or other investment-grade securities.
The extent to which any of our products achieves market acceptance will depend on competitive factors. Competition in the biopharmaceutical industry is intense and characterized by ongoing research and development and technological change. We face competition from many for-profit companies and major universities and research institutions in the U.S. and abroad. We face competition from companies marketing existing products or developing new products for diseases and conditions targeted by our technologies. We are aware of a number of products and product candidates which compete or may potentially compete with Relistor, PSMA ADC or our other product candidates. For instance, there are product candidates in pre-clinical or clinical development that target the side effects of opioid pain therapy, and a marketed product for the treatment of post-operative ileus could compete with Relistor. We are aware of several competitors which have received approval for or are developing alternative treatments for castration-resistant prostate cancer, some of which are directed against PSMA, including Zytiga® (abiraterone acetate), Xtandi® (enzalutamide), and Alpharadin® (radium-223 chloride). In relation to our pre-clinical development of P13K inhibitors, recent evidence suggests that activation of complementary oncogenic pathways can confer resistance to PI3K inhibition, requiring co-administration of agents targeting these “resistance” pathways. We are aware of several competitors which are developing small molecule PI3K inhibitors that co-target additional oncogenic pathways. Any of these competing approved products or product candidates, or others which may be developed in the future, may achieve a significant competitive advantage relative to Relistor, PSMA ADC or any of our other product candidates. Competition with respect to our technologies and products is based on, among other things, product efficacy, safety, reliability, method of administration, availability, price and clinical benefit relative to cost; timing and scope of regulatory approval; sales, marketing and manufacturing capabilities; collaborator capabilities; insurance and other reimbursement coverage; and patent protection. Competitive disadvantages in any of these factors could materially harm our business and financial condition. Many of our competitors have substantially greater research and development capabilities and experience and greater manufacturing, marketing, financial and managerial resources than we do. These competitors may develop products that are superior to those we are developing and render our products or technologies non-competitive or obsolete. Our products and product candidates under development may not compete successfully with existing products or product candidates under development by other companies, universities and other institutions. Drug manufacturers that are first in the market with a therapeutic for a specific indication generally obtain and maintain a significant competitive advantage over later entrants and therefore, the speed with which industry participants move to develop products, complete clinical trials, approve processes and commercialize products is an important competitive factor. If our product candidates receive marketing approval but cannot compete effectively in the marketplace, our operating results and financial position would suffer.
Progenics is dedicated to the development of innovative medicines to treat disease. Our focus is on the treatment of cancer. Relistor. Our first commercial drug is Relistor R (methylnaltrexone bromide), for the treatment of opioid induced constipation (OIC) in patients with advanced illnesses,
such as cancer. OIC is the constipation that often arises when patients take opioids for pain relief. Relistor is the only prescription medicine approved in the United States to treat this form of constipation. Relistor subcutaneous injection is now approved in the U.S., the European Union and over 50 other countries around the world for use in patients with advanced illness. Relistor is marketed in the U.S. by our commercial partner, Salix Pharmaceuticals, Inc. (Salix), a leading specialty pharmaceutical company focusing on gastrointestinal diseases, and by sublicensees and distributors of Salix outside of the U.S. Our partner, Ono Pharmaceutical Co., Ltd. (Ono), is currently developing subcutaneous Relistor for the Japanese market. Under our license agreement with Salix, Salix is responsible for developing and commercializing Relistor, including completing clinical development necessary to support regulatory marketing approvals for potential new indications (such as OIC in patients with chronic, non-cancer pain) and formulations of the drug (such as an oral formulation of methylnaltrexone, the active ingredient in Relistor). Under the license agreement, in addition to payments already received, we are eligible to receive (i) a development milestone of up to $40.0 million upon U.S. marketing approval for subcutaneous Relistor in chronic, non-cancer pain patients (the proposed indication addressed in the Complete Response Letter discussed below), (ii) a development milestone of up to $50.0 million upon U.S. marketing approval of an oral formulation of Relistor, (iii) up to $200.0 million of commercialization milestone payments upon achievement of specified U.S. sales targets, (iv) royalties ranging from 15 to 19 percent of net sales by Salix and its affiliates, and (v) 60 percent of any upfront, milestone, reimbursement or other revenue (net of costs of goods sold and territory-specific research and development expense reimbursement) Salix receives from sublicensees outside the U.S. (of which we have received $0.2 million to date). In the event that marketing approval is subject to a Boxed Warning or Risk Evaluation and Mitigation Strategy (REMS), payment of a substantial portion of specified milestone amounts would be deferred, and subject, to achievement of the first commercialization milestone payable upon annual U.S. sales first exceeding $100.0 million. As part of our efforts to develop and commercialize Relistor and its active ingredient, methylnaltrexone, we and Salix have sought to expand the availability of subcutaneous Relistor to patients who are taking opioids for non-cancer pain and suffer from OIC as a result (a population which includes patients taking opioids for conditions such as back pain or joint pain) and to develop an oral formulation of Relistor for use by such patients. In July, the U.S. Food and Drug Administration (FDA) issued a Complete Response Letter (CRL) requesting additional clinical data for the supplemental New Drug Application (sNDA) for Relistor injection for subcutaneous use for the treatment of OIC in adult patients with chronic, non-cancer pain. On October 5, 2012, we attended an End-of-Review meeting with Salix and the FDA’s Division of Gastroenterology and Inborn Errors Products (Division) to better understand the contents of the CRL. The Division has expressed a concern that there may be a risk associated with the chronic use of mu-opioid antagonists in patients who are taking opioids for chronic, non-cancer pain. In order to understand this potential risk, the Division has communicated that a very large, well- controlled, chronic administration trial will have to be conducted to assess the safety of any mu-opioid antagonist prior to market approval for the treatment of patients with OIC who are taking opioids for chronic, non-cancer pain. We plan to work with Salix and the FDA to generate a reasonable path forward for the further development and regulatory review of Relistor which can be agreed upon by the parties. At this time, we anticipate that a determination of whether a path forward can be reached with the FDA could be made during 2013. It is not possible, however, to determine definitively the duration or outcome of discussions with the FDA regarding this matter at this time, and it may be that a commercially feasible path forward cannot be reached with the FDA, or that Salix may determine to discontinue the current subcutaneous Relistor development program or terminate our collaboration altogether. Even if the parties agree upon a path forward, we cannot estimate the timeframe or costs associated with the future development of Relistor for non-cancer patients. As a result, we do not know when, if ever, we may reach milestones related to such indications under our license agreement with Salix. Royalty and milestone payments from Relistor depend on success in development and commercialization, which is dependent on many factors, principally the development and commercialization efforts, and possible strategic decisions, of Salix, decisions by the FDA and other regulatory bodies, such as the recent CRL, the outcome of clinical and other testing of Relistor, including Ono’s efforts, and, to the extent requested by our collaboration partners, our own efforts. Oncology. Our lead oncology product candidate is PSMA ADC, a fully human monoclonal antibody-drug conjugate (ADC) directed against prostate specific membrane antigen (PSMA), a protein found at high levels on the surface of prostate cancer cells and also on the neovasculature of a number of other types of solid tumors. The principal focus of these efforts is our fully human monoclonal ADC, which utilizes technology licensed to us from Sloan-Kettering Institute for Cancer Research, through Cytogen Corporation, and Seattle Genetics, and is designed to deliver a chemotherapeutic agent to cancer cells by targeting the three-dimensional structure of the PSMA protein on these cells and binding to and internalizing within the cell. In September, we opened enrollment in a Phase 2 clinical trial of our PSMA ADC compound in prostate cancer patients. The trial is an open-label, multicenter study to assess the anti-tumor activity (measured by prostate specific antigen; circulating tumor cells; bone, visceral and nodal metastases; and pain), tolerability and safety of PSMA ADC in up to 75 subjects with metastatic castration-resistant prostate cancer. In June, we presented a summary of current interim results from our Phase 1 clinical trial of PSMA ADC at the Plenary Session of the General Meeting of the American Society of Clinical Oncology (ASCO) held in Chicago. We are considering, as appropriate, strategic collaborations with biopharmaceutical companies for PSMA ADC. As a part of our work in oncology, we are also conducting preclinical development of novel phosphoinositide 3-kinase (PI3K) inhibitors, which we believe may be effective in blocking signaling pathways critical in the growth of aggressive cancers, particularly ras (rat sarcoma) mutated tumors. We are seeking opportunities to expand our oncology pipeline through in-licensing and acquisitions. With our focus on the development of medicines to treat cancer, we have discontinued development work on programs outside of this focus and are divesting or out-licensing others. In the third quarter of 2012, we signed a non-binding term sheet, and are now in contract negotiations, for disposition of our C. difficile program. In October, we completed the divestment of our PRO 140 program, for which we received a $3.5 million up front cash payment and have rights to receive additional payments of $1.5 million in the event of commencement of a U.S., or equivalent outside of the U.S., Phase 3 clinical trial of PRO 140 and $5.0 million in the event of U.S. or European Union marketing approval of the drug, as well as a 5 percent royalty on any net sales of any approved products. Recent Restructuring. We completed a companywide restructuring in the third quarter, including a workforce reduction and termination of several early stage research projects. Our clinical development and manufacturing capabilities were unaffected by this restructuring. If we do not realize sufficient royalty or other revenue from Relistor, or are unable to enter into favorable collaboration, license, asset sale, capital raising or other financing transactions, we will have to reduce, delay or eliminate spending on other programs and/or further reduce headcount and other overhead expenses. ----- Progenics was incorporated in Delaware in 1986. We maintain our executive offices at 777 Old Saw Mill River Road, Tarrytown, New York 10591, and our main telephone number is (914) 789-2800. We maintain a website at www.progenics.com.
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