Progenics Pharmaceuticals Inc. in Greenburgh has cut more than one-fourth of its workforce and is ending several research projects in the wake of an unfavorable federal review of a new, expanded use for its first commercial drug that has sent the Nasdaq-traded company”™s stock price tumbling in the last two months.
The response in late July from the U.S Food and Drug Administration (FDA) has held up the company”™s expected $40 million payment from a licensing partner that develops and markets Relistor, a drug injected to treat constipation in terminally ill patients caused by opioid painkillers.
Progenics in 2011 exclusively licensed development and worldwide marketing of the drug, excluding Japan, to Salix Pharmaceuticals Ltd., a Raleigh, N.C. company specializing in prescription drugs that target gastrointestinal disease. The deal brought Progenics a $60 million upfront fee and included $90 million in future payments to the Westchester company for development milestones and up to $200 million in sales-based milestones.
Salix and Progenics, a 26-year-old company headquartered at The Landmark at Eastview life sciences campus, are seeking FDA approval of Relistor”™s longer-term use to treat opioid-induced constipation in patients with chronic pain not caused by cancer. But the FDA instead requested more clinical data.
“The goal was to expand the (Relistor) label for a longer-term use and a broader patient application,” said Alan Carr, an analyst at Needham & Co. L.L.C. in Manhattan. “The FDA has some problem with this.”
Progenics and Salix have not disclosed the FDA”™s concerns. Investors and analysts should learn more in November after Salix and Progenics staff meet with the FDA, Carr said.
“It came as a surprise to me,” Carr said of the FDA response. “I expected them to get the expansion.”
Carr and Needham analyst Mark Vignola in August maintained their “hold” rating for Progenics stock. “We are primarily concerned by potential carryover of FDA concerns with injection Relistor to the more important oral Relistor program” in the Progenics development pipeline, they said in their review.
The companywide restructuring recently announced by Progenics will reduce its annual cash expenditures by an estimated $8 million.
The company workforce has been reduced to 77 employees, a 26 percent decrease. Its workforce has been reduced by nearly 50 percent since September 2011, when the company announced it was laying off 38 employees after turning over Relistor manufacturing and development to Salix and discontinuing its work in virology and infectious diseases. Those moves last year were expected to save the company an estimated $7.5 million
In the latest round of cost-cutting, two veteran executives, Chief Financial Officer Robert McKinney and Benedict Osorio, senior vice president of quality, lost their jobs.
Progenics CEO Mark R. Baker in a statement announcing the restructuring said the company will maintain its clinical focus on developing its oncology drug program and continue to explore strategic licensing opportunities with biopharmaceutical partners.
Baker said the company”™s top clinical priority continues to be its antibody drug treatment for prostate cancer, PSMA ADC. Carr in his company analysis said Progenics plans to begin a phase two trial of the drug in 75 patients with advanced prostate cancer this year.
Progenics stock closed at $10.80 per share on the last day of Nasdaq trading before the FDA”™s unfavorable response to Relistor”™s expanded use was announced on July 27. Progenics stock closed at $5.39 a share on the next day of trading.
The company”™s stock closed at $3.29 per share on Sept. 25.
