This Partnership Will Go No Further

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Progenics Pharmaceuticals' (Nasdaq: PGNX) constipation reliever, Relistor, is a good drug that not enough people want. That includes Progenics' partner, Wyeth (NYSE: WYE), which handed back the rights to the drug yesterday.

Relistor is approved to treat constipation caused by opioid pain relievers (called OIC) in patients with advanced illnesses. With Adolor (Nasdaq: ADLR) and GlaxoSmithKline's (NYSE: GSK) Entereg knocked out of the OIC market because of long-term safety issues, it looked like Relistor was in good shape. Progenics soared to above $17 after the drug was approved by the Food and Drug Administration and recommended for approval in Europe.

Unfortunately, the drug's sales have been plain awful. They totaled just $3.2 million last quarter, and Progenics got less than $300,000 of that in royalty payments. Needless to say, Progenics shares have suffered greatly over the last year.

Wyeth is paying $10 million to return the rights to Progenics, and it'll pay for other development costs associated with the expansion of the drug into chronic pain. It'll also continue to market the drug for another year in the U.S., and until the end of next year outside the U.S. That should give Progenics plenty of time to find another partner -- if anyone is willing to take it -- or set up a sales force of its own.

The drug's return may not be the worst thing for Progenics. Development of the oral version of the drug, which should be easier to sell in the chronic-pain setting, seems to have stalled, and the takeover of Wyeth by Pfizer (NYSE: PFE) would only complicate the development. And Nektar Therapeutics (Nasdaq: NKTR) and AstraZeneca (NYSE: AZN) are breathing down Progenics' neck with an oral opioid-induced constipation drug of their own.

Whether Progenics is a value at this beaten-down price will depend on how quickly it can get development moving again.