It's been a long haul for biotech drugmaker Praecis Pharmaceuticals (NASDAQ:PRCS), but the news after the market's close yesterday was all good: The Food and Drug Administration finally approved Praecis' Plenaxis prostate cancer treatment. Shares climbed 13% after hours and maintained most of that rise in morning trading, zooming past their $7.25 52-week high to prices not seen since September 2001.
Plenaxis has had a long slog to approval, including a giveback from Amgen (NASDAQ:AMGN). Amgen had been a development partner but returned the drug to Praecis when trial data showed that its market would be limited and less lucrative.
Current hormonal therapies (LHRH) for prostate cancer cause an initial surge in testosterone levels that can make symptoms worse. Plenaxis is the first long-acting form of a drug to reduce the testosterone spike, but the FDA approved the drug for very limited cases, including where LHRH therapies are inappropriate, the patient refuses surgical castration, and more. Plus it's subject to a user safety program that requires sign-up and monitoring from doctors, hospital pharmacists, and patients.
So while prostate cancer is the third-largest killer of men from cancer, and Plenaxis will bring help to many patients, it remains to be seen what Plenaxis sales will do for Praecis' health. While the company had $156 million in cash and equivalents at the end of Q3 and little debt, that's three years of survival at current cash burn. Any Plenaxis revenues slow that burn and allow more time for Praecis' other drug candidates -- all earlier in development -- to progress. Investors should watch the quarterly sales carefully after product launch in Q1 2004.
For full background on the risks and rewards of Plenaxis for Praecis, check out Motley Fool Senior Analyst Tom Jacobs' article "Speculating in Biotech," where he suggested Praecis as a speculative investment based partially on the opinion of Ron Garren, M.D. (editor of biotechInsight and consultant to InvestBio) that the drug would likely be approved.