Progenics Pharmaceuticals (PGNX) Q1 2019 Earnings Call Transcript

Progenics Pharmaceuticals (PGNX)
Q1 2019 Earnings Call
May. 09, 2019, 8:30 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good day, ladies and gentlemen, and welcome to the Progenics Pharmaceuticals first-quarter 2019 financial results conference call. [Operator instructions] As a reminder, this call may be recorded. I would now like to turn the call over to Melissa Downs, head of investor relations. You may begin.

Melissa Downs -- Head of Investor Relations

Thank you, operator. On behalf of Progenics' management team, thank you for joining our conference call to review our first-quarter 2019 financial results and provide a business update. Joining the call today are Mark Baker, chief executive officer; Dr. Asha Das, chief medical officer; Bryce Tenbarge, senior vice president, commercial; and Pat Fabbio, executive vice president and chief financial officer.

Before we begin, I'll remind you that remarks made on this call that are not historical in nature may be forward-looking statements and are subject to a number of risks and uncertainties. Our actual results may differ materially. Such remarks may include, but are not limited to, those involving regulatory actions, clinical development and other matters related to our prostate cancer pipeline; AZEDRA, RELISTOR, and our other product candidates; our business and commercialization strategies; and expectations of future growth, revenues and assessments of our competitive position. Please see our most recent forms 10-Q, 10-K and other filings with the U.S.

Securities and Exchange Commission for additional information on the risks that could cause our actual results to differ. As a reminder, statements are as of today only, May 9, 2019. I will now turn the call over to chief executive officer, Mark Baker. Mark?

Mark Baker -- Chief Executive Officer

Thank you, Melissa, and good morning to everybody joining us today. Progenics is continuing the advancement of our targeted radiopharmaceuticals pipeline designed to find, fight, and follow cancer, and this quarter's results reflect our positive momentum. We've made significant progress since securing FDA approval and the ongoing commercial launch of AZEDRA for the treatment of patients with unresectable, locally advanced or metastatic pheochromocytoma, or pheo, or paraganglioma, or para. Bryce will discuss the launch, which is going well and as expected momentarily, we will record our initial AZEDRA revenues in the second quarter.

We have also advanced our portfolio of PSMA-targeted imaging agents, therapeutics, and digital technologies. We're excited to announce today that we have initiated a Phase 2 trial for 1095, our PSMA-targeted small molecule radiopharmaceutical for the treatment of prostate cancer. In addition, the data emerging for PyL is encouraging and underscores the potential of this imaging agent to drive treatment decisions. Asha will discuss our clinical programs in further detail.

In addition, I'm pleased to note that we've had a smooth transition following our acquisition of the radiopharmaceutical manufacturing facility in Somerset, New Jersey. This site serves as the launch facility for AZEDRA and will also provide manufacturing support for the company's development-stage radiopharmaceuticals, including 1095. We are up and running producing commercial batches from this manufacturing facility. I'll now turn the call over to Bryce for the AZEDRA commercial update.

Bryce?

Bryce Tenbarge -- Senior Vice President, Commercial

Thanks, Mark. We are pleased with the advancements we've made one of our commercial market initiatives for AZEDRA, which are proceeding as expected. To provide some color, we are receiving treatment requests and patient dosimetry and therapeutic dose administration have been scheduled. As we have previously disclosed, the majority of pheo and para patients in the U.S.

are treated at approximately 25 multidisciplinary centers with specialized resources. We have received inbound interest from other institutions in key geographic regions that have expressed interest in utilizing AZEDRA. As a result, we are now in active dialogue with more than 30 centers interested in offering AZEDRA to their patients. We currently have 12 centers throughout the country evaluating patients for therapy and expect the vast majority of those remaining targets will be activated by year-end.

22 patient treatment requests have been received and are being processed by the hub. As we've worked with hospitals to complete their administrative and nuclear medicine-related processes, we've seen the pace of activity pick up in the form of patient identification, treatment requests, and scheduling. The majority of patients identified to date have been cared for in the center of excellence where they'll receive treatment. In addition, as centers complete their processes, we are working with them to identify patients in need, who will be referred to their hospital for care.

We have implemented patient support service programs to provide out-of-pocket needs, including travel. Our market access team continues to work to ensure reimbursement is in place and that the proper support is available to our hospitals that need coding and billing assistance. Our pass-through C-codes from CMS was approved earlier this year, and we anticipate that our permanent A-codes will be awarded in January 2020. Payers are supporting reimbursement for AZEDRA, and all plans that have written coverage policies are covering to label.

Additionally, CMS proposed rules for 2020 have been posted for public comment. These include the presentation for our application for a new technology add-on payment, which would mitigate the economic burden for hospitals when administrating inpatient AZEDRA to Medicare patients. Advocacy input is being received in support for our application. If approved, the payment would be implemented in October of this year.

Now that we have our core centers coming online, our commercial team is moving to engage with referral physicians. Our medical affairs team is also working to further educate and raise awareness of AZEDRA within the greater medical community, particularly among endocrinologists. At the ENDO Meeting in March, there was a well-attended oral session dedicated to pheo and para, which highlighted AZEDRA as the only approved therapeutic option and provided an excellent educational opportunity for us. In June, we plan to present long-term survival and safety data from the pivotal AZEDRA study at ASCO and SNMMI.

I am pleased with the progress our commercial team has made and look forward to providing updates in the coming months. I will now turn the call over to Asha for an update on clinical developments. Asha?

Asha Das -- Chief Medical Officer

Thank you, Bryce. Earlier this week, we attended the 2019 Annual Meeting of the American Neurological Association. There was strong interest in PSMA-targeted agents as demonstrated by 26 abstracts and oral presentations. It's fascinating to see this growth beyond oncology into the field of urology.

Let me begin with 1095, a priority for Progenics. We are pleased to report that the study has been initiated, and we will begin enrolling patients this quarter. 1095 radiotherapy represents a new mechanism of action that may overcome resistance developed to the anti-androgen. Preclinical research shows that enzalutamide can sensitize cells to radiotherapy-induced cell death.

1095 with enzalutamide has the potential to be a more effective treatment paradigm for patients with metastatic castration-resistant prostate cancer who are resistent to anti-androgen. This data provided the rationale for treatment in this setting and informed the design of our Phase 2 study. Importantly, 1095 targets a large group of patients in the pre-chemo setting, where patients have rising PSMA expression. This multicenter Phase 2 trial with a 2:1 randomization will evaluate 1095 in combination with enzalutamide in metastatic CRPC patients who are PSMA-avid, chemotherapy-naïve and have progressed on abiraterone.

The primary endpoint is PSA response rate. Secondary endpoints include radiologic response, progression-free survival and overall survival. We plan to enroll approximately 120 patients. They will be followed for one year after their first treatment for all efficacy endpoints.

And survival and safety data will be collected for an additional year. Based on the early data from this open-label trial and also upon discussion with the FDA, we will evaluate initiating a pivotal trial in 2020. Now to PyL. The data emerging from this program further established the broad potential of this imaging agent.

We have data sets showing that PyL can visualize locally advanced prostate cancer, biochemically recurrent prostate cancer, including those with low PSA scores and metastatic disease. The results to date provide tangible evidence of how the use of PyL imaging can impact changes in clinical management, which we believe may ultimately translate into better outcomes for men with prostate cancer. At the recent AUA Meeting, PyL was featured in three oral presentations, and we are very encouraged by the reception to the data and continued interest in this program. First, we had the opportunity to present our Phase 2/3 OSPREY data.

As previously discussed, the study shows that PyL had high sensitivity in detecting metastatic disease. Additionally, OSPREY data will be presented at the upcoming ASCO Meeting. In addition, a Stanford University research presented data from their investigator-sponsored prospective study of PyL in patients with biochemical recurrent prostate cancer. This was a 50-patient study, which reported that PyL imaging localized disease in the majority of patients, including those with very low PSA levels.

PyL imaging had an impact on clinical management in 65% of the patients, including 25% who had negative findings with conventional imaging. Aside from the AUA Meeting, data from an investigator-sponsored study of PyL in biochemical recurrent prostate cancer was recently published in the Journal of Nuclear Medicine. The results highlighted a change in treatment intent in two-thirds of patients following a PyL scan. So collectively, the emerging data illustrate how [Inaudible] access to disease visualization with PyL improves patient monitoring and care management.

The two investigator-sponsored studies, they highlight a particular strategic focus of our PyL clinical program. By providing access to PyL and working with interested key opinion leaders; we can expand the PyL clinical experience; increase PyL awareness; we can also generate additional data to support utility; and ultimately, support inclusion of PyL in treatment guidelines. We look forward to the additional data emerging from these efforts. All of this data is generating a lot of interest in PyL from the physician community and from patients who are increasingly educated about their disease.

And this, in turn, is driving enrollment in our ongoing Phase 3 CONDOR study. We are pleased to report that the trial is progressing ahead of schedule with over 50% of patients now enrolled. We remain on track to complete enrollment in the fourth quarter of this year. The CONDOR trial design will be highlighted in a poster at ASCO.

Lastly, on PyL. Our European partner, Curium, has requested a scientific advice meeting with the European Medicines Agency to discuss the regulatory path forward for PyL in Europe, and we look forward to providing updates when available. Before turning the call to Pat [Audio gap] the financial update, let me just mention we're in dialogue with the FDA to request a life cycle management meeting, and this is to discuss potential pathways for additional drug indication. Feedback from a Feb advisory board meeting with leading physicians showed strong support for research into AZEDRA in multiple MIBG-avid tumor indication.

These include tumors such as gastroenteropancreatic and other neuroendocrine tumors, given the high unmet need, and we hope to provide updates on the outcomes in the coming months. Now to Pat.

Pat Fabbio -- Executive Vice President and Chief Financial Officer

Thanks, Asha. You can read details of our financials in the press release we issued this morning and in the 10-Q that we will file later today. First-quarter revenue totaled $4.3 million, up from $3.2 million in the first quarter of 2018, reflecting RELISTOR royalty income of $4.2 million, compared to $3.1 million in the corresponding period of 2018. First-quarter RELISTOR worldwide net sales were $27.7 million as reported by our partner, Bausch Health.

Research and development expenses increased by 4.1 -- $4.3 million compared to the corresponding prior-year period, resulting primarily [Inaudible] transition costs for the AZEDRA manufacturing site and higher clinical and contract manufacturing costs for PyL. First-quarter selling, general and administrative expenses increased by $2.5 million compared to the corresponding prior year [Inaudible], primarily attributable to costs associated with the build-out of the commercial infrastructure to support the launch and distribution of AZEDRA, as well as higher legal fees. We also reported noncash adjustments of $900,000 in the first quarter of 2019 related to changes in the fair value estimate of the contingent consideration liability. For the three months ended March 31, 2019, we recognized interest expense of $1.1 million related to the RELISTOR royalty backlog.

Our net loss for the quarter -- first quarter was $18.7 million or $0.22 per diluted share, compared to a net loss of $13.4 million or $0.19 per diluted share in the corresponding 2018 period. In terms of our cash position, we ended the quarter with cash and cash equivalents of $109.6 million, reflecting a decrease of $28.1 million in the quarter, which includes approximately $10.8 million related to the acquisition and transition costs for the Somerset manufacturing site for the AZEDRA launch. And now I'll turn the call back over to Mark to conclude.

Mark Baker -- Chief Executive Officer

Thanks, Pat. I'm proud of the accomplishments Progenics has made in advancing our radiopharmaceutical programs and increasing the reach of our portfolio across the globe. I'd like to recognize and thank the full Progenics team for their tireless work and dedication. Over the past year, we've made significant progress advancing our business and accelerating growth.

We know that we have a lot more work ahead, and we are diligently executing our strategy to meet our objectives. This includes remaining disciplined in our approach to capital allocation and ensuring Progenics is well positioned for our next phase of growth. We are committed to taking steps to build on this positive momentum and delivering value for shareholders. Before we begin the Q&A portion of the call, I want to reiterate that we value the views of our shareholders and are open to any opportunities that may advance our common goal of enhancing shareholder value.

With that, I'll open the call for questions. Operator?

Questions & Answers:

Operator

[Operator instructions] Our first question comes from Tim Chiang of BTIG. Your line is open.

Tim Chiang -- BTIG -- Analyst

Hi, Mark. I know you guys provide a little bit more detail on the AZEDRA launch and how you now have 22 treatment requests. At what point do you think you will have some level of clarity in terms of the ability to start to provide AZEDRA sales guidance? Does the 22 treatment requests basically equate to sales beginning in the next quarter? And how do you see the sales of AZEDRA starting to progress here as the year rolls out?

Mark Baker -- Chief Executive Officer

Thanks, Tim, for that. Well, what we're announcing today is we expect revenue from AZEDRA this quarter -- this second quarter. We're not guiding to the amount because we're still gaining experience and the timing and -- of the trial of the usage of the drug. But hopefully, we'll be able to provide more guidance later in the year as we gain more experience.

I think we're pleased by the momentum. You see increasing number of treatment requests. You see more centers coming online. And momentum is building with the commercials team and now expanding to include targeting referral doctors as well as the centers of excellence that have been our primary and initial focus.

Bryce, do you have anything to add to that?

Bryce Tenbarge -- Senior Vice President, Commercial

No. That's exactly right. Tim, obviously, patient requests are a great start. That -- it's the start, though, of the process, which includes then scheduling of the dosimetry dose, subsequently then the therapeutic doses as well and of course, obviously, includes benefit verification and prior raws in that process as well.

So that is a process that differs on a patient-by-patient, center-by-center basis. And as Mark said, we are seeing how that's playing out in real time, but not quite there yet in terms of providing strict guidance on sales. But very happy again to say that the process is started in earnest and looking on first revenue in this quarter.

Mark Baker -- Chief Executive Officer

I've been pleased by the payer response, not been turned down by any payers. And the demand seems strong. So we're hoping, Tim, that this momentum will continue to build as you see from the metrics that we presented today.

Tim Chiang -- BTIG -- Analyst

OK. I guess just one follow-up. You highlighted these 12 treatment centers that have been activated already. Obviously, you're talking to them about reimbursement as well. I mean, would you say that it wouldn't be surprising to you that you would have all 12 support reimbursement for AZEDRA by year-end?

Mark Baker -- Chief Executive Officer

We definitely expect that, yes.

Bryce Tenbarge -- Senior Vice President, Commercial

Yes. I mean, that's -- look, in terms of center readiness, there's two major components, right? It's a high-dose radiotherapeutics, so nuclear medicine and all the licensure, policies, training, handling, etc., that goes into that is part of the process. The other big part of the process is the administrative side, which is inclusive of purchasing, which is inclusive of reimbursements. It's an inpatient product so that carries with it some complexities depending on the patient type, in particular, whether it be a privately insured or a Medicare patient.

So when we say a center is evaluating patients for their treatment, we feel confident that, that center has progressed well on both those fronts, right? And when we say that we're still working on centers, we're still helping the centers progress on one or both of those fronts, and they -- it takes time. So yes, Tim, to your question, we do feel confident that in those 12 centers, reimbursement is obtainable not by year end but in real time.

Mark Baker -- Chief Executive Officer

Yes. So 12 are ready now, and we would expect to get all the remaining centers onboard over the remainder of this year.

Tim Chiang -- BTIG -- Analyst

OK. Great. Thanks.

Operator

[Operator instructions] Our next question comes from Martin Auster of Credit Suisse. Your line is open.

Unknown speaker

Hi, everyone. This is EK on for Marty. I have a question regarding the AZEDRA launch. You kind of spoke to the complexities of what goes into setting up the infrastructure and going -- the new patient requests, and things of that sort.

Can you speak a little bit about these different centers and the following 18 centers that you're trying to get active? Are some centers a lot easier to walk through and guide through these complexities and these nuances? Can you speak to the challenges to that? Does it depend on the size of academic center, the capabilities, things of that sort?

Mark Baker -- Chief Executive Officer

Yes. Bryce, do you want to take that one?

Bryce Tenbarge -- Senior Vice President, Commercial

Sure. Yes, it's a mixed bag is the only way I could put it. The majority of the centers that we have up and running were part of our clinical trial, not all of them. So being part of our clinical trial obviously helps in terms of having certain infrastructure in place and know-how, doesn't really help on the administrative side that I spoke about but -- and then other centers are learning about what it takes to onboard a product like this, right, which in some centers, just for example, it includes things like infrastructure upgrades, such as increasing the thickness of lead-lined walls, things of that nature.

So it's a granular detailed process sometimes. And again, I hate to belabor it, but it differs by center and the time lines associated with some of the things that we are watching take place. And these are all, right, earnest efforts by these centers to put themselves in a position to treat this high unmet need patient population. And we're doing everything we can to help, but, yes, it's fair to say that some centers have more to do than others and that's why you see the difference, right, in terms of the time lines.

And I think it's also -- and it's always been part of the reality that we've communicated that not every center wants to handle this product. I mean that's why we started off with an N at 25 or 30 and not 250 or 300 or 2,500 or 3,000. And so we've done our best to maintain a focus on those centers with which we feel we have the best chance of success and they feel they have the best chance of success treating these highly complex patient populations.

Mark Baker -- Chief Executive Officer

These centers have identified themselves as centers of excellence for the treatment of pheo and para, so they're highly motivated to use AZEDRA. If they're not going to provide AZEDRA, it will be difficult for them to continue to be a center of excellence. So I'm encouraged by the fact that every center is continuing to progress. They all have their individual hurdles and procedures, and I think our commercial team has done a great job of supporting the centers as they move through the process.

And so far, not a single one is not moving ahead.

Unknown speaker

OK. Thank you, guys.

Operator

Our next question comes from Jennifer Shen of Needham. Your line is open.

Jennifer Shen -- Needham and Company -- Analyst

[Inaudible]

Mark Baker -- Chief Executive Officer

Jennifer?

Operator

[Operator instructions]

[Operator Instructions] Our next question comes from Biren Amin of Jefferies. Your line is open.

Unknown speaker

Yes. Hey, guys. This is Jeet on for Biren. Just a question about the first 22 patients that you mentioned.

You said that they have been scheduled for treatment, but do you have any sense of when these patients will actually be dosed? And what is the pipeline or size of patients behind these first 22 patients? And a follow-up question after, please.

Mark Baker -- Chief Executive Officer

So we're expecting dosing to occur during this quarter, leading the revenue this quarter. And we do expect that most of these patients will receive two doses, so that will continue on into subsequent quarters. I think as we think about how demand will be generated, we're particularly focused on how quickly does it take for the patient to get both doses, and we're gaining experience with that. So I think from that point of view, we're seeing good demand.

We have long guided to an addressable population here of between 400 and 600 patients per year, and I don't think that anything we're seeing in the rollout is causing us to think that we should change that view. As to guiding to actual sales in the second quarter, that's something we just don't feel comfortable doing as we're gaining experience with the drug. But we do know that we'll have revenue this quarter, and we would expect it to grow as the launch rolls out over the remaining quarters of the year.

Unknown speaker

Got it. Thank you. And just one more question. Have any centers chosen not to adopt AZEDRA due to price at this point?

Mark Baker -- Chief Executive Officer

No, not at all.

Unknown speaker

OK. Thank you very much.

Operator

Our next question comes from Jennifer Shen of Needham.

Jennifer Shen -- Needham and Company -- Analyst

Hi, guys. Thanks for taking my questions. Sorry about the technical difficulty previously. Can you provide additional colors on the investigators' interest in these PyL-sponsored studies, such as different indications or stages of cancers? Thank you.

Mark Baker -- Chief Executive Officer

So we have our PyL Research Access Program, which has generated numerous investigator trials. We also see investigators starting trials on their own. As you think about the indications that they're looking at, Asha, what sort of range are you seeing in terms of their research interest?

Asha Das -- Chief Medical Officer

Similar to the investigator-sponsored trials that have been reported at AUA, they are looking at patients with biochemically recurring prostate cancer and just how PyL adds so much more to conventional imaging and more importantly, looking at assessments of how this changes patient management. And so that's very similar to the reports that we saw at AUA and also the publication in the Journal of Nuclear Medicine. What's very interesting to me is that they have looked at change in management both for patients to get palliative treatment and also to get earlier-line treatment. So it's really interesting to see that, that is in both ends of the spectrum.

And I think that these types of investigator-initiated trials reporting, I would say, "real-world data," but really from their centers and their experience really adds to our body of evidence of how this helps patients.

Mark Baker -- Chief Executive Officer

I was struck by the data from that Vancouver trial, where they looked at treatment intent. And they defined intent just as is the intent to treat curative or is the intent to treat palliative. And in two-thirds of the patients in the trial, the intent changed from palliative to curative or from curative to palliative, and the split there was 50-50. So PyL is causing, in one-third of men, a change from only go to treat the patient from a palliative perspective and enabled a curative intent treatment.

And also in a third of patients, the change was from curative to palliative. So this is not minor changes in treatment attempt. These are major changes in how demand is proceeding. We use this PyL Research Access Program.

We wouldn't use this type of program with a therapeutic. But with an imaging agent, we want to make sure that the KOLs are getting good usage of the drug, understanding its complexities, and we're hoping to see adoption of the drug in other clinical trials. And eventually, our hope would be that this would translate into treatment guidelines.

Jennifer Shen -- Needham and Company -- Analyst

Thank you so much.

Operator

This concludes our Q&A session. I'd like to turn the call back over to Mark Baker for any closing remarks.

Mark Baker -- Chief Executive Officer

Thank you, operator, and thank you all again for joining us this morning to review our continued progress, financial results, and upcoming milestones.

Duration: 31 minutes

Call participants:

Melissa Downs -- Head of Investor Relations

Mark Baker -- Chief Executive Officer

Bryce Tenbarge -- Senior Vice President, Commercial

Asha Das -- Chief Medical Officer

Pat Fabbio -- Executive Vice President and Chief Financial Officer

Tim Chiang -- BTIG -- Analyst

Unknown speaker

Jennifer Shen -- Needham and Company -- Analyst

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