Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares in Progenics Pharmaceuticals (NASDAQ:PGNX) fell by as much as 10% today after reporting fourth quarter financial results that missed Wall Street forecasts.
So what: The clinical stage company reported that its fourth quarter net loss was $0.18 per share, or $0.05 worse than analysts were expecting. For the full year, Progenics reported net income of $0.06 per share.
In 2014, Progenics spent $27.7 million on R&D, down from $33.3 million in 2013. The company also paid out $14.94 million on the year in general and administrative expenses, up slightly from the $14.6 million it spent on them in 2013.
Offsetting those costs, Progenics reported revenue of $44.4 million in 2014, courtesy of a $40 million milestone payment it had received from Salix Pharmaceuticals (NASDAQ: SLXP) tied to a label expansion for Relistor, a treatment for opioid induced constipation.
However, enthusiasm for that milestone payment was blunted by Salix's decision to draw down wholesaler's inventory of Relistor last year, which led to significantly lower royalty revenue paid to Progenics. Progenics' royalty revenue from Relistor sales dropped from $5.9 million in 2013 to $3.1 million in 2014.
Now what: Relistor's future is the big question mark facing Progenics investors. Progenics believes that inventory levels of Relistor at wholesalers is down to 12 weeks and that should allow for more normalized royalties down the road. If so, then Relistor's recent label expansion to include chronic pain sufferers and a potential FDA filling for an oral formulation of the drug that could sell better, could mean that royalty revenue bounces back this year.
However, a lot of that will depend on Salix, which is in charge of marketing the drug. Salix is likely to be acquired by Valeant Pharmaceuticals and its certainly possible that Relistor won't be a priority for Valeant, at least in the short term. Since we don't know with certainty how the Relistor situation will play out this year, I'm staying on the sidelines on Progenics.