An hour before market open in the US on Tuesday, Progenics Pharmaceuticals, Inc. (NASDAQ:PGNX) announced that one of its candidates had received US Food and Drug Administration (“FDA”) breakthrough therapy designation. The company’s market capitalization gained a little over 22% during the first part of the US session, before settling to close around $9.42 – giving back some of the gains but still 4% up on the previous day’s close. We have had a number of key announcements from the Progenics over the last few weeks, and the latest is just one in a series of potential market movers for the company. However, with this said, and now the breakthrough designation is in place, is there likely any further short to medium-term upside potential in the company’s stock, or is it worth waiting a little longer before gaining exposure to a revaluation? To answer, let’s have a look at the treatment in question, and a couple of the previous announcements with regards to how they relate to Progenics’s near term prospects.
So, first, let’s get to the science. The treatment in question is called Azedra. Azedra is a late stage drug candidate in development for the treatment of malignant pheochromocytoma and paraganglioma – which are essentially very rare brain tumors that develop from cells in the sympathetic nervous system. Basically, the human autonomic nervous system is split into two parts – the parasympathetic nervous system and the sympathetic system. The sympathetic nervous system is responsible for what we refer to in the nonscientific world as the fight or flight response, and as you might have guessed, includes the adrenal glands. A malignant pheochromocytoma is a tumor that forms in the sympathetic nervous system but is not attached to adrenal glands. Conversely, a paraganglioma is a tumor that attaches itself to adrenal glands. So, with this out of the way, what is the difference between this and current standard of care treatment? Well, it all comes down to targeting. Azedra is a small molecule (just another term for the type of molecule that makes up most drug treatments) with a radioisotope attached to it. When introduced to the body, it can first be used as an imaging agent as the combination of the small molecule and radioisotope targets both pheochromocytoma and paraganglioma highly specifically, and then once identified, can be channeled to deliver specific and individualized radio treatment to the tumors. Current standard of care is pretty hit and miss, and includes an adrenergic blockade (which has obvious negative side-effects) surgery, which is risky in the sympathetic nervous system, and chemotherapy, which has generally been shown to fail to produce a cure or generate significant remission.
So why the upside momentum from the breakthrough designation? Well, the treatment is currently under evaluation in a pivotal Phase 2b trial, and already has orphan drug and fast-track designation is from the FDA, since it is designed to treat a very rare indication. Breakthrough designation means that Progenics can hold regular meetings with the FDA throughout the drug development in order to gain real-time insight into how best to do things such as trial design, in order to achieve approval. There is also a cross-disciplinary review panel, which again, from an advisory perspective, can increase the likelihood of approval (of course, so long as efficacy is shown). Fast-track designation is very similar, in that it offers more frequent FDA interaction and the potential for rolling review, meaning the FDA will review each stage of the drug’s development rather than wait until it is all complete a review it as a whole.
So, put simply, what does all this mean? Well, the current phase 2 trial is a pivotal trial, meaning that – if it is successful – Progenics may be able to get approval for Azedra without having to conduct the usual phase 3. The trial started in late 2010, but was suspended whilst the company sought additional funding. Reenrollment began again in January this year, and at that point, the company treated 41 patients with 30% of them achieving the primary endpoint. In order to be considered for approval, 25% of the total of 58 evaluable patients must achieve the similar endpoints.
So what sort of timeframes are we looking at? Well, the company expects to complete the main part of the trial before the end of this year, or at least expects to complete enrolment before this year closes out, and so we could be looking at second half 2016 before we get trial end data. However, as things develop, interim data has the potential to move the stock on positive news. So, to answer the initial question, will we see further upside momentum between now and trial completion? In all likelihood, yes. Providing, the drug can maintain its current performance as Progenics seeks to treat the remaining portion of its required subject panel.
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