Is Progenics Pharmaceuticals, Inc. (NASDAQ:PGNX) Ready For $50 Million Payday?


Things were just quiet for Progenics Pharmaceuticals, Inc. (NASDAQ: PGNX) until the big news came: the FDA approval of Relistor. For some, things didn’t seem to make sense immediately because Relistor is now owned by Valeant Pharmaceuticals Intl Inc (NYSE:VRX) after it acquired Salix.

But the story gets more interesting when you realize that it was Progenics Pharmaceuticals, Inc. (NASDAQ:PGNX) that developed Relistor and licensed it to Salix back in 2011.

What is Relistor about?

Relistor is currently marketed as an injectable drug for treating constipation brought about by use of opioids. But the FDA has now approved an oral version of the medicine for commercialization in the U.S.

What changes now?

Sales figures of Relistor are expected to change dramatically following FDA’s approval of the drug’s oral version. You find that despite Relistor being effective in treating opioid-induced constipation, its sales have not picked up strongly. Sales of the medicine were only $16.6 million in 1Q2016 and that’s a far cry from its revenue potential.

What’s there for Progenics Pharmaceuticals, Inc. (NASDAQ: PGNX)?

Though Relistor belongs to Valeant thanks to its acquisition of Salix, it was Progenics Pharmaceuticals, Inc. (NASDAQ: PGNX) that licensed the drug to Salix. As such, Progenics receives royalty payments from the sale of Relistor and in 1Q2016 it took home $2.2 million in royalty revenue relating to the sale of the injectable version of Relistor. In addition to royalties, the agreement that Progenics inked with Salix makes it legible for some milestone payments.

$50 million for oral Relistor

Part of the milestone agreement with Salix calls for Progenics Pharmaceuticals, Inc. (NASDAQ:PGNX) to receive $50 million once oral Relistor is approved in the U.S. and that is what has just happened. Progenics could receive up to $200 million in milestones relating to the annual sales of Relistor.

The royalty income that Progenics receives in relation to Relistor increases with increase in sales of the drug. As such, with the oral Relistor now expected to boost sales, the company stands to book more royalty revenue from Relistor. It is estimated that sales of Relistor could hit $1 billion or more in the future.

It is the potential in Relistor that is driving investors to Progenics Pharmaceuticals, Inc. (NASDAQ:PGNX).


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