Progenics Pharmaceuticals Has Its Date with the FDA
“We must accept finite disappointment, but never lose infinite hope.” – Martin Luther King Jr.
The biotech sector was largely flat last week despite daily gyrations. The sector lost almost two percent in trading on Thursday, only to recover those declines on Friday. Biotech seems to firmly be in a narrow trading range here, sitting in between 10% above the bear market lows and approximately five percent below where a couple of rallies have failed this year.
Performance Update:
Our benchmark the iShares Nasdaq Biotechnology ETF (NASDAQ: IBB), the largest ETF focused on the biotech sector with almost $9 billion in assets, is now down 20.76% since we launched the Biotech Gems service at the start of May of 2015.
Our large cap core positions are now down 2.52% on average while our small cap portion of our portfolio is now down 19.87% on average, both not including dividends. Using the minimum 50% allocation recommended to our core positions gives us a blended loss of 11.20%, 956 basis points above our benchmark. The most conservative allocation of 75% dedicated to the large cap core positions results in a loss of 6.86%, 1,390 basis points above the benchmark.
Portfolio News:
Supernus Pharmaceuticals (NASDAQ: SUPN) continues its recent strong performance since being included in the portfolio a month ago. Relypsa (NASDAQ: RLYP) saw monthly veltassa script growth accelerate in June as it continues to gain more health care network coverage.
Ardelyx (NASDAQ: ARDX) closed the week on a strong note, rising more than 10% in trading on Friday after announcing it had raised $110 million for development via a private placement. The market seemed impressed the company was able to raise such a sum of money without too much of a haircut from the current price of the stock, and the list of investors that participated in the offering excited the market as well.
The company had some $170 million in cash on hand at the end of the last completed quarter. Ardelyx is burning about $25 million to $30 million per quarter as it tries to move forward and file up to three separate NDAs before the end of 2017. With this capital raise, any funding concerns have been erased.
This week, of course, we eagerly await approval of Progenics Pharmaceuticals’ (NASDAQ: PGNX) oral version of their drug relistor. The FDA should act to approve this compound on Tuesday, July 19. Approval is highly likely given this is just the oral version of an approved and effective drug. A positive decision will trigger a $50 million payment to Progenics from its distribution and marketing partner on relistor, Valeant Pharmaceuticals (NYSE: VRX).
More importantly for the future, the oral version of relistor should significantly boost sales given the drug is currently only available by injection. This will also make it much easier for Progenics to earn not only increased royalty revenues but accelerate the timeline to how fast it can start earning some $200 million in sales milestones from Valeant. It is an event we are eagerly waiting for this week.