Here’s Why Progenics Pharmaceuticals, Inc. Lost Ground Today

What happened

Despite upbeat recent developments, shares of Progenics Pharmaceuticals, Inc. (NASDAQ: PGNX) fell 15.3% during Wednesday’s session. The biotech reported solid progress with clinical-stage candidates, but a steep drop in Relistor revenue weighed on the stock.

So what 

An injectable form of Progenics’ Relistor for the treatment of opioid-induced constipation has been available since 2008. Investors expected a tablet version approved last July to lead to significantly higher sales and are punishing the stock because the revenue hasn’t materialized.

Second-quarter royalty revenue came in at just $2.6 million. Although that was 9.3% higher than royalty revenue reported during the previous-year period, investors were looking for more.

During the second quarter of 2016, the company recorded a $6.1 million antibody technology licensing payment from Germany’s Bayer. With very little licensing revenue to speak of during the second quarter this year, the company reported a 67% year-to-year total revenue slide that didn’t sit well with the market.

Now what

The good news is that Progenics’ marketing partner, Valeant Pharmaceuticals, reported that Relistor tablet prescriptions were 68% higher during the second quarter than the first three months of the year. Relistor tablet sales might not reach the $1 billion target Valeant set last year, but they’re clearly on the rise despite competition from AstraZeneca‘s Movantik.

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Progenics investors would do well to stay focused on Progenics’ clinical stage pipeline. The company expects to complete a rolling submission for Azedra later this month. The drug succeeded in the pivotal trial supporting the application, and the FDA is expected to grant it a speedy review. That means the company could have a second drug on pharmacy shelves by the end of the year.

If approved, Azedra is expected to generate between $200 million and $300 million in peak annual sales. With a modest $360 million market cap after today’s beating, a successful launch for this candidate alone could make this stock a multibagger over the long run.

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Cory Renauer has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Valeant Pharmaceuticals. The Motley Fool has a disclosure policy.

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