FDA's OK of Relistor Bodes Well for Progenics

The FDA approved Relistor as a treatment for opioid-induced constipation in patients with acute medical illness, or AMI.

AMI is a catchall term, but it generally refers to hospice-care patients who are nearing the end of their lives. These patients are typically offered palliative care that includes large doses of narcotics, which can cause severe constipation. The form of Relistor approved Thursday is injected under the skin and relieves painful constipation and bloating that can't be treated with ordinary laxatives.

Under the terms of their partnership, Wyeth will market Relistor worldwide, paying Progenics a royalty percentage on sales believed to be in the mid- to upper teens.

The size of the palliative care market for Relistor isn't entirely clear. Wyeth has only said that there are 1.5 million Americans with AMI. Analysts have disparate estimates, ranging roughly from $100 million to $400 million.

One hedge fund analyst who owns Progenics pegs fair value for the stock at around $15. That's only accounting for Relistor in its currently approved indication, he says, stripping out value for an intravenous formulation that failed a phase III study for a different indication in March, as well as an oral formulation in earlier development.

Progenics management is holding a conference call Friday morning at 10 a.m. EDT, so perhaps more visibility into the size of the AMI market will be offered.

In the meantime, Progenics did itself and its share price a favor by announcing Thursday night a $15 million share-repurchase plan, funded by the milestone payment for Relistor's approval that is being paid to the company by Wyeth.