| PROGENICS PHARMACEUTICALS INC Item 1A RISK FACTORS Our business and operations entail a variety of serious risks and uncertainties, including those described below |
| Our product development programs are inherently risky |
| We are subject to the risks of failure inherent in the development of product candidates based on new technologies |
| Our MNTX product candidate, which is designed to reverse certain side effects induced by opioids and to treat post-operative bowel dysfunction and is being developed through a collaboration with Wyeth, is based on a novel method of action that has not yet been proven to be safe or effective |
| No drug with MNTX’s method of action has ever received marketing approval |
| Additionally, some of our HIV product candidates are designed to be effective by blocking viral entry, and our GMK product candidate is designed to be a therapeutic cancer vaccine |
| To our knowledge, no drug designed to treat HIV infection by blocking viral entry (with one exception) and no cancer therapeutic vaccine has been approved for marketing in the US Our other research and development programs, and those conducted through PSMA LLC, involve similarly novel approaches to human therapeutics |
| Consequently, there is little precedent for the successful commercialization of products based on our technologies |
| There are a number of technological challenges that we must overcome to complete most of our development efforts |
| We may not be able to develop successfully any of our products |
| We have granted to Wyeth the exclusive rights to develop and commercialize MNTX, our lead product candidate, and our resulting dependence on Wyeth exposes us to significant risks |
| In December 2005, we entered into a license and co-development agreement with Wyeth |
| Under this agreement, we granted to Wyeth the exclusive worldwide right to develop and commercialize MNTX, our lead product candidate |
| As a result, we are dependent on Wyeth to perform and fund development, including clinical testing, to make certain regulatory filings and to manufacture and market products containing MNTX Our collaboration with Wyeth may not be scientifically, clinically or commercially successful |
| Any revenues from the sale of MNTX, if approved for sale by the FDA, will depend almost entirely on the efforts of Wyeth |
| Wyeth has significant discretion in determining the efforts and resources it applies to sales of the MNTX products and may not be effective in marketing such products |
| In addition, Wyeth is a large, diversified pharmaceutical company with global operations and its own corporate objectives, which may not be consistent with our best interests |
| For example, Wyeth may change its strategic focus or pursue alternative technologies in a manner that results in reduced revenues to us |
| In addition, we will receive milestone and contingent payments from Wyeth only if MNTX achieves specified clinical, regulatory and commercialization milestones, and we will receive royalty payments from Wyeth only if MNTX receives regulatory approval and is commercialized by Wyeth |
| We may not receive any milestone, contingent or royalty payments from Wyeth |
| The Collaboration Agreement extends, unless terminated earlier, on a country-by-country and product-by-product basis, until the last to expire royalty period, as defined, for any product |
| Progenics may terminate the Collaboration Agreement at any time upon 90 days of written notice to Wyeth (30 days in the case of breach of a payment obligation) upon material breach that is not cured |
| Wyeth may, with or without cause, following the second anniversary of the first commercial sale, as defined, of the first commercial product in the US, terminate the Collaboration Agreement by providing Progenics with at least 360 days prior written notice of such termination |
| Wyeth may also terminate the agreement (i) upon 30 days written notice following one or more serious safety or efficacy issues that arise, as defined, and (ii) at any time, upon 90 days written notice of a material breach that is not cured by Progenics |
| Upon termination of the Collaboration Agreement, the ownership of the license we granted to Wyeth will depend on the party that initiates the termination and the reason for the termination |
| If our relationship with Wyeth were to terminate, we would have to either enter into a license and co-development agreement with another party or develop and commercialize MNTX ourselves |
| We may not be able to enter into such an agreement with another suitable company on acceptable terms or at all |
| To develop and commercialize MNTX on our own, we would have to develop a sales and marketing organization and a distribution infrastructure, neither of which we currently have |
| Developing these resources would be an expensive and lengthy process and would have a material adverse effect on our revenues and profitability |
| Moreover, a termination of our relationship with Wyeth could seriously compromise the development program for MNTX For example, we could experience significant delays in the development of MNTX and would have to assume full funding and other responsibility for further development and eventual commercialization |
| Any of these outcomes would result in delays in our ability to distribute MNTX and would increase our expenses, which would have a material adverse effect on our business, results of operations and financial condition |
| Our collaboration with Wyeth is multi-faceted and involves a complex sharing of control over decisions, responsibilities, costs and benefits |
| There are numerous potential sources of disagreement between us and Wyeth, including with respect to product development, marketing strategies, manufacturing and supply issues and rights relating to intellectual property |
| Wyeth has significantly greater financial and managerial resources than we do, which it could draw upon in the event of a dispute |
| A disagreement between Wyeth and us could lead to lengthy and expensive litigation or other dispute resolution proceedings as well as to extensive financial and operational consequences to us, and have a material adverse effect on our business, results of operations and financial condition |
| 20 _________________________________________________________________ [44]Table of Contents If testing does not yield successful results, our products will not be approved |
| We will need to obtain regulatory approval before we can market our product candidates |
| To obtain marketing approval from regulatory authorities, we or our collaborators must demonstrate a product’s safety and efficacy through extensive preclinical and clinical testing |
| Numerous adverse events may arise during, or as a result of, the testing process, including the following: · the results of preclinical studies may be inconclusive, or they may not be indicative of results that will be obtained in human clinical trials; · potential products may not have the desired efficacy or may have undesirable side effects or other characteristics that preclude marketing approval or limit their commercial use if approved; · after reviewing test results, we or our collaborators may abandon projects, which we previously believed to be promising; and · we, our collaborators or regulators may suspend or terminate clinical trials if we or they believe that the participating subjects or patients are being exposed to unacceptable health risks |
| Results attained in early human clinical trials may not be indicative of results that are obtained in later clinical trials |
| In addition, many of our products, such as PRO 140 and the PSMA product candidates, are at an early stage of development |
| The successful commercialization of early stage products will require significant further research, development, testing, approvals by regulators and additional investment |
| Our products in the research or preclinical development stage may not yield results that would permit or justify clinical testing |
| Our failure to adequately demonstrate the safety and efficacy of a product under development would delay or prevent marketing approval of the product, which could adversely affect our operating results and credibility |
| We have successfully completed two pivotal phase 3 clinical trials of subcutaneous MNTX for the treatment of opioid-induced constipation in patients with advanced medical illness |
| We are now working with our collaborator Wyeth to submit a New Drug Application to the US Food and Drug Administration to market subcutaneous MNTX We also have successfully completed a phase 2 clinical trial of intravenous MNTX in patients at risk for post-operative bowel dysfunction |
| Based on our end of phase 2 meeting with the FDA, we are planning a phase 3 clinical program for treatment of post-operative bowel dysfunction |
| We had completed phase 1 clinical trials of oral MNTX in healthy volunteers prior to our Collaboration Agreement with Wyeth |
| Wyeth is responsible for the worldwide development of oral MNTX and will conduct additional clinical trials of oral MNTX in chronic pain patients who experience opioid-induced constipation |
| If the results of any of these ongoing trials are not satisfactory, or if we encounter problems enrolling patients, or if clinical trial supply issues or other difficulties arise, our entire MNTX development program could be adversely affected, resulting in delays in commencing or completing clinical trials or in making our regulatory filing for marketing approval |
| The need to conduct additional clinical trials or significant revisions to our clinical development plan would lead to delays in filing for the regulatory approvals necessary to market MNTX If the clinical trials indicate a serious problem with the safety or efficacy of an MNTX product, then Wyeth has the right under our license and co-development agreement to terminate the agreement or to stop the development or commercialization of the affected products |
| Since MNTX is our most clinically advanced product, any setback of these types would have a material adverse effect on our stock price and business |
| We also have two ongoing pivotal phase 3 clinical trials for GMK In May 2000, our collaborating research cooperative group in one of these trials, ECOG, recommended to clinical investigators participating in the trial that they discontinue administering GMK, and as a result that trial did not complete patient dosing as contemplated by the initial trial protocol |
| A second pivotal phase 3 trial for GMK was initiated in May 2001 and full enrollment of 1cmam314 patients has been completed |
| We expect to assess the recurrence of cancer and overall survival of the study patients over the next several years |
| If the results of either of the GMK trials are not satisfactory, we may need to conduct additional clinical trials or abandon our GMK program |
| If the results of our phase 1b study with PRO 140 or the preclinical and clinical studies involving the PSMA vaccine and antibody candidates are not satisfactory, we would need to reconfigure our clinical trial programs to conduct additional trials or abandon the program involved |
| We have incurred substantial losses since our inception |
| As of December 31, 2005, we had an accumulated deficit of dlra188dtta7 million |
| We have derived no significant revenues from product sales or royalties |
| We do not expect to achieve significant product sales or royalty revenue for a number of years, if ever, other than potential revenues from MNTX We expect to incur additional operating losses in the future, which could increase significantly as we expand our clinical trial programs and other product development efforts |
| Our ability to achieve and sustain profitability is dependent in part on obtaining regulatory approval to market our products and then commercializing, either alone or with others, our products |
| We may not be able to develop and commercialize products |
| Moreover, our operations may not be profitable even if any of our products under development are commercialized |
| We are likely to need additional financing, but our access to capital funding is uncertain |
| As of December 31, 2005, we had cash, cash equivalents and marketable securities, including non-current portion, totaling dlra173dtta1 million |
| In December 2005, we received a dlra60 million upfront payment from Wyeth in connection with the signing of the license and co-development agreement relating to MNTX During the year ended December 31, 2005, we had a net loss of dlra69dtta4 million and cash provided by operating activities was dlra11dtta1 million during the year ended December 31, 2005 |
| Under our agreement with Wyeth, Wyeth is responsible for all future development and commercialization costs relating to MNTX starting January 1, 2006 |
| As a result, we expect that our spending on MNTX in 2006 and beyond will drop significantly from the amounts expended in 2005 |
| With regard to our other product candidates, however, we expect that we will continue to incur significant expenditures for their development and we do not have committed external sources of funding for most of these projects |
| These expenditures will be funded from our cash on hand, or we may seek additional external funding for these expenditures, most likely through collaborative agreements, or other license or sale transactions, with one or more pharmaceutical companies, through the issuance and sale of securities or through additional government grants or contracts |
| We cannot predict with any certainty when we will need additional funds or how much we will need or if additional funds will be available to us |
| Our need for future funding will depend on numerous factors, many of which are outside our control |
| Our access to capital funding is uncertain |
| We may not be able to obtain additional funding on acceptable terms, or at all |
| Our inability to raise additional capital on terms reasonably acceptable to us would seriously jeopardize the future success of our business |
| If we raise funds by issuing and selling securities, it may be on terms that are not favorable to our existing stockholders |
| If we raise additional funds by selling equity securities, our current stockholders will be diluted, and new investors could have rights superior to our existing stockholders |
| If we raise funds by selling debt securities, we could be subject to restrictive covenants and significant repayment obligations |
| Our clinical trials could take longer than we expect |
| Although for planning purposes we forecast the commencement and completion of clinical trials, and have included many of those forecasts in reports filed with the Securities and Exchange Commission and in other public disclosures, the actual timing of these events can vary dramatically |
| For example, we have experienced delays in our MNTX clinical development program in the past as a result of slower than anticipated patient enrollment |
| These delays may recur |
| Delays can be caused by, among other things: · deaths or other adverse medical events involving patients or subjects in our clinical trials; · regulatory or patent issues; · interim or final results of ongoing clinical trials; · failure to enroll clinical sites as expected; · competition for enrollment from clinical trials conducted by others in similar indications; · scheduling conflicts with participating clinicians and clinical institutions; and · manufacturing problems |
| 22 _________________________________________________________________ [46]Table of Contents In addition, we may need to delay or suspend our clinical trials if we are unable to obtain additional funding when needed |
| Clinical trials involving our product candidates may not commence or be completed as forecasted |
| Although work on the PSMA projects continues, our clinical programs involving PSMA LLC could also be delayed by disagreements between Cytogen and us concerning funding development programs or other matters |
| PSMA LLC currently has no approved 2006 budget or work plan because we and Cytogen have not yet reached agreement with respect to a number of matters relating to PSMA LLC Moreover, we have limited experience in conducting clinical trials, and we rely on others to conduct, supervise or monitor some or all aspects of some of our clinical trials |
| In addition, certain clinical trials for our products may be conducted by government-sponsored agencies, and consequently will be dependent on governmental participation and funding |
| Under our agreement with Wyeth relating to MNTX, Wyeth has the responsibility to conduct some of the clinical trials for that product candidate, including all trials outside of the United States |
| We will have less control over the timing and other aspects of these clinical trials than if we conducted them entirely on our own |
| As a result of these and other factors, our clinical trials may not commence or be completed as we expect or may not be conducted successfully, in which event investors’ confidence in our ability to develop products may be impaired and our stock price may decline |
| We are subject to extensive regulation, which can be costly and time consuming and can subject us to unanticipated fines and delays |
| We and our products are subject to comprehensive regulation by the FDA in the US and by comparable authorities in other countries |
| These national agencies and other federal, state and local entities regulate, among other things, the preclinical and clinical testing, safety, approval, manufacture, labeling, marketing, export, storage, record keeping, advertising and promotion of pharmaceutical products |
| If we violate regulatory requirements at any stage, whether before or after marketing approval is obtained, we may be subject to forced removal of a product from the market, product seizure, civil and criminal penalties and other adverse consequences |
| Our products do not yet have, and may never obtain, the regulatory approvals needed for marketing |
| None of our products has been approved by applicable regulatory authorities for marketing |
| The process of obtaining FDA and foreign regulatory approvals often takes many years and can vary substantially based upon the type, complexity and novelty of the products involved |
| We have had only limited experience in filing and pursuing applications and other submissions necessary to gain marketing approvals |
| Our products under development may never obtain the marketing approval from the FDA or any other regulatory authority necessary for commercialization |
| Even if our products receive regulatory approval: · they might not obtain labeling claims necessary to make the product commercially viable (in general, labeling claims define the medical conditions for which a drug product may be marketed, and are therefore very important to the commercial success of a product); · we or our collaborators might be required to undertake post-marketing trials to verify the product’s efficacy or safety; · we, our collaborators or others might identify side effects after the product is on the market, or we or our collaborators might experience manufacturing problems, either of which could result in subsequent withdrawal of marketing approval, reformulation of the product, additional preclinical testing or clinical trials, changes in labeling of the product or the need for additional marketing applications; and · we and our collaborators will be subject to ongoing FDA obligations and continuous regulatory review |
| If our products fail to receive marketing approval or lose previously received approvals, our financial results would be adversely affected |
| 23 _________________________________________________________________ [47]Table of Contents Even if our products obtain marketing approval, they might not be accepted in the marketplace |
| The commercial success of our products will depend upon their acceptance by the medical community and third party payors as clinically useful, cost effective and safe |
| If health care providers believe that patients can be managed adequately with alternative, currently available therapies, they may not prescribe our products, especially if the alternative therapies are viewed as more effective, as having a better safety or tolerability profile, as being more convenient to the patient or health care providers or as being less expensive |
| For pharmaceuticals administered in an institutional setting, the ability of the institution to be adequately reimbursed could also play a significant role in demand for our products |
| Even if our products obtain marketing approval, they may not achieve market acceptance |
| If any of our products do not achieve market acceptance, we will likely lose our entire investment in that product |
| Marketplace acceptance will depend in part on competition in our industry, which is intense |
| The extent to which any of our products achieves market acceptance will depend on competitive factors |
| Competition in our industry is intense, and it is accentuated by the rapid pace of technological development |
| There are products currently in the market that will compete with the products that we are developing, including AIDS drugs and chemotherapy drugs for treating cancer |
| As described below, Adolor Corporation is developing a drug that would compete with MNTX Many of our competitors have substantially greater research and development capabilities and experience and greater manufacturing, marketing, financial and managerial resources than we do |
| These competitors may develop products that are superior to those we are developing and render our products or technologies non-competitive or obsolete |
| If our product candidates receive marketing approval but cannot compete effectively in the marketplace, our operating results and financial position would suffer |
| One or more competitors developing an opioid antagonist may reach the market ahead of us and adversely affect the market potential for MNTX We are aware that Adolor Corporation, in collaboration with Glaxo Group Limited, or Glaxo, a subsidiary of GlaxoSmithKline plc, is developing an opioid antagonist, Entereg™ (alvimopan), for post-operative ileus, which has completed phase 3 clinical trials, and for opioid-induced bowel dysfunction, which is in phase 3 clinical trials Post-operative ileus is a condition similar to post-operative bowel dysfunction, a condition for which we are developing MNTX Entereg is further along in the clinical development process than MNTX, and Adolor Corporation has received an approvable letter from the US Food and Drug Administration for Entereg regarding the treatment of post-operative ileus |
| Additionally, it has been reported that a European specialty pharmaceutical company is in clinical development of an oral formulation of methylnaltrexone for use in opioid-induced constipation |
| If either of these products reaches the market before MNTX, it could achieve a significant competitive advantage relative to our product |
| In any event, the considerable marketing and sales capabilities of Glaxo may impair our ability to penetrate the market |
| Under the terms of our collaboration with Wyeth with respect to MNTX, Wyeth will develop the oral form of MNTX worldwide |
| We will lead the US development of the subcutaneous and intravenous forms of MNTX, while Wyeth will lead development of these parenteral products outside the US Wyeth and we will pursue an integrated strategy to optimize worldwide development, regulatory approval, and commercial launch of the three MNTX products, which may impact timelines for the development of MNTX previously disclosed by us |
| Decisions regarding the timelines for development of the three MNTX products will be made by a Joint Development Committee formed under the terms of the license and co-development agreement, consisting of members from both Wyeth and Progenics |
| Disputes with Cytogen could delay or halt our PSMA programs |
| Our research and development programs relating to vaccine and antibody immunotherapeutics based on PSMA are conducted through PSMA LLC, a joint venture between Cytogen Corporation and us |
| This is a 50/50 joint venture, meaning that our ownership rights in the programs, funding obligations and governance rights are equal |
| As a result, for PSMA LLC to operate efficiently, and for the research and development programs to be adequately funded and staffed and productive, we and Cytogen must be in agreement on strategic and operational matters |
| There is a significant risk that, as a result of differing views and priorities, there will be occasions when we do not agree on various matters, as is the case currently |
| Our level of commitment to fund PSMA LLC and that of our joint venture partner, Cytogen, is based upon a budget and work plan that are developed and approved annually by the parties |
| We have in the past experienced delays in reaching agreement with Cytogen regarding annual budget issues and strategic and operational matters relating to PSMA LLC PSMA LLC currently has no approved 2006 budget or work plan because we and Cytogen have not yet reached agreement with respect to a number of matters relating to PSMA LLC If we do not reach an agreement regarding the 2006 budget and work plan, we would likely experience delays in advancing the PSMA programs and may need to dissolve PSMA LLC and abandon the PSMA programs being conducted by PSMA LLC We may not reach an agreement with Cytogen on these matters |
| 24 _________________________________________________________________ [48]Table of Contents If we are unable to negotiate collaborative agreements, our cash burn rate could increase and our rate of product development could decrease |
| Our business strategy includes as an element entering into collaborations with pharmaceutical and biotechnology companies to develop and commercialize our products and technologies |
| We recently entered into such a collaboration with Wyeth |
| However, we may not be successful in negotiating additional collaborative arrangements |
| If we do not enter into new collaborative arrangements, we would have to devote more of our resources to clinical product development and product-launch activities, and our cash burn rate would increase or we would need to take steps to reduce our rate of product development |
| If we do not remedy our failure to achieve milestones or satisfy conditions regarding some of our product candidates, we may not maintain our rights under our licenses relating to these product candidates |
| We are required to make substantial cash payments, achieve specified milestones and satisfy other conditions, including filing for and obtaining marketing approvals and introducing products, to maintain rights under our intellectual property licenses |
| Under our license agreements with Sloan-Kettering Institute for Cancer Research relating to GMK, we are required, among other things, to have filed for marketing approval for a drug by 2000 and to have commenced commercialization of the drug by 2002 |
| We have not achieved these and other milestones and are unlikely to achieve them soon |
| We are in a similar position with respect to our license agreement with Antigenics Inc |
| concerning QS-21^TM, a component of GMK If we can establish that our failure to achieve these milestones resulted from technical issues beyond our control or delays in clinical studies that could not have been reasonably avoided, we may be entitled to a revision of these milestone dates |
| Although we believe that we satisfy one or more of these conditions, we may become involved in disputes with our licensors as to our continued right to a license |
| In addition, at September 1, 2004 we became obligated under our license agreement with Columbia to pay Columbia dlra225cmam000 |
| We have accrued this amount but, pending the outcome of discussions with Columbia regarding this payment and other matters relating to the license, we have not yet paid it |
| If we do not comply with our obligations under our license agreements, the licensors may terminate them |
| Termination of any of our licenses could result in our losing our rights to, and therefore being unable to commercialize, any related product |
| We have had discussions with Sloan-Kettering and Columbia to reach agreement on the revision of applicable milestone dates |
| We may not, however, reach agreement with these licensors in a manner favorable to us |
| We have limited manufacturing capabilities, which could adversely impact our ability to commercialize products |
| We have limited manufacturing capabilities, which may result in increased costs of production or delay product development or commercialization |
| In order to commercialize our product candidates successfully, we or our collaborators must be able to manufacture products in commercial quantities, in compliance with regulatory requirements, at acceptable costs and in a timely manner |
| The manufacture of our product candidates can be complex, difficult to accomplish even in small quantities, difficult to scale-up for large-scale production and subject to delays, inefficiencies and low yields of quality products |
| The cost of manufacturing some of our products may make them prohibitively expensive |
| If adequate supplies of any of our product candidates or related materials are not available to us on a timely basis or at all, our clinical trials could be seriously delayed, since these materials are time-consuming to manufacture and cannot be readily obtained from third-party sources |
| We operate pilot-scale manufacturing facilities for the production of vaccines and recombinant proteins |
| We believe that, for these types of product candidates, these facilities will be sufficient to meet our initial needs for clinical trials |
| However, these facilities may be insufficient for late-stage clinical trials for these types of product candidates, and would be insufficient for commercial-scale manufacturing requirements |
| We may be required to expand further our manufacturing staff and facilities, obtain new facilities or contract with corporate collaborators or other third parties to assist with production |
| In the event that we decide to establish a commercial-scale manufacturing facility, we will require substantial additional funds and will be required to hire and train significant numbers of employees and comply with applicable regulations, which are extensive |
| We may not be able to build a manufacturing facility that both meets regulatory requirements and is sufficient for our clinical trials or commercial-scale manufacturing |
| We have entered into arrangements with third parties for the manufacture of some of our products |
| Our third-party sourcing strategy may not result in a cost-effective means for manufacturing products |
| In employing third-party manufacturers, we will not control many aspects of the manufacturing process, including compliance by these third parties with the FDA’s current Good Manufacturing Practices and other regulatory requirements |
| We may not be able to obtain adequate supplies from third-party manufacturers in a timely fashion for development or commercialization purposes, and commercial quantities of products may not be available from contract manufacturers at acceptable costs |
| 25 _________________________________________________________________ [49]Table of Contents We are dependent on our patents and other intellectual property rights |
| The validity, enforceability and commercial value of these rights are highly uncertain |
| Our success is dependent in part on obtaining, maintaining and enforcing patent and other intellectual property rights |
| The patent position of biotechnology and pharmaceutical firms is highly uncertain and involves many complex legal and technical issues |
| There is no clear policy involving the breadth of claims allowed, or the degree of protection afforded, under patents in this area |
| Accordingly, the patent applications owned by or licensed to us may not result in patents being issued |
| We are aware of other groups that have patent applications or patents containing claims similar to or overlapping those in our patents and patent applications |
| We do not expect to know for several years the relative strength or scope of our patent position as compared to these other groups |
| Furthermore, patents that we own or license may not enable us to preclude competitors from commercializing drugs, and consequently may not provide us with any meaningful competitive advantage |
| We own or have licenses to several issued patents |
| However, the issuance of a patent is not conclusive as to its validity or enforceability |
| The validity or enforceability of a patent after its issuance by the patent office can be challenged in litigation |
| Our patents may be successfully challenged |
| Moreover, we may incur substantial costs in litigation to uphold the validity of patents or to prevent infringement |
| If the outcome of litigation is adverse to us, third parties may be able to use our patented invention without payment to us |
| Moreover, third parties may avoid our patents through design innovation |
| Most of our product candidates, including MNTX, PRO 140, GMK and our PSMA program products, incorporate to some degree intellectual property licensed from third parties |
| We can lose the right to patents and other intellectual property licensed to us if the related license agreement is terminated due to a breach by us or otherwise |
| Our ability, and that of our collaboration partners, to commercialize products incorporating licensed intellectual property would be impaired if the related license agreements were terminated |
| Generally, we have the right to defend and enforce patents licensed by us, either in the first instance or if the licensor chooses not to do so |
| In addition, our license agreement with the University of Chicago regarding MNTX gives us the right to prosecute and maintain the licensed patents |
| We bear the cost of engaging in some or all of these activities with respect to our license agreements with Sloan-Kettering for GMK and the University of Chicago for MNTX Under our Collaboration Agreement, Wyeth has the right, at its expense, to defend and enforce the MNTX patents licensed to Wyeth by us |
| With most of our other license agreements, the licensor bears the cost of engaging in all of these activities, although we may share in those costs under specified circumstances |
| Historically, our costs of defending patent rights, both our own and those we license, have not been material |
| We also rely on unpatented technology, trade secrets and confidential information |
| Third parties may independently develop substantially equivalent information and techniques or otherwise gain access to our technology or disclose our technology, and we may be unable to effectively protect our rights in unpatented technology, trade secrets and confidential information |
| We require each of our employees, consultants and advisors to execute a confidentiality agreement at the commencement of an employment or consulting relationship with us |
| However, these agreements may not provide effective protection in the event of unauthorized use or disclosure of confidential information |
| If we infringe third-party patent or other intellectual property rights, we may need to alter or terminate a product development program |
| There may be patent or other intellectual property rights belonging to others that require us to alter our products, pay licensing fees or cease certain activities |
| If our products infringe patent or other intellectual property rights of others, the owners of those rights could bring legal actions against us claiming damages and seeking to enjoin manufacturing and marketing of the affected products |
| If these legal actions are successful, in addition to any potential liability for damages, we could be required to obtain a license in order to continue to manufacture or market the affected products |
| We may not prevail in any action brought against us, and any license required under any rights that we infringe may not be available on acceptable terms or at all |
| We are aware of intellectual property rights held by third parties that relate to products or technologies we are developing |
| For example, we are aware of other groups investigating methylnaltrexone and other peripheral opioid antagonists, PSMA or related compounds and CCR5 monoclonal antibodies and of patents held, and patent applications filed, by these groups in those areas |
| While the validity of these issued patents, patentability of these pending patent applications and applicability of any of them to our programs are uncertain, if asserted against us, any related patent or other intellectual property rights could adversely affect our ability to commercialize our products |
| The research, development and commercialization of a biopharmaceutical often involve alternative development and optimization routes, which are presented at various stages in the development process |
| The preferred routes cannot be predicted at the outset of a research and development program because they will depend on subsequent discoveries and test results |
| There are numerous third-party patents in our field, and we may need to obtain a license to a patent in order to pursue the preferred development route of one or more of our products |
| The need to obtain a license would decrease the ultimate profitability of the applicable product |
| If we cannot negotiate a license, we might have to pursue a less desirable development route or terminate the program altogether |
| 26 _________________________________________________________________ [50]Table of Contents We are dependent upon third parties for a variety of functions |
| These arrangements may not provide us with the benefits we expect |
| We rely in part on third parties to perform a variety of functions |
| We are party to numerous agreements which place substantial responsibility on clinical research organizations, consultants and other service providers for the development of our products |
| We also rely on medical and academic institutions to perform aspects of our clinical trials of product candidates |
| In addition, an element of our research and development strategy is to in-license technology and product candidates from academic and government institutions in order to minimize investments in early research |
| Furthermore, we recently entered into an agreement under which we will depend on Wyeth for the commercialization and development of MNTX, our lead product candidate |
| We may not be able to maintain any of these relationships or establish new ones on beneficial terms |
| Furthermore, we may not be able to enter new arrangements without undue delays or expenditures, and these arrangements may not allow us to compete successfully |
| We lack sales and marketing experience, which will make us dependent on third parties for their expertise in this area |
| We have no experience in sales, marketing or distribution |
| If we receive marketing approval, we expect to market and sell our products principally through distribution, co-marketing, co-promotion or licensing arrangements with third parties |
| We may also consider contracting with a third party professional pharmaceutical detailing and sales organization to perform the marketing function for our products |
| Under our license and co-development agreement with Wyeth, Wyeth is responsible for commercializing MNTX To the extent that we enter into distribution, co-marketing, co-promotion, detailing or licensing arrangements for the marketing and sale of our other products, any revenues we receive will depend primarily on the efforts of third parties |
| We will not control the amount and timing of marketing resources these third parties devote to our products |
| In addition, if we market products directly, significant additional expenditures and management resources would be required to develop an internal sales force |
| We may not be able to establish a successful sales force should we choose to do so |
| If we lose key management and scientific personnel on whom we depend, our business could suffer |
| We are dependent upon our key management and scientific personnel |
| Paul J Maddon, our Chief Executive Officer and Chief Science Officer, could cause our management and operations to suffer |
| We have an employment agreement with Dr |
| Maddon, the initial term of which ran through June 30, 2005, which was automatically renewed for an additional period of two years |
| Executive Compensation - Employment Agreements” in this Annual Report on Form 10-K for the year ended December 31, 2005 |
| We are currently in discussions with Dr |
| Maddon regarding the future renewal of his employment agreement |
| Employment agreements do not, however, assure the continued employment of an employee |
| We maintain key-man life insurance on Dr |
| Competition for qualified employees among companies in the biopharmaceutical industry is intense |
| Our future success depends upon our ability to attract, retain and motivate highly skilled employees |
| In order to commercialize our products successfully, we may be required to expand substantially our personnel, particularly in the areas of manufacturing, clinical trials management, regulatory affairs, business development and marketing |
| We may not be successful in hiring or retaining qualified personnel |
| If we are unable to obtain sufficient quantities of the raw and bulk materials needed to make our products, our product development and commercialization could be slowed or stopped |
| We currently obtain supplies of critical raw materials used in production of MNTX, GMK and other of our product candidates from single sources |
| In particular, we rely on single-source third-party manufacturers for the supply of both bulk and finished form MNTX We have a supply agreement with Mallinckrodt Inc, our current supplier of bulk-form MNTX, which has an initial term that expires on January 1, 2008 |
| In accordance with our collaboration agreement with Wyeth, we will transfer to Wyeth, at a mutually agreeable time, the responsibility for manufacturing MNTX for clinical and commercial use, including our supply agreements with third parties |
| We do not have long-term contracts with any of our other suppliers |
| In addition, commercialization of GMK requires an adjuvant, QS-21^TM, available only from Antigenics Inc |
| Our existing arrangements may not result in the supply of sufficient quantities of our product candidates needed to accomplish our clinical development programs, and we may not have the right or capability to manufacture sufficient quantities of these products to meet our needs if our suppliers are unable or unwilling to do so |
| Any delay or disruption in the availability of raw materials would slow or stop product development and commercialization of the relevant product 27 _________________________________________________________________ [51]Table of Contents A substantial portion of our funding comes from federal government grants and research contracts |
| We cannot rely on these grants or contracts as a continuing source of funds |
| A substantial portion of our revenues to date has been derived from federal government grants and research contracts |
| In July and September 2005, we were awarded a dlra3dtta0 million and a dlra10dtta1 million grant from the NIH to partially fund our hepatitis C virus and PRO 140 programs, respectively |
| Also, in 2004 we were awarded, in the aggregate, approximately dlra9dtta2 million in NIH grants and research contracts in addition to previous years’ awards |
| We cannot rely on grants or additional contracts as a continuing source of funds |
| Moreover, funds available under these grants and contracts must be applied by us toward the research and development programs specified by the government rather than for all our programs generally |
| For example, the dlra28dtta6 million contract awarded to us by the NIH in September 2003 must be used by us in furtherance of our efforts to develop an HIV vaccine |
| The government’s obligation to make payments under these grants and contracts is subject to appropriation by the US Congress for funding in each year |
| Moreover, it is possible that Congress or the government agencies that administer these government research programs will decide to scale back these programs or terminate them due to their own budgetary constraints |
| Additionally, these grants and research contracts are subject to adjustment based upon the results of periodic audits performed on behalf of the granting authority |
| Consequently, the government may not award grants or research contracts to us in the future, and any amounts that we derive from existing grants or contracts may be less than those received to date |
| If health care reform measures are enacted, our operating results and our ability to commercialize products could be adversely affected |
| In recent years, there have been numerous proposals to change the health care system in the US and in foreign jurisdictions |
| Some of these proposals have included measures that would limit or eliminate payments for medical procedures and treatments or subject the pricing of pharmaceuticals to government control |
| In some foreign countries, particularly countries of the European Union, the pricing of prescription pharmaceuticals is subject to governmental control |
| In addition, as a result of the trend towards managed health care in the US, as well as legislative proposals to reduce government insurance programs, third-party payors are increasingly attempting to contain health care costs by limiting both coverage and the level of reimbursement of new drug products |
| Consequently, significant uncertainty exists as to the reimbursement status of newly approved health care products |
| If we or any of our collaborators succeed in bringing one or more of our products to market, third-party payors may establish and maintain price levels insufficient for us to realize an appropriate return on our investment in product development |
| Significant changes in the health care system in the US or elsewhere, including changes resulting from adverse trends in third-party reimbursement programs, could have a material adverse effect on our operating results and our ability to raise capital and commercialize products |
| We are exposed to product liability claims, and in the future we may not be able to obtain insurance against these claims at a reasonable cost or at all |
| Our business exposes us to product liability risks, which are inherent in the testing, manufacturing, marketing and sale of pharmaceutical products |
| We may not be able to avoid product liability exposure |
| If a product liability claim is successfully brought against us, our financial position may be adversely affected |
| Product liability insurance for the biopharmaceutical industry is generally expensive, when available at all |
| We have obtained product liability insurance in the amount of dlra5dtta0 million per occurrence, subject to a deductible and a dlra5dtta0 million annual aggregate limitation |
| In addition, where local statutory requirements exceed the limits of our existing insurance or where local policies of insurance are required, we maintain additional clinical trial liability insurance to meet these requirements |
| Our present insurance coverage may not be adequate to cover claims brought against us |
| In addition, some of our license and other agreements require us to obtain product liability insurance |
| Adequate insurance coverage may not be available to us at a reasonable cost in the future |
| We handle hazardous materials and must comply with environmental laws and regulations, which can be expensive and restrict how we do business |
| If we are involved in a hazardous waste spill or other accident, we could be liable for damages, penalties or other forms of censure |
| Our research and development work and manufacturing processes involve the use of hazardous, controlled and radioactive materials |
| We are subject to federal, state and local laws and regulations governing the use, manufacture, storage, handling and disposal of these materials |
| Despite procedures that we implement for handling and disposing of these materials, we cannot eliminate the risk of accidental contamination or injury |
| In the event of a hazardous waste spill or other accident, we could be liable for damages, penalties or other forms of censure |
| In addition, we may be required to incur significant costs to comply with environmental laws and regulations in the future |
| 28 _________________________________________________________________ [52]Table of Contents Our stock price has a history of volatility |
| You should consider an investment in our stock as risky and invest only if you can withstand a significant loss |
| Our stock price has a history of significant volatility |
| Between January 1, 2002 and December 31, 2005, our stock price has ranged from dlra3dtta82 to dlra27dtta00 per share |
| At times, our stock price has been volatile even in the absence of significant news or developments relating to us |
| Moreover, the stocks of biotechnology companies and the stock market generally have been subject to dramatic price swings in recent years |
| Factors that may have a significant impact on the market price of our common stock include: · the results of clinical trials and preclinical studies involving our products or those of our competitors; · changes in the status of any of our drug development programs, including delays in clinical trials or program terminations; · developments regarding our efforts to achieve marketing approval for our products; · developments in our relationship with Wyeth regarding the development and commercialization of MNTX; · announcements of technological innovations or new commercial products by us, our collaborators or our competitors; · developments in our relationships with other collaborative partners; · developments in patent or other proprietary rights; · governmental regulation; · changes in reimbursement policies or health care legislation; · public concern as to the safety and efficacy of products developed by us, our collaborators or our competitors; · our ability to fund on-going operations; · fluctuations in our operating results; and · general market conditions |
| Our principal stockholders are able to exert significant influence over matters submitted to stockholders for approval |
| At December 31, 2005, Dr |
| Maddon and stockholders affiliated with Tudor Investment Corporation together beneficially own or control approximately 19prca of our outstanding shares of common stock |
| These persons, should they choose to act together, could exert significant influence in determining the outcome of corporate actions requiring stockholder approval and otherwise control our business |
| This control could have the effect of delaying or preventing a change in control of us and, consequently, could adversely affect the market price of our common stock |
| Anti-takeover provisions may make the removal of our Board of Directors or management more difficult and discourage hostile bids for control of our company that may be beneficial to our stockholders |
| Our Board of Directors is authorized, without further stockholder action, to issue from time to time shares of preferred stock in one or more designated series or classes |
| The issuance of preferred stock, as well as provisions in certain of our stock options that provide for acceleration of exercisability upon a change of control, and Section 203 and other provisions of the Delaware General Corporation Law could: · make the takeover of Progenics or the removal of our Board of Directors or management more difficult; · discourage hostile bids for control of Progenics in which stockholders may receive a premium for their shares of common stock; and · otherwise dilute the rights of holders of our common stock and depress the market price of our common stock |
| 29 _________________________________________________________________ [53]Table of Contents If there are substantial sales of our common stock, the market price of our common stock could decline |
| Sales of substantial numbers of shares of common stock could cause a decline in the market price of our stock |
| We require substantial external funding to finance our research and development programs and may seek such funding through the issuance and sale of our common stock |
| We have announced that we have filed shelf registration statements to permit the sale of up to 4dtta0 million shares of our common stock to investors and to permit the public reoffer and sale from time to time of up to 286cmam000 shares of our common stock by certain stockholders |
| Sales of our common stock pursuant to these registration statements could cause the market price or our stock to decline |
| In addition, some of our other stockholders are entitled to require us to register their shares of common stock for offer or sale to the public |
| Also, we have filed Form S-8 registration statements registering shares issuable pursuant to our equity compensation plans |
| Any sales by existing stockholders or holders of options may have an adverse effect on our ability to raise capital and may adversely affect the market price of our common stock |