April 25, 2008 / 5:08 PM / 9 years ago

Progenics shares soar on bowel drug approval

3 IN. DI LETTURA

BANGALORE, April 25 (Reuters) - Shares of Progenics Pharmaceuticals (PGNX.O) rose as much as 48 percent, a day after the company's bowel drug, Relistor, won U.S. approval and received a positive opinion from European health regulators.

Progenics is partnered with Wyeth WYE.N for the development of the drug. Wyeth shares were up 24 cents at $44.80 in afternoon trade on the New York Stock Exchange.

Relistor is already approved in Canada, and is expected to be approved for opioid-induced constipation (OIC) in Europe by mid-year.

Citigroup analyst Yaron Werber upgraded the stock to "hold" from "sell," calling the approval from the U.S. Food and Drug Administration a "pleasant surprise".

In March, Progenics shares lost almost two-thirds of their value after the drug failed a late-stage trial for another bowel condition -- post-operative ileus (POI).

At that time, Werber had doubted that the drug would be approved in April and had cut the stock's rating.

In a note to clients, RBC Capital Markets analyst Michael Yee said the U.S. approval is a "significant achievement and clears a major regulatory overhang for the company."

Yee raised the stock's price target to $19 from $10 keeping an "outperform" rating, and said mid-stage trial data for oral Relistor would be the next biggest catalyst for the stock.

Progenics is also studying the oral formulation of the drug in a mid-stage trial for OIC in chronic pain patients.

Citigroup's Werber said the market for OIC in advanced medical illness patients is limited, and would be more aggressive on the stock if issues with the failed late-stage trial results for POI are addressed.

Lazard Capital Markets analyst Joel Sendek echoed Werber's view, saying that the relatively small OIC market may be challenging to penetrate despite Relistor's strong efficacy profile.

Sendek kept a "hold" rating on the stock.

Shares of Tarrytown, New York-based Progenics were trading up $3.42, or 32 percent, at $14.06 in afternoon trade on Nasdaq. (Reporting by Jennifer Robin Raj in Bangalore; Editing by Varsha Tickoo)

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