In nearly 20 years as a pubic company, Repros (fka Zonagen) has been run by one man, Joseph Podolski, who has failed to deliver quarter after quarter and year after year. How did RPRX (fka ZONA) get here, and how could it survive so long?
Once upon a time, in 1993, an outfit named Reich & Co, most famous for touting its offerings on AM radio ads in the early 90s, took public a company called Zonagen (ZONA).
Reich did offerings for Hemagen (HMGN) now 8c, Concord Camera (LENS), now delisted, Protein Polymer Tech (PPTI), now at 1/10 of a penny, Polar Molecular (POMH), also delisted, Liuski Intl. (LSKI), surprise, delisted, and, well, one gets the idea.
Chris Byron wrote a great piece on Reich for NY Magazine, check it out here.
Zonagen went public with dreams of a contraceptive vaccine and in 1994 ZONA acquired the rights to a pre-clinical oral impotency treatment. ZONA named it Vasomax. ZONA was also working on a third product, an immune booster called ImmuMax. ImmuMax turned out to be nothing more than chitosan, ground up shrimp shells. You can go to any health food shop and buy as much as you would like. Today it is often marketed as a fat blocking pill.
In 1996 ZONA became a Dan Dorfman favorite, and the stock began to zoom. In 1997, on the back of what appeared to the untrained eye to be positive Phase II trial results and a marketing deal for Vasomax with Schering Plough, ZONA reached a high of $183 (split adjusted) and managed to raise $67.5mm in a secondary offering.
But that was the high point for ZONA. In late 1997 the story began to unravel and the stock began a quick fall. It was revealed that the incessantly hyped Vasomax pills were nothing but an old generic drug called phentolamine and milk sugar.
By mid-1998 the bottom really fell out when Pfizer‘s Viagra was approved by the FDA. After a June 1998 urology conference the shares fell even more. A closer look at the study results showed they were not actually very impressive. From a June 3, 1998 Bloomberg news article:
“Two clinical trials of Vasomax found that about 35 percent of men with mild to moderate erectile dysfunction responded to a 40 milligram dose of the drug and 45 percent responded when the dose was twice was strong. Also, the Vasomax data looked only at patients with mild to moderate impotence, a subset that is hard for doctors to identify, said Steve Lisi, an analyst at Mehta Partners who attended the presentation. In addition, 20 percent of the men in the Vasomax trial taking placebo also reported success, fairly close to the benefits seen among those on the drug, Lisi said.”
During late 1998 ZONA also decided to test phentolamine in women, calling the new pill Vasofem.
The news only got worse for Repros/Zonagen on May 10, 1999 when the FDA gave the company a smackdown:
“The Woodlands, Texas, May 10 (Bloomberg) — Zonagen Inc. said it expects U.S. regulators will not approve its first product — an impotence pill that would compete with Pfizer Inc.’s Viagra. The surprise disclosure is likely to send shares of the unprofitable biotech company tumbling. Zonagen and marketing partner Schering-Plough Corp. said they expect the Food and Drug Administration to issue a so-called “non-approvable” letter for Vasomax. That’s after the two companies declined an agency request that they defend the drug next month before a panel that would evaluate its safety and effectiveness.
In August 1999 things got even uglier, as the FDA put a clinical hold on all studies using phentolamine due to toxicity concerns.
Washington, Aug. 10 (Bloomberg) — Zonagen Inc. says the U.S. Food and Drug Administration has barred the company from further human trials of Zonagen’s experimental impotence drug Vasomax because of safety concerns. Zonagen released the news before U.S. markets opened. Shares in the money-losing Texas dropped 2 1/16 to 5 1/4 in early trading. The so-called clinical hold affects Zonagen’s experimental drugs for male and female sexual dysfunction.
(NB: For even more detail on the ZONA story of the mid to late 90s, read Manuel Asensio’s book Sold Short. Your author cannot recommend it more highly, it is a great read.)
In April 2000 the clinical hold on phentolamine was finally lifted, but in May 2000 the FDA demanded additional new studies from ZONA to consider Vasomax/fem.
The Woodlands, Texas, May 17 (Bloomberg) — Zonagen Inc. shares fell 20 percent after U.S. regulators said they won’t consider approving the biotechnology company’s first product, an impotence drug, without further testing on animals. Zonagen fell 15/16 to 3 13/16, and have fallen almost 70 percent since March 3. The U.S. Food and Drug Administration’s demand for more studies on the drug was reported late yesterday. Citing safety concerns, the FDA asked Zonagen to carry out a second two-year study on animals of the experimental drug that Schering-Plough Corp. intends to market as Vasomax. The agency said Zonagen could continue testing Vasomax in people, though it limited the treatment time and dosage in human testing.
This will not be the last time ZONA investors see such news from the FDA.
In August 2000 ZONA began Phase I work on Progenta, a drug that would become known as Proellex, a compound with its own dubious safety profile.
In 2001 ZONA admitted its contraceptive vaccine, which was the hyped product at the IPO, was a failure in animal studies and killed the program:
The Woodlands, Texas, Sept. 27 (Bloomberg) — Zonagen Inc. said it halted research on an experimental contraceptive vaccine, ending an agreement the biotechnology company had with American Home Products Corp. on the product. Animal studies failed to show the vaccine works across all animal types, the company said in a release distributed on BusinessWire. No jobs will be cut, the company said. Company officials were not available for comment. Zonagen shares have fallen 10 percent in the last year. The shares, which closed at $3.15 yesterday, once traded as high as 35.75. Zonagen also has faced delays and problems with studies of its impotence drug Vasomax, which Schering-Plough Corp. had intended to market. Vasomax was once considered a potential rival to Pfizer Inc.’s Viagra.
In 2002 the clowns at Zonagen finally gave up on Vasomax, withdrawing the application for approval in the UK, and deciding not to do the additional animal studies demanded by the FDA.
By 2004, after a failed merger, a failed herpes treatment, and another attempt to sell phentolamine under the name Bimexes, the company’s pipeline was reduced to Progenta as a treatment for both endometreosis and uterine fibroids, and Androxal.
Androxal, a male fertility treatment, is actually a chemical called enclomifene. Enclomifene is a SERM (Selective Estrogen Receptor Modulator), that is just a single isomer version of a generic drug clomifene, better known as Clomid. Much like Vasomax, ZONA/RPRX‘s Androxal is just a hyped drug that, in reality, already exists in a cheaper, generic, form.
In 2006 Zonagen was touted by Gene Marcial in his Inside Wall Street column, reminiscent of Dan Dorfman 10 years earlier. The company also changed its name to Repros Therapeutics in May of that year.
Unfortunately for Repros, in 2007 the FDA told the company that the endpoints originally proposed for their Phase III trials of Androxal were not appropriate. So it was back to the drawing board for RPRX and their Androxal studies. Readers of Asensio’s book will recall this is not the first time that Podolski has had to change trial endpoints to satisfy the regulators.
In what must have been a strange episode of deja vu for long suffering RPRX shareholders, 2009 brought about interesting Phase II results for Proellex, and a huge drop in the price of RPRX shares.
In a July 1 2009 press release RPRX disclosed safety problems with the 50mg dose of the drug:
Furthermore, Repros has decided to discontinue the use of the higher, 50 mg dose in its ongoing studies in women with chronic symptomatic uterine fibroids and anemia associated with this condition due to an observed dose-dependent increase in liver enzymes in a low percentage of women.
In August of 2009 RPRX filed a 10Q with a now classic disclaimer:
“We may need to seek protection under the provisions of the U.S. Bankruptcy Code, and in that event, it is unlikely that stockholders would receive any value for their shares” for a complete discussion of the risks associated with our inability to raise additional capital on a timely basis.’’ The company also stated that “Our ability to continue as a going concern requires that we raise additional funds immediately, without which we will need to cease our business operations and begin bankruptcy or liquidation proceedings.”
Of course, Podolski is nothing if not resilient, and somehow he found people to fund him. While in January of 2009 RPRX traded as high as $55.76, in September 2009 RPRX raised a massive 1mm at an embarrassing 65c a share.
THE WOODLANDS, Texas — September 08, 2009 Repros Therapeutics (Nasdaq:RPRX) today announced that Repros has entered into a definitive agreement with a single institutional investor to sell 1.5 million shares of its common stock at $0.65 per share for gross proceeds of approximately $1.0 million.
But just a few days later, the FDA delivered another blow to Repros. Much like with Vasomax, the FDA put a clinical hold on Proellex due to safety concerns.
But RPRX managed to keep on selling stock. In early October 2009 they raised cash again.
THE WOODLANDS, Texas — October 08, 2009 Repros Therapeutics (NasdaqGM:RPRX) today announced that Repros has entered into a definitive agreement with institutional investors to sell 3.5 million shares of its common stock at $1.27 per share for gross proceeds of approximately $4.4 million. The offering is expected to close on or about October 9, 2009, subject to the satisfaction of customary closing conditions.
In early 2010 RPRX initiated an at-the-market continuous offering of stock through Ladenburg, through which they raised 6.8mm.
In June 2010 the FDA agreed to lift the clinical hold on Proellex, and allow RPRX to test lower doses for safety. Will they be safe? Will they be effective?
But what the FDA gives, it can also take away, and in November 2010 the FDA further crushed RPRX‘s dreams of Andoxal approval under a Special Protocol Assessment agreement (SPA):
Nov. 9 (Bloomberg) — Repros Therapeutics down as much as 13%, as FDA does not agree with company’s proposal for moving into Phase III trials under an SPA for Androxal in the treatment of secondary hypogonadism in men.
What is truly amazing about ZONA/RPRX is that since inception it has managed to raise, and burn over $178mm with nothing to show for it. Two things are clear. Podolski might not have a clue about bringing a safe drug to market, but he sure knows how to sell stock. The boys at Reich taught him well.