Why Repros Is Still Risky Despite Stock's Ascent

THE WOODLANDS, Texas (TheStreet) -- This morning's Repros Therapeutics (RPRX) conference call was boring. There was no discussion of gay Cuban sex, no admission of fabricated clinical data. The closest we got to fun was Repros CEO Joe Podolski explaining men who took the experimental testosterone-raising drug Androxal were reporting "lower rates of abstinence" and therefore had low sperm counts. (Lots of ejaculations, understand?)

Repros reported results from a second pivotal study of Androxal on Tuesday which read very much like what the company said last March about the first study: Androxal, a pill, normalized testosterone levels in men with lower-than-normal testosterone and did not cause a statistically lower sperm count than placebo.

A lot of Androxal data wasn't reported Tuesday, just like it was omitted last March. Instead, Repros' Podolksi offered assurances about Androxal's efficacy and safety, even while remaining non-committal about presenting complete results from the two clinical trials at a medical meeting.

The company intends to file Androxal for approval with the FDA in the middle of next year. Repros shares rose 21% to 25.62 Tuesday, so like last March, investors are brushing off the real risk FDA rejects Androxal. Androxal is a variant of the female reproductive hormone Clomid which Repros is developing as a treatment for men with low testosterone. Right now, men with "low T" are prescribed various testosterone-laden gels and creams -- Abbvie's (ABBV) Androgel, Auxillium Pharmaceuticals' (AUXL) Testim or Eli Lilly's (LLY) Axiron. The worldwide testosterone market is $2 billion annually and growing but these rub-on treatments are messy, carry the risk of transference and cause sperm counts to fall. (A big negative for men who still want to father kids.) As a pill, Androxal is designed to be much more convenient, can't be transferred to kids or women, and most importantly, doesn't lower sperm count. In the second phase III study disclosed Tuesday, Repros said 81% of Androxal-treated men reached normal testosterone range, which exceeded the 75% threshold requirement under the Special Protocol Agreement reached with the FDA. [Seventy-nine percent of men on Androxal reported normal testosterone in the first phase III study.] What was the rate of testosterone normalization for men treated with placebo in the phase III study? Repros did not disclose.

What were the baseline and end-of-treatment levels of testosterone for patients in both arms of the study? Repros did not disclose.

Was the testosterone normalization endpoint reached with statistical significance? Repros did not disclose. [The terms "statistical significance" or "statistically signifcant" do not appear in today's press release.]

The study's sperm count endpoint is similarly messy.

Twenty of 134 men on Androxal reported sperm counts that fell 50% below their baseline levels compared to 2 of 47 men on placebo. While numerically worse, Repros said the Androxal was statistically non inferior to placebo but only just barely. To meet the study's sperm-count endpoint, Androxal could be no more than 20% worse than placebo. The reported statistical difference was 18.3%. Last March, Repros admitted that one of the clinical trials sites fabricated baseline sperm counts for patients. As a result, the company analyzed the study omitting patients from that troubled site. Here, the statistical worsening in sperm count reduction was 19.6%, meaning the study came within a whisper of failing on this endpoint. Repros also slipped in a change to the reporting from the first phase III study. Tuesday, the company said 16 of 113 Androxal-treated men reported sperm counts lower than 50% from baseline. Last March, it was 15 of 113 patients. Under the SPA agreement, Androxal must meet both primary endpoints in both phase III clinical trials in order for the study to be considered successful. On Tuesday, Repros said it "believes" the sperm-count endpoint was met. Why not just make a definitive statement? Repros CEO Podolski blamed his lawyers for wanting to be conservative. Repros must complete an Androxal safety study plus finish some preclinical work before submitting for FDA approval in the middle of next year. The company is also still working through a messy challenge to the patents for Androxal by a New York urologist who claims Podolski stole the idea for the drug from him. -- Reported by Adam Feuerstein in Boston. Follow @AdamFeuerstein

Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.

The Deal: Divided SEC Takes Shot at CEO Compensation

NEW YORK (TheStreet) -- Federal securities regulators voted on Wednesday along partisan lines to propose a controversial rule that would require corporations to calculate and compare the median annual pay of all its employees to its CEO compensation.

The provision is required by the Dodd-Frank Act, written in the wake of the 2008 financial crisis.

The proposal by the Securities and Exchange Commission, which sought to strike a delicate balance between the interests of global corporations and labor unions, comes after CEO pay has risen significantly compared to that of employees. The labor union AFL-CIO notes that in 2012 CEOs of S&P 500 index companies were paid 354 times more than rank-and-file workers. The labor union also reported that thirty years ago, CEOs of the nation's largest companies received 42 times the pay of employees.

As sought by labor union and consumer groups, the proposal would require U.S.-based corporations to calculate the median annual compensation of all its employees including full and part-time workers outside the U.S. However, the balance wasn't enough of a compromise for Republican SEC commissioners, who voted against introducing the measure. They argued that global corporations would have a difficult time calculating the pay of their thousands or tens of thousands of oversea employees. Michael Piwowar, a new Republican commissioner at the agency, said "shame on us" for voting on this proposal and putting "special interests" ahead of investors. He argued that the measure is intended to shame CEOs and instead will harm investors because it will encourage global corporations to maintain a low pay ratio, which will discourage expansion of business operations into regions with low labor costs. "It will unambiguously harm investors," Piwowar said. However, a former SEC official familiar with the proposal argued it was unlikely that a corporation will make a decision not to expand into a new region because hiring low income employees there will translate into an embarrassing pay ratio. "I give very little credence to that argument," he said. Business groups argued that these U.S.-based international firms would have a difficult time reconciling pay processing systems set up in different parts of the globe to meet the new requirements. They also will have a hard time identifying part-time employees or employees of joint ventures, all of which would create an unmanageable costly burden.

The three Democrats on the SEC backed the rule. Democratic SEC Commissioner Luis Aguilar said it was not surprising that investors are asking whether such a high CEO pay multiple that we are seeing at large U.S. corporations is in the interest of corporations and their shareholders. "Shareholders have the right to know whether CEO pay multiples reflect CEO performance," he said.

Nevertheless, the agency responded to some CEO concerns. Instead of requiring that companies identify the total compensation of all its employees, the measure is permitting companies to calculate a statistical sample of the total population of its employees. The Bureau of Labor Statistics defines the median wage as the 50th percentile wage estimate, with 50% of workers earning less than the median and 50% of workers earning more.

Republican Commissioner Daniel Gallagher, who also voted against introducing the proposal, acknowledged that "it could have been worse." He praised SEC Chairman Mary Jo White for permitting a more "flexible" approach to the rule.

Sanjay Shirodkar, an attorney at DLA Piper (US) in Washington, said he expects that the biggest pay disparities will be seen at global firms in the financial services, mining and manufacturing sectors. He added that it remains to be seen if the SEC will move to adopt the rule, arguing that a strong enough backlash from the U.S. Chamber of Commerce and the corporate community could pressure the SEC to put the proposal on the backburner permanently � or at least have it revised substantially. He refuted assertions that the proposed rule provides additional benefits to investors by putting a new spotlight on whether the CEO's pay is tied to his or her performance. Shirodkar noted that as a result of new SEC requirements companies are already providing additional disclosure in their proxy statements linking the pay of their CEO to the company's performance � including a simplified executive pay summary section. Alex Pollcok, a fellow at the American Enterprise Institute, said the proposal is "ridiculous," arguing that to find out exactly who is the median employee is would be a "gigantic and highly dubious" endeavor, especially when considering that global corporations would have to factor in different currencies in dozens of countries where they operate.

Because the rule would apply only to companies that cross certain size thresholds, a huge swath of smaller and newly public companies would not be required to make the calculation. Among the exemptions: "Emerging growth companies" with less than $1 billion in annual revenue when they conduct their initial public offering would not be required to comply.

Separately, the SEC also voted unanimously to adopt a proposal that had been languishing at the agency since December 2010 that would require advisers to state and local governments in the $3 trillion municipal bond issuance market to register with the SEC and open their books to periodic exams. The next step is for the Municipal Securities Rulemaking Board to adopt follow-up rules, which could include requiring municipal advisers to pass compliance tests. The SEC expects about 1100 advisers to register with the agency, following up on a temporary requirement.

The measure comes after municipal bond issuances have grown in complexity, in part because of increasing use of derivatives, raising questions about whether municipal officials are sophisticated enough to understand their bond issuances.

--Written by Ronald D. Orol In Washington