On August 2, NPS Pharmaceuticals (NASDAQ: NPSP) announced that it had updated an 18-year-old licensing agreement with GlaxoSmithKline (NYSE: GSK), allowing NPS to regain rights to two experimental treatments. It wasn’t the sort of news likely to induce panting on Wall Street, as Bedminster, NJ-based NPS is developing the compounds to treat orphan diseases—those that affect small populations of patients. But NPS’s CEO Francois Nader says taking back the drugs from GSK complements NPS’s overall strategy. “We are in endocrinology and we are in orphan disease, so these compounds are in our sweet spot,” he says.
The GSK deal instantly doubles the size of NPS’s pipeline—quite an accomplishment considering that the company had to reinvent itself just four years ago in order to survive. NPS initially tried to develop one of its drugs, now called NPSP558, to treat osteoporosis, but the FDA turned it down in 2006. So Nader and his team slashed the company’s workforce from 400 to 19, began outsourcing everything they could, and made a commitment to finding new remedies for rare diseases.
NPS’s focus on orphan diseases turned out to be prescient. Over the past two years, Big Pharma companies ranging from Pfizer (NYSE: PFE) to Sanofi (NYSE: SNY) have made major investments in orphan disease research. But NPS’s pipeline is certainly shaping up to be competitive with those larger rivals. NPS has a Phase 3 compound called teduglutide (Gattex) to treat a digestive condition called short bowel syndrome. It has repurposed the osteoporosis compound NPSP558 and advanced it into Phase 3 trials for hypoparathyroidism. And the two drugs NPS acquired from GSK—NPSP790 and NPSP795—are in the early stages of development for rare, calcium-related disorders.
Over the past 18 months, NPS’s stock has nearly doubled to $7.28 on hopes for its lead compound, teduglutide. Short bowel syndrome only affects about 15,000 patients in the U.S., but because the FDA has granted the drug orphan status, NPS will have market exclusivity. The company estimates the sales opportunity to be $350 million a year.
At a meeting with the FDA in May, FDA regulators and NPS executives agreed that in order to ensure teduglutide is safe for patients to take chronically, NPS’s application should include data on a certain number of patients who had been on the drug for at least a year. During the company’s second-quarter earnings call on August 2, … Next Page »
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