NPS Re-Jiggers Glaxo Partnership, Finds Value in Ultra-Orphan Diseases

8/9/11Follow @arleneweintraub

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NPS disclosed that it had reached that number. The company expects to file for approval by the end of the year.

NPS is also making progress with NPSP558. NPS has been studying the compound in hypoparathyroidism, which affects about 60,000 patients in the U.S. The most commonly used treatments are Vitamin D and calcium, but at least 20 percent of patients cannot control their disease adequately with the supplements, Nader says. In the fourth quarter of this year, NPS will release top-line data from a study designed to determine whether patients on NPSP558 can reduce their reliance on Vitamin D and calcium.

After NPSP558 failed in osteoporosis, Wall Street analysts didn’t pay much attention to it—until recently. In an August 1 report, Leerink Swann analyst Joshua Schimmer notes that an independent scientist in Europe already performed a trial of the drug against calcium and Vitamin D, and results bode well for NPS’s upcoming study. In the European study, which was published recently in the Journal of Bone and Mineral Research, 22 percent of patients were able to stop taking calcium and Vitamin D completely. Even though NPS’s own research won’t be revealed until late in the year, Schimmer wrote, “we conclude that the study is highly likely to succeed and represents a compelling risk-reward opportunity for investors.” He has a price target of $14 to $16 on the stock.

As for the GSK deal, Nader says it can be seen as history repeating itself. Like NPSP558, the two GSK compounds are in a class of drugs that were initially thought to be promising as osteoporosis treatments. GSK licensed a family of these compounds, known as “calcilytics,” from NPS and took one of them through Phase 2 development for osteoporosis. But the trial results were disappointing. NPS saw potential of developing calcilytics as treatments for rare diseases, but needed to revise the agreement first.

NPS plans to start by examining the two calcilytics it took back in a rare disorder caused by a genetic mutation. Patients who have the mutation suffer a shortage of parathyroid hormone, which causes calcium levels in their blood to drop. That results in kidney disease, neurological problems, bone weakness, and other problems. “The only option is to give these patients calcium and Vitamin D, but that damages their kidneys even more,” Nader says. “So the standard treatment is no treatment. It’s very sad.” Nader estimates only 4,000 people have the condition—making it an “ultra-orphan disease—but with a lack of alternatives on the market, it represents a good opportunity, he says. Calcilytics work by blocking the faulty cellular receptors.

NPS pulled off three secondary offerings in the last 18 months, raising a total of $204 million. The company finished the quarter with $202 million in cash—enough to carry it through the launch of teduglutide, Nader says. Leerink Swann’s Schimmer estimates that if all goes well, NPS will turn a profit in 2013 and will be bringing in more than $500 million in sales by 2018.

Nader was one of the first pharmaceutical CEOs to embrace a virtual business model—an approach that becomes more challenging as NPS gets closer to becoming a commercial organization, he says. NPS has grown its ranks from 65 to 80 since the beginning of the year and, says Nader, “We have to hire more on the commercial side in the months ahead.” But every request for additional headcount is heavily scrutinized. “The question I ask myself and my team every time we want to recruit someone is ‘Is this person core to our business model?’” Nader says. “If not, why are we doing it? What we need in-house is our core expertise. The rest can be contracted out.”

With plenty of financial runway, NPS is starting to look for other rare diseases where teduglutide might be useful. NPS has convened an advisory panel and is in the process of evaluating their recommendations, Nader says. In the meantime, the company plans to request fast-track approval for teduglutide, which would guarantee an answer from the FDA within six months of the filing.

NPS’s progress is especially gratifying for Nader, who still talks about that day four years ago when he literally scribbled a game plan for NPS’s reinvention on a piece of paper. “I truly believe in the virtual model,” he says. “We had to go through improvements, tweaks, changes. But now it is a very exciting time for us.”

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