NPS Rallies as Good News Flows for Two Rare-Disease Drugs

6/25/12Follow @arleneweintraub

Shares of Bedminster, NJ-based NPS Pharmaceuticals (NASDAQ: NPSP)  jumped 14 percent to $8.21 on Friday after a panel of drug experts in Europe recommended that the regulatory agency there approve teduglutide (Gattex), the company’s experimental drug to treat a rare intestinal disorder called short bowel syndrome. The stock is moving again today, following the company’s weekend presentation of positive late-stage trial results for its second pipeline product, a form of recombinant human parathyroid hormone that will be given the brand name Natpara if it’s approved.

Wall Street’s excitement is understandable given the rarity of this scenario in biotech—namely a company facing the potential to transition from a pure research outfit to a full commercial organization with not just one product, but two. If all continues to go well, both drugs could win FDA approval in 2013. The consensus among the nine analysts following NPS is that it will turn a profit by the end of 2013.

But the journey has been anything but smooth. Last November, NPS’s shares fell 33 percent in a day after three patients in a pivotal trial of teduglutide developed cancer. The company managed to calm concerns about side effects, and the stock—which had been languishing around $5 a share—climbed past $8. Then, on June 8, the company’s stock plunged 14 percent to $7.10 on news that the thyroid drug cinacalcet (Sensipar), which NPS licenses to Amgen (NASDAQ: AMGN), performed poorly in a clinical trial, creating a perception that NPS’s royalty income might suffer.

Now the focus has shifted back to NPS’s lead drugs, which it has been toiling to develop ever since 2006, when the FDA rejected it’s osteoporosis drug and CEO Francois Nader reinvented the company as a rare-disease play. Leerink Swann analyst Joseph Schwartz predicts that teduglutide will eventually bring in $450 million a year in sales worldwide. In the U.S., where there are about 40,000 patients with short bowel syndrome, the drug has been granted orphan status, guaranteeing NPS market exclusivity.

NPS is testing its recombinant parathyroid hormone in hypoparathyroidism, which affects more than 80,000 patients in the U.S. The new data, which the company presented over the weekend at 2012 annual meeting of the Endocrine Society, showed that patients in the trial were able to cut down on their intake of calcium and vitamin D supplements—which are not very effective at controlling the disease and can cause dangerous side effects. Schwartz estimates NPS’s drug could bring in $458 million in annual sales by 2018.

NPS executives are planning a webcast to discuss the new data after the market closes this afternoon. But it seems investors are already predicting the news bodes well for NPS’s ongoing transition: The company’s shares are up 3 percent in pre-market trading to $8.44.

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