Bedminster,NJ-based NPS Pharmaceuticals (NASDAQ: NPSP) said today it had amended its licensing agreement with biotech giant Amgen (NASDAQ: AMGN) for sales of cinacalcet HCl (Sensipar), a drug used to treat secondary hyperparathyroidism. NPS originally licensed the drug to Thousand Oaks, CA-based Amgen in 1996 and gets a 10 percent royalty on sales, which totaled $894 million in 2011. Under the terms of the new agreement, NPS will receive a one-time payment of $25 million in exchange for giving up its rights to receive royalties earned after 2018. In addition, the deal extends the repayment period for a royalty advance NPS received from Amgen in August 2011.
All told, NPS expects $75 million of incremental cash to flow from the new agreement through 2013.
That may be enough to soothe fears on Wall Street about NPS’s short-term cash position. The company is in late-stage development of two drugs: teduglutide (Gattex) to treat the rare intestinal disorder short bowel syndrome, and recombinant human parathyroid hormone (Natpara) to treat hypoparathyroidism. Luke Beshar, NPS’s chief financial officer, said in a statement today that the cash from the amended Amgen deal would be enough to fully support the launch of both products, which could be eligible for FDA approval in 2013.
The new Amgen agreement might also allay recent concerns about the future of cinacalcet HCl for NPS. On June 8, shares of NPS fell 14 percent to $7.21 on news that the drug did not perform well in a clinical trial in patients with secondary hyperparathyroidism and chronic kidney disease receiving dialysis. Had the trial turned out positive, Amgen—and by extension NPS—may have enjoyed some incremental sales, but most analysts agreed that the negative results would have little impact on NPS. The company’s stock has since recovered and closed Friday at $8.61.
Today’s news is the latest step in what has been a long history of financial re-invention for NPS. In 2006, the FDA turned down the company’s osteoporosis drug, prompting NPS to lay off most of its 400 employees and transform itself into a virtual company with a focus on rare diseases. Between 2010 and mid-2011, the company pulled off three secondary offerings, raising $204 million. The new deal with Amgen, said Beshar in the statement, represents “a critical step in our transition to a self-sustaining commercial-stage organization.”