Earnings and Natpara Expectations Prompt NPSP Rally

With guidance for Natpara’s Biologic License Application (BLA) by mid-2013, and an earnings beat in the third quarter, shares of NPS Pharmaceuticals (NASDAQ:NPSP) climbed 8% on Friday. NPS reported a net loss of $3.3 million or $0.04 per share, vs. a $0.14 average estimate from the Street, with royalty revenues of $27M, just below the Street’s $28M expectations. The company expects to end the year with $92M in cash and investments, and previously reported that it has sufficient funds, with royalty revenue, to launch both Gattex and Natpara. Management believes royalties from Amgen’s (NASDAQ:AMGN) Sensipar sales will contribute at least $75M in 2013.

NPS has two late-stage products slated for launch, if all goes well, over the next two years, and one material royalty stream ongoing, with multiple small royalty streams as well. The company’s lead candidate, Gattex, received a vote of confidence from the Gastrointestinal Drugs Advisory Committee in October, and the FDA will decide on its approval as a treatment for Short Bowel Syndrome by December 30th. Expectations are for peak sales of around $350M due to a minuscule, but untreated patient population. Natpara, a replacement therapy for hypoparathyroidism, also addresses an unmet medical need, and sales may top $250M. Given, these are estimates and hinge entirely on both treatments’ approvals, but factoring in cash and investments and the afore-mentioned royalties, we expect shares to continue trading in the $9-$10.50 range, gaining into the Gattex PDUFA.