NPS Pharmaceuticals Buy Target $ 16

FDA (trade union)

FDA (trade union) (Photo credit: Wikipedia)

NPSP : NASDAQ : US$6.75 Buy , Target US$16.00

 

June 14, 2012

Natpara abstracts out; management takeaways

ENDO (June 23-26; Houston, TX) abstracts were released. New Natpara P3 data in hypoparathyroidism (which met its primary endpoint of

50% reduction in oral calcium and vitamin D use in the drug arm (53.3%) vs. placebo (2.3%) at 24 weeks at p<0.001) are as follows: 1) mean calcium and vitamin D use were separately significantly reduced in the drug arm; 2) independence of vitamin D and high-dose calcium ( 500 mg/day) was significantly higher in the drug arm.

The next catalysts are the Gattex CHMP decision (meeting on June 18-21) for short bowel syndrome and a likely FDA GI Drugs Advisory Panel (Aug 28, for which NPSP is past the deadline to be notified (~55 business days prior), and Oct 15 are on the tentative calendar, suggesting a delay in the Sept 30 PDUFA).

Solid efficacy and safety for Natpara: P3 REPLACE data will be presented by Dr. John Bilezikian of Columbia University in an oral presentation on Saturday, June 23 at 4:15 pm CT (S18-3). Two posters (SUN-325 and SUN- 341) demonstrate in-line or better safety in the Natpara arm and balanced demographics between the two arms.

We are encouraged by this data and look toward a Natpara regulatory submission by YE12. Management color on Gattex: management. They noted that ~57 patients (of the 88 initially enrolled) remain in the STEPS 2 worldwide extension study as of end-May, with the ~20 U.S. patients expected to roll over to STEPS 3 (≥2 years on STEPS 2).

Management expects chronic use of the drug. Most patients in STEPS are opting for days off parenteral nutrition (PN) vs. volume reductions in PN.

 

Management is currently identifying SBS patients through the following :

 1) shortbowelsupport.com website;

 2) collaborating with the Oley foundation; and

 3) MSLs are contacting physicians and quantifying patients.

NPSP intends to work with home infusion companies and/or specialty distributors. In preparation for the FDA panel, NPSP has hosted 3 mock panels where feedback from physician thought leaders have included: how 20-days off PN translates to risks/benefits to patients and the REMS program.

Valuation

Our 12-month price target of $16 is based on 35x our fully taxed, fully diluted FY18 EPS (adjusted for royalty revenue owed by NPSP) of $1.99 discounted back to mid-13 at 30%. In addition, we arrive at our $16 price target based on a DCF Sum-of-the-parts analysis which ascribes $6.47/share to Gattex, $4.71/share to Natpara, $3.28/share to Sensipar and $1.29/share to cash

 

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