NPS Pharma jumps ahead of Gattex FDA review
NEW YORK (AP) — Shares of NPS Pharmaceuticals Inc. surged to their highest price in more than six years Friday as investors hope that a Food and Drug Administration advisory panel will recommend that the FDA approve NPS' bowel drug Gattex.
THE SPARK: The FDA's Gastrointestinal Drugs Advisory Committee will discuss Gattex at a meeting on Tuesday, and the panel's questions were posted to the FDA website on Friday. The committee will make a recommendation on whether to approve the drug to the FDA, which is scheduled to issue a decision by Dec. 30. The FDA is not required to follow the advice of its panels, but if often does so. A positive recommendation makes it more likely that a drug will be sold to consumers.
THE BIG PICTURE: Gattex is designed to treat a rare disease call short bowel syndrome, a potentially life-threatening chronic condition that prevents patients from absorbing nutrients from food. People with short bowel syndrome are prone to malnutrition, diarrhea and dehydration. The European Union regulators approved it in early September.
THE ANALYSIS: The FDA panel's documents contain a "very positive assessment of Gattex," which makes it more likely the drug will be approved, said Leerink Swann analyst Joseph Schwartz said the documents.
The questions were straightforward, said Wedbush Securities analyst David Nierengarten, which is soothing to investors.
The panel was not overly concerned about three cases of cancer that were observed in patients who took Gattex during a late-stage clinical trial, Schwartz added.
Both analysts rate shares of Bedminster, N.J.-based NPS "Outperform." Nierengarten has a price target of $18 per share and Schwartz has a target of $14 per share.
SHARE ACTION: NPS Pharmaceuticals shares rose $1.73, or 19 percent, to $10.86 Friday. During the day the shares peaked at $11.22, their highest price since early 2006.