Options Evaluation After FDA Panel Backing For NPS Pharma

NPS Pharmaceuticals, Inc. (NASDAQ: NPSP) may not yet have formal approval for its short bowel syndrome drug called Gattex, but it has at least received a panel back at the Food & Drug Administration. The drug called teduglutide received panel backing under the gastrointestinal drugs advisory committee. If the stock options pricing before today was accurate, NPS could be one of the larger movers on Wednesday after shares are freed up to trade.

What will help give shareholders some confidence here is that the vote in support of the drug was unanimous. The FDA’s formal approval is not bound to follow the panel recommendation process but a unanimous vote is more comforting than a panel backing with dissenting votes.

NPS can now expect a formal decision likely by December 30 of this year as long as no delays arise. The injection aims to help those with short bowel syndrome absorb liquids and nutrients. Studies have shown that patients need less intravenous liquid and nutrient injections each week, and some patients were even able to completely halt such parenteral treatment. The concerns included increased chances of tumors and polyps.

NPS Pharmaceuticals has a pre-panel decision market cap of almost $880 million. At $10.19, the 52-week trading range is $4.35 to $11.22. Options have an elevated open interest and a binary option trade was pricing in a move of up to $2.00 in either direction based on the $10 puts and calls.

JON C. OGG