NPS Pharma Enters Cautionary Phase of the FDA Approval Process

NPS’s drug candidate is a hormone replacement therapy developed to treat hypoparathyroidism. The PDUFA date for completion of the Natpara BLA review has now been set for October 24, 2014. As a reminder, Natpara was given an orphan drug status.

An FDA advisory panel of outside advisers voted to recommend approval for Natpara. That is the good news. The bad news is that the panel recommendation vote was only by a margin of eight to five.

Investors have learned to be doubtful of most FDA panel votes because the formal FDA approval often ignores or waters down the panel’s preliminary recommendation. With a vote of eight to five, that is simply close for comfort.

Another consideration now is that there is a chance for a delay in the FDA approval process. This is true for many drug approvals, so it is not unique to NPS Pharma. Another risk with an eight-to-five voting margin is that there could be a laundry list of conditions inside the warning label or in prescribing protocols.

Still, the NPS Pharma bulls will point out that NPS Pharma was given an orphan drug designation. It also has an orphan status in under the European Medicines Agency.

Monday’s early trading is in give-back mode, wiping out most of last week’s gains. Shares were down 12.4% at $28.62 shortly after the open. NPS has a consensus price target of $37.77 and a 52-week trading range of $21.60 to $39.68. With a market cap of $3 billion, even after the drop, there will be many investors paying close attention here to this ongoing development.

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