NPS Pharmaceuticals: A Strong Near-Term Catalyst

| About: NPS Pharmaceuticals, (NPSP)

NPS Pharmaceuticals (NASDAQ:NPSP) is a biopharmaceutical company focused on bringing orphan products to patients with rare disorders and few, if any, therapeutic options. NPS is advancing two late-stage registration programs. A New Drug Application is undergoing FDA review for Gattex (teduglutide) as a treatment for adult short bowel syndrome (NYSE:SBS) and a Phase 3 registration study has been completed for Natpara (recombinant human parathyroid hormone (rhPTH [1-84]) in adult hypoparathyroidism.

NPS' earlier stage pipeline includes two calcilytic compounds, NPSP790 and NPSP795, with potential application in rare disorders involving increased calcium receptor activity, such as autosomal dominant hypocalcemia with hypercalciuria (OTCPK:ADHH). NPS complements its proprietary programs with a royalty-based portfolio of products and product candidates that includes agreements with Amgen (NASDAQ:AMGN), GlaxoSmithKline (NYSE:GSK), Janssen Pharmaceuticals, Kyowa Hakko Kirin, and Nycomed (acquired by Takeda Pharmaceutical Company Limited).

NPS has a near term catalyst, as Gattex (teduglutide) will be discussed at the Gastrointestinal Drugs Advisory Committee (AdCom) meeting scheduled for October 16, 2012 wile the second catalyst is the Prescription Drug User Fee Act (PDUFA) date for completion of review by the FDA is December 30, 2012.

In the other hand, the company with its European partner Takeda received a positive CHMP opinion for Teduglutide (Revestive) for patients with short bowel syndrome and gained a positive opinion from the CHMP, which will lead for an EMA approval.

In the Canaccord Genuity 32nd Annual Growth Conference NPSP CEO said:

"...our partner Nycomed/Takeda secured a positive CHMP opinion back in June and the approval is expected later on this month."

The EMA in most cases relies on the Committee for Medicinal Products for Human Use, or CHMP, and gives the final decision according to the CHMP opinion And in NPS case, it was a positive opinion, so the chances to get the EU approval are very high.

The next real catalyst is the FDA AdCom on 10/16 where the Gastrointestinal Drugs Advisory Committee will review and evaluate available data concerning the safety and effectiveness of marketed and investigational human drug products for use in the treatment of gastrointestinal diseases and make an appropriate recommendation to the Commissioner of Food and Drugs.

As a biotech trader, I'm watching this events and had experienced hundreds of those catalysts, watching the price moving upward in anticipating of the AdCom results, starting with releasing the documents two days ahead of the Adcom date.

Technical Analysis

If we look at the 6 month chart, we can see a huge run from $6.30 until it reached $9.28 as a peak and then start a sell off after the news about the FDA 3 months extension decision, NPS announced that it has received a communication from the FDA extending the PDUFA action date for its New Drug Application (NDA) for Gattex by three months to December 30, 2012.

The price found a support at the $7.05 support line, bouncing up after a double dip, while the indicators start moving upward and exiting the oversold zone.

The price has to break out the downtrend resistance line (pink) around the $7.84 point, but has to face another resistance by the 50MA around the $8.0 area.

I believe that the huge interest around the FDA AdCom will move the price upward. My first target is $8.48, then it will reach the $9 area ahead of the AdCom results.

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Disclosure: I am long NPSP. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.