NPS Pharmaceuticals (NASDAQ:NPSP) is getting a nice boost after the FDA published its briefing documents ahead of Tuesday's Gastrointestinal Advisory Committee meeting on Gattex. For Advisory Committee meetings, the FDA brings in a panel of industry experts to discuss safety and efficacy concerns and vote on whether they would recommend approval. These votes aren't binding, and the FDA has gone against recommendations in the past, but those cases are rare. The briefing documents lay out a series of questions for discussion, and can provide great insight into what the FDA is thinking.
For NPS there are nine questions that the panel is asked to answer, which can be categorized into questions about efficacy, safety, and NPS's Risk Evaluation and Mediation Plan (REMS).
Here the FDA asked two questions. First, are the efficacy results clinically meaningful? While posed to the panel, the FDA essentially answers its own question by pointing out that the drug has already been determined to be clinically meaningful by the European Medicines Agency.
More interesting is the FDA question, "Is there a group of patients who might benefit from treatment for longer than 24 weeks, since some patients were weaned off PN/I.V. during the extension study after more than 24 weeks of therapy? How long should teduglutide be administered?" This has the potential to be a small positive for NPS. If the committee recommends, the FDA may not require labeling that limits the length of treatment, increasing sales for the drug.
What the FDA says about safety is the main concern to investors, especially after three cancer cases during a previous trial tanked the stock in October of last year. See my article originally debunking the concerns. In the briefing documents, the FDA lists the details of each cancer case, points out the history of Hodgkin's Disease in one patient, and the history of smoking in the other two, and states, "A relationship between malignancy and teduglutide cannot be determined based on these cases, all of whom were at high risk for cancer. It is impossible to know whether the drug had a role in increasing tumor growth in these patients." Since the drug is specifically contraindicated for patients who have undergone cancer treatment in the last five years, it appears that the FDA is going along with NPS, and not making carcinogenicity a concern.
The FDA also raises concerns about the development of intestinal polyps, of which two cases were discovered in Gattex patients and one in the placebo group. Four additional cases have appeared in the extension study. However, again the FDA plays down the concern, stating, "although biologically plausible a definitive statement regarding the relationship of polyps and treatment with teduglutide cannot be made based on these data."
A number of other safety concerns, including intestinal obstruction, Acute Cholecystitis (gall bladder inflammation), and pancreatitis are discussed, but most of these concerns are relatively minor and unlikely to prevent approval of the drug. The briefing documents note that these problems are relatively common in patients with short bowel syndrome and that the target prescribers, "will most likely be subspecialty physicians, specifically, gastroenterologists and colorectal surgeons who have expertise in the complex management of adult patients with SBS post-surgical resection."
The Risk Evaluation and Mediation Plan, often required by the FDA, may add some cost for NPS, but is unlikely to provide any stumbling blocks for approval or implementation. The plan was originally proposed by NPS, and the FDA seems to agree with most of its suggestions. The only modification suggested is that NPS strengthen the prescriber communication plan to "emphasize the three key serious risks with GATTEX, summarize the key non-clinical study findings…and underscore the recommended pre-treatment screening colonoscopy and vigilant laboratory monitoring." The panel will be asked to comment on the communication plan but major additions are unlikely.
Based on the briefing documents, it appears that the FDA has already answered its own questions and much made up its mind on approving Gattex. Going into Tuesday's panel, I would not be surprised to see a unanimous positive vote, with the FDA approving the drug before Thanksgiving, more than a month ahead of the December 30th PDUFA date. The stock has had a big run over the past few months, and approval is close to baked in, but I believe there is still room to the upside both on Gattex approval, and the upcoming Natpara submission in mid-2013.
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.