NPS shares drop on bone-drug data, editorial
Monday September 22, 4:44 pm ET
By Bill Berkrot
(Updates with closing stock price)
NEW YORK, Sept 22 (Reuters) - Shares of NPS Pharmaceuticals Inc. (NasdaqNM:NPSP - News) fell nearly 10 percent on Monday after some negative data from a trial of its experimental osteoporosis treatment was released at a medical meeting and an editorial in a leading journal raised questions about it.
"Their most important product has some issues associated with it," CIBC World Markets analyst Matthew Geller said of NPS's bone-building hormone Preos. He changed his rating of NPS to "sector underperform" from "sector perform."
"There are a lot of hurdles they have to face before it becomes a success," he added, citing finding a marketing partner and NPS's need to differentiate Preos from a similar treatment by Eli Lilly and Co. (NYSE:LLY - News) called Forteo.
Adams Harkness & Hill analyst Felicia Reed lowered her rating to "reduce" from "market perform."
Interim results presented at a medical meeting on Saturday showed that Preos was not more effective in increasing bone density when used in combination with popular Merck & Co. (NYSE:MRK - News) osteoporosis drug Fosamax as was hoped.
In addition, an editorial in the latest edition of The New England Journal of Medicine suggested that patients who take Fosamax might need to be off that drug for at least a year before going on Preos.
"What this really adds is a lot of uncertainty among clinicians about where (Preos) is going to fit in," Reed said.
Even if you stop Fosamax to use Preos, Fosamax, because of how long it lasts in the system, could still have a negative impact on the effectiveness of Preos or Forteo, Reed said.
Despite the criticism, Reed projects Preos worldwide sales of $425 million by 2007.
Other analysts remained positive on NPS's prospects.
Mark Schoenebaum, an analyst for U.S. Bancorp Piper Jaffray, chalked up Monday's stock sell-off to confusion over the data released at the medical meeting and published in The Journal.
"We continue to believe that NPS is going to be one of the best performing mid-cap biotech names over the next six to 12 months," Schoenebaum said.
Lehman Brothers analyst Jim Birchenough said the data would only present a problem for NPS if most osteoporosis sufferers were taking Fosamax. He said the vast majority of millions of potential patients are not receiving any treatment.
"This drug still has a lot of potential," he said of Preos.
NPS, based in Salt Lake City, expects to unveil results from its pivotal-stage Preos trial next March and to file for U.S. regulatory approval of the drug next year.
Shares of NPS closed down $3.16, or 9.6 percent, at $29.66 on Nasdaq after falling as low as $28.87 earlier in the day.
and for ML's take:
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