February 15, 2011, 4:30 pm
BEDMINSTER, N.J.--(BUSINESS WIRE)-- NPS Pharmaceuticals, Inc. (NASDAQ:NPSP - News), a specialty pharmaceutical company developing innovative therapeutics for rare gastrointestinal and endocrine disorders, today reported its results for 2010 and provided cash burn guidance for 2011.
NPS reported a net loss of $6.4 million or $0.09 per diluted share for the fourth quarter 2010, compared to a net loss of $2.0 million or $0.04 per diluted share for the fourth quarter 2009. For the full year, the company reported a net loss of $31.4 million or $0.54 per diluted share for 2010, versus $17.9 million or $0.37 per diluted share for 2009. The year-over-year changes in the company’s financial results were principally driven by increased research and development expenses of $2.9 million and $25.5 million for the fourth quarter and full year, respectively, due to the advancement of the company’s two Phase 3 registration programs, GATTEX® (teduglutide) in short bowel syndrome (SBS) and NPSP558 in hypoparathyroidism. Cash and investments totaled $133.8 million at December 31, 2010 versus $74.9 million at December 31, 2009.
“In 2010 we achieved our stated objectives and delivered meaningful results across all aspects of our business,” said Francois Nader, MD, president and chief executive officer of NPS Pharmaceuticals. “We recently reported positive top-line data from our Phase 3 STEPS study of GATTEX in short bowel syndrome and expect to submit our U.S. marketing application later this year. We are also pleased with the progress of our NPSP558 pivotal registration study in hypoparathyroidism. We achieved our randomization target ahead of prior guidance and now expect to report top-line results before the end of this year. And we further enhanced our financial position through successful financing activities and delivering full-year cash burn at the low end of our guidance.”
Product pipeline update
GATTEX in short bowel syndrome
In January, NPS reported that its Phase 3 registration study of GATTEX met its primary efficacy endpoint with a statistically significantly higher responder rate for GATTEX versus placebo. A responder was defined as a 20 to 100 percent reduction in parenteral nutrition (PN) volume from baseline at both weeks 20 and 24. Key findings are summarized below.
In an intent-to-treat analysis, 63 percent (27/43) of GATTEX-treated patients responded versus 30 percent (13/43) of placebo-treated patients (p=0.002).
Patients treated with GATTEX achieved statistically significant reductions in weekly PN volume versus placebo beginning at week eight of the study. On average, at week 24, patients who received GATTEX experienced a 4.4 liter reduction in weekly PN volume from a pre-treatment baseline of 12.9 liters; patients who received placebo experienced a 2.3 liter reduction from a pre-treatment baseline of 13.2 liters (p less than or equal to 0.001).
GATTEX was well tolerated. Five of the 86 randomized patients discontinued the study due to adverse events, of which two were GATTEX-treated and three were placebo-treated.
Based on the STEPS results, NPS expects to file for U.S. regulatory approval of GATTEX in the second half of this year as a first-in-class treatment for adult SBS.
Seventy-six of the 78 patients who completed STEPS elected to enroll in STEPS 2, an open-label continuation study in which all participants receive up to an additional 24 months of GATTEX therapy. The company expects to report interim data from STEPS 2 later this year.
NPSP558 in hypoparathyroidism
The company has met its randomization target for the REPLACE Phase 3 registration study of NPSP558 and plans to close patient randomization later this month. This is ahead of prior guidance and puts NPS on track to report top-line data before the end of 2011. This double-blind, placebo-controlled study is designed to evaluate the use of NPSP558, a bioengineered form of human parathyroid hormone 1-84, as hormone replacement therapy in patients with hypoparathyroidism. NPS believes positive results from REPLACE will enable it to file for U.S. marketing approval in 2012 for NPSP558 in hypoparathyroidism.
Financial results
Royalties
Royalty revenue was $23.4 million for the fourth quarter 2010 versus $22.0 million for the fourth quarter 2009. For the full year, royalty revenue was $86.2 million in 2010 as compared to $79.3 million in 2009. NPS earns royalties on (i) Amgen’s sales of Sensipar® (cinacalcet HCl), (ii) Nycomed’s sales of Preotact® (recombinant parathyroid hormone 1-84 [rDNA origin] injection), (iii) Kyowa Hakko Kirin’s sales of REGPARA® (cinacalcet HCl), and (iv) Ortho-McNeil’s sales of Nucynta® (tapentadol).
The components of royalties are summarized as follows:
In millions Fourth Quarter Full Year
2010 2009 2010 2009
Royalty:
Sensipar $18.4 $17.1 $69.9 $64.6
Preotact 2.9 3.5 9.5 10.5
REGPARA 1.7 1.2 5.6 3.7
Nucynta 0.4 0.2 1.2 0.5
Total $23.4 $22.0 $86.2 $79.3
The company’s royalty rights related to Sensipar, Preotact, and REGPARA have been partially monetized and classified as non-recourse debt. After repayment of the obligations, as set forth in the agreements, any remaining cash flows from these royalties will return to NPS.
Research and development
Research and development expenses were $16.1 million for the fourth quarter 2010 versus $13.3 million for the fourth quarter 2009. For the full year, research and development expenses were $60.8 million in 2010 versus $35.3 million in 2009. The increase in research and development expense was due to the advancement of the company’s short bowel syndrome and hypoparathyroidism registration programs.
General and administrative
General and administrative expenses increased to $5.1 million for the fourth quarter 2010 as compared to $4.8 million for the fourth quarter 2009 due to market research activities. For the full year, general and administrative expenses decreased to $19.0 million for 2010 as compared to $20.1 million for 2009. This decrease was related to a decline in outside legal and other administrative costs, which was partially offset by expenses associated with market research.
Interest expense
Fourth quarter interest expense decreased to $9.8 million for 2010 versus $13.0 million for 2009. For the full year, interest expense decreased to $45.1 million for 2010 versus $52.6 million for 2009. Interest expense is largely attributable to non-recourse debt. With the exception of $50 million in 5.75% convertible notes due in 2014, all of the company’s debt is non-recourse and secured by its Sensipar, Preotact, and REGPARA royalties.
Cash and investments
At December 31, 2010, the company’s cash, cash equivalents, and marketable investment securities totaled $134 million compared to $75 million at December 31, 2009. During 2010, the company sold certain of its royalty rights from sales of REGPARA® (cinacalcet HCl) for $38 million. The company also completed two equity financings in 2010 for combined net proceeds of approximately $98 million. The company’s net cash burn was $77 million for 2010. The company’s cash burn is defined as the net change in cash, cash equivalents, and marketable investment securities, excluding proceeds from external financing activities (approximately $136 million).
Cash burn guidance
NPS expects its 2011 cash burn to be in the range of $85 to $100 million.<<
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My concerns about financing voiced a year ago have been dealt with for the time being. They should have enough to make it to a decision point on GATTEX and P3 data for NPSP558. They may have to raise once more. My guess is that they will hope for good results from NPSP558 to goose the share price and do a raise to the launch of GATTEX should it gain approval a few months later. There is an outside chance they could partner something:
npsp.com
but most of these opportunities have lain fallow for a while without takers. I see they are no longer pursuing neurological programs, and are seeking to outlicense all of that stuff. NPSP156 has a competitor in UCB's lacosamide, which has been approved for epilepsy, but is a schedule V drug. I have no idea if NPSP156 can avoid that if it makes it through. Its target is also associated with psychoactive properties. Whatever, they are apparently trying to partner it early, and they won't get much for it.
So I do not expect a partner to help with cash; if so, a pleasant surprise.
Cheers, Tuck |
