Takeda’s NPS move does not alter US attraction or risk

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Under normal circumstances a pharma company handing rights to a partnered drug back to its biotech licensor would spell disaster for the junior party. But these are not normal circumstances: this is the biotech bull market.

Even so, this might be a slightly unfair appraisal of yesterday’s 9% rise in NPS Pharmaceuticals stock after Takeda’s decision to pull out of a deal on Revestive and Preotact. There is much to suggest that these products were never a logical focus for Takeda. Moreover, the most important market for NPS is the US, and Takeda’s decision has no effect on the prospects – or risks – there.

The move concerns non-US rights to the short bowel syndrome drug teduglutide, approved last year as Gattex in the US and Revestive in the EU, and to recombinant human parathyroid hormone 1-84. The latter had been marketed in the EU as Preotact for osteoporosis until being withdrawn last summer over manufacturing problems, and has completed phase III studies for hypoparathyroidism under the name Natpara.

The original ex-US licensee was not even Takeda but Nycomed, which the Japanese company acquired in 2011. Takeda’s R&D productivity problems notwithstanding, it made little sense for the company, whose focus is primary care and whose growth prospects lie in the US, to retain an EU interest in what are now two rare disease projects.

As such, and given that teduglutide’s development risk had already been eliminated, Takeda’s decision differs from that of a big pharma partner bailing out after a poor clinical study readout. Indeed, the Japanese major retains a share in both products’ success via the $50m of NPS equity it has been given under the breakup.

Takeda also stands to receive a $30 million milestone should combined global net sales of both drugs exceed $750m in one year, although this seems unlikely. EvaluatePharma consensus estimates see 2018 sales of teduglutide and Natpara of $395m and $142m respectively.

US concerns

None of this changes the lingering risk to Gattex’s prospects in the US, where NPS is in the early stages of launch. Already, the drug’s price – $295,000 per patient per year, or three times more than analysts had expected – has prompted concerns over sustainability with insurers.

NPS says 72 US prescriptions for Gattex have been written so far, and it expects 200 to 300 patients to be on the drug by the end of the year. But patients are expected to initiate very slowly given the complex risk-mitigation programme; Gattex had earlier been derailed by a phase III cancer scare.

The actual sales generation and profitability of the drug will only become apparent after two quarters of launch, NPS says, while in the EU it seems that Takeda’s activity since approval last August has been non-existent. NPS admits that it is “not aware of any formal approach yet in terms of initiating the pricing and the reimbursement process” in Europe. The New Jersey group is hoping to achieve a small European revenue stream through a named-patients programme.

The osteoporosis indication for Preotact/Natpara remains another unknown, and NPS targets a US filing for hypoparathyroidism this year.

But the US firm’s retention of the economic interest in both projects, whose rare disease focus is well suited for a small, targeted sales force, remains a key positive. What is more, a tiny player like NPS might encounter less resistance to Gattex’s extremely high price.

NPS’s share price rise owes much to the firm’s ability to spin these positive aspects of the Takeda pull-out. And for this the company can thank the biotech bull market.

To contact the writer of this story email Jacob Plieth in London at jacobp@epvantage.com or follow @JacobEPVantage on Twitter

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