NPS Pharmaceuticals, Inc. (NPSP) posted earnings of 7 cents per share in the fourth quarter of 2013 surpassing the Zacks Consensus Estimate by 4 cents. The company had reported a loss of 14 cents per share in the final quarter of 2012. Favorable results in the fourth quarter of 2013 were primarily due to higher revenues. We expect the stock to be favorably impacted due to the profit reported by the company.
Full year 2013 revenues increased 19.1% to $155.6 million, topping the Zacks Consensus Estimate of $146 million. Full year 2013 loss narrowed to 14 cents per share from 22 cents a year ago. The Zacks Consensus Estimate hinted at a loss of 19 cents per share.
The Fourth Quarter in Detail
Revenues in the final quarter of 2013 jumped approximately 101% to $54.5 million. The massive jump was primarily due to increased royalties from Amgen’s (AMGN) Sensipar. Sales of NPS Pharma’s sole marketed product Gattex, which were absent a year ago, also contributed to the surge in revenues. Revenues easily beat the Zacks Consensus Estimate of $45 million.
Royalty revenues climbed 44.6% to $39.2 million in the final quarter of 2013. Bulk of the royalty revenues ($36.4 million) came from Sensipar.
NPS Pharma launched Gattex in the U.S. in Feb 2013, following approval by the U.S. Food and Drug Administration (FDA) in Dec 2012. The drug was cleared for treating adults with short bowel syndrome, dependent on parenteral support. The drug was cleared in the EU in 2012 (European trade name: Revestive).
Gattex sales in the reported quarter were $15.3 million. The company stated that 303 patients were undergoing Gattex therapy and 530 prescriptions were received as of Dec 31, 2013.
Research and development expenses declined 16.6% to $20 million in the fourth quarter of 2013 due to lower clinical development activities. General and administrative expenses jumped to $21.9 million in the fourth quarter of 2013 from $11.2 million a year ago. The massive increase was primarily due to costs pertaining to Gattex’s marketing in the U.S.
Guidance
NPS Pharma maintained the outlook for 2014 which it had announced last month. NPS Pharma still expects sales of Gattex to jump by over 250% in 2014 over the 2013 figure of $31.5 million. Sales of Gattex in 2014 are expected in the range of $110 million–$120 million. Operating expenses (excluding cost of goods sold and share-based compensation expense) in 2014 are projected in the range of $180 million–$200 million, up from 2013 levels. The increase is attributable to NPS Pharma’s efforts to develop its pipeline and sustain growth.
Our Take
We are not surprised by the impressive numbers and the rosy 2014 guidance provided by NPS Pharma as the preliminary results and the 2014 outlook were already announced by the biopharmaceutical company last month.
A key action date for NPS Pharma is coming up in October this year when the FDA will decide on its lead pipeline candidate Natpara (hypoparathyroidism). Natpara approval will augment the company’s top line and reduce its dependence on Gattex.
Another interesting candidate in NPS Pharma’s pipeline is NPSP795 (autosomal dominant hypocalcemia). NPS Pharma intends to make significant efforts to advance the development of the candidate during the course of the year (a phase IIa proof of concept study on the candidate is expected to be initiated in mid 2014). We expect investor focus to remain on updates relating to Gattex as well as NPS Pharma’s pipeline going forward.
NPS Pharma carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the biopharma space include Alexion Pharmaceuticals, Inc. (ALXN) and Emergent BioSolutions, Inc. (EBS) with a Zacks Rank #1 (Strong Buy).
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