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To put revenue in rare form, a focus on uncommon disease

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Francois Nader expects NPS Pharmaceuticals to be a billion-dollar company by the end of the decade as a result of its pursuit of treatments for rare diseases.
Francois Nader expects NPS Pharmaceuticals to be a billion-dollar company by the end of the decade as a result of its pursuit of treatments for rare diseases. - ()

CEO Francois Nader envisions NPS Pharmaceuticals Inc. becoming a billion-dollar revenue company by the end of the decade.

That's an ambitious goal, given that revenue for NPS was just below $106 million in 2012, with most of that coming from royalties from drugs marketed by other companies. But the CEO says such growth is conceivable, believing the Bedminster pharmaceutical company has turned the corner through a potentially lucrative niche that's been boosted by a recent drug approval from the Food and Drug Administration.

NPS is developing products designed to treat rare disease, defined by the federal government as maladies affecting 200,000 people or fewer.

The biopharmaceutical company, which employs 160, won its first FDA approval last December for Gattex, which treats people with short bowel syndrome. The European Union equivalent was approved last summer under the trade name Revestive.

For much of its history, NPS has relied on royalties from drugs commercialized by other companies, such as Sensipar, a drug marketed by Amgen to treat thyroid conditions.

Seeing a void in medications that treat rare disease, NPS has now begun to make and market its own drugs.

“We are at an inflection point,” Nader said. “While royalties will continue to grow, now we have revenue we are starting to generate from our own products.”

Gattex, NPS' lead product, generated $654,000 in sales in its first quarter. Nader believes Gattex can generate $350 million in annual U.S. sales in the next five to seven years if growth plans come to fruit.

Short bowel syndrome is a rare disorder that prevents a person from properly absorbing nutrients. The syndrome normally results from surgical removal from half or more of a person's small intestine to treat intestinal disease present at birth. Gattex helps patients to better absorb nutrients, reducing their reliance on artificial nutrition.

The disorder is “a totally life-changing event, especially when you consider the social implications,” Nader said. “These patients are not only home-ridden, they have to go to restrooms 20 to 25 times a day, or once an hour.”

Since the drug's launch, NPS reports 160 prescriptions of Gattex to date, with 42 patients on therapy since the drug's launch. The company says there are about 3,000 to 5,000 Gattex-eligible patients in the United States. NPS projects 200 to 300 patients on Gattex by year's end.

NPS is also developing Natpara to treat adult hypoparathyroidism, a rare endocrine disorder that causes blood calcium levels to fall. An estimated 80,000 Americans suffer from this illness, the company said; NPS plans to apply for FDA approval for Natpara in the second half of 2013.

But while there are opportunities in the rare disease space, there are challenges, too. Getting regulatory approval is time consuming, because there often is no precedent for approving these drugs, Nader said. Plus, given that these are such small segments of the population, it often takes considerable effort just to locate the patients, he said.

Debbie Hart, president and CEO of BioNJ, a trade group that supports New Jersey's biotech industry, said rare disease is a growing interest among companies because of the scarcity of approved treatments. Of 7,000 rare diseases, there are fewer than 500 approved treatments, Hart said. The number of people suffering from a rare disease is one in 10 when counting all varieties, said Hart, citing data from the National Organization for Rare Disorders.

“There is a need across the spectrum for companies to look at rare diseases,” said Hart, listing Amicus Therapeutics, in Cranbury, and PTC Therapeutics, in South Plainfield, as other New Jersey companies making progress in this field.

Incentives do exist to help companies clear some of those hurdles, Hart said. Companies can obtain tax credits and other benefits through the federal Orphan Drug Act, which was passed in 1983 to encourage research on rare disease.

Right now, profitably eludes NPS, though its deficit narrowed in the first quarter. The company reported a $7.8 million loss, or 9 cents a share, an improvement from a loss of $10.6 million, or 12 cents a share in the year-ago period. Revenue was $25.4 million in the first quarter, up 10.9 percent from $22.9 million in the year-ago quarter.

NPS envisions growth from overseas markets, including Europe, Latin America and Japan, and expects to expand its footprint internationally over the next three to five years, Nader said, speaking like an executive anxious to carve a well-defined territory for his company.

“At the end of the day, our mission is to focus on rare diseases,” Nader said. “The best way to do that is to develop them on our own and market them on our own.”

E-mail to: tomz@njbiz.com
On Twitter: @biztzanki

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