NPS Pharmaceuticals price target raised at Oppenheimer
"Over the next three years our surveyed physicians plan to increase their Gattex prescriptions significantly," Oppenheimer's Boris Peaker says, reiterating an Outperform rating on shares of NPS Pharmaceuticals (NPSP +2%).
Peaker is confident enough in the survey to use it as a basis for a new price target of $28, up markedly from the previous target of $19.
SA contributor Cory Renauer also likes the prospects for Gattex, calling it a potential "billion plus blockbuster."
OPY - KEY POINTS
■ Our survey suggests that Gattex has substantial room for growth based on
increasing physician comfort level as well as lack of alternative treatments.
Although some investors may have viewed a 1-2 day reduction in IV nutrition as
marginal, we believe that it is meaningful for these patients.
■ Based on limited patients awareness of Gattex, and the strong support for
treatment by docs, we anticipate Gattex to be highly promotion-sensitive. Although
it may take a year or two to raise this awareness, we believe that the result will be
strong growth in new patient starts over the next several years.
■ Over 2/3 of physicians recommend patients to stay on Gattex for 4-6 months
or longer to confirm efficacy. We believe that this commitment to treatment is
important and will allow patients to see the maximum efficacy of Gattex.
■ Although our survey does not focus on Natpara, based on feedback from our
consultants we anticipate a strong launch for Natpara as well. As such, with two
concurrent successful drug launches, we believe that NPS will have a lot more
positive updates to maintain investor interest over the next several years.
■ Our price target of $28/share is based on an NPV analysis of major assets. We
estimate an NPV of $15/share for Gattex, $8/share for Natpara, $4/share for
Sensipar/Mimpara royalties, and another $1/share for earlier stage pipeline. We've
adjusted our model for the recent 2Q13 financials and our raised Gattex growth
OPY - We conducted a survey of 25 community gastroenterologists to assess their current
view on Gattex and the future growth potential for the drug. Our results show that while
most docs are aware of Gattex, most of their patients are not. Over the next three
years our surveyed physicians plan to increase their Gattex prescriptions significantly,
part of which is likely to be driven by increased patient awareness, positive feedback
from initial patients, and improved reimbursements. Based on the results of this survey
we are raising our price target for NPS from $19/share to $28/share and reiterate our