Why NPS Pharmaceuticals Shares Popped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of NPS Pharmaceuticals (Nasdaq: NPSP  ) , a clinical-stage biotechnology firm focused on therapeutic products for endocrine and gastrointestinal disorders, rallied as much as 12% this morning after receiving favorable news from a review panel in Europe on Revestive (aka teduglutide).

So what: Earlier today, NPS and partner Takeda Pharmaceuticals announced that the Committee for Medicinal Products for Human Use of the European Medicines Agency (basically the equivalent to an FDA panel review in the United States) recommended granting approval for Revestive for the treatment of short bowel syndrome. With the primary treatment for this rare disease currently just nutritional support and vitamins and supplements, NPS and Takeda could easily garner all the market share with no true competing drugs.

Now what: Today we see both the boon and bane of rare-disease medicine. A lack of competition gives a company like NPS Pharmaceuticals a clear path to success in short bowel syndrome, but a lack of a large pool of patients caps the potential of the drug. The good news here is that analysts expect NPS to turn the corner to profitability in 2013, so it's quite possible this run higher could continue into next year.

Craving more input? Start by adding NPS Pharmaceuticals to your free and personalized watchlist so you can keep up on the latest news with the company.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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