Monday’s Top Biotech Stories: Ariad, Omeros, NPS Pharmaceuticals, and Shire

Ariad, Omeros, NPS Pharmaceuticals, and Shire could all loom large in health care headlines this Monday morning.

Jun 2, 2014 at 9:04AM


Let's take a look at four stocks -- Ariad Pharmaceuticals (NASDAQ:ARIA), Omeros (NASDAQ:OMER), NPS Pharmaceuticals (NASDAQ:NPSP), and Shire (NASDAQ:SHPG) -- which could all make waves across the health care sector this Monday morning.

Ariad reports positive GIST trial results for Iclusig, FDA lifts partial clinical hold
Ariad just announced positive results from a phase 2 trial testing Iclusig (ponatinib) on patients with refractory metastatic and/or unresectable gastrointestinal stromal tumors (GIST) with KIT exon 11 mutations. Out of the 34 patients in the trial, 50% of patients showed a clinical benefit at 16 weeks. 46% of patients in the trial had failed three previous GIST-approved treatments -- the patient population as a whole was heavily pre-treated.

Ariad also announced that the FDA had lifted its partial clinical hold on patient enrollment for the GIST trial. Shares of Ariad rose more than 14% in pre-market trading after the announcement.

Problems with Iclusig, which is approved as a leukemia treatment, started last October when the FDA started investigating safety concerns about the drug. The probe resulted in the discontinuation of Ariad's phase 3 trial for the drug as a potential treatment for newly diagnosed chronic myeloid leukemia (CML), and the suspension of marketing and sales of the drug in the U.S.

Iclusig was allowed back on the market in late December with a new warning label, but previous peak sales expectations, which once topped $1.4 billion (Kantor), were reduced to a more conservative range between $100 million (RBC Capital Markets) and $500 million (Jefferies). Ariad reported $45.2 million in Iclusig sales in fiscal 2013.

The FDA approves Omeros' Omidria
Meanwhile, the FDA just approved Omeros' Omidria, a treatment for cataract and lens replacement surgeries.

Omeros plans to launch the drug in the U.S. later this year as it continues pursuing a market approval in Europe. Omidria will be the company's first marketed drug. Analysts at Wedbush believe that Omidria, formerly known as OMS302, could hit peak worldwide sales of $600 million -- which would be a big boost considering that Omeros only reported $1.6 million in revenues last year.

Another drug in Omeros' pipeline, OMS103HP, is also worth keeping an eye on. OMS103HP is being tested in phase 3 trials as a potential treatment for arthroscopy and menisectomy procedures. Wedbush believes that OMS103HP has peak sales potential of $250 million if approved.

Shares of Omeros have climbed more than 120% over the past 12 months, and are currently up 6% in pre-market trading this morning.

NPS Pharmaceuticals soars in anticipation for a bid from Shire
Last but not least, shares of NPS Pharmaceuticals are up more than 18% in pre-market trading in anticipation of a bid from Shire.

Shire recently lined up a $5 billion credit facility from several banks led by Citigroup to finance its takeover offer for NPS. The Times reported that NPS board member Colin Broom -- also the chief scientific officer of ViroPharma, which Shire acquired last year -- would play a key role in the upcoming takeover talks.

NPS has a single approved product in the U.S. and Europe -- Gattex/Revestive, a treatment for adult PN-dependent short bowel syndrome. NPS reported $31.8 million in Gattex sales in fiscal 2013, and anticipates sales to reach $100 million to $110 million in 2014. NPS CEO Francois Nader expects sales of Gattex to eventually exceed $350 million.

Gattex would be a good fit for Shire, which already has two gastrointestinal disorder treatments -- Lialda/Mezavant and Pentasa -- in its portfolio. Both drugs are treatments for ulcerative colitis, a form of inflammatory bowel disease. In 2013, sales of Lialda rose 32% year-over-year to $529 million, while sales of Pentasa climbed 6% to $281 million. Together, the two drugs accounted for 17% of Shire's top line.

Shire is best known for its attention deficit hyperactive disorder (ADHD) treatments -- Vyvanse, Adderall XR, and Intuniv. Sales of those three drugs accounted for 41% of Shire's 2013 sales.

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4 in 5 Americans Are Ignoring Buffett's Warning

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Jun 12, 2015 at 5:01PM

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.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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