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Raptor Pharmaceutical: FDA Delay Is A Near-Term Negative, But Immaterial Overall

 December 26, 2012 09:24 AM

(By Mani) Raptor Pharmaceutical Corp. (NASDAQ: RPTP) said the FDA delayed the Prescription Drug User Fee Act (PDUFA) date by three months from January 30 to April 30 for Procysbi. Although the delay is a near-term negative event, it would not impact the FDA's ultimate decision about Procysbi.

On the news, shares of Raptor fell as much as 11 percent to $5.11 on Monday. They were trading between $4.35 and $7.90 during the past 52-weeks. However, the potential near-term weakness may provide an attractive buying opportunity given the FDA's delay is unlikely to impact the probability of approval or future commercial potential of Procysbi.

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Moreover, Raptor noted that the FDA has not requested any additional studies while continuing to expect a decision from European Medicines Agency on its Marketing Authorization Application (MAA) in the first half of 2013.

"In our view, delays in the FDA review are not uncommon and have no implications on the agency's decision. It could be due to staff turnover/vacations, additional analyses, etc," Oppenheimer analyst Boris Peaker wrote in a note to clients.

However, the key outstanding uncertainty for the stock is pricing. DR Cysteamine will be one of the higher priced drugs on the US market. There is a risk of pricing pressure from insurance companies and/or the government.

[Related -Raptor Pharmaceutical (RPTP): FDA OKs Procysbi For Rare Genetic Disorder]

The drug is estimated to be priced at about $350,000/patient/year based on the pricing of orphan drugs targeting similar population sizes. The pricing will likely remain unresolved until the drug is launched.

On the positive side, the company has sufficient cash to bring the drug into the market. Raptor ended the fourth quarter with total cash of $38.9 million and recently signed a $50 million loan agreement with Healthcare Royalty Partners, which should provide enough capital to launch Procysbi.

"As such, in our view a delay of three months does not significantly alter the commercial value of Procysbi post approval," Peaker noted.

Raptor Pharmaceutical is a development-stage company with a late-stage orphan drug which completed a successful pivotal program, as well as several earlier stage assets. Raptor's leading drug, DR Cysteamine is in development for cystinosis, a condition with an estimated 500 patients in the US.



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