NPS Pharmaceuticals, Inc. (NASDAQ:NPSP) rises on Gattex approval expectations

Expectations that the U.S. Food and Drug Administration's advisory panel would recommend approval for the bowel drug, Gattex, from NPS Pharmaceuticals, Inc.(NASDAQ:NPSP) sent the rug firm's shares soaring on Friday.

 NPS Pharmaceuticals shares rose $1.73, or 19 percent, to $10.86 on Friday. During the day, the shares peaked at $11.22, their highest price since early 2006.

The advisory panel that oversees gastrointestinal drugs will be meeting and discussing the merits of the drug on Tuesday while the questions and comments based on the discussions will be posted to the website of the FDA on Friday.

The committee will then make a recommendation as to whether to approve the drug for marketing and the FDA will issue a decision, which is expected to take place by Dec. 30.

While it is not mandatory that the FDA has to follow the recommendations of its panels, it generally takes their advice and a positive recommendation from an advisory panel is an indication that a drug will make its way into the market.

Gattex is used on the treatment of people who suffer from something known as short bowel syndrome. It is a rare disease and potentially life-threatening as people who develop this condition are unable to absorb nutrients from the food they eat.

It leads to other complications such as malnutrition, diarrhoea and dehydration.

The drug has already been approved for use in the European Union in early September.

Analysts who have seen the FDA panel's documents said that it contained a very positive assessment of the drug and some analysts have rates the NPS stock at Outperform.