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New drug offers hope to kidney patients

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Major news this past week for Utah's leading drug discovery firm, NPS Pharmaceuticals (Nasdaq: NPSP).

NPS announced last Monday that one of its licensing partners, Amgen of Thousand Oaks, Calif., had submitted a new drug application (NDA) to the U.S. Food and Drug Administration seeking approval to market cinacalcet HCl as a therapy for the treatment of secondary hyperparathyroidism in chronic kidney disease patients.

Cinacalcet HCl was discovered by NPS as a possible drug lead in the early 1990s and is the first NPS compound to be the subject of an NDA.

According to a company news release, NPS will receive a milestone payment of $6 million from Amgen (Nasdaq: AMGN) as a result of its regulatory filing.

Amgen licensed cinacalcet HCl from NPS in 1996, and under its agreement with NPS, Amgen has the right to sell the compound on a worldwide basis except in Japan, Korea, Taiwan, and China, where rights to the molecule have been licensed to the pharmaceutical division of Kirin Brewery.

In addition to the milestone payment, Amgen will also pay NPS royalties on sales of cinacalcet HCl if the drug is cleared by the FDA for use in the United States.

Wall Street responded quite favorably to the news, particularly since few in the marketplace expected Amgen to file a cinacalcet HCl NDA before the end of 2003.

As it was, NPSP jumped dramatically during Tuesday's trading, with NPS shares up at one point during the day more than $4 per share.

For the week, NPSP finished up $3.47 per share, closing at $31.92 on Friday.

The end result of the announcement is that NPS's market capitalization is now back above $1 billion again, hitting nearly $1.2 billion on Friday, all of which makes it easier for NPS to raise more money and/or do deals with other companies.

The SCO Group (Nasdaq: SCOX) also did something that caught my eye last week — it distributed an "open letter" from its chief executive officer, Darl McBride, to the open source community via a commercial wire service.

Typically, in marketing and public relations efforts, companies tend to stick to writing and distributing news releases and media alerts via the BusinessWires and PR Newswires of the world.

Occasionally, however, particularly in legal matters, companies will disseminate letters and statements as a way of attempting to sway public, opponent and judicial opinion.

The more than 1,800-word letter was written quite well as far as "news release" letters are concerned, as I thought SCO did a good job articulating its beliefs regarding the weaknesses of certain practices within the open source community.

SCO also worked hard to delineate its arguments on copyright, derivative works and intellectual property laws.

What I found most intriguing about the letter is the question of whom SCO was trying to reach and convince with this letter?

If it was members of the open source community, I suspect that SCO reached them, but I'm pretty confident that nary an Open Source adherent had a change of heart based upon the letter alone.

It's like the old Benjamin Franklin adage — "A man convinced against his will is of the same opinion still." In other words, I don't think this letter convinced any open source developers, users or proponents to change their ways.

Then again, if SCO was trying to communicate with investors, the company probably succeeded as SCOX stock jumped more than $2 per share on Monday and basically held that gain throughout the week, finishing at $17.75 per share on Friday.

What I'd really like to know, however, are how corporate counsels at large firms currently using Linux versions 2.4 or 2.5 felt about the letter? Did it give any of them pause?

That's the real question, particularly since SCO is still interested in getting other firms (both Linux users and developers) to jump on the SCO licensing bandwagon.

Finally, based upon a few lines in the SCO letter, don't be surprised to see SCO fire a legal salvo at Silicon Graphics in the weeks ahead.

(Disclosure: SCO was a short-term client of Politis Communications in the latter part of 2002.)

Last note, in the past several months, two Utah-based firms have seen their respective market caps rise to the point where both are entering what is known as the mid-cap arena — companies valued at $350 million to $400 million on the low end to upwards of $1.5 billion on the high end.

The two companies I'm referring to are Altiris (Nasdaq: ATRS) and Merit Medical (Nasdaq: MMSI).

Altiris closed last week with a $539 million valuation, while Merit finished the week at a market cap of $444 million.

As with NPS above, the higher valuation makes raising money and doing deals (think mergers and acquisitions) that much easier.

David Politis leads Politis Communications, a public relations, investor relations and marketing communications agency serving the high-tech and biotech markets. E-MAIL: dpolitis@politis.com.