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Valeant Pharmaceuticals Intl Inc (VRX), GlaxoSmithKline plc (ADR) (GSK) – CAPScall of the Week: Raptor Pharmaceutical Corp. (RPTP)

For years, satirical late-night TV host Stephen Colbert has been running a series on his show called “Better Know a District,” which highlights one of the 435 U.S. congressional districts and its representative. While I am no Stephen Colbert, I am brutally inquisitive when it comes to the 5,000-plus listed companies on the U.S. stock exchanges.

That’s why I’ve made it a weekly tradition to examine one seldom-followed company within the Motley Fool CAPS database and make a CAPScall of outperform or underperform on that company.

For this week’s round of “Better Know a Stock,” I’m going to take a closer look at Raptor Pharmaceutical Corp. (NASDAQ:RPTP).

What Raptor Pharmaceuticals does
Raptor Pharmaceutical Corp. (NASDAQ:RPTP) is a biopharmaceutical company focused on treating both ultra-orphan and chronic diseases. The company currently has one drug approved by the Food and Drug Administration called Procysbi for the treatment of nephropathic cystinosis, and is testing RP-103 (the scientific name for Procysbi) in mid- and late-stage trials for the treatment of nonalcoholic fatty liver disease and Huntington’s disease, with data due out for both indications in 2014. Its other clinical-stage drug is Convivia, which is licensed out to Uni Pharma and is currently in mid-stage trials for ALDH2 deficiency.

Valeant Pharmaceuticals Intl Inc (NYSE:VRX)In Raptor Pharmaceutical Corp. (NASDAQ:RPTP)’s most recent quarterly results, the company delivered $21,000 in total revenue from Procysbi sales — in all fairness, the drug was only launched 13 days prior to the end of the quarter — compared to no revenue in the year-ago period while losses ballooned from $3 million, or $0.06 per share, to $24 million, or $0.43 per share. Selling and administrative expenses more than doubled, while fair value adjustment to its warrants following its share price spike hurt its bottom-line figures.

Whom it competes against
Here’s the good news: Raptor Pharmaceutical Corp. (NASDAQ:RPTP)’ Procysbi is pretty much in the clear when it comes to competition for a while. Having received orphan drug status, it will not have any competition for at least seven years in the U.S., and looks to be on its way to an approval in Europe after receiving a positive opinion from the European Medicine Agency’s panel.

Raptor Pharmaceutical Corp. (NASDAQ:RPTP)’s remaining pipeline has all-or-nothing potential. Take RP-103 for Huntington’s disease as a perfect example. Right now, treating HD — an inherited and rare neurodegenerative disorder that leads to degeneration in the cerebral cortex and basal ganglia — is done simply on a symptomatic basis. There is no cure, just palliation of the symptoms. This means Valeant Pharmaceuticals Intl Inc (NYSE:VRX) and GlaxoSmithKline plc (ADR) (NYSE:GSK)‘s Xenazine, which is approved to treat chorea (an involuntary muscle movement) associated with HD, is often used to treat the motor aspects of the disease. The need for mood-stabilizing, or antidepressant drugs like Forest Laboratories, Inc. (NYSE:FRX) now generic Lexapro, are also commonly prescribed for HD patients. RP-103, since it has demonstrated the potential for blood-brain barrier transcendence, has an actual shot at alleviating the cause of the disease, and not just focusing on the symptoms.

The call
After carefully reviewing the prospects on Raptor Pharmaceutical Corp. (NASDAQ:RPTP), I’ve decided to make a CAPScall of underperform on the company.

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