Snap Up This Snapback Biotech Play

Late Thursday night, shares of NPS Pharma(NPSP Quote) sank as its partner GlaxoSmithKline(GSK Quote) decided to prematurely stop a midstage study of an osteoporosis drug that was being developed as a joint venture. Glaxo decided to terminate the study of Ronacaleret in postmenopausal women with osteoporosis earlier than expected due to an observed lack of efficacy.

Weak-handed investors clearly over-reacted as they dumped the stock in the after-hours market, to the tune of almost 20%. By all accounts, this is a massive buying opportunity, and here is why:

1. Ronacaleret, one of nine drugs in NPS' pipeline, is not even considered a cash flow item to the company.

2. Glaxo was never really a partner. Rather, in 1993, it bought the rights to a drug that is now obsolete.

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