NPS Pharmaceuticals Reports Third Quarter 2007 Financial Results, Revises Financial Guidance



    BEDMINSTER, N.J., Nov. 1 /CNW/ -- NPS Pharmaceuticals, Inc. (Nasdaq:  
NPSP) today reported its financial results for the quarter ended September 30,
2007 and provided an update on its 2007 milestones and financial guidance.
    
    Update on 2007 Milestones
    
    With the confirmation of its partnership with Nycomed to develop
GATTEX(TM) (teduglutide) outside North America, NPS has now met or exceeded
all of its key corporate milestones for 2007.  The company announced that it
has:

    
    -- Completed the Phase 3 study of GATTEX in short bowel syndrome and
       announced top-line results in October;
    -- Secured a development and commercialization partner for one of its
       late-stage programs;
    -- Monetized non-core assets to raise cash;
    -- Retired substantially all of its 2008 convertible debt;
    -- Reduced cash burn guidance to $70 to $80 million from previous guidance
       of $80 to $90 million;
    -- Positioned the company to burn between $35 and $45 million in 2008;
    -- Explored the development of PREOS and GATTEX in at least one new
       indication for each program.
    
    Dr. Tony Coles, president and CEO of NPS, stated:  "Our team's diligent
efforts this year have strengthened our balance sheet and increased our
operating flexibility to drive our late-stage products forward.  By monetizing
our non-core assets and addressing our debt, we are in a much stronger
position to maximize the value of GATTEX and PREOS for patients and
shareholders.  As a result of the improvements in our financial profile, we
are revising our 2007 guidance to reflect the transformation our business has
undergone this year."
    
    Business Highlights and Revised 2007 Financial Guidance
    
    NPS reported net income of $14.1 million for the third quarter of 2007
and ended the quarter with $302.2 million in cash and marketable securities.
During the third quarter the following financial transactions were executed:

    
    -- NPS granted Nycomed the rights to develop and market GATTEX outside
       North America, which generated an up-front payment of $10 million;
    -- NPS sold $11 million of Preotact(R) bulk drug supply to Nycomed;
    -- The Preotact royalty entitlement was sold to Drug Royalty LP 3 for an
       up-front payment of $50 million;
    -- $50 million of convertible notes were issued to Visium Asset
       Management;
    -- $100 million in Sensipar(R) royalty-backed notes were issued;
    -- $20.2 million of 3% Convertible Notes were repurchased for $19.5
       million.
    
    Subsequent to the close of the third quarter the following transactions
were completed:

    
    -- NPS sold its interests in the mGluR research and development program
       to partner AstraZeneca for $30 million;
    -- $171.2 million of its outstanding 3% Convertible Notes were repurchased
       through a cash tender offer for $169.1 million;
    -- Nycomed elected to proceed with the GATTEX licensing agreement,
       triggering a $25 million additional upfront payment to NPS.
    
    Excluding the net proceeds generated by new business development
activities and financing transactions executed in 2007, NPS now expects to
have a 2007 cash burn between $70 and $80 million, a change from its earlier
guidance of $80 to $90 million.  As a result of the reduced cash burn, recent
transactions and gains on facilities sales, NPS is revising its previous year
end cash balance guidance of $65 to $75 million to a new range of between $130
and $140 million.
    NPS projects that its 2008 cash burn will be $35 to 45 million, as
indicated in previous guidance.  With the reduced cash burn and revised cash
balance, NPS should have sufficient cash to fund operations for the next two
to three years.


    
    Pipeline Update
    GATTEX
    
    Nycomed has confirmed to NPS its commitment to license GATTEX for
development and commercialization outside of North America.  Under the terms
of the agreement announced in September 2007, Nycomed will now pay NPS the $25
million balance of the $35 million up-front payment due NPS for the rights to
develop and market GATTEX outside North America.  In October 2007, NPS
announced top-line results of the Phase 3 study of GATTEX in patients with
short bowel syndrome (SBS).  The company has requested a meeting to discuss
the next steps in the drug's regulatory approval process with the FDA this
year.  NPS believes GATTEX could generate U.S. sales of between $150 and $250
million in this indication.
    NPS is also running pre-clinical studies of GATTEX in support of a
pediatric IND in necrotizing enterocolitis.  NEC affects 12,000 neonates
annually in the U.S. and mortality approaches 50% in infants weighing less
than fifteen-hundred grams.  Additional preclinical studies in
chemotherapy-induced gastrointestinal mucositis will be initiated very soon.
Chemotherapy-induced GI mucositis affects over 500,000 cancer patients in the
U.S. annually.
    
    Cinacalcet
    
    NPS recently announced that Kirin Pharma has received approval to market
cinacalcet HCl in Japan.  This regulatory event triggered a $2 million
milestone payment to NPS.
    
    PREOS
    
    In September 2007, the FDA granted orphan drug status for PREOS as a
treatment for hypoparathyroidism. The company is currently supporting a
two-year study with PREOS in patients with hypoparathyroidism.  The study was
initiated by Dr. John Bilezikian at Columbia University and is now 96%
enrolled.
    The company believes that as a result of recent fundraising activities,
sales of non-core assets and the GATTEX partnership with Nycomed, it now has
the financial resources to fund the continued U.S. development of PREOS in a
variety of indications, including hypoparathyroidism and osteoporosis.  NPS is
committed to advancing the development of PREOS in hypoparathyroidism where
worldwide annual sales could exceed $200 million.  NPS is currently reviewing
its development and commercialization options for PREOS in osteoporosis and
expects to make a decision regarding this indication in the first quarter of
2008.
    
    Third Quarter 2007 Financial Results
    
    NPS reported net income for the third quarter of 2007 of $14.1 million,
or $0.28 per diluted share, versus a net loss in the third quarter of 2006 of
$21.1 million, or $0.45 per diluted share.  The third quarter profit in 2007,
versus a loss in the same period of 2006, reflects aggressive expense
reduction measures, increased revenues from royalties and product sales, and
gains from the sale of fixed assets related to site closures in Salt Lake City
and Toronto.
    Revenues for the third quarter of 2007 grew 190% to $29.2 million from
revenues of $10.1 million in the third quarter of 2006.  Increased revenues
are primarily the result of higher royalty revenue earned from Amgen on sales
of cinacalcet HCl and increased product sales, royalty and milestone revenue
earned from Nycomed on sales of Preotact(R).
    Research and development expenses for the third quarter of 2007 declined
61% to $5.4 million compared to $13.7 million for the same period of 2006.
These changes are primarily due to decreased clinical development activity for
PREOS, reductions in personnel, and associated cash and stock compensation,
and lower pre-approval manufacturing expenses associated with PREOS, offset by
higher pre-approval manufacturing expenses associated with GATTEX.
    Selling, general and administrative expenses for the third quarter 2007
declined 23% to $5.7 million compared to $7.5 million for the same period in
2006.  These decreases are primarily due to reductions in personnel and
associated cash and stock compensation.
    Restructuring charges for the third quarter of 2007 were $1.0 million
compared to $2.2 million for the same period in the prior year. Restructuring
charges in 2007 relate primarily to initiatives to restructure operations
announced in March 2007 while restructuring charges in 2006 related to
initiatives to restructure operations announced in June 2006.
    In the third quarter of 2007, NPS sold its rights to the PREOTACT royalty
to Drug Royalty Corporation for $50 million up-front with an additional $25
million to be paid upon the achievement of certain revenue milestones.
Although the sale is non recourse, under U.S. generally accepted accounting
pronouncements this transaction will be treated as debt.  NPS also issued $100
million of non recourse Sensipar backed B bonds, and issued $50 million of new
5.75% convertible debt due 2014.  In the third quarter, NPS repurchased $20.2
million of 3% Convertible Notes due 2008 for $19.5 million.
    As of September 30, 2007, the company had 46.4 million shares outstanding
and $302.2 million in cash, cash equivalents and marketable investment
securities as compared to $146.2 million at December 31, 2006.



    
                  NPS PHARMACEUTICALS, INC. AND SUBSIDIARIES
               Condensed Consolidated Statements of Operations
                    (In thousands, except per share data)
                                 (Unaudited)
    

    
                              Three Months Ended      Nine Months Ended
                                September 30,            September 30,
                             2007         2006         2007        2006
    Revenues               $29,161      $10,071      $52,267      $24,436
    Operating expenses
      Cost of goods sold       823          536        2,875          902
      Cost of royalties      1,228          796        3,363        1,954
      Research and
       development           5,400       13,692       28,121       55,076
      Selling, general
       and administrative    5,744        7,482       17,667       42,405
      Restructuring
       charges               1,013        2,228       12,252        8,240
      Gain on sale of
       fixed assets         (6,459)           -       (6,459)           -
      Gain on sale of
       assets held for sale      -            -       (1,826)           -
         Total operating
          expenses           7,749       24,734       55,993      108,577
         Operating income
          (loss)            21,412      (14,663)      (3,726)     (84,141)
    

    
    Other expense, net      (7,323)      (6,416)     (18,136)     (14,542)
         Income (loss)
          before income
          tax expense      $14,089     $(21,079)    $(21,862)    $(98,683)
    

    Income tax expense           -            -            -            -

    
         Net income
          (loss)           $14,089     $(21,079)    $(21,862)    $(98,683)
    

    
    Net income (loss) per
     common and potential
     common share:
      Basic                  $0.30       $(0.45)      $(0.47)      $(2.13)
      Diluted                $0.28       $(0.45)      $(0.47)      $(2.13)
    

    
    Weighted average common
     and potential common
     shares outstanding:
      Basic                 46,841       46,435       46,729       46,329
      Diluted               52,396       46,435       46,729       46,329
    



    
                  NPS PHARMACEUTICALS, INC. AND SUBSIDIARIES
                    Condensed Consolidated Balance Sheets
                                (In thousands)
                                 (Unaudited)
    

    
                                                  September 30,   December 31,
                                                      2007           2006
    

    
    Cash, cash equivalents and marketable
     investment securities                          $302,229       $146,152
    

    
    Current restricted cash and cash equivalents      16,246         21,921
    Account receivable                                16,927         15,534
    Other current assets                               4,037          6,082
    Plant and equipment, net of accumulated
     depreciation and amortization                       337         19,849
    Debt issuance costs                                8,248          5,569
    Other assets, net of accumulated amortization     13,465          9,633
      Total assets                                  $361,489       $224,740
    

    
    Liabilities and Stockholders' Equity (Deficit)
    Current liabilities                              $28,927        $25,423
    Current notes payable                            191,265         19,044
    Long-term notes payable and other liabilities    350,995        373,517
         Total liabilities                           571,187        417,984
    


    
    Paid-in capital and common stock                 681,536        677,520
    Accumulated other comprehensive loss                (500)        (1,892)
    Accumulated deficit                             (890,734)      (868,872)
      Net stockholders' deficit                     (209,698)      (193,244)
      Total liabilities and stockholders' deficit   $361,489       $224,740
    About NPS Pharmaceuticals
    
    NPS develops small molecules and recombinant proteins as drugs, primarily
for the treatment of metabolic, bone and mineral, and central nervous system
disorders.  The company has drug candidates in various stages of clinical
development.  Additional information is available on the company's website,
http://www.npsp.com.
    
    Conference Call Information
    
    A conference call will be held today at 5:00 p.m. ET.  To participate in
the call, dial (866) 770-7051 with passcode 53288322.  International callers
may dial (617) 213-8064 using the same passcode.  In addition, live audio of
the conference call will be simultaneously broadcast over the Internet and may
be accessed on the company's home page, http://www.npsp.com.  A conference
call replay will be available until November 15, 2007 at (888) 286-8010, or
(617) 801-6888 for international callers, with passcode 16038876.   The
webcast will be available for replay and iPod(R) download for the same period
of time.
    
     Cautionary Statement For The Purpose Of The "Safe Harbor" Provisions
           Of The Private Securities Litigation Reform Act of 1995
    
    Note: Statements made in this press release, which are not historical in
nature, constitute forward-looking statements for purposes of the safe harbor
provided by the Private Securities Litigation Reform Act of 1995. Such
statements include those regarding: implementation of our new business plan;
meeting our 2007 and 2008 cash burn and 2007 year-end cash balance targets;
partnering our clinical development programs; submission of regulatory filings
for GATTEX; exploration of PREOS and GATTEX for additional indications; and
our partners' continued advancement of our partnered programs and drug
candidates. These statements are based on management's current expectations
and beliefs and are subject to a number of factors and uncertainties that
could cause actual results to differ materially from those described in the
forward-looking statements. Such risks and uncertainties include: we may not
be successful in implementing or carrying out our new business plan or
reducing our cash burn for future periods; we may not be able to secure a
commercial or financial partner for our clinical development programs; even if
we are able to secure a partner for one or more of our programs, the terms of
the partnership or funding may not be favorable to us; the data from our
clinical trials with GATTEX may not be sufficient to support the filing of an
NDA for GATTEX; our data and exploratory findings may not support advancing
PREOS or GATTEX in other indications; we may never develop additional products
that generate revenues; the FDA may delay approval or may not approve any of
our product candidates; our current collaborators or partners may not devote
adequate resources to the development and commercialization of our licensed
drug candidates which would prevent or delay introduction of drug candidates
to the market; and we may not have or be able to secure sufficient capital to
fund our operations and the development and commercialization of our product
candidates.  All information in this press release is as of November 1, 2007,
and we undertake no duty to update this information. A more complete
description of these risks can be found in our filings with the Securities and
Exchange Commission, including our Current Report on Form 10-Q for the
quarter-ended June 30, 2007 and our Annual Report on Form 10-K for the year
ended December 31, 2006.
    Sensipar(R) and Kineret(R) are trademarks owned by Amgen.  Restasis(R) is
a trademark owned by Allergan.




For further information:

For further information: Brandi Simpson of NPS Pharmaceuticals, 
+1-908-450-5616 Web Site: http://www.npsp.com

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NPS PHARMACEUTICALS, INC.

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