NPS Pharmaceuticals Raises $200 Million to Retire Debt, Reports Second Quarter Financial Results and Revises Guidance



    PARSIPPANY, N.J., Aug. 7 /CNW/ -- NPS Pharmaceuticals, Inc. (Nasdaq:  
NPSP) today reported financial results for the quarter ended June 30, 2007 and
reviewed recent accomplishments under the company's new business plan.
    "Our second quarter results and recent financing and clinical progress
reflect the successful execution of our strategy to monetize non-core assets
and drive our late-stage clinical programs.  We are pleased to announce that
we have raised nearly $200 million which will be used to retire our 2008
convertible debt and strengthen our balance sheet," said Tony Coles, M.D.,
president and chief executive officer of NPS.  "We remain on track to achieve
several key milestones this year: the announcement of topline results of the
teduglutide Phase 3 study in short bowel syndrome, the continuation of our
development work with PREOS and teduglutide in specialty indications, and the
consolidation of our operations in New Jersey which will cut our annual
facilities costs by 90 percent and increase our operating flexibility."
    
    Business Highlights
    Debt Reduction/Refinancing and Balance Sheet Strength:
    
    NPS has entered into the following three transactions, the proceeds of
which will be used to retire all of the company's 2008 convertible debt.

    
    -- NPS has issued $100 million in Series B Sensipar(R) royalty-backed
       notes.  The notes are non-recourse to NPS, bear an interest rate of
       15.5% and will be repaid only after the Series A Sensipar royalty-
       backed notes are paid in full.  The Series B notes mature March 2017.
       However, based on third-party forecasts of Sensipar sales, NPS expects
       the royalty payments will be sufficient to repay the Series B notes by
       December 2012 after which the Sensipar royalties will return to NPS.
    

    
    -- NPS has issued $50 million in convertible notes to funds managed by
       Visium Asset Management, LLC.  These notes will be convertible into NPS
       common stock at a conversion price of $5.44 per share (reflecting a
       premium of 30%, relative to the five-day volume-weighted average price
       for NPS common stock between July 31 and August 6, 2007), mature in
       2014 and bear interest at a rate of 5.75% per annum.
    

    
    -- NPS sold its royalty entitlement from European sales of Preotact by
       Nycomed for $75 million paid as $50 million up front with another $25
       million payable in 2010 if certain sales milestones are achieved.  This
       transaction was with Drug Royalty L.P. 3.
    

    Portfolio Progress:

    
    -- Teduglutide:  NPS has completed treatment of patients in the six-month
       Phase 3 study of teduglutide in 84 patients with short bowel syndrome
       and expects to complete the analysis of and report topline results for
       the study in the fourth quarter of 2007.  The original endpoint for the
       study was a twenty percent or greater reduction in total parenteral
       nutrition at weeks 20 to 24 of the study compared to baseline.  During
       the finalization of the study's statistical analysis plan, the primary
       endpoint was expanded to incorporate several data points that were
       included as secondary endpoints in the protocol.  The expanded endpoint
       is designed to account for the degree of effect and duration of a
       patient's response to teduglutide.
    

    
       If results of the Phase 3 study are positive, NPS intends to submit a
       new drug application (NDA) in mid-2008 seeking approval to market
       teduglutide for the treatment of short bowel syndrome.  Once the
       company has completed its analysis of data from the SBS study, it
       expects to pursue a pre-NDA meeting with the FDA to discuss its plan
       for submitting the NDA.  The company anticipates submitting marketing
       applications in Europe and Canada shortly thereafter.
    

    
       NPS is also conducting preclinical studies with teduglutide as a
       potential treatment for chemotherapy-induced gastrointestinal mucositis
       in cancer patients and necrotizing enterocolitis in preterm infants.
    

    
    -- PREOS(R):   NPS has submitted to the FDA a request seeking orphan drug
       status for PREOS as a treatment for hypoparathyroidism and is making
       final plans to pursue clinical testing of PREOS in this indication.
    

    
    -- Preotact(R):  NPS licensed to Nycomed the rights to market Preotact in
       additional territories and assume responsibility for supply chain
       management in all the Nycomed territories.  Under the agreement, NPS
       will receive approximately $11 million from Nycomed as consideration
       for the acquisition of existing bulk drug inventory.
    


    Site Consolidation:

    
    -- NPS repurchased from its lessor and then subsequently sold its facility
       in Salt Lake City, Utah.  The company also sold its technical
       operations building in Mississauga, Canada and terminated the lease on
       its research facility in Toronto.  By October, the company plans to
       move its New Jersey headquarters to a smaller facility in Bedminster,
       New Jersey.  These actions will decrease facility costs by over 90
       percent resulting in $7 million in annual savings.
    Second Quarter 2007 Financial Results
    
    NPS chief financial officer Gerard Michel stated:  "With $200 million in
gross proceeds from the Sensipar B-bond transaction, the private convertible
debt offering and the upfront payment from Drug Royalty, we now have all the
monies required to retire the 3% convertible debt without significant dilution
of current shareholders.  These transactions give us a much stronger balance
sheet and the flexibility to invest in our late-stage assets.  Due to our
successful restructuring activities, we are reducing our previous 2007
operating cash burn guidance by $5 million to a new range of $80 to $90
million and reiterating our 2008 cash burn guidance of $35 to $45 million.  We
are also increasing our previous 2007 year-end cash balance guidance by $15
million to a new range of $65 to $75 million, after retiring the 3%
convertible debt."

    Key results for the quarter include:

    
    -- Revenues of $13.1 million, up 58% from the second quarter of 2006
    -- Operating expenses of $22.3 million, down 48% from the second quarter
       of 2006
    -- Net loss of $14.8 million, or $0.32 per share, down 62% from the second
       quarter of 2006
    
    NPS incurred a net loss for the second quarter of 2007 of $14.8 million,
or $0.32 per share, a 62% reduction from its net loss in the second quarter of
2006 of $39.3 million, or $0.85 per share.  For the six months ended June 30,
2007, the net loss was $36.0 million, or $0.77 per share, a 54% reduction from
the same period of the prior year of $77.6 million, or $1.68 per share. The
reduction in net loss reflects the 2006 and 2007 restructurings which called
for aggressive expense reduction measures.
    Revenues for the second quarter of 2007 grew 58% to $13.1 million from
revenues of $8.3 million in the second quarter of 2006.  Revenues for the six
months ended June 30, 2007 grew 61% to $23.1 million from revenues of $14.4
million in the same period in the prior year. 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 second quarter of 2007 declined
38% to $12.5 million compared to $20.2 million for the same period of 2006.
Research and development expense for the six months ended June 30, 2007
declined 45% to $22.7 million compared to $41.4 million for the same period of
2006.  These changes are primarily due to decreased clinical development
activity for PREOS, reductions in cash and stock compensation, and lower pre-
approval manufacturing expenses associated with PREOS, offset by higher pre-
approval manufacturing expenses associated with teduglutide.
    Selling, general and administrative expenses for the second quarter 2007
declined 67% to $5.4 million compared to $16.0 million for the same period in
2006.  Selling, general and administrative expenses for the six months ended
June 30, 2007 declined 66% to $11.9 million compared to $34.9 million for the
same period of 2006. These decreases are primarily due to reduced pre-launch
commercial support for PREOS as well as termination of NPS's sales promotion
of Kineret(R), a biologic therapy owned by Amgen, and Restasis(R), an
ophthalmic product owned by Allergan, in 2006.
    Restructuring charges for the second quarter of 2007 were $4.1 million
compared to $6.0 million for the same period in the prior year. Restructuring
charges for the six months ended June 30, 2007 were $11.2 million compared to
$6.0 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
restructuring operations announced in June 2006.
    As of June 30, 2007, the company had 46.3 million shares outstanding and
$91.4 million in cash, cash equivalents and marketable investment securities
as compared to $146.2 million at December 31, 2006.  The company's June 30
cash balance does not include net proceeds of approximately $216 million from
the recent transaction with Drug Royalty, the sales of Series B and
convertible notes and the sale of the Salt Lake City facility.
    Due to planned decreases in future spending as a result of the March 2007
restructuring and its recent transaction with Nycomed, NPS now expects its
2007 operating cash burn to be no more than $80.0 to $90.0 million and that it
will end 2007 with a cash balance of between $65.0 and $75.0 million, after
retiring the 3% convertible debt.  The company expects to further reduce
operating cash burn in 2008 to $35.0 to $45.0 million.



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


    
                            Three Months Ended             Six Months Ended
                                  June 30,                     June 30,
                              2007       2006             2007           2006
    

    Revenues                $13,115     $8,282          $23,106       $14,365

    
    Operating expenses
      Cost of goods sold      1,100        366            2,052           366
      Cost of royalties       1,088        704            2,135         1,158
      Research and
       development           12,476     20,176           22,721        41,386
      Selling, general and
       administrative         5,353     16,025           11,923        34,923
      Restructuring
       charges                4,124      6,012           11,238         6,012
      Gain on sale of assets
       held for sale         (1,826)        --           (1,826)           --
        Total operating
         expenses            22,315     43,283           48,243        83,845
    

    Operating loss       (9,200)   (35,001)         (25,137)      (69,480)

    
    Other expense, net       (5,607)    (4,274)         (10,814)       (8,124)
        Loss before income
         tax expense       $(14,807)  $(39,275)        $(35,951)     $(77,604)
    

    Income tax expense           --         --               --            --

    Net loss             $(14,807)  $(39,275)        $(35,951)     $(77,604)

    
    Basic and diluted net
     loss per common and
     potential common
     share                  $(0.32)     $(0.85)          $(0.77)       $(1.68)
    

    
    Weighted average
     common and potential
     common shares
     outstanding - basic
     and diluted            46,719      46,313           46,672        46,275
    



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


    
                                                June 30,          December 31,
                                                  2007                2006
    

    
    Cash, cash equivalents and marketable
     investment securities                      $91,446             $146,152
    Current restricted cash and
     cash equivalents                             8,467               21,921
    Account receivable                           12,815               15,534
    Other current assets                          4,079                6,082
    Plant and equipment, net of accumulated
     depreciation and amortization               18,549               19,849
    Debt issuance costs                           4,315                5,569
    Other assets, net of accumulated
     amortization                                10,271                9,633
         Total assets                          $149,942             $224,740
    

    
    Liabilities and Stockholders' Equity
     (Deficit)
    Current liabilities                         $19,330              $25,423
    Current notes payable                       204,023               19,044
    Long-term notes payable and other
     liabilities                                152,577              373,517
             Total liabilities                  375,930              417,984
    

    
    Paid-in capital and common stock            680,598              677,520
    Accumulated other comprehensive loss         (1,763)              (1,892)
    Accumulated deficit                        (904,823)            (868,872)
        Net stockholders' deficit              (225,988)            (193,244)
        Total liabilities and
         stockholders' deficit                 $149,942             $224,740
    About NPS Pharmaceuticals
    
    NPS discovers and 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. EDT.  To participate in
the call, dial (866) 202-4367 with passcode 89607320.  International callers
may dial (617) 213-8845 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 August 14, 2007 at (888) 286-8010, or
(617) 801-6888 for international callers, with passcode 20347471.   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 operating cash burn and 2007 year-end cash balance
targets; partnering our clinical development programs; addressing our
convertible debt; completion of ongoing clinical trials with teduglutide and
the submission of regulatory filings for teduglutide; exploration of PREOS and
teduglutide for additional indications; royalty revenue from Amgen and our
ability to repay our Sensipar(R) secured debt obligations; 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; our ongoing clinical trials for
teduglutide may not be completed in a timely manner, which would delay the
clinical advancement and regulatory approval of teduglutide; the data from our
clinical trials with teduglutide may not be positive or ultimately support the
filing of an NDA for teduglutide; our data and exploratory findings may not
support advancing PREOS or teduglutide in other indications; our royalty
revenue from Amgen may not be sufficient to repay our Sensipar(R) secured debt
obligations in accordance with our expectations or at all; 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 August 7, 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: Gail Brophy of NPS Pharmaceuticals, Inc., 
+1-973-658-8504; or Jason Rubin of The Redstone Group, LLC, +1-610-941-2741,
for  NPS Pharmaceuticals, Inc. Web Site: http://www.npsp.com

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NPS PHARMACEUTICALS, INC.

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