<PAGE>
As filed with the Securities and Exchange Commission on October 20, 2000
Registration No. 333-45274
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------
NPS Pharmaceuticals, Inc.
(Exact name of Registrant as specified in its charter)
Delaware 420 Chipeta Way, 87-0439579
(State or other Salt Lake City, Utah 84108-1256 (I.R.S. Employer
jurisdiction (801) 583-4939 Identification No.)
of incorporation or
organization)
----------------------
James U. Jensen, Vice President
Corporate Development and Legal Affairs
NPS Pharmaceuticals, Inc.
420 Chipeta Way
Salt Lake City, Utah 84108-1256
(801) 583-4939
with copies to:
Brent Christensen Rodd M. Schreiber
Scott R. Carpenter Skadden, Arps, Slate, Meagher & Flom
Parsons Behle & Latimer (Illinois)
201 South Main Street 333 West Wacker Drive
Salt Lake City, Utah 84111 Chicago, Illinois 60606
----------------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the Registration Statement becomes effective.
----------------------
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of earlier effective
registration statement for same offering. [_]
If this Form is a post-effective amendment file pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If the delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
Proposed
Proposed Maximum
Maximum Aggregate Amount of
Title of Securities to Amount to be Offering Price Offering Registration
be Registered Registered Per Share(1) Price(1) Fee(2)
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock (par value
$0.001) 4,025,000 $35.81 $173,253,250 $45,739
</TABLE>
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(1) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(c). The price per share for the
additional 575,000 shares registered herewith is based upon the closing
price of the Registrant's Common Stock on October 16, 2000 as reported on
the Nasdaq National Market.
(2) The Registrant paid $40,303 with its initial filing and subsequently paid
the balance of $5,436.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall
file a further amendment that specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the SEC, acting pursuant to said Section 8(a), may
determine.
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<PAGE>
Subject to Completion, Dated October 20, 2000
The information contained in this prospectus is not complete and may be
changed. These securities may not be sold until the registration statement
filed with the Securities and Exchange Commission is effective. This prospectus
is not an offer to sell these securities and it is not soliciting an offer to
buy these securities in any state or jurisdiction where the offer or sale is
not permitted.
3,500,000 Shares
[LOGO OF NPS Pharmaceuticals]
Common Stock
$ per share
------------------------------------------------------------------
NPS Pharmaceuticals, Inc. is offering for sale 3,500,000 shares of its common
stock.
Our common stock is listed on the Nasdaq National Market under the symbol
"NPSP." On October 16, 2000, the last reported sale price of our common stock
on the Nasdaq National Market was $35.81 per share.
Investing in our common stock involves risks. See "Risk Factors" beginning on
page 6.
<TABLE>
<CAPTION>
Per Share Total
--------- -----------
<S> <C> <C>
Price to the public........................... $ $
Underwriting discount.........................
Proceeds to NPS...............................
</TABLE>
We have granted an over-allotment option to the underwriters. Under this
option, the underwriters may elect to purchase a maximum of 525,000 additional
shares from us within 30 days following the date of this prospectus to cover
over-allotments.
------------------------------------------------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
CIBC World Markets
Prudential Vector Healthcare
a unit of Prudential Securities
Robertson Stephens
The date of this prospectus is , 2000.
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary....................................................... 2
Risk Factors............................................................. 6
Forward-Looking Statements............................................... 12
Common Stock Market Data................................................. 13
Use of Proceeds.......................................................... 14
Dividend Policy.......................................................... 14
Capitalization........................................................... 15
Dilution................................................................. 16
Selected Consolidated Financial Data..................................... 17
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 18
Business................................................................. 23
Management............................................................... 36
Principal Stockholders................................................... 40
Related-Party Transactions............................................... 42
Description of Capital Stock............................................. 43
Underwriting............................................................. 46
Legal Matters............................................................ 48
Experts.................................................................. 48
Where You Can Find More Information...................................... 48
</TABLE>
<PAGE>
Prospectus Summary
This summary highlights information contained in other parts of this
prospectus. Because it is a summary, it does not contain all of the information
that you should consider before investing in the shares. You should read the
entire prospectus carefully, including the Risk Factors and the reports
incorporated by reference in this prospectus.
Overview
We discover, develop and intend to commercialize small molecule drugs and
recombinant proteins, primarily for bone and mineral disorders and central
nervous system disorders. We have five drugs in clinical development and
several preclinical product candidates. Our two most advanced product
candidates focus on bone and mineral disorders. They are AMG 073, which has
completed a series of Phase II clinical trials for treatment of
hyperparathyroidism, and ALX1-11, which is in a pivotal Phase III clinical
trial for treatment of post-menopausal osteoporosis.
Our Products
Bone and Mineral Disorders
AMG 073 for Hyperparathyroidism. We are developing a small molecule
calcimimetic compound, AMG 073, for the treatment of primary and secondary
hyperparathyroidism. Patients with primary hyperparathyroidism secrete
excessive parathyroid hormone, which causes bone loss, muscle weakness,
depression and cognitive disorders. Over 500,000 people in the United States
suffer from primary hyperparathyroidism. Secondary hyperparathyroidism is a
physiological response to failing kidneys that affects most of the
approximately 260,000 dialysis patients in the United States and over 30% of
the several million patients suffering from early stages of chronic renal
failure before dialysis is necessary.
Amgen Inc. and Kirin Brewery Company, Ltd. are developing AMG 073 under license
agreements with us. Results from Amgen's Phase II clinical trial in patients
with primary hyperparathyroidism were presented at the American Society for
Bone and Mineral Research meeting in September 2000. Results from other Amgen
Phase II clinical trials in patients with secondary hyperparathyroidism were
presented at the American Society of Nephrology meeting in October 2000. Amgen
has been and is continuing to conduct a larger Phase II clinical trial in
patients with secondary hyperparathyroidism to confirm and build upon these
results. While it is impossible to predict the timing of the start or finish of
any specific clinical trial, we expect Amgen to begin Phase III clinical trials
in 2001.
ALX1-11 for Osteoporosis. We are independently developing ALX1-11, our patented
recombinant, full-length parathyroid hormone, for treatment of post-menopausal
osteoporosis. Osteoporosis is an age-related disorder that is characterized by
a reduction in bone mass and affects over 10 million patients in the United
States. We are currently conducting an 1,800 to 2,000 patient pivotal Phase III
clinical trial that will measure increases in bone mineral density and
determine ALX1-11's effectiveness in fracture prevention over an 18-month
course of treatment. Our Phase II clinical trial in over 200 post-menopausal
women produced an average increase in bone mineral density of nearly seven
percent in a one-year course of treatment. ALX1-11 is also being used in a
National Institutes of Health, or NIH, sponsored clinical trial. This trial
will test ALX1-11 in combination with Merck & Co., Inc.'s Fosamax(R) as a
therapy for osteoporosis.
Calcilytics for Osteoporosis. In collaboration with SmithKline Beecham
Corporation, we are pursuing another treatment for osteoporosis that focuses on
the use of orally administered drugs called calcilytics. Calcilytic compounds
are small molecules that can stimulate the secretion of the body's own
parathyroid hormone reserves, resulting in the formation of new bone. We have
conducted preclinical studies with SmithKline on some of the lead compounds
identified in this program.
Central Nervous System Disorders
NPS 1776 for Epilepsy and Bipolar Disorder. We are developing NPS 1776 for
epilepsy and bipolar disorder. In early 2000, we entered into a collaboration
agreement with Abbott Laboratories, Inc. for the development of this drug.
Before we entered into this agreement, we completed two
2
<PAGE>
Phase I clinical trials to confirm NPS 1776's safety and tolerability. NPS 1776
has been shown to be effective in animal models of epilepsy, and has
demonstrated a better safety profile than other currently available epilepsy
treatments in those models.
Metabotropic Glutamate Receptor Program. Since 1996, we have been working to
identify compounds that act on targets in the central nervous system called
metabotropic glutamate receptors, or mGluRs. We believe we have an advantage in
identifying compounds that act on these targets because mGluRs are structurally
related to calcium receptors. We have been able to use our expertise in calcium
receptors to create proprietary methods for screening drug candidates that act
on mGluRs. We have identified a number of proprietary compounds for preclinical
development that target mGluRs and may be useful for the treatment of central
nervous system disorders, including neuropathic pain.
Other Programs for Central Nervous System Disorders. We have completed a Phase
I clinical trial outside the United States with ALX-0646, our product candidate
for the treatment of migraine. In August 2000, we licensed ALX-0646 to Forest
Laboratories, Inc. for further development and commercialization.
We are also working with Janssen Pharmaceutica N.V., a division of Johnson &
Johnson, on glycine reuptake inhibitors to identify potential drug candidates
for schizophrenia and dementia, and with Eli Lilly and Company to identify
excitatory amino acid receptors as therapeutic targets for psychiatric
disorders and pain.
Gastrointestinal Disorders
ALX-0600 for Short Bowel Syndrome. We are independently pursuing the
development of ALX-0600 for the treatment of gastrointestinal disorders. We are
currently conducting a pilot Phase II clinical trial with ALX-0600 in a small
number of patients with short bowel syndrome. We previously completed a Phase I
clinical trial that demonstrated ALX-0600's safety and tolerability in healthy
volunteers. Approximately 20,000 to 40,000 patients in North America are
afflicted with short bowel syndrome. In July 2000, we obtained orphan drug
designation for ALX-0600 for short bowel syndrome from the U.S. Food & Drug
Administration, or FDA. Although short bowel syndrome is a relatively
small indication, we believe that if ALX-0600 is successful as a treatment for
short bowel syndrome, it may also be useful in treating other gastrointestinal
conditions such as Crohn's disease, inflammatory bowel disease and intestinal
mucositis in cancer patients.
Our Strategy
Our objective is to build a profitable biopharmaceutical company by developing
innovative therapies that maintain human health and relieve suffering. The key
elements of our strategy to accomplish this objective are to:
. build a diversified pipeline of products
. retain greater product rights for internal development and
commercialization
. in-license or acquire complementary products, technologies or companies
. leverage collaborations to reduce our risk and accelerate the
commercialization of our product candidates
. maintain our core discovery competencies
Other Information
We originally incorporated in Utah in 1986 and reincorporated in Delaware in
1992. In December 1999, we acquired Allelix Biopharmaceuticals, Inc., or
Allelix, a biopharmaceutical company based in Ontario, Canada. We now operate
Allelix as a subsidiary, and refer to it as NPS Allelix. Our executive offices
are located at 420 Chipeta Way, Salt Lake City, Utah 84108-1256. Our telephone
number is (801) 583-4939. Our website can be found at www.npsp.com. Our website
does not constitute a part of this prospectus.
"NPS," "NPS Pharmaceuticals," "Allelix Biopharmaceuticals," "NPS Allelix" and
"Allelix" are our trademarks. All other trademarks or trade names referred to
in this prospectus are the property of their respective owners. The
underwriters are offering the shares subject to various conditions and may
reject all or part of any order.
3
<PAGE>
The Offering
<TABLE>
<C> <S>
Common stock offered by NPS........................ 3,500,000 shares
Common stock to be outstanding after the offering.. 28,517,685 shares
Use of proceeds.................................... We intend to use the net
proceeds from this
offering to fund clinical
trials and commercial
development of our product
candidates, including
ALX1-11 and ALX-0600; to
advance our preclinical
research programs,
including metabotropic
glutamate receptors; to
in-license and acquire
products, technologies or
companies; and to fund
general corporate
purposes.
Nasdaq National Market symbol...................... NPSP
</TABLE>
The number of shares of common stock to be outstanding after the offering as
shown in the table above is based on the 25,017,685 shares outstanding as of
October 9, 2000. This number includes 1,039,261 shares of our Canadian
subsidiary, NPS Allelix, which are exchangeable into shares of our common stock
at any time on a one-for-one basis. The number of shares of common stock
outstanding excludes:
. 2,530,882 shares of common stock issuable upon exercise of outstanding
options as of October 9, 2000, at a weighted average exercise price of
$8.53 per share
. 36,357 shares of common stock issuable upon exercise of outstanding
warrants as of October 9, 2000, at a weighted average exercise price of
$5.56 per share
. 2,060,382 shares of common stock reserved for future issuance under the
terms of our equity incentive plans as of October 9, 2000
Unless otherwise stated, all information contained in this prospectus assumes
no exercise of the over-allotment option we granted to the underwriters.
4
<PAGE>
Summary Consolidated Financial Data
(in thousands, except per share data)
<TABLE>
<CAPTION>
Six Months Ended
Year Ended December 31, June 30,
---------------------------- ------------------
1997 1998 1999 1999 2000
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Revenues from research and
license agreements.......... $ 5,842 $ 3,568 $ 3,445 $ 1,830 $ 3,654
Operating expenses:
Research and development.... 15,090 17,856 16,935 10,404 13,961
General and administrative.. 5,587 5,546 5,983 3,099 6,792
Amortization of goodwill and
acquired intangibles....... -- -- -- -- 1,820
In-process research and
development acquired....... -- -- 17,760 -- --
-------- -------- -------- -------- --------
Total operating expenses..... 20,677 23,402 40,678 13,503 22,573
-------- -------- -------- -------- --------
Operating loss............... (14,835) (19,834) (37,233) (11,673) (18,919)
Other income, net............ 3,308 2,672 1,579 908 400
-------- -------- -------- -------- --------
Loss before income tax
expense..................... (11,527) (17,162) (35,654) (10,765) (18,519)
Income tax expense........... 167 -- -- -- --
-------- -------- -------- -------- --------
Net loss..................... $(11,694) $(17,162) $(35,654) $(10,765) $(18,519)
======== ======== ======== ======== ========
Diluted net loss per share... $ (0.98) $ (1.39) $ (2.77) $ (0.85) $ (0.85)
======== ======== ======== ======== ========
Diluted weighted average
shares...................... 11,956 12,337 12,863 12,649 21,724
</TABLE>
<TABLE>
<CAPTION>
June 30, 2000
--------------------
Actual As Adjusted
------- -----------
<S> <C> <C>
Balance Sheet Data:
Cash, cash equivalents and marketable investment
securities.............................................. $73,408 $190,803
Working capital.......................................... 69,541 186,936
Total assets............................................. 98,866 216,261
Long term obligations, less current portion.............. 1,749 1,749
Deficit accumulated during development stage............. (97,442) (97,442)
Net stockholders' equity................................. 91,783 209,178
</TABLE>
The as adjusted balance sheet data above gives effect to the sale of 3,500,000
shares of our common stock in this offering at an assumed public offering price
of $35.81 per share, after deducting the underwriting discount and our
estimated offering expenses.
5
<PAGE>
Risk Factors
You should carefully consider the following risk factors and other information
included or incorporated by reference in this prospectus before deciding to
invest in the shares.
We have a history of operating losses and may never reach profitability.
With the exception of 1996, we have not been profitable since our inception in
1986. As of June 30, 2000, we had an accumulated deficit of approximately $97.4
million. We have not generated any revenue from product sales to date, and it
is possible that we will never have significant product sales revenue. We
expect to continue to incur losses for the next several years.
We are dependent on the successful outcome of the clinical trials for our two
most advanced product candidates, AMG 073 and ALX1-11.
Amgen, our collaborator, has conducted Phase II clinical trials for AMG 073,
and we are currently conducting a pivotal Phase III clinical trial for ALX1-11.
Our success will depend, to a great degree, on the success of these and
subsequent clinical trials. Prior to receiving approval for commercialization,
we must demonstrate to the satisfaction of the FDA and comparable foreign
regulatory authorities that each of the product candidates are both safe and
efficacious. While no significant safety issues have emerged in Phase I and
Phase II clinical trials with respect to either of these candidates, we will
still need to demonstrate their efficacy for the treatment of the specific
indication as well as the product candidates' continued safety through the
conduct of Phase III clinical trials. The successful outcome of the Phase III
clinical trials will depend in part on our and Amgen's ability to successfully
complete enrollment in the clinical trials. To date, neither long term safety
nor efficacy has been demonstrated in clinical trials with either of these
product candidates. Accordingly, the results of future studies may indicate
that the candidates are unsafe, ineffective, or both, notwithstanding the
results of earlier clinical trials. If either or both of these products do not
continue to prove to be safe and are not shown to be efficacious to the
satisfaction of the FDA and comparable foreign regulatory authorities, our
business would be materially harmed and our stock price would be adversely
affected.
The FDA has not approved any of our product candidates and we cannot assure you
that data collected from clinical trials of our product candidates will be
sufficient to support approval by the FDA, the failure of which could delay our
profitability and adversely impact our stock price.
Many of our research and development programs are at an early stage. Clinical
trials are long, expensive and uncertain processes. We cannot assure you that
the clinical trials will be commenced or completed on schedule, or that the FDA
will ultimately approve our product candidates for commercial sale.
Furthermore, even if the results of our preclinical studies or clinical trials
are initially positive, it is possible that we will obtain different results in
the later stages of drug development. Drugs in late stages of clinical
development may fail to show the desired safety and efficacy traits despite
having progressed through initial clinical testing. For example, positive
results in early Phase I or Phase II clinical trials may not be repeated in
larger Phase II or Phase III clinical trials. All of our potential drug
candidates are prone to the risks of failure inherent in drug development.
The clinical trials of any of our drug candidates could be unsuccessful, which
would prevent us from commercializing the drug. Our failure to develop safe,
commercially viable drugs would substantially impair our ability to generate
revenues and sustain our operations and would materially harm our business and
adversely affect our stock price.
If we fail to maintain our existing or establish new collaborative
relationships, or if our collaborators do not devote adequate resources to the
development and commercialization of our licensed drug candidates, we may have
to reduce our rate of product development and may not be able to achieve
profitability.
Our strategy for developing, manufacturing and commercializing our products
includes entering into various relationships with large pharmaceutical
companies to advance our programs. We have granted exclusive development,
commercialization and marketing rights to a number of our collaborators for
some of our key product
6
<PAGE>
development programs, including AMG 073, calcilytics, NPS 1776, ALX-0646,
glycine reuptake inhibitors and excitatory amino acid receptors. Our
collaborators have full control over those efforts in their territories, the
resources they commit to the program, and the success of the development and
commercialization of products in those programs depends on their efforts. For
us to receive any significant royalty payments from our collaborators, they
must establish the safety and efficacy of our drug candidates, obtain
regulatory approvals and achieve market acceptance of those products.
We continue to evaluate whether to seek collaborators for ALX1-11, ALX-0600 and
our metabotropic glutamate receptor program. We may not be able to negotiate
further collaborative arrangements for those or our other programs on
acceptable terms, if at all. If we are not able to establish additional
collaborative arrangements, we will either have to delay further development of
these or other programs or increase our capital expenditures and undertake the
development activities at our own expense.
Collaborative agreements, including our existing agreements, pose the following
risks:
. our contracts with collaborators may be terminated and we may not be able
to replace them
. the terms of our contracts with our collaborators may not be favorable to
us in the future
. our collaborators may not pursue further development and commercialization
of compounds resulting from their collaborations with us
. a collaborator with marketing and distribution rights to one or more of our
products may not commit enough resources to the marketing and distribution
of our products
. disputes with our collaborators may arise, leading to delays in or
termination of the research, development or commercialization of our
product candidates, or resulting in significant litigation or arbitration
. contracts with our collaborators may fail to provide significant protection
if one or more of them fail to perform
. our collaborators could independently develop, or develop with third
parties, drugs that compete with our products.
There is a great deal of uncertainty surrounding the success of our current and
future collaborative efforts. If our collaborative efforts fail, our business
and financial condition would be materially harmed.
We may need additional financing, but our access to capital funding is
uncertain.
Our current and anticipated development projects, particularly our clinical
trial programs for ALX1-11, ALX-0600 and our metabotropic glutamate receptor
program, require substantial additional capital. We expect that the net
proceeds from this offering, together with our existing assets, will
sufficiently fund our operations for at least the next 24 months. However, our
future capital needs will depend on many factors, including receiving milestone
payments from our collaborators and making progress in our research and
development activities. Our capital requirements will also depend on the
magnitude and scope of these activities, the progress and level of unreimbursed
costs associated with preclinical studies and clinical trials, the costs
associated with acquisitions, the cost of preparing, filing, prosecuting,
maintaining and enforcing patent claims and other intellectual property rights,
competing technological and market developments, changes in or terminations of
existing collaboration and licensing arrangements, and the establishment of
additional collaboration and licensing arrangements, particularly for ALX1-11,
ALX-0600 and our metabotropic glutamate receptor program. We do not have
committed external sources of funding and we cannot assure you that we will be
able to obtain additional funds on acceptable terms, if at all. If adequate
funds are not available, we may be required to:
. delay, reduce the scope of or eliminate one or more of our development
programs
. obtain funds through arrangements with collaborators or others that may
require us to relinquish rights to technologies, product candidates or
products that we would otherwise seek to develop or commercialize ourselves
. license rights to technologies, product candidates or products on terms
that are less favorable to us than might otherwise be available
7
<PAGE>
If funding is insufficient at any time in the future, we may not be able to
develop or commercialize our products, take advantage of business opportunities
or respond to competitive pressures.
We may be unable to obtain patents to protect our technologies from other
companies with competitive products, and patents of other companies could
prevent us from developing or marketing our products.
The patent positions of pharmaceutical and biotechnology firms are uncertain
and involve complex legal and factual questions. In addition, the scope of the
claims in a patent application can be significantly modified during prosecution
before the patent is issued. Consequently, we cannot know whether our pending
applications will result in the issuance of patents or, if any patents are
issued, whether they will provide us with significant proprietary protection or
will be circumvented or invalidated. Generally, patent applications in the
United States are maintained in secrecy until the patents issue, and
publication of discoveries in scientific or patent literature often lags behind
actual discoveries. In addition, we cannot assure you that, even if published,
we will be aware of all such literature. Accordingly, we cannot be certain that
the named inventors of our products and processes were the first to invent that
product or process or that we were the first to pursue patent coverage for our
inventions.
Moreover, we may have to participate in interference proceedings declared by
the U.S. Patent and Trademark Office to determine priority of invention, which
could result in substantial cost, even if the eventual outcome is favorable to
us. We cannot assure you that our pending patent applications, if issued, would
be held valid. Third parties may assert infringement or other intellectual
property claims against us based on their patents or other intellectual
property rights. An adverse outcome in these proceedings could subject us to
significant liabilities to third parties, require disputed rights to be
licensed from third parties or require us to cease or modify our use of the
technology. Additionally, many of our foreign patent applications have been
published as part of the patent prosecution process in such countries.
Protection of the rights revealed in published patent applications can be
complex, costly and uncertain.
The pursuit of patent applications is intensely competitive for therapeutic
products in our areas of research. A number of pharmaceutical companies,
biotechnology companies, universities and research institutions have filed
patent applications or received patents in these and related fields. Some of
these applications or patents may limit or preclude our applications and could
result in a significant reduction in the coverage of our patents.
We also rely on trade secrets, know-how and confidentiality provisions in our
agreements with our collaborators, employees and consultants to protect our
intellectual property. However, these and other parties may not comply with the
terms of their agreements with us, and we might be unable to adequately enforce
our rights against these people or obtain adequate compensation for the damages
caused by their unauthorized disclosure or use.
We are subject to extensive government regulation that may cause us to cancel
or delay the introduction of our products to market.
Our research and development activities and the investigation, manufacture,
distribution and marketing of drug products are subject to extensive regulation
by governmental authorities in the United States, Canada and other countries.
Prior to marketing in the United States, a drug must undergo rigorous testing
and an extensive regulatory approval process implemented by the FDA under
federal law, including the Federal Food, Drug and Cosmetic Act. To receive
approval, we or our collaborators must, among other things, show the FDA that
the product is both safe and effective. Depending upon the type, complexity and
novelty of the product and the nature of the disease or disorder to be treated,
that approval process can take several years and require substantial
expenditures. Data obtained from testing are susceptible to varying
interpretations that could delay, limit or prevent regulatory approvals of our
products. Drug testing is subject to complex FDA rules and regulations,
including the requirement to conduct human testing on a large number of test
subjects. We, our collaborators or the FDA may suspend human trials at any time
if a party believes that the test subjects are exposed to unacceptable health
risks. Other countries, including Canada, also have extensive requirements
regarding clinical trials, market authorization and pricing. These regulatory
schemes vary widely from country to country, but,
8
<PAGE>
in general, are subject to all of the risks associated with U.S. approvals.
If any of our products receive regulatory approval, the approval will be
limited to those disease states and conditions for which the product is useful,
as demonstrated through clinical trials. Furthermore, governmental approval may
subject us to ongoing requirements for post-marketing studies. Even if we
obtain governmental approval, a marketed product, its U.S. manufacturer and its
manufacturing facilities are subject to biannual inspections by the FDA and
must comply with the FDA's current Good Manufacturing Practices, or cGMP, and
other regulations. These regulations govern all areas of production, record
keeping, personnel and quality control, and are designed to insure full
technical compliance. If a manufacturer fails to comply with any of the
manufacturing regulations, it may be subject to, among other things, product
seizures, recalls, fines, injunctions, suspensions or revocations of marketing
licenses, operating restrictions and criminal prosecution. Other countries also
impose similar manufacturing requirements. We may discover previously unknown
problems with a product, manufacturer or facility that may result in
restrictions on that product or manufacturer, including costly recalls or
withdrawals of the product from the market.
As a result of intense competition and technological change in the
pharmaceutical industry, the marketplace may not accept our products and we may
not be able to compete successfully against other companies in our industry and
achieve profitability.
Many of our competitors have drug products that have already been approved or
are in development, and operate large, well-funded research and development
programs in these fields. For example, Hectoral(TM), a product of Bone Care
International, Inc., is being marketed as a treatment to relieve some symptoms
of secondary hyperthyroidism and may compete directly with AMG 073 if it is
approved. Also, GelTex Pharmaceuticals, Inc. is currently marketing
RenaGel(TM), which is a treatment for secondary hyperparathyroidism. Eli Lilly
& Co. is currently developing Forteo(TM), a fragment of the full length
parathyroid hormone for the treatment of osteoporosis that will compete with
our product candidate, ALX1-11, if it is approved. In addition, many of our
competitors have greater financial resources, more effective marketing and
sales, superior intellectual property positions and substantially greater
management resources than we do. Existing and future products, therapies and
technological approaches will compete directly with our products. Competing
products may provide greater therapeutic benefits for a specific problem or may
offer comparable performance at a lower cost. Any products we develop may
become obsolete before we recover any expenses we incurred in connection with
the development of these products. As a result, we may never achieve
profitability.
Because we do not have internal manufacturing facilities and rely on third-
party manufacturers, we are unable to control the availability of our products.
We rely on third-party manufacturers for the manufacture of most of the
products we use in our clinical trials and intend to rely on third-party
manufacturers to manufacture any products we sell. If we are unable to contract
for a sufficient supply of our products on acceptable terms, or if we encounter
delays and difficulties in our relationships with manufacturers, we may not
have sufficient product to conduct or complete our clinical trials,
particularly in the case of our Phase III clinical trials for ALX1-11, which
could delay those trials. A delay would set back our timetable for the
submission of our products for regulatory approval, market introduction and
subsequent sales, and would postpone revenues and profitability. Because we do
not have or intend to develop the capacity to manufacture ALX1-11, we intend to
establish agreements with third-party manufacturers for commercial scale
manufacturing of ALX1-11. Our third-party manufacturers may be unable to
manufacture ALX1-11 or any other products we develop in commercial quantities
on a cost-effective basis. We will need to expand our existing relationships or
establish new relationships with additional third-party manufacturers for
products that we commercialize or develop in the future. We may be unable to
establish or maintain relationships with third-party manufacturers on
acceptable terms. Our dependence on third parties may reduce our profit margins
and delay our ability to develop and commercialize our products on a timely and
competitive basis. Furthermore, third-party manufacturers may encounter
manufacturing or
9
<PAGE>
quality control problems in connection with the manufacture of our products and
may be unable to maintain the necessary governmental licenses and approvals to
continue manufacturing our products.
Because we do not have sales, marketing or distribution capabilities, we may be
unable to market and sell our products and generate revenues.
We do not have any sales, marketing or distribution capabilities. We will have
to develop a sales force or rely on third parties to perform these functions
for any products we decide to commercialize. To market products directly, we
would have to develop a marketing and sales force with technical expertise and
supporting distribution capability. Our inability to establish in-house sales
and distribution capabilities or relationships with third parties may limit our
ability to generate revenues.
For example, if we are successful in our Phase III clinical trials with ALX1-
11, and the FDA grants approval for the commercialization of ALX1-11, we will
be unable to introduce the product to market without developing these channels.
Because of the uncertainty of pharmaceutical pricing, reimbursement and
healthcare reform measures, we may be unable to sell our products profitably.
The availability of reimbursement by governmental and other third-party payors
affects the market for any pharmaceutical product. These third-party payors
continually attempt to contain or reduce the costs of healthcare. There have
been a number of legislative and regulatory proposals to change the healthcare
system and further proposals are likely. Under current guidelines, Medicare
does not reimburse patients for self-administered drugs. Medicare's policy may
decrease the market for our products that are designed to treat patients with
age-related disorders, such as hyperparathyroidism and osteoporosis. In
addition, third-party payors are increasingly challenging the price and cost-
effectiveness of medical products and services. Significant uncertainty exists
with respect to the reimbursement status of newly approved healthcare products.
We might not be able to sell our products profitably if reimbursement is
unavailable or limited in scope.
If we fail to attract and retain key employees and consultants, we may have to
delay the development and commercialization of our products.
We are highly dependent on the principal members of our scientific and
management staff. If we lose any of these persons, our ability to develop
products and become profitable could suffer. The risk of being unable to retain
key personnel may be increased by the fact that we have not executed long term
employment contracts with our employees. Our future success will also depend in
large part on our continued ability to attract and retain other highly
qualified scientific and management personnel. We face competition for
personnel from other companies, academic institutions, government entities and
other organizations.
If product liability claims are brought against us, we may incur substantial
liabilities that could reduce our financial resources.
The testing and commercial use of pharmaceutical products involves significant
exposure to product liability claims. The use of our product candidates in
clinical trials and the sale of our products following regulatory approval may
expose us to product liability claims. We have obtained limited product
liability insurance coverage for our clinical trials on humans. Currently, we
are conducting clinical trials with humans for a number of our product
candidates. Our insurance coverage may be insufficient to protect us against
product liability damages. We might not be able to obtain or maintain product
liability insurance in the future on acceptable terms or in sufficient amounts
to protect us against product liability damages. If we are required to pay a
product liability claim, we may not have sufficient financial resources to
complete development or commercialization of any of our products.
Our operations involve hazardous materials and we must comply with
environmental laws and regulations, which can be expensive and restrict how we
do business.
Our research and development activities involve the controlled use of hazardous
materials, radioactive compounds and other potentially dangerous chemicals and
biological agents. Although we believe our safety procedures for these
materials comply with governmental standards, we cannot
10
<PAGE>
eliminate the risk of accidental contamination or injury from these materials.
If an accident or environmental discharge occurs, we could be held liable for
any resulting damages, which could exceed our financial resources.
Our stock price has been and may continue to be volatile and your investment
could suffer a decline in value.
You should consider an investment in our common stock as risky and invest only
if you can withstand a significant loss and wide fluctuations in the market
value of your investment. We receive only limited attention by securities
analysts and frequently experience an imbalance between supply and demand for
our common stock. The market price of our common stock has been highly volatile
and is likely to continue to be volatile. Factors affecting our common stock
price include:
. fluctuations in our operating results
. announcements of technological innovations or new commercial products by
us, our collaborators or our competitors
. published reports by securities analysts
. the progress of our and our collaborators' clinical trials
. governmental regulation
. changes in medical and pharmaceutical product reimbursement policies
. developments in patent or other intellectual property rights
. publicity concerning the discovery and development activities by our
licensees
. public concern as to the safety and efficacy of drugs we and our
competitors develop
. general market conditions
Anti-takeover provisions in our certificate of incorporation, bylaws,
stockholders rights plan and under Delaware law may discourage or prevent a
change of control.
Provisions of our certificate of incorporation, bylaws and Section 203 of the
Delaware General Corporation Law could delay or prevent a change in control of
NPS. For example, our board of directors, without further stockholder approval,
may issue preferred stock that could delay or prevent a change in our control
as well as reduce the voting power of the holders of common stock, even to the
extent of losing control to others. In addition, our board of directors has
adopted a stockholder rights plan, commonly known as a "poison pill," that may
delay or prevent a change in control.
We have broad discretion as to the use of the net proceeds we receive from this
offering and, if we do not allocate those proceeds wisely, your investment
could suffer.
We expect to use the net proceeds we receive from this offering to fund
clinical trials and commercial development of our product candidates, advance
our preclinical research programs and in-license or acquire complementary
products, technologies or companies. We also intend to use the net proceeds we
receive from this offering for general corporate purposes. Our board of
directors and management will determine the ways in which we will spend the
proceeds from this offering, and may determine to spend the proceeds from this
offering in ways with which our stockholders may not agree. We may not invest
the proceeds from this offering in a manner that will yield a favorable return
to our stockholders.
Investors will incur immediate dilution because the public offering price of a
share of our common stock in this offering will exceed its book value.
Any shares of common stock that investors purchase in this offering will have a
net tangible book value of $6.84, or $28.97 less per share than the price paid
by the investors, assuming a public offering price per share of $35.81, based
on our net tangible book value as of June 30, 2000.
11
<PAGE>
Forward-Looking Statements
This prospectus and the documents we have filed with the Securities and
Exchange Commission, or SEC, that are referenced under the section entitled
"Where You Can Find More Information" on page 48 contain forward-looking
statements made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Forward-looking statements represent
our management's judgment regarding future events. Forward-looking statements
typically are identified by use of terms such as "may," "will," "should,"
"plan," "expect," "anticipate," "estimate," and words of similar import,
although some forward-looking statements are expressed differently. All
statements other than statements of historical fact included in this prospectus
regarding our financial position, business strategy and plans or objectives for
future operations are forward-looking statements. We cannot guarantee the
accuracy of the forward-looking statements, and you should be aware that
results and events could differ materially from those contained in the forward-
looking statements due to a number of factors, including:
. our and our collaborators' failure to achieve positive results in clinical
trials
. competitive factors
. relationships with our collaborators
. variability of our royalty, license and other revenues
. our ability to enter into future collaborative agreements
. uncertainty regarding our patents and patent rights, including the risk
that we may be forced to engage in costly litigation to protect or secure
such patent rights and the material harm to us if there were an unfavorable
outcome in any such litigation
. compliance with current or prospective governmental regulation
. technological change
. general economic conditions
You should also consider carefully the statements set forth in the section
entitled "Risk Factors" and other sections of this prospectus, and in the other
documents we have filed with the SEC, which address additional factors that
could cause results or events to differ from those set forth in the forward-
looking statements. All subsequent written and oral forward-looking statements
attributable to us or persons acting on our behalf are expressly qualified in
their entirety by the applicable cautionary statements. We have no plans to
update these forward-looking statements.
12
<PAGE>
Common Stock Market Data
Since May 26, 1994, our common stock has been traded on the Nasdaq National
Market under the symbol "NPSP." The shares of NPS Allelix are traded on the
Toronto Stock Exchange under the symbol "NX" and are exchangeable into shares
of our common stock on a one-for-one basis. The following table sets forth, for
the periods indicated, the high and low closing prices for our common stock, as
reported on the Nasdaq National Market.
<TABLE>
<CAPTION>
High Low
------- -------
<S> <C> <C>
1998
First Quarter............................................. $ 8.500 $ 7.375
Second Quarter............................................ 8.500 6.750
Third Quarter............................................. 9.313 6.375
Fourth Quarter............................................ 7.938 5.500
1999
First Quarter............................................. $ 7.500 $ 6.563
Second Quarter............................................ 8.625 5.875
Third Quarter............................................. 8.000 5.500
Fourth Quarter............................................ 12.500 3.813
2000
First Quarter............................................. $29.750 $10.750
Second Quarter............................................ 26.750 9.500
Third Quarter............................................. 56.563 26.750
Fourth Quarter (through October 16, 2000)................. 52.375 35.813
</TABLE>
On October 16, 2000, the closing price of our common stock on the Nasdaq
National Market was $35.81 per share. As of October 9, 2000, there were
approximately 364 holders of record of our common stock, which includes 149
holders of the exchangeable shares.
13
<PAGE>
Use of Proceeds
We estimate that the net proceeds from the sale of 3,500,000 shares of our
common stock in this offering at an assumed public offering price of $35.81 per
share will be approximately $117.4 million. If the underwriters fully exercise
their over-allotment option, the net proceeds from the sale of the shares we
are offering will be approximately $135.1 million. "Net proceeds" are what we
expect to receive after deducting the underwriting discount and other estimated
expenses of this offering.
We intend to use the net proceeds from this offering primarily to:
. fund clinical trials and commercial development of our product candidates,
including ALX1-11 andALX-0600
. advance our preclinical research programs, including our metabotropic
glutamate receptor program
. in-license or acquire complementary products, technologies or companies
. fund general corporate purposes
We have discussions on an ongoing basis regarding potential acquisition and in-
licensing opportunities that are complementary to our business. Although we may
use a portion of the net proceeds for this purpose, we currently have no
agreements or commitments in this regard.
The timing and amount of our actual expenditures for the purposes set forth
above are subject to change, however, and will be based on many factors,
including:
. the progress and scope of our internally funded research, development and
commercialization activities
. our ability to establish new collaborations and the terms of those
collaborations
. the success of our collaborators in developing and marketing products under
their respective collaborations with us
. competing technological and market developments
. the time and cost of obtaining regulatory approvals
. the costs we incur in obtaining and enforcing patent and other proprietary
rights or gaining the freedom to operate under the patents of others
. our success in acquiring and integrating complementary products,
technologies or businesses
These or other factors may result in our decision to make changes in the
allocation of the net proceeds from this offering. Our management will retain
broad discretion as to the allocation of the net proceeds of the offering.
However, we believe the proceeds of this offering generally will enable us to
focus on our business strategy and respond to competitive pressures. Until we
use the net proceeds of the offering, we will invest the funds in accordance
with our investment policy.
Dividend Policy
We have never declared or paid any cash dividends on our common stock. We
anticipate that we will retain our earnings to support operations and to
finance the growth and development of our business. Therefore, we do not expect
to pay cash dividends in the foreseeable future.
14
<PAGE>
Capitalization
The following table shows:
. our actual capitalization on June 30, 2000 (assuming the exchange of all
outstanding shares of our Canadian subsidiary, NPS Allelix, which are
exchangeable into shares of our common stock at any time on a one-for-one
basis)
. our as adjusted capitalization as of June 30, 2000 to give effect to the
sale of 3,500,000 shares of common stock in this offering at an assumed
public offering price of $35.81 per share, less the underwriting discount
and estimated costs associated with this offering
<TABLE>
<CAPTION>
June 30, 2000
--------------------
Actual As Adjusted
------- -----------
(in thousands)
<S> <C> <C>
Long term obligations, less current portion............... $ 1,749 $ 1,749
------- --------
Stockholders' equity:
Preferred stock, $0.001 par value; 5,000,000 shares
authorized.............................................. -- --
Common stock, $0.001 par value; 45,000,000 shares
authorized; 24,572,024 shares issued and outstanding,
actual; 28,072,024 shares issued and outstanding, as
adjusted................................................ 25 29
Additional paid-in capital............................... 189,233 306,624
Deficit accumulated during development stage............. (97,442) (97,442)
Accumulated other comprehensive loss..................... (33) (33)
------- --------
Net stockholders' equity................................ 91,783 209,178
------- --------
Total capitalization................................... $93,532 $210,927
======= ========
</TABLE>
The number of shares of common stock outstanding in the actual and as adjusted
columns in the table above excludes the following:
. 2,673,385 shares of common stock issuable upon exercise of options
outstanding as of June 30, 2000, at a weighted average exercise price of
$8.96 per share
. 301,007 shares of common stock issuable upon exercise of warrants
outstanding as of June 30, 2000, at a weighted average exercise price of
$14.90 per share
. 2,143,291 shares of common stock reserved for future issuance under the
terms of our equity incentive plans as of June 30, 2000
Subsequent to June 30, 2000, warrant holders exercised their right to acquire
264,650 shares of NPS Allelix for net proceeds to NPS of $4,207,051.
Additionally, since June 30, 2000, option holders exercised their options under
the terms of our equity incentive plans to purchase 175,326 shares of our
common stock through October 9, 2000 for net proceeds to NPS of $1,745,402.
15
<PAGE>
Dilution
Our net tangible book value on June 30, 2000 was $74.6 million, or
approximately $3.03 per share. Net tangible book value per share is equal to
total assets minus the sum of liabilities and intangible assets divided by the
total number of shares outstanding.
Net tangible book value dilution per share to new investors represents the
difference between the amount per share paid by purchasers of shares of common
stock in this offering and the net tangible book value per share of our common
stock immediately after completion of this offering. After giving effect to the
sale of 3,500,000 shares of our common stock in this offering at an assumed
public offering price of $35.81 per share and after deducting the underwriting
discount and estimated offering expenses, our net tangible book value as of
June 30, 2000 would have been $6.84 per share. This amount represents an
immediate increase to existing stockholders of $3.81 and an immediate and
substantial dilution in net tangible book value of $28.97 per share to
purchasers of common stock in this offering, as illustrated in the following
table:
<TABLE>
<S> <C> <C>
Assumed public offering price per share....................... $35.81
Net tangible book value per share as of June 30, 2000......... $3.03
Increase in net tangible book value per share attributable to
the offering................................................. 3.81
-----
Net tangible book value per share as of June 30, 2000 after
giving effect to the offering................................ 6.84
------
Dilution per share to new investors in the offering........... $28.97
======
</TABLE>
In the discussion and table above, we assume the exchange of all outstanding
exchangeable shares of NPS Allelix which are exchangeable into shares of our
common stock at any time on a one-for-one basis. Additionally, we assume no
exercise of outstanding options and warrants to purchase shares of our common
stock. As of June 30, 2000, there were outstanding options to purchase a total
of 2,673,385 shares of our common stock, at a weighted average exercise price
of $8.96 per share. As of June 30, 2000, there were outstanding warrants to
purchase a total of 301,007 shares of our common stock, at a weighted average
price of $14.90 per share. Subsequent to June 30, 2000, warrant holders
exercised their right to acquire 264,650 shares of NPS Allelix for net proceeds
to NPS of $4,207,051. Additionally, since June 30, 2000, option holders
exercised their options under the terms of our equity incentive plans to
purchase 175,326 shares of our common stock through October 9, 2000 for net
proceeds to NPS of $1,745,402. To the extent outstanding options and warrants
have been and will be exercised, there will be further dilution to new
investors.
16
<PAGE>
Selected Consolidated Financial Data
This section presents our historical financial data. You should read carefully
the financial statements included in the reports incorporated by reference in
this prospectus, including the notes to the financial statements included in
those reports, and the section of this prospectus entitled "Management's
Discussion and Analysis of Financial Condition and Results of Operations." We
do not intend the selected data in this section to replace the financial
statements.
We derived the statement of operations data for the years ended December 31,
1997, 1998 and 1999, and the balance sheet data as of December 31, 1998 and
1999 from the audited financial statements included in the reports incorporated
by reference in this prospectus. KPMG LLP, independent certified public
accountants, audited those financial statements and their reports thereon that
are also included in the reports incorporated by reference in this prospectus.
We derived the statement of operations data for the years ended December 31,
1995 and 1996 and the balance sheet data as of December 31, 1995, 1996 and 1997
from our audited financial statements that are not incorporated by reference
into this prospectus. The statement of operations data for the six months ended
June 30, 1999 and 2000 and the balance sheet data as of June 30, 2000 have been
derived from our unaudited financial statements and include all adjustments,
consisting only of normal recurring adjustments, which management considers
necessary for a fair presentation of the financial data for these periods and
as of June 30, 2000. The financial statements reflect our acquisition of
Allelix effective as of December 31, 1999. Historical results are not
necessarily indicative of the results that we may expect in the future.
<TABLE>
<CAPTION>
Six Months Ended
Year Ended December 31, June 30,
--------------------------------------------- ------------------
1995 1996 1997 1998 1999 1999 2000
------- ------- -------- -------- -------- -------- --------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Revenues from research
and license
agreements............. $ 9,562 $20,342 $ 5,842 $ 3,568 $ 3,445 $ 1,830 $ 3,654
Operating expenses:
Research and
development........... 8,727 11,326 15,090 17,856 16,935 10,404 13,961
General and
administrative........ 3,975 5,111 5,587 5,546 5,983 3,099 6,792
Amortization of
goodwill and acquired
intangibles........... -- -- -- -- -- -- 1,820
In-process research and
development acquired.. -- -- -- -- 17,760 -- --
------- ------- -------- -------- -------- -------- --------
Total operating
expenses............... 12,702 16,437 20,677 23,402 40,678 13,503 22,573
Operating income
(loss)................. (3,140) 3,905 (14,835) (19,834) (37,233) (11,673) (18,919)
Other income, net....... 322 2,550 3,308 2,672 1,579 908 400
------- ------- -------- -------- -------- -------- --------
Income (loss) before
income tax expense..... (2,818) 6,455 (11,527) (17,162) (35,654) (10,765) (18,519)
Income tax expense...... 500 350 167 -- -- -- --
------- ------- -------- -------- -------- -------- --------
Net income (loss)....... $(3,318) $ 6,105 $(11,694) $(17,162) $(35,654) $(10,765) $(18,519)
======= ======= ======== ======== ======== ======== ========
Diluted net income
(loss) per share....... $ (0.48) $ 0.55 $ (0.98) $ (1.39) $ (2.77) $ (0.85) $ (0.85)
======= ======= ======== ======== ======== ======== ========
Diluted weighted average
shares................. 6,924 11,086 11,956 12,337 12,863 12,649 21,724
</TABLE>
<TABLE>
<CAPTION>
December 31,
------------------------------------------- June 30,
1995 1996 1997 1998 1999 2000
------- ------- ------- ------- ------- --------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash, cash equivalents
and marketable
investment securities.. $ 8,340 $68,962 $57,942 $43,444 $35,679 $73,408
Working capital......... 5,832 67,413 56,365 40,767 32,532 69,541
Total assets............ 10,600 72,160 62,634 48,111 64,966 98,886
Long term obligations,
less current portion .. 747 327 65 32 1,940 1,749
Deficit accumulated
during development
stage.................. (20,517) (14,413) (26,107) (43,269) (78,923) (97,442)
Net stockholders'
equity................. 7,322 69,870 60,319 45,146 56,079 91,783
</TABLE>
17
<PAGE>
Management's Discussion and Analysis of Financial Condition
and Results of Operations
You should read this discussion together with the financial information
included in this prospectus and the financial statements and reports
incorporated by reference in this prospectus.
Overview
We discover, develop and intend to commercialize small molecule drugs and
recombinant proteins, primarily for bone and mineral disorders and central
nervous system disorders. We have five drugs in clinical development and
several preclinical product candidates. Our two most advanced product
candidates focus on bone and mineral disorders. They are AMG 073, which has
completed a series of Phase II clinical trials for treatment of
hyperparathyroidism, and ALX1-11, which is in a pivotal Phase III clinical
trial for treatment of post-menopausal osteoporosis.
On December 23, 1999 we acquired all of the outstanding common stock of
Allelix, a biopharmaceutical company based in Ontario, Canada for 6,516,923
shares of our common stock and assumed options and warrants for the issuance of
an additional 675,520 shares of our common stock. The acquisition was accounted
for under the purchase method of accounting, with an effective date of December
31, 1999. Accordingly, operating results of Allelix are only included in our
consolidated statements of operations for periods after that date. We did,
however, record an expense of $17.8 million in 1999 for in-process research and
development that we acquired as part of our purchase of Allelix.
Substantially all our historical revenues have come from license fees,
milestone payments, research and development support payments from our
licensees and collaborators. These revenues fluctuate from quarter to quarter.
All of the research and development support payments under our existing license
or collaborative agreements are scheduled to expire in 2000.
Substantially all of our resources are devoted to our research and development
programs. To date, we have not completed the development of any pharmaceutical
product for sale. We have incurred cumulative losses through June 30, 2000 of
approximately $97.4 million, net of cumulative revenues from research and
license agreements of approximately $59.2 million. We expect to incur
significant operating losses over at least the next several years as we
continue to expand our clinical trials and research activities. In particular,
we recently initiated an 1,800 to 2,000 patient Phase III clinical trial for
ALX1-11, and expect to expend a significant portion of our resources on the
development of this product.
Results of Operations
Six Months Ended June 30, 2000 Compared to Six Months Ended June 30, 1999
Revenues. Our revenues for the six-month period ended June 30, 2000 were $3.7
million compared to $1.8 million for the same period in the prior year. The
increase in revenues was primarily due to revenues from collaborative license
agreements we acquired as a result of our purchase of Allelix.
Research and Development Expenses. Our research and development expenses arise
primarily from the compensation and other related costs of our personnel who
are dedicated to research and development activities and from the fees we pay
to outside professionals to conduct clinical studies and trials. Our research
and development expenses increased to $14.0 million for the six-month period
ended June 30, 2000 from $10.4 million for the comparable period in 1999. The
increase in research and development expenses was principally due to the
commencement of a pivotal Phase III clinical trial for ALX1-11 and a pilot
Phase II clinical trial for ALX-0600, two product candidates that we acquired
as a result of our acquisition of Allelix. We have the right to be reimbursed
under our agreement with Technology Partnerships Canada, or TPC, for a portion
of our
18
<PAGE>
research and development expenses for ALX-0600. We expect research and
development expenses to continue at this level or higher levels as these
clinical trials progress.
General and Administrative Expenses. Our general and administrative expenses
consist primarily of the costs of our executive management, finance and
administrative staff, business insurance, taxes and professional fees. Our
general and administrative expenses increased to $6.8 million for the six-month
period ended June 30, 2000, up from $3.1 million for the comparable period in
1999. The increase in general and administrative expenses was primarily the
result of increased costs of our operations and of our recently acquired
subsidiary, NPS Allelix, and a charge of $990,000 for compensation expense for
stock options held by management that vested on the signing of a license
agreement in the first quarter of 2000. That type of compensation expense may
occur in the future upon vesting of contingent options we may grant to
employees and upon our grant of options to consultants or other non-employees.
Amortization of Goodwill and Acquired Intangibles. We are required to amortize
goodwill and other acquired intangibles as a result of our acquisition of
Allelix. The remaining intangible assets at June 30, 2000 total approximately
$17.2 million. We are amortizing these assets over their expected lives, which
range from two to six years. We recorded amortization expense of $1.8 million
for the six months ended June 30, 2000. We did not record any amortization of
goodwill and acquired intangibles for the same period in 1999, since the
effective date of the Allelix acquisition was December 31, 1999.
Other Income, Net. Our other income, net, decreased from $908,000 for the six
months ended June 30, 1999 to $400,000 for the six months ended June 30, 2000.
The decrease in other income, net, was primarily related to a non-cash loss of
approximately $1.2 million associated with our closing of a facility in New
Jersey that we acquired as part of the Allelix transaction. We anticipated at
the time of the acquisition that we would sublease the facility for the
remaining nine-year term of our lease obligation and retain the existing
leasehold improvements. However, we were able to negotiate a release of our
obligation from the landlord subject to our forfeiting the leasehold
improvements and certain office furniture and equipment that had a net book
value of approximately $1.2 million. The loss of $1.2 million for the six
months ended June 30, 2000 was offset by increased interest income of
approximately $461,000 resulting from our higher balances of cash, cash
equivalents and marketable investment securities. These balances increased
primarily due to the net proceeds of $43.3 million we received from a private
placement of 3.9 million common shares that we closed in April 2000.
Year Ended December 31, 1999 Compared to Years Ended December 31, 1998 and 1997
Revenues. All of our revenues of $3.4 million in 1999, $3.6 million in 1998,
and $5.8 million in 1997 were derived from research and license agreements. The
higher revenue in 1997 resulted from a one-time milestone payment of $2.0
million from one of our licensees.
Research and Development Expenses. Our research and development expenses
decreased to $16.9 million in 1999 from $17.9 million in 1998 after an increase
from $15.1 million in 1997. The increase in research and development expenses
from 1997 to 1998 was principally due to the Phase I clinical trials we
initiated for NPS 1776 in the third quarter of 1998. The decrease in research
and development expenses from 1998 to 1999 was principally due to the
completion of our clinical trials for NPS 1776 in mid-1999.
General and Administrative Expenses. Our general and administrative expenses
were $6.0 million in 1999, $5.5 million in 1998 and $5.6 million in 1997.
In-Process Research and Development Acquired. We recorded an expense of $17.8
million in 1999 for in-process research and development that we acquired as
part of our purchase of Allelix. The acquired in-process research and
development consisted of five drug development programs. The two most advanced
product candidates, ALX1-11, for osteoporosis, and ALX-0600, for
gastrointestinal disorders, accounted for 83% of the total value of the
acquired in-process research and development.
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We determined the fair value assigned to the in-process research and
development by estimating the total costs to develop the product candidates
into commercially viable products (i.e., to obtain FDA approval). We then
discounted the projected net cash flows related to these product candidates
back to their present value using a risk-adjusted discount rate. At the date of
the acquisition, the product candidates had not yet received FDA approval and
had no alternative future uses.
Since the date of the acquisition, we revised our plans for the next series of
clinical trials for ALX1-11 and ALX-0600. We started a pivotal Phase III
clinical trial with ALX1-11, which we expect will include an 18-month course of
treatment in 1,800 to 2,000 patients with osteoporosis. We also started
enrolling a small number of patients with short bowel syndrome in a pilot Phase
II clinical trial with ALX-0600. Since the date of acquisition, we have
incurred development costs of approximately $5.8 million for ALX1-11 and
$129,000 for ALX-0600. Total development costs and time-to-completion for each
of these product candidates will depend on the costs we incur to conduct
current clinical trials and any additional testing we find necessary to obtain
FDA approval.
We believe the assumptions we used in the valuation of the in-process research
and development we acquired from Allelix were reasonable at the time of the
acquisition. However, we have modified our development plans as new data have
become available regarding each product candidate. Accordingly, actual results
may vary from the projected results in the valuation.
Other Income, Net. The majority of our other income, net, is comprised of
interest income. Our interest income was $1.8 million in 1999, $2.4 million in
1998 and $3.3 million in 1997. The decreases in 1998 and 1999 were primarily
due to decreases in the average balances of our cash, cash equivalents and
marketable investment securities as we used cash for operations.
Liquidity and Capital Resources
We have financed our operations since inception primarily through collaborative
research and license agreements and the private and public placement of our
equity securities. As of June 30, 2000, we had recognized $59.2 million of
cumulative revenues from payments for research support and license fees and
$138.2 million from the sale of equity securities for cash. The sale of equity
securities includes $4.5 million received from the exercise of options during
the first six months of 2000, $43.3 million, net, from the sale of 3.9 million
shares of common stock we completed in the second quarter of 2000, and $2.0
million from the sale of 168,492 shares of common stock under the terms of an
agreement with an existing corporate licensee during the second quarter of
2000. Our principal sources of liquidity are cash, cash equivalents and
marketable investment securities, which totaled $73.4 million at June 30, 2000.
During July 2000, existing warrant holders of our wholly owned subsidiary, NPS
Allelix, exercised warrants to acquire 264,650 exchangeable shares of NPS
Allelix for approximately $4.2 million. The exchangeable shares may be
exchanged into shares of our common stock at any time on a one-for-one basis.
In the past, we received quarterly research and/or development support payments
under our agreements with Amgen, Kirin and SmithKline, and under NPS Allelix's
agreements with Janssen and Eli Lilly. All of the research and development
support payments under these agreements are scheduled to expire in 2000. We do
not receive any research and development support payments under our agreements
with Abbott or Forest. However, we could receive future milestone payments of
up to $113.5 million in the aggregate if we accomplish specified research
and/or development milestones under our agreements with all of these parties.
All of the agreements also require the licensees to make royalty payments to us
if they sell products derived from the license rights. However, we do not
control the subject matter, timing or resources applied by our licensees to
their development programs. Thus, potential receipt of milestone payments from
these licensees is largely beyond our control. Each of these agreements may be
terminated before its scheduled expiration date by the respective licensee
under certain conditions.
We have an agreement with Technology Partnerships Canada, or TPC, a Canadian
government program, under which TPC will reimburse us for our research expenses
for treatments for various intestinal disorders using our
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ALX-0600 product. TPC will reimburse us for 30% of the qualified costs we incur
through December 2002, to a maximum of Cdn. $8.4 million. We will pay a 10%
royalty to TPC on revenues received from the sale or license of any product we
develop from the funded research. Those payments terminate in December 2008 if
we have paid TPC a total of at least Cdn. $23.9 million through that date, or
if we have paid TPC less than that amount through that date, the payments
continue until the earlier of when we have paid TPC a total of Cdn. $23.9
million or December 2017. As of June 30, 2000, we have invoiced TPC for a total
of Cdn. $2.4 million for reimbursement.
We have entered into joint venture agreements and sponsored research and
license agreements that obligate us to purchase services from the joint
ventures and to make research support payments to academic and/or commercial
research institutions. As of June 30, 2000, we had a total commitment under the
arrangements of approximately $244,000. We may be required to make additional
payments if the research institutions reach milestones, or for license fees or
royalties to maintain the licenses. We expect to enter into additional
sponsored research and license agreements in the future.
We expect that our existing capital resources, together with the net proceeds
from this offering, including interest earned thereon, will be sufficient to
allow us to maintain our current and planned operations for at least the next
24 months. However, our actual needs will depend on numerous factors,
especially with regard to the clinical trials and pre-launch marketing and
production costs for ALX1-11, if approved. Furthermore, if we advance current
propriety programs or if we in-license or otherwise acquire other technologies,
product candidates or companies, we may need to make substantial additional
expenditures. For additional information regarding factors that could impact
our capital requirements, see the items listed under the heading "We may need
additional financing, but our access to capital funding is uncertain" in Risk
Factors.
Income Tax Carryforwards. As of December 31, 1999, we had a U.S. federal income
tax net operating loss carryforward of approximately $64.4 million and a U.S.
federal income tax research credit carryforward of approximately $4.1 million.
We also had a Canadian federal income tax investment credit carryforward of
approximately $6.7 million, a Canadian federal income tax research carryforward
of approximately $76.7 million and a Canadian net operating loss carryforward
of approximately $1.9 million. Our ability to utilize the U.S. operating loss
and credit carryforwards against future taxable income will be subject to
annual limitations in future periods pursuant to the "change in ownership
rules" under Section 382 of the Internal Revenue Code of 1986.
Recent Accounting Pronouncements
The Financial Accounting Standards Board (FASB) issued Statement of Financial
Accounting Standards (SFAS) No. 133, Accounting for Derivative Instruments and
Hedging Activities in 1998. SFAS No. 133, as amended, establishes accounting
and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts (collectively referred to as
derivatives), and for hedging activities. It requires that an entity recognize
all derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. For a derivative not
designated as a hedging instrument, changes in the fair value of the derivative
are recognized in earnings in the period of change. We must adopt SFAS No. 133
in the first quarter of 2001. We do not believe the adoption of SFAS No.133
will have a material effect on our consolidated financial position, results of
operations or liquidity.
In December 1999, the Securities and Exchange Commission staff issued Staff
Accounting Bulletin No. 101, Revenue Recognition, (SAB No. 101) to provide
guidance on the recognition, presentation and disclosure of revenue in
financial statements. SAB No. 101 does not modify existing literature on
revenue recognition. SAB No. 101 explains the staff's general framework for
revenue recognition. We will incorporate the guidance of SAB No. 101 in
financial reporting beginning with the fourth quarter of fiscal 2000. We
continue to evaluate the impact, if any, of SAB No. 101 and any possible,
subsequent interpretations of SAB No. 101 on our policies and procedures
relating primarily to upfront license fees and milestone payments receivable
under current and potential collaborative license agreements.
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The FASB issued Interpretation No. 44, Accounting for Certain Transactions
Involving Stock Compensation--an Interpretation of APB Opinion No. 25 (FIN No.
44) in March 2000. The interpretation clarifies the application of Opinion 25
for only certain issues such as the following: (i) the definition of employee
for purposes of applying Opinion 25, (ii) the criteria for determining whether
a plan qualifies as a noncompensatory plan, (iii) the accounting consequences
of various modifications to the terms of a previously fixed stock option or
award, and (iv) the accounting for an exchange of stock compensation awards in
a business combination. We adopted FIN No. 44 effective July 1, 2000. The
impact of adopting FIN No. 44 is not anticipated to be material to our
consolidated financial position, results of operations or liquidity.
Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Risk. Our primary objectives in managing our investment portfolio
are to preserve principal, maintain proper liquidity to meet operating needs
and maximize yields. The securities we hold in our investment portfolio are
subject to interest rate risk. We have established policies and procedures to
manage exposure to fluctuations in interest rates. We place our investments
with high quality issuers and limit the amount of credit exposure to any one
issuer and do not use derivative financial instruments in our investment
portfolio. We maintain an investment portfolio of various issuers, types and
maturities, which consist mainly of fixed-rate financial instruments. These
securities are classified as available-for-sale and, consequently, are recorded
on the balance sheet at fair value with unrealized gains or losses reported as
accumulated other comprehensive income as a separate component in stockholders'
equity. At any time, sharp changes in interest rates can affect the fair value
of the investment portfolio and its interest earnings. Currently, we do not
hedge these interest rate exposures. After a review of our marketable
investment securities, we believe that in the event of a hypothetical 10%
increase in interest rates, the resulting decrease in fair market value of our
marketable investment securities would be insignificant to the financial
statements.
Foreign Currency Risk. Some of our research and development operations are in
Canada. As a result, our financial results could be affected by factors such as
a change in the foreign currency exchange rate between the U.S. dollar and the
Canadian dollar, or by weak economic conditions in Canada. When the U.S. dollar
strengthens against the Canadian dollar, the cost of expenses in Canada
decreases. When the U.S. dollar weakens against the Canadian dollar, the cost
of expenses in Canada increases. The monetary assets and liabilities in our
foreign subsidiary that are impacted by the foreign currency fluctuations are
cash, accounts receivable, accounts payable and certain accrued liabilities. A
hypothetical 10% increase or decrease in the exchange rate between the U.S.
dollar and the Canadian dollar from the June 30, 2000 rate would cause the fair
value of such monetary assets and liabilities in Canada to change by an
insignificant amount. We are not currently engaged in any foreign currency
hedging activities, although we may engage in those types of activities in the
future.
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Business
Overview
We discover, develop and intend to commercialize small molecule drugs and
recombinant proteins, primarily for bone and mineral disorders and central
nervous system disorders. We have five drugs in clinical development and
several preclinical product candidates. Our two most advanced product
candidates focus on bone and mineral disorders. They are AMG 073, which has
completed a series of Phase II clinical trials for treatment of
hyperparathyroidism, and ALX1-11, which is in a pivotal Phase III clinical
trial for treatment of post-menopausal osteoporosis.
Strategy
Our objective is to build a profitable biopharmaceutical company by developing
innovative therapies that maintain human health and relieve suffering. The key
elements of our strategy to accomplish this objective are to:
. Build a diversified pipeline of products. We are developing a broad
pipeline of products that are in various stages of clinical and
preclinical development. We believe this strategy increases the likelihood
that we will successfully develop commercially-viable pharmaceutical
products. Our portfolio approach will reduce our exposure to the impact of
any single product failure and will increase our flexibility to eliminate
programs we deem less promising.
. Retain greater product rights for internal development and
commercialization. We intend to increase our participation in the
development and commercialization of our product candidates, either
independently or with collaborators. By selectively pursuing the
development and commercialization of product candidates on our own or
through collaborations, we employ a flexible approach in an effort to
optimize our products' value to us. In our future collaborations, we will
seek to retain strategic sales and marketing rights to product candidates
in therapeutic areas where we think we will be able to achieve a greater
return.
. In-license or acquire complementary products, technologies or companies.
In addition to our internal development efforts, we plan to expand our
product portfolio by identifying and evaluating potential products and
technologies developed by third parties that we believe fit within our
overall portfolio strategy. For example, in 1999 we acquired Allelix, in
part because its product candidates complemented our existing programs in
osteoporosis and central nervous system disorders.
. Leverage collaborations to reduce our risk and accelerate the
commercialization of our product candidates. We selectively enter into
collaboration agreements with large pharmaceutical companies to augment
our financial investment in our development programs. This strategy allows
us to develop a greater number of products than would otherwise be
possible. In addition, we believe collaborators with clinical development
and marketing expertise in specific therapeutic areas will facilitate more
rapid entry into the market for our products and accelerate their
acceptance by healthcare providers and third-party payors.
. Maintain our core discovery competencies. We have developed a significant
portion of our product pipeline through internal discovery efforts. We
intend to continue our strong focus on scientific discovery by retaining
creative scientists who we believe can make breakthrough discoveries
leading to innovative products.
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Our Product Development Programs
The following is a summary of our product development programs by therapeutic
area:
<TABLE>
<CAPTION>
Product or Program Indication(s) Status Collaborators
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Bone and Mineral Disorders
Calcimimetics: Hyperparathyroidism
AMG 073 Primary Phase II Amgen, Kirin
Secondary Phase II Amgen, Kirin
ALX1-11 Osteoporosis Phase III
Calcilytics Osteoporosis Preclinical SmithKline
Central Nervous System
Disorders
NPS 1776 Epilepsy and bipolar disorder Phase I Abbott
ALX-0646 Migraine Phase I Forest
Metabotropic glutamate
receptors:
Group I Neuropathic pain, epilepsy Preclinical
and other neurological
disorders
Group II Anxiety, craving disorders Preclinical
and other neurological
disorders
Group III Neuroprotection, neuro- Preclinical
psychiatric and other neurological
disorders
Glycine reuptake inhibitors Schizophrenia and dementia Preclinical Janssen
Excitatory amino acid Psychiatric disorders and pain Preclinical Eli Lilly
receptors
Gastrointestinal Disorders
ALX-0600 Short bowel syndrome Pilot Phase II
</TABLE>
Bone and Mineral Disorders
Overview of Parathyroid Hormone and Calcium Receptors
In normal circumstances, calcium receptors on parathyroid cells control the
level of calcium in the blood. These receptors are located in four parathyroid
glands in the neck. When the level of calcium in the blood falls, the calcium
receptors detect the change and stimulate the release of parathyroid hormone,
which acts to release calcium from bone, increase calcium retention in the
kidney and stimulate the synthesis of vitamin D in the kidney. Vitamin D
increases the efficiency of calcium absorption from dietary sources. As calcium
levels in the blood rise, calcium receptors then decrease the secretion of
parathyroid hormone. Calcium receptors play the key role in maintaining calcium
balance in the blood.
In 1993, we and our collaborators at The Brigham and Women's Hospital in Boston
were the first to isolate and clone calcium receptors. We have discovered small
molecules that mimic the role of calcium and activate calcium
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in the blood. These compounds are called "calcimimetic compounds," and they are
the foundation of our collaborations with Amgen and Kirin to develop small
molecule, orally administered drugs for treatment of hyperparathyroidism.
We have also discovered compounds that block calcium receptors, and, by this
action, cause a rapid increase of parathyroid hormone. These calcium receptor
blockers, called "calcilytic compounds," have been shown to stimulate new bone
formation in animal models of osteoporosis. They form the basis of our
collaboration with SmithKline to develop small molecule, orally administered
drugs for treatment of osteoporosis.
AMG 073 for Hyperparathyroidism
We discovered and patented AMG 073, a small molecule calcimimetic compound for
the treatment of both primary and secondary hyperparathyroidism. We licensed
AMG 073 to Kirin in the territories of Japan, China, Taiwan and Korea, and to
Amgen for the rest of the world.
Market Opportunity. Hyperparathyroidism is characterized as either primary or
secondary. Primary hyperparathyroidism is an age-related disorder that results
from excessive secretion of parathyroid hormone and is characterized by
enlargement of one or more of the four parathyroid glands located in the neck.
Symptoms of primary hyperparathyroidism may include bone loss, muscle weakness,
depression and cognitive dysfunction.
Over 75,000 people in the United States develop new cases of primary
hyperparathyroidism each year, and over 500,000 people in the United States are
estimated to suffer from the disorder. The treatment for primary
hyperparathyroidism is surgery to remove one or more of the parathyroid glands
in the neck. There are currently no effective pharmaceutical therapies for the
treatment of primary hyperparathyroidism.
Secondary hyperparathyroidism is a physiological response to failing kidneys.
As renal function deteriorates, the body is unable to maintain proper levels of
calcium and phosphorus in the blood, or serum. To compensate, parathyroid
glands enlarge and produce increased amounts of parathyroid hormone in an
attempt to increase calcium and decrease phosphorus levels in the blood.
Symptoms of secondary hyperparathyroidism may include bone loss, bone pain,
soft tissue calcification and chronic, severe itching.
Parathyroid hyperplasia, which is a proliferation of cells in the parathyroid
glands, is a major component of hyperparathyroidism and occurs in virtually all
patients with chronic renal failure. More than 260,000 patients in the United
States suffer from chronic renal failure to a degree that they require dialysis
or kidney transplantation. Several million people in the United States are
thought to suffer from some degree of renal insufficiency. Secondary
hyperparathyroidism commonly develops during the early stages of chronic renal
failure before dialysis is necessary. Studies suggest that over 30% of such
patients are affected by secondary hyperparathyroidism. Current treatment for
secondary hyperparathyroidism includes calcium supplements, phosphate binding
chemicals and vitamin D, none of which directly regulate the secretion of
parathyroid hormone.
Development Status. We licensed AMG 073 to Kirin in the territories of Japan,
China, Taiwan, and Korea, and to Amgen for the rest of the world. Results from
Amgen's Phase II clinical trial in patients with primary hyperparathyroidism
were presented at the American Society for Bone and Mineral Research meeting in
September 2000 and other Amgen Phase II clinical trial results in patients with
secondary hyperparathyroidism were presented at the American Society of
Nephrology meeting in October 2000. Amgen has been and is continuing to conduct
a larger Phase II clinical trial in patients with secondary hyperparathyroidism
to confirm and build upon these results. While it is impossible to predict the
timing of the start or finish of any specific clinical trial, we expect Amgen
to begin Phase III clinical trials in 2001.
The results from Amgen's Phase II clinical trial in patients with primary
hyperparathyroidism, presented at the American Society of Bone and Mineral
Research conference, indicated that AMG 073 normalized total serum calcium
safely and effectively.
Amgen has also completed three Phase II clinical trials of AMG 073 in patients
with secondary hyperparathroidism. Data collected from the Phase II clinical
trials indicate that AMG 073 safely and effectively reduced parathyroid
hormone, phosphorus and calcium-x-phosphorus product in dialysis
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patients with secondary hyperparathyroidism. The data from the first clinical
trial indicate single doses of AMG 073 reduced parathyroid hormone levels in a
dose dependent manner. In the second clinical trial, daily doses of AMG 073
effectively reduced parathyroid hormone by 25% to 40% and serum phosphorus by
approximately 25%. In the third clinical trial conducted over an eighteen-week
period, mean parathyroid hormone levels were 48% lower for the AMG 073 group
compared to placebo during the final six-week period. These reductions in
parathyroid hormone were accompanied by minimal (6%) reductions in plasma
calcium. However, serum phosphorus and calcuim-x-phosphorus product each fell
approximately 25% relative to the placebo group during the final six-week
period. Persistently elevated calcium-x-phosphorus product has been implicated
as a cause of soft tissue and vascular calcification in this disorder.
Generally, the drug was safe and well tolerated in each of these trials.
Amgen has paid license fees, development support payments and made equity
purchases totaling $19.5 million in connection with its license of AMG 073, and
will pay us up to an additional $26.0 million if it achieves development
milestones. Amgen will also pay royalties on any sales of AMG 073 in its
territories. Kirin has already paid us $16.0 million in license fees, research
and development support payments and milestone payments, and will pay us up to
an additional $9.0 million upon accomplishment of development milestones. Kirin
will also pay royalties on any sales of AMG 073 in its territories.
ALX1-11 and Calcilytic Compounds for Osteoporosis
We are developing two products for the treatment of osteoporosis, ALX1-11 and
calcilytic compounds. ALX1-11 is our patented recombinant, full-length
parathyroid hormone for treatment of post-menopausal osteoporosis. The drug
will be delivered subcutaneously on a daily basis. Although chronically high
levels of parathyroid hormone are known to cause bone loss as in
hyperparathyroidism, pulsatile dosing with ALX1-11, in which parathyroid
hormone levels rise rapidly and then return to normal levels within a few
hours, actually stimulates bone growth. We are independently developing ALX1-11
and are conducting a double blind, placebo-controlled pivotal Phase III
clinical trial. We are also pursuing a treatment for osteoporosis in
collaboration with SmithKline. This collaboration focuses on small molecule,
orally administered calcilytic compounds.
Market Opportunity. Osteoporosis is an age-related disorder characterized by a
reduction in bone mass. Although bone loss is a universal consequence of
advancing age, the process is accelerated in women following menopause.
Osteoporosis is often diagnosed only after fractures in weakened bones.
Fractures of hip, spine or wrist bones can result in serious long term
disability.
Ten million Americans have advanced osteoporosis and another 18 million are at
high risk of fractures because of low bone mass. One half of all women over 50
years of age in the United States will suffer an osteoporosis-related fracture
during their lifetime. Osteoporosis is responsible for 1.5 million fractures
annually in the United States, including 300,000 hip fractures.
Current therapies for osteoporosis, including supplementing dietary calcium and
vitamin D, help to slow the rate of bone loss. In post-menopausal women,
estrogen replacement therapy decreases the rate of bone resorption but does not
reverse the loss of bone mass. Other therapies include the use of compounds
such as bisphosphonates and raloxifene. These drugs can halt bone loss and,
over several years, can increase bone mass by amounts ranging from two to eight
percent. Fosamax, an oral bisphosphonate marketed by Merck, had sales of over
$1.0 billion in 1999. In clinical trials, Fosamax demonstrated an increase in
bone mineral density of seven to ten percent and a reduction in fractures over
three years. However, we believe there remains a need for a treatment that can
prevent fractures by more rapidly replacing lost bone.
Development Status. We are currently conducting a double blind, placebo-
controlled, pivotal Phase III clinical trial for ALX1-11. Our clinical trial
will measure increases in bone mineral density and determine the compound's
effectiveness in fracture prevention over an 18-month course of treatment in
1,800 to 2,000
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patients. ALX1-11 also is being tested in a clinical trial coordinated by the
University of California, San Francisco, and sponsored by the NIH. This trial
will test the combination of ALX1-11 and Fosamax as a therapy for osteoporosis.
In our Phase II clinical trial in over 200 post-menopausal women, daily
injections of ALX1-11 produced a clinically and statistically significant
average increase in bone mineral density of nearly seven percent in a one-year
course of treatment.
We believe our expectations for the safety and efficency of ALX1-11, our
recombinant parathyroid hormone consisting of all 84 amino acids, are further
validated by Eli Lilly's clinical experience with Forteo(TM), its active
fragment of parathyroid hormone comprised of the first 34 amino acids. Eli
Lilly recently announced its plans to file a U.S. New Drug Application for
Forteo for the treatment of osteoporosis. Data from Eli Lilly's Phase III
clinical trial indicated that, in post-menopausal women with severe
osteoporosis, daily injections of Forteo provided statistically significant
reductions in fractures and rapid and significant increases in bone mineral
density.
Calcilytic Compounds. We are collaborating with SmithKline on the discovery,
identification and characterization of calcilytic compounds for treatment of
osteoporosis. Calcilytic compounds are aimed at temporarily increasing the
secretion of the body's own parathyroid hormone. In animal studies, we
demonstrated that intermittent increases in circulating levels of parathyroid
hormone can be obtained through the use of calcilytics. Increased levels of
parathyroid hormone achieved by this mechanism are equivalent to those achieved
by an injection of parathyroid hormone sufficient to cause bone growth. We
believe that orally administered calcilytic drugs that act on the parathyroid
cell calcium receptors could provide a cost-effective treatment for
osteoporosis. We have already conducted preclinical studies with SmithKline on
some of the lead compounds identified in this program and we expect the first
clinical trial to begin before the end of 2000.
SmithKline has paid us a total of $29.5 million for license fees, research
support, milestone payments and equity purchases as part of our collaboration.
We will receive additional payments of up to an aggregate of $14.0 million upon
acheivement of clinical milestones and royalties on any sales by SmithKline of
products commercialized through this collaboration. We also have a limited
right to co-promote any products we develop through our collaboration and we
will receive a share of the profits.
Central Nervous System Disorders
NPS 1776 for Epilepsy and Bipolar Disorder
We are developing NPS 1776 for epilepsy and bipolar disorder. In early 2000, we
entered into a collaboration agreement with Abbott for the development of this
drug. Prior to entering into that agreement, we completed two Phase I clinical
trials to confirm its safety and tolerability.
Market Opportunity. Many types of epileptic seizures have been medically
defined. They range from mild cases of nearly imperceptible behavior, such as
staring into space, to grand mal seizures where consciousness is lost and the
body convulses uncontrollably. In most cases of recurrent seizures, drugs are
the treatment of choice, although in some extreme instances, neurosurgery may
be an option. While the majority of epilepsy patients can control their
seizures with currently available drug therapies, in many cases seizure control
is achieved only at doses that cause significant side effects. Up to 30% of
patients with epilepsy do not respond adequately to any medication.
Bipolar disorder, known until recently as manic-depressive disorder, is
characterized by the occurrence of both manic and depressive states, usually in
alternation. Bipolar disorder, like other mood disorders, is a lifetime illness
with no known cure. As a result, the number of bipolar patients continues to
increase each year. In the United States, approximately 2.3 million people have
been diagnosed as having bipolar disorder. It is now generally accepted that
some drugs normally used in treating seizures may also be effective treatments
for bipolar disorder. For example, Abbott's drug, Depakote(R), has received FDA
approval for the treatment of both epilepsy and manic episodes in bipolar
disorder.
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Development Status. Our studies show that NPS 1776 is effective in a number of
animal models of epilepsy. Importantly, it exhibited a high margin of safety in
the animal models compared to currently available epilepsy treatments, as
measured by a lack of motor impairment side effects following drug
administration. In addition, we have shown that NPS 1776 has the same broad
spectrum of anticonvulsant activity in animals as Depakote. We also believe NPS
1776 may have a better safety profile than other currently available
anticonvulsant drugs, particularly in terms of a reduced risk of birth defects
and liver damage. Thus, we believe that NPS 1776 may be useful for the
treatment of epilepsy and bipolar disorder.
In December 1998, we completed a Phase I clinical trial of NPS 1776 in healthy
male volunteers in the United Kingdom. Our analysis of the data indicates that
the drug was safe and well tolerated. In December 1999, we completed another
Phase I clinical trial in the United Kingdom to confirm safety and tolerability
in healthy volunteers receiving multiple doses of the drug.
On March 20, 2000, we entered into an agreement with Abbott in which we granted
Abbott worldwide marketing rights to NPS 1776 in return for Abbott's commitment
to fund further development of NPS 1776 and pay us milestone payments of up to
$18.0 million and royalties on any sales of NPS 1776. Abbott is currently
optimizing formulations of NPS 1776 in preparation for further clinical trial
development.
Metabotropic Glutamate Receptor Program
Since 1996, we have been working to find compounds that act on targets in the
central nervous system called metabotropic glutamate receptors, or mGluRs.
Because these nerve cell receptors are structurally related to calcium
receptors, we have been able to leverage our expertise in calcium receptors to
create proprietary methods for screening drug candidates active at mGluRs. We
have discovered a number of compounds that activate or inhibit mGluRs, and that
are highly selective for specific subtypes of mGluRs. Our animal studies with a
number of these compounds have demonstrated their potential as drug candidates
for the treatment of central nervous system disorders such as chronic pain.
There are three principal groups of mGluRs and several subtypes of mGluRs
within those groups that differ in their chemical composition, their effects on
cellular metabolism and their location in the central nervous system. Our
research indicates that different mGluRs are variously involved in diseases
such as stroke, epilepsy, Alzheimer's disease, schizophrenia and pain. Because
we have the ability to identify compounds that are selective for the various
mGluR subtypes, it is possible that we will be able to pursue the development
of products that will treat several central nervous system disorders.
Other Programs for Central Nervous System Disorders
We are developing ALX-0646, a small molecule compound, for the treatment of
migraine. We completed a Phase I clinical trial outside the United States with
ALX-0646 in healthy volunteers in 1998. In August 2000, we entered into an
agreement with Forest in which we granted Forest worldwide marketing rights to
ALX-0646 in return for Forest's commitment to fund further development of ALX-
0646 and pay us milestones payments of up to $25.0 million and royalties on any
sales of ALX-0646. Forest is conducting additional necessary toxicology studies
prior to beginning clinical trials in the United States.
We have two additional preclinical-stage central nervous system programs. We
are working with Janssen on glycine reuptake inhibitors to identify prospective
drug candidates for schizophrenia and dementia. The initial research phase of
this collaboration will expire in October 2000. Thereafter, Janssen has a one-
year period to select lead candidates for further clinical development. We are
also working with Eli Lilly to identify excitatory amino acid receptors as
therapeutic targets for various central nervous system disorders. The initial
research phase of this collaboration expires in November 2000. We are currently
in discussions with Eli Lilly regarding an extension of the research phase of
this collaboration. We will receive milestone payments of up to $21.5 million
from Janssen and royalties from both Janssen and Eli Lilly from any drugs
developed or sold by them under these collaboration agreements.
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Gastrointestinal Disorders
ALX-0600 for Short Bowel Syndrome
We are independently developing ALX-0600 for the treatment of short bowel
syndrome and are currently conducting a pilot Phase II clinical trial in a
small number of patients. We previously completed a Phase I clinical trial of
ALX-0600 that demonstrated safety and tolerability in healthy volunteers. In
July 2000, we obtained orphan drug designation for ALX-0600 for short bowel
syndrome from the FDA, which provides, subject to some restrictions, seven
years of marketing exclusivity once a product is launched for diseases that
afflict fewer than 200,000 patients.
Market Opportunity. Short bowel syndrome is a condition in which disease or
surgical removal of a large portion of the small intestine results in an
inadequate surface area for absorption of nutrients, electrolytes and fluids.
It results in symptoms such as diarrhea, weight loss and fatigue. Patients with
short bowel syndrome often must be fed intravenously by a technique called
total parenteral nutrition for a period of time and, in some cases,
permanently. Total parenteral nutrition costs can exceed $100,000 annually per
patient. There are currently no effective therapies available for enhancing the
growth and repair of the cell lining of the small intestine. Approximately
20,000 to 40,000 patients in North America are afflicted with short bowel
syndrome.
Development Status. ALX-0600 is an analog of glucagon-like peptide 2, a
naturally occurring hormone that regulates growth and proliferation of the cell
lining of the small intestine. Our animal studies have indicated that ALX-0600
has the ability to stimulate the regeneration of cells lining the small
intestine, expanding the surface area for absorption of nutrients. In animal
studies, ALX-0600 induced an approximately 50% increase in the weight of the
small intestine within 10 days of administration. Furthermore, the growth-
promoting properties of ALX-0600 appear to be highly tissue-specific,
predominantly affecting the small intestine, and thereby reducing the risk of
adverse side effects.
We are conducting a pilot Phase II clinical trial with ALX-0600 in a small
number of patients with short bowel syndrome. The clinical trial is designed to
measure improvement in nutrient absorption and physical changes in the small
intestine, as well as safety and tolerability. We previously completed a Phase
I clinical trial of ALX-0600 that demonstrated safety and tolerability in
healthy volunteers.
Although short bowel syndrome is a relatively small indication, we believe
that, if ALX-0600 is successful in treatment of short bowel syndrome, it may
also be useful in treating other gastrointestinal conditions marked by
inefficient absorption or altered absorptive capacity. Examples of these
conditions include Crohn's disease, inflammatory bowel disease and intestinal
mucositis in cancer patients, which is caused by chemotherapy or radiation
therapy. If ALX-0600 is approved for gastrointestinal conditions other than
short bowel syndrome, we will not lose our orphan drug status for the product
for short bowel syndrome.
In November 1999, we entered into an agreement with the Canadian government
through a program known as Technology Partnerships Canada. Under the agreement,
the Canadian government will reimburse us up to Cdn. $8.4 million for our
qualified costs related to research and development of ALX-0600. As a result of
the funding, we will pay a 10% royalty to the Canadian government through
December 2008 on the sale or license of any product developed from the funded
research. If the payments have not reached a total of Cdn. $23.9 million by
that date, we will continue to pay royalty payments until we reach that amount
or until December 2017, whichever occurs first.
Collaborative Research, Development and License Agreements
We currently have collaborative research, development and/or license agreements
with several collaborators, including Amgen, Kirin, SmithKline, Eli Lilly,
Janssen, Abbott, Forest and The Brigham and Women's Hospital.
Amgen
Our development and license agreement with Amgen grants Amgen the exclusive
right to develop and commercialize AMG 073 and related compounds for the
treatment of hyperparathyroidism and indications
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other than osteoporosis worldwide, excluding Japan, China, Hong Kong, North and
South Korea and Taiwan. Amgen has assumed full control, authority and
responsibility for conducting, funding and pursuing all aspects of the
development, submissions for regulatory approvals, manufacture and
commercialization of the AMG 073 compound in its territories. Amgen is required
to pay us royalties on any sales of AMG 073 in its territories. Amgen may
terminate the agreement for any reason on 90 days written notice, in which case
we would reacquire at no cost the technology, patent and commercialization
rights to AMG 073.
Kirin
In June 1995, we entered into a five-year collaborative research and license
agreement with Kirin to develop and commercialize AMG 073 for treatment of
hyperparathyroidism in Japan, China, Hong Kong, North and South Korea and
Taiwan. Kirin is responsible for conducting clinical trials and obtaining
regulatory approvals in its territories. Kirin is required to pay all costs of
developing and commercializing products within its territories and is required
to pay us royalties on any sales of AMG 073 within its territories. Kirin may
terminate the agreement for any reason on 90 days written notice. If Kirin
terminates the agreement, Amgen would receive worldwide rights to develop and
commercialize AMG 073 for treatment of hyperparathyroidism and other
indications except osteoporosis.
SmithKline
In November 1993, we entered into a research and license agreement with
SmithKline to collaborate on the discovery, development and marketing of drugs
for treatment of osteoporosis and other bone metabolism disorders. Under the
agreement, SmithKline has an exclusive license to the worldwide development and
marketing of any calcium receptor-active compounds developed under the
agreement that are useful for treatment of osteoporosis and other bone
metabolism disorders, excluding hyperparathyroidism. Once compounds have been
selected for development, SmithKline has agreed to conduct and fund all product
development, including all human clinical trials and regulatory submissions. We
have the right to co-promote any resulting products in the United States. We
are entitled to royalties on any sales of products for osteoporosis and other
bone metabolism disorders developed by SmithKline under the agreement and a
share of the profits from any co-promotion of the products. SmithKline may
terminate the agreement on 30 days' written notice, and we may both agree to
extend the agreement for an additional period of time. Under certain
circumstances, we have the right to terminate the SmithKline agreement after
October 2000. Termination of the SmithKline agreement will result in the return
of our technology, commercialization and patent rights in the licensed field of
osteoporosis and other bone and mineral disorders, as well as all additional
technology developed in the course of the collaboration.
Eli Lilly
In December 1989, we entered into a collaborative research and license
agreement with Eli Lilly. The agreement was assigned by Eli Lilly to Lilly
Canada in December 1990, and the scope of the agreement was modified in
December 1998 to include only research related to excitatory amino acid
receptors. Under the agreement, Eli Lilly has an exclusive worldwide license to
any and all patents and technology developed under the agreement after December
1, 1989. Eli Lilly is solely responsible for development, preclinical and
clinical testing and commercialization of any products under the collaboration,
and has an exclusive worldwide license to manufacture and market products
developed under the agreement. We are entitled to royalties on any sales of all
excitatory amino acid receptor products developed under the agreement. Eli
Lilly solely owns the right to any compounds and products developed under the
agreement, and will retain these rights if the agreement terminates. Upon
termination, we will retain our patent and technology rights. Eli Lilly will,
however, have a non-exclusive license to those patents and technology.
Janssen
In October 1998, we entered into a collaborative agreement with Janssen for the
research, development and marketing of new drugs for treatment of schizophrenia
and dementia. We will receive royalties from any product sales resulting from
the collaboration. In addition, Janssen will assume responsibility for
development of the
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compounds, including all costs and expenses associated with the development
efforts. While Janssen has the right to market products worldwide, we may co-
promote any products developed under the agreement in Canada.
Abbott
In March 2000, we entered into an exclusive license agreement with Abbott for
our compound NPS 1776 and related molecules. The agreement grants Abbott the
exclusive worldwide license to develop and commercialize NPS 1776 for all
indications. Abbott has committed to conduct and fund all preclinical
development and, if warranted, clinical development activities for NPS 1776 and
related molecules. We will receive royalties from any product sales resulting
from the collaboration. We will participate with Abbott on a joint project
review committee, where we will observe the progress of Abbott during the first
24 months of the agreement and where we will review progress on Abbott's
subsequent clinical development work plan. We will continue to prosecute all
our worldwide patent applications for NPS 1776. Abbott has the right to
terminate the agreement at any time. Upon termination, all of the data and
intellectual property covered by the agreement will be returned to us. We have
the right to institute binding alternative dispute resolution for the return of
the program and related technology in the absence of development progress.
Forest
In August 2000, we entered into an exclusive worldwide license with Forest for
the development and commercialization of ALX-0646. We are entitled to receive
licensing fees under the agreement, as well as royalties for any sales of
resulting products. If Forest does not obtain sublicense agreements in some
major markets outside of the United States within three years, we have the
option to remove those markets from Forest's territory, subject to Forest
having the right to buy our termination option. Forest may terminate the
agreement upon the occurrence of certain conditions. If the agreement is
terminated, Forest's license is terminated and the technology,
commercialization and patent rights relating to ALX-0646 will be returned to
us.
The Brigham and Women's Hospital
In February 1993, we entered into a sponsored collaborative research agreement
and a patent license agreement with The Brigham and Women's Hospital, an
affiliate of Harvard University Medical School. The patent license agreement
grants us an exclusive license to certain calcium receptor and inorganic ion
receptor technology covered by patents we jointly own with the hospital. The
research agreement grants us a right of first negotiation for exclusive license
rights to any patentable subject matter arising out of research that we sponsor
at the hospital. Brigham and Women's Hospital is also entitled to a royalty on
any sales of certain products under the patent license agreement, and we have
committed to promote sales of any licensed products for hyperparathyroidism for
which we receive regulatory approval.
Government Regulation
Research, preclinical development, clinical trials, manufacturing and marketing
activities are subject to regulation for safety, efficacy and quality by
numerous governmental authorities in the United States and other countries. In
the United States, drugs are subject to rigorous FDA regulation. The Federal
Food, Drug and Cosmetic Act and other federal and state statutes and
regulations govern, among other things, the testing, manufacture, safety,
efficacy, labeling, storage, record keeping, approval, advertising and
promotion of our products. Product development and approval within this
regulatory framework take a number of years and involve the expenditure of
substantial resources.
The steps required before a pharmaceutical agent may be marketed in the United
States include:
. preclinical laboratory tests, animal pharmacology and toxicology studies
and formulation studies
. the submission of an investigational new drug application to the FDA for
human clinical testing, which must become effective before human clinical
trials commence
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. adequate and well-controlled human clinical trials to establish the safety
and efficacy of the drug
. the submission of a new drug application to the FDA
. FDA approval of the new drug application before any commercial sale or
shipment of the drug. In addition to obtaining FDA approval for each
product, each domestic drug manufacturing establishment must be registered
with, and approved by, the FDA
Domestic drug manufacturing establishments are subject to regular inspections
by the FDA and must comply with FDA regulations. To supply products for use in
the United States, foreign manufacturing establishments must comply with FDA
regulations and are subject to periodic inspection by the FDA, or by
corresponding regulatory agencies in their home countries under reciprocal
agreements with the FDA.
Preclinical studies include the laboratory evaluation of in vitro pharmacology,
product chemistry and formulation, as well as animal studies to assess the
potential safety and efficacy of a product. Compounds must be formulated
according to cGMP regulations, and preclinical safety tests must be conducted
by laboratories that comply with FDA regulations regarding good laboratory
practices. The results of the preclinical tests are submitted to the FDA as
part of an investigational new drug application and are reviewed by the FDA
before human clinical trials can begin. Unless the FDA objects to an
investigational new drug application, the investigational new drug application
usually becomes effective 30 days following its receipt by the FDA.
Clinical trials must be sponsored and conducted in accordance with good
clinical practice under protocols and methodologies that: ensure receipt of
signed consents from participants that inform them of risks; detail the
objectives of the study; detail the parameters to be used to monitor safety;
and detail the efficacy criteria to be evaluated. Accurate documentation and
analyses must be submitted to the FDA as part of an investigational new drug
application. Furthermore, each clinical study must be conducted under the
supervision of a principal investigator operating under the auspices of an
Institutional Review Board, or IRB, at the institution where the study is
conducted. The IRB will consider, among other things, ethical factors, the
safety of human subjects and the possible liability of the institution.
Sponsors, investigators and IRB members must avoid conflicts of interests and
ensure compliance with all legal requirements.
Clinical trials typically are conducted in three sequential phases. In Phase I,
the initial introduction of the drug into a small number of healthy volunteers
is undertaken. The drug is evaluated for safety (adverse effects), dosage
tolerance, metabolism, distribution, excretion and pharmacodynamics (clinical
pharmacology). The Phase I trial must provide pharmacological data that is
sufficient to devise the Phase II trials.
Phase II trials involve studies in a larger, but still limited, patient
population in order to:
. determine the efficacy of the drug for specific, targeted indications
. determine dosage tolerance and optimal dosage
. identify possible adverse affects and safety risks
When a compound is determined to be effective and to have an acceptable safety
profile in Phase II evaluation, Phase III trials can be undertaken to evaluate
further safety and efficacy in expanded patient populations at geographically
diverse clinical trial sites.
The results of the pharmaceutical development, preclinical studies and clinical
trials are submitted to the FDA in the form of a new drug application, which
must be complete and accurate. The approval of a new drug application permits
the commercial-scale manufacturing, marketing, distribution, exportation from
the United States and sale of the drug in the United States. The testing and
approval process typically requires substantial time, effort and expense. The
FDA may deny a new drug application if the applicable scientific and regulatory
criteria are not satisfied. Moreover, the FDA may require additional testing or
information, or may require post-approval testing, surveillance and reporting
to monitor the products. Notwithstanding any of the foregoing, the
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FDA may ultimately decide that a new drug application does not meet the
applicable agency standards, and even if approval is granted, it can be limited
or revoked if the sponsor who received the approval does not comply with
regulatory standards. Finally, an approval may entail limitations on the uses,
labeling, dosage forms, distribution and packaging of the product.
Among the conditions for new drug approval is the requirement that the
prospective manufacturer's quality control, record keeping, notifications and
reporting and manufacturing systems conform to cGMP. In complying with the
standards contained in these regulations, manufacturers must continue to expend
time, money, resources and effort in order to ensure compliance.
Outside the United States, our ability to market a product is contingent upon
receiving a marketing authorization from the appropriate regulatory authority.
This foreign regulatory approval process includes many of the same steps
associated with FDA approval described above.
In addition to regulations enforced by the FDA, we are subject to regulation
under the Occupational Safety and Health Act, the Environmental Protection Act,
the Toxic Substances Control Act, the Resource Conservation and Recovery Act
and other present and future federal, state or local regulations. Our research
and development activities involve the controlled use of hazardous materials,
chemicals and various radioactive compounds. Although we believe that our
safety procedures for handling and disposing of these materials comply with the
standards prescribed by state and federal regulations, the risk of accidental
contamination or injury from these materials cannot be completely eliminated.
In the event of an accident, we could be liable for any damages that result.
Patents and Other Proprietary Technology
Our intellectual property portfolio includes patents, patent applications,
trade secrets, know-how, and trademarks. Our success will depend in part on our
ability to obtain additional patents, maintain trade secrets and operate
without infringing the proprietary rights of others, both in the United States
and other countries. We periodically file patent applications to protect the
technology, inventions and improvements that may be important to the
development of our business. We rely on trade secrets, know-how, continuing
technological innovations and licensing opportunities to develop and maintain
our competitive position.
We file patent applications in our own name, and when appropriate, have filed
and expect to continue to file, applications jointly with our collaborators.
These patent applications cover compositions of matter, methods of treatment,
methods of discovery, use of novel compounds and novel modes of action, as well
as recombinantly expressed receptors and gene sequences that are important in
our research and development activities. Some of our principal intellectual
property rights related to processes, compounds, uses and techniques related to
calcium receptor science are now protected by issued U.S. patents. We intend to
file additional patent applications relating to our technology and to specific
products as we think appropriate.
We hold patents directed to potential therapeutic products such as new chemical
entitles, pharmaceutical compositions and methods of treating diseases. We hold
patents directed also to nucleic acid and amino acid sequences of novel
cellular receptors and methods of screening for compounds active at such
cellular receptors. We continue actively to seek patent protection for these
and related technologies in the U.S. and in foreign countries.
We also rely on trade secrets and contractual arrangements to protect our trade
secrets. Much of the know-how important to our technology and many of its
processes are dependent upon the knowledge, experience and skills of our key
scientific and technical personnel and are not the subject of pending patent
applications or issued patents. To protect our rights to know-how and
technology, we require all of our employees, consultants, advisors and
collaborators to enter into confidentiality agreements that prohibit the
unauthorized use of, and restrict the disclosure of, confidential information,
and require disclosure and assignment to us of their ideas, developments,
discoveries and inventions.
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In connection with our research and development activities, we have sponsored
research at various university and government laboratories. For example, we
have executed license and research agreements regarding research in the area of
calcium and other ion receptors with The Brigham and Women's Hospital. We have
also sponsored work at other government and academic laboratories for various
evaluations, assays, screenings and other tests. Generally, under these
agreements, we fund the work of investigators in exchange for the results of
the specified work and the right or option to a license to any patentable
inventions that may result in certain designated areas. If the sponsored work
produces patentable subject matter, we generally have the first right to
negotiate for license rights therein. Any resulting license would be expected
to require us to pay royalties on net sales of licensed products.
Competition
We and our licensees are pursuing areas of product development in which we
believe there is a potential for extensive technological innovation in
relatively short periods of time. We operate in a field in which new
discoveries occur at a rapid pace. Our competitors may succeed in developing
technologies or products that are more effective than ours, or in obtaining
regulatory approvals for their drugs more rapidly than we are able to, which
could render our products obsolete or noncompetitive. Competition in the
pharmaceutical industry is intense and is expected to continue to increase.
Many competitors, including biotechnology and pharmaceutical companies, are
actively engaged in the research and development of products in areas similar
to the areas in which we are developing products, including the fields of
hyperparathyroidism, osteoporosis, neuroprotection and neurological disorders.
In particular, Eli Lilly has been developing Forteo, an active fragment of
human parathyroid hormone comprising the first 34 amino acids of the
parathyroid hormone, as a potential treatment for osteoporosis. Eli Lilly has
announced its plans to file a U.S. New Drug Application for Forteo. We believe
that our ALX1-11, which is an injectably administered recombinant parathyroid
hormone consisting of all 84 amino acids, will compete with Forteo. We believe
that at least one other company is developing a parathyroid hormone-based
treatment that is not delivered through injection. Additionally, Bone Care
International is presently marketing Hectoral, a vitamin D pro-hormone to
relieve some symptoms of secondary hyperparathyroidism. Also, GelTex is
currently marketing RenaGel for the treatment of secondary hyperparathyroidism.
Many of our competitors have substantially greater financial, technical,
marketing and personnel resources. In addition, some of them have considerable
experience in preclinical testing, human clinical trials and other regulatory
approval procedures. Moreover, certain academic institutions, governmental
agencies and other research organizations are conducting research in the same
areas in which we are working. These institutions are becoming increasingly
aware of the commercial value of their findings and are more actively seeking
patent protection and licensing arrangements to collect royalties for the
technology that they have developed. These institutions may also market
competitive commercial products on their own or through joint ventures and will
compete with us in recruiting highly qualified scientific personnel. Our
ability to compete successfully will depend, in part, on our ability to:
. establish collaborations for the development of our products
. identify new product candidates
. develop products that reach the market first
. develop products that are technologically superior to other products in
the market
. obtain and enforce patents covering our technology
Manufacturing
We have no small molecule manufacturing facilities. Under our existing
collaborative agreements, each licensee is responsible for the manufacture of
the applicable product.
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We currently produce some biological material at our Mississauga, Ontario site.
We use those materials in connection with our preclinical and early clinical
testing activities for our ALX1-11 and ALX-0600 product candidates. We obtain
other biological material from contract production firms. For certain tests,
this material, including clinical grade ALX1-11 and ALX-0600, must be
manufactured under the cGMP of the FDA. We are currently reviewing alternatives
to meet our current and planned manufacturing needs of these materials.
Employees
As of October 9, 2000, we employed 125 individuals full-time, 29 of whom hold
Ph.D. degrees and 32 of whom hold other advanced degrees. A total of 79 full-
time employees are engaged in research, development and support activities. A
total of 46 full-time employees are employed in finance, legal, human
resources, market research, corporate development and general administrative
activities. None of our employees are covered by collective bargaining
agreements and our management considers its relations with our employees to be
good.
Properties
We have ongoing operations in both the United States and Canada. In the United
States, we lease approximately 54,000 square feet of laboratory, support and
administrative space in the University of Utah's Research Park located in Salt
Lake City, Utah. That lease expires in September 2004, but may be extended for
three additional three-year terms. In Canada, we own a building consisting of
approximately 90,000 square feet of laboratory, support and administrative
space in Mississauga, Ontario. We anticipate that we will not need to acquire
additional space in order to meet our needs over the next three years.
Legal Proceedings
From time to time, we are involved in certain litigation arising out of our
operations. We maintain liability insurance, including product liability
coverage, in amounts our management believes is adequate. We are not currently
engaged in any legal proceedings that we expect would materially harm our
business or financial condition.
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Management
Board of Directors and Executive Officers
The following table sets forth certain information concerning our executive
officers and directors as of September 30, 2000:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<C> <C> <S>
Hunter Jackson, Ph.D............... 50 Chief Executive Officer, President
and Chairman of the Board
David L. Clark..................... 46 Vice President, Operations, Business
Development and Corporate
Communications
N. Patricia Freston, Ph.D.......... 60 Vice President, Human Resources
James U. Jensen, J.D (1)........... 56 Vice President, Corporate
Development and Legal Affairs,
Secretary and Director
Thomas B. Marriott, Ph.D........... 52 Vice President, Development Research
Robert K. Merrell.................. 45 Vice President, Finance, Chief
Financial Officer and Treasurer
Edward F. Nemeth, Ph.D............. 47 Vice President and Chief Scientific
Officer
Paul J. Van Damme.................. 50 Vice President, Finance--Canada
Santo J. Costa, J.D. (2)........... 54 Director
John R. Evans, M.D. (2)............ 70 Director and Vice-Chairman of the
Board
James G. Groninger (2)............. 56 Director
Tamar Howson....................... 51 Director
Joseph Klein, III (3).............. 39 Director
Donald E. Kuhla, Ph.D.(1).......... 58 Director
Thomas N. Parks, Ph.D. (3)......... 50 Director
Edward K. Rygiel (3)............... 60 Director
Calvin R. Stiller, C.M., M.D. (1).. 59 Director
Peter G. Tombros (2)............... 58 Director
</TABLE>
------------------
(1) Member of the Nominating Committee.
(2) Member of the Compensation Committee.
(3) Member of the Audit Committee.
Hunter Jackson, Ph.D. has been Chief Executive Officer and Chairman of our
board since founding NPS in 1986. He was appointed to the additional position
of President in January 1994. Before founding NPS, he was an Associate
Professor in the Department of Anatomy at the University of Utah School of
Medicine. Dr. Jackson received a Ph.D. in Psychobiology from Yale University.
He received postdoctoral training in the Department of Neurosurgery, University
of Virginia Medical School.
David L. Clark has been Vice President, Business Development and Corporate
Communications since January 2000 and Vice President, Operations since March
2000. Before being appointed to these positions, he served as Director of
Business Development and Corporate Communications for us from September 1998 to
December 1999. He served as Director of Corporate Communications for us from
March 1996 to September 1998. From 1988 to 1996 he served as Vice President,
Business Development for Agridyne Technologies Inc., a publicly held
biotechnology company. Mr. Clark received an M.S. in Plant Genetics from the
University of Illinois. He received an M.B.A. from the University of Utah.
N. Patricia Freston, Ph.D. has been Vice President, Human Resources since March
1997. From 1980 to February 1997, she served as Manager of Personnel Services,
Questar Corporation, a public integrated energy
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company. From 1977 to 1980, Dr. Freston was Assistant Director of Training for
Mountain Fuel Supply, a subsidiary of Questar. From 1971 to 1977, she was
Director of Academic Programming for the Division of Continuing Education,
University of Utah. Dr. Freston received a Ph.D. in Industrial Psychology from
the University of Utah.
James U. Jensen, J.D. has been Vice President, Corporate Development and Legal
Affairs and Secretary since August 1991. He has been Secretary and a director
of NPS since 1987. From 1986 to July 1991, he was a partner in the law firm of
Woodbury, Jensen, Kesler & Swinton, P.C., or its predecessor firm,
concentrating on technology transfer and licensing and corporate finance. From
July 1985 until October 1986, he served as Chief Financial Officer of Cericor,
a software company. He serves as a director of Wasatch Funds, Inc., a
registered investment company, and of Interwest Home Medical, Inc., a public
home use medical equipment distributor. Mr. Jensen received a J.D. and an
M.B.A. from Columbia University.
Thomas B. Marriott, Ph.D. has been Vice President, Development Research since
August 1993. From February 1990 to July 1993, he served as Director, Clinical
Investigations for McNeil Pharmaceutical, a subsidiary of Johnson & Johnson
with responsibility for developing and implementing clinical trial strategies
for a number of products. From 1986 until 1990, Dr. Marriott was Director, Drug
Metabolism for McNeil Pharmaceutical with the responsibility for planning,
initiating and completing bioanalytical drug disposition and clinical
biopharmaceutics and pharmacokinetics research required for investigational new
drug applications and new drug applications. He received a Ph.D. in Chemistry
from the University of Oregon.
Robert K. Merrell has been Vice President, Finance, Chief Financial Officer and
Treasurer since January 1995 and served as Director of Finance and
Administration and Treasurer from December 1993 to December 1994. He joined NPS
as Controller/Treasurer in September 1988. Prior to that time, he was a Senior
Manager at KPMG LLP. Mr. Merrell has been a licensed C.P.A. since 1980. He
received an M.M. from Kellogg Graduate School of Management at Northwestern
University.
Edward F. Nemeth, Ph.D. has been a Vice President of NPS since January 1994 and
was appointed Chief Scientific Officer in July 1997. He joined NPS as Director
of Pharmacology in March 1990. From 1986 until joining NPS, Dr. Nemeth was an
Assistant Professor in the Department of Physiology and Biophysics at Case
Western Reserve University School of Medicine. He received a Ph.D. in
Pharmacology from Yale University.
Paul J. Van Damme has been Vice President, Finance--Canada since December 1999.
He was Senior Vice President, Finance and Chief Financial Officer of Allelix
from September 1997 to December 1999. From December 1996 to September 1997, he
was Vice President and Chief Financial Officer of GlycoDesign Inc., a
biotechnology company. From 1994 to 1996, he served as Senior Vice President
and Chief Financial Officer of TeleZone Corporation, a wireless
telecommunications company. From 1991 to 1994, he was Vice President and
Controller of Laidlaw Inc., a publicly held environmental services and
transportation company. Mr. Van Damme is a Chartered Accountant and worked with
PricewaterhouseCoopers for several years. Mr. Van Damme received an M.B.A. from
the University of Toronto.
Santo J. Costa, J.D. has served as a director since 1995. Mr. Costa has been a
director of Quintiles Transnational Corporation, a publicly held global
contract research organization since April 1994 and has served as their Vice-
Chairman since November 1999. From April 1994 to November 1999 he served as
President and Chief Operating Officer for Quintiles. From 1986 to 1993, he was
employed by Glaxo, Inc., a worldwide pharmaceutical company, where he served as
Senior Vice President, Administration and General Counsel and was a member of
that company's board of directors. Mr. Costa received his J.D. from St. John's
University.
John R. Evans, M.D. has served as a director and Vice-Chairman of our board
since the closing of our acquisition of Allelix in December 1999. Previously,
Dr. Evans was Chairman of the Board of Allelix since 1983. From 1979 to 1983,
Dr. Evans served as a Director of the Population, Health and Nutrition
Department of the World Bank in Washington. From 1972 to 1978 he served as
President of the University of Toronto.
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Currently, Dr. Evans is Chairman of the Canada Foundation for Innovation and
serves as Chairman of the Board for both Alcan Aluminum Limited in Montreal and
Torstar Corporation in Toronto. He is a director of the Walter-Duncan Gordon
Charitable Foundation and a member of the board of directors of MDS Inc., a
publicly held health and life sciences company listed on the New York Stock
Exchange and the Toronto Stock Exchange, and GlycoDesign, Inc. Dr. Evans
received his M.D. from the University of Toronto and engaged in specialty
training in internal medicine and cardiology in London, Boston and Toronto.
James G. Groninger has served as a director since 1988. Mr. Groninger founded
in January 1995 and is President of The Bay South Company, a Richmond,
Virginia-based provider of financial advisory and investment banking services.
From 1988 through 1994, he served as a Managing Director, Investment Banking
Division, of PaineWebber Incorporated. Mr. Groninger is on the board of
directors of Cygne Designs, Inc., a publicly traded company, and Layton
BioScience, Inc., a private biotechnology company. Mr. Groninger received an
M.B.A. from Harvard Business School.
Tamar Howson has served as a director since July 2000. Ms. Howson also acts as
a consultant in business development and strategic planning. Between April 1993
and April 2000, Ms. Howson served as the Senior Vice President and Director,
Worldwide Business Development, for SmithKline. Between 1991 and 1993, she
served as Vice President and Director, Worldwide Business Development for
SmithKline. Before joining SmithKline, Ms. Howson was Vice President, Venture
Investments at Johnston Associates, a venture capital firm. Before that, she
was director of Worldwide Business Development and Licensing for Squibb
Corporation. Ms. Howson received an M.B.A. from Columbia University. She also
holds a M.Sc. from City College of New York.
Joseph Klein, III has served as a director since 1998. Currently, Mr. Klein is
Vice President, Strategy for Medical Manager Corporation, a physician office
management information systems vendor. From 1998 to 1999, Mr. Klein was a
Health Care Investment Analyst with the Kaufmann Fund, Inc. From 1995 to 1998,
Mr. Klein was a Portfolio Manager and Chairman of the Investment Advisory
Committee of T. Rowe Price Health Sciences Fund, Inc. From 1990 to 1998, Mr.
Klein was Vice President and Health Care Investment Analyst for T. Rowe Price
Associates, Inc., an investment management firm. Mr. Klein serves as a director
of Guilford Pharmaceuticals, a publicly held biotechnology company, and
Synbiotics Corporation, a publicly held veterinary diagnostic products company.
Mr. Klein received an M.B.A. from Stanford Graduate School of Business.
Donald E. Kuhla, Ph.D. has served as a director since 1991. Since 1998, Dr.
Kuhla has been President and Chief Operating Officer of Albany Molecular
Research, Inc., a chemical contract research organization, where he has also
been a director since 1995. From 1994 through 1998 Dr. Kuhla was Vice President
of Plexus Ventures, Inc., a business consulting firm. From 1990 to 1994, Dr.
Kuhla held senior management positions with two venture capital-backed,
biotechnology start-up companies. His early career was spent in research and
development and operations management positions with Pfizer Inc. and Rorer
Group, Inc., his last position at Rorer being Senior Vice President of
Operations. Dr. Kuhla received a Ph.D. in Organic Chemistry from Ohio State
University.
Thomas N. Parks, Ph.D. has served as a director since our founding in 1986. Dr.
Parks also serves as a scientific consultant to us. He is currently the George
and Lorna Winder Professor of Neuroscience and Chairman of the Department of
Neurobiology and Anatomy at the University of Utah Medical School. Dr. Parks
joined the faculty at the University of Utah Medical School in 1978 as an
assistant professor. Dr. Parks received a Ph.D. in Psychobiology from Yale
University. He was a postdoctoral fellow in Development Neurology at the
University of Virginia Medical School.
Edward K. Rygiel has served as a director since the closing of our acquisition
of Allelix in December 1999. Mr. Rygiel served on the board of Allelix since
1995. Since January 2000, Mr. Rygiel has been Executive Vice President of MDS
Inc., and since 1988 he has been President and Chief Executive Officer of MDS
Capital Corp., a subsidiary of MDS Inc. From 1988 to 2000, Mr. Rygiel was
Senior Vice President, Strategic Investments, of MDS Inc. Mr. Rygiel currently
is a director of Hemosol, Inc., a biotechnology company. Mr. Rygiel earned a
B.A.Sc. from the University of Toronto, School of Chemical Engineering.
38
<PAGE>
Calvin R. Stiller, C.M., M.D. has served as a director since the closing of our
acquisition of Allelix in December 1999. Mr. Stiller served on the board of
Allelix since April 1999. Since 1996, Mr. Stiller has served as Chairman and
Chief Executive Officer of Canadian Medical Discoveries Fund. Dr. Stiller
served as the Chief of the Multi-Organ Transplant Service at the University
Hospital in London, Ontario from 1984 through 1996. He is a full professor of
medicine at the University of Western Ontario. Dr. Stiller is the Chairman of
the Ontario Research and Development Challenge Fund and sits as a director of
Drug Royalty Corp. Inc., and CPL Trust, a public company. Dr. Stiller obtained
his M.D. from the University of Saskatchewan.
Peter G. Tombros has served as a director since 1998. Since 1994, Mr. Tombros
has served as President, Chief Executive Officer, and a Director of Enzon,
Inc., a public biopharmaceutical company. Prior to joining Enzon, Mr. Tombros
spent 25 years with Pfizer, Inc., a global healthcare company. Mr. Tombros
served as Vice President of Pfizer, Inc. in the following areas: Executive Vice
President of Pfizer Pharmaceuticals, Corporate Strategic Planning and Investor
Relations. Currently, Mr. Tombros serves on the board of directors of the
following public companies: Enzon, Inc. and Alpharma, Inc., a pharmaceutical
company. Mr. Tombros received an M.S. from Pennsylvania State University and an
M.B.A. from the Wharton Graduate School of Business.
39
<PAGE>
Principal Stockholders
The following table sets forth information regarding beneficial ownership of
our common stock as of September 30, 2000 by:
. each stockholder known by us to be the beneficial owner of more than five
percent of our outstanding shares of common stock
. each of our directors
. each of our executive officers
. all directors and officers as a group
Beneficial ownership is determined according to the rules of the Securities and
Exchange Commission, and generally means that person has beneficial ownership
of a security if he or she possesses sole or shared voting or investment power
over that security, and includes options that are currently exercisable or are
exercisable within 60 days. Each director, officer or five percent or more
stockholder, as the case may be, has furnished us information with respect to
beneficial ownership. Except as otherwise indicated, we believe that the
beneficial owners of the common stock listed below, based on the information
each of them has given to us and by our review of Schedules 13D and 13G filed
with Securities Exchange Commission, have sole investment and voting power with
respect to their shares, except where community property laws may apply.
This table lists the applicable percentage of ownership based on 24,990,936
shares of common stock outstanding as of September 30, 2000, including
1,055,461 shares of common stock issuable upon exchange of outstanding
exchangeable shares of NPS Allelix, and also lists applicable percentage
ownership based on the assumed issuance of an additional 3,500,000 shares of
our common stock in connection with the completion of this offering. The first
column includes options to purchase shares of our common stock that are
exercisable within 60 days of September 30, 2000, and that are deemed to be
beneficially owned by the persons holding them for the purpose of computing
percentage ownership of that person, but are not treated as outstanding for the
purpose of computing any other person's ownership percentage. The shares
underlying options that are deemed beneficially owned are listed in this table
separately in the column labeled "Shares Subject to Options."
Unless otherwise indicated, the principal address of each stockholder below is
at our principal corporate office address at 420 Chipeta Way, Salt Lake City,
Utah 84108.
<TABLE>
<CAPTION>
Shares Beneficially Owned
-------------------------------------------------------
Total Shares Subject Percent Percent
Name of Beneficial Owner Number to Options Before Offering After Offering
------------------------ --------- -------------- --------------- --------------
5% Stockholders
<S> <C> <C> <C> <C>
T. Rowe Price
Associates, Inc.(1).... 2,393,200 -- 9.6% 8.4%
100 E. Pratt Street
Baltimore, MD 21202
Wellington Management
Company, LLP (2)....... 1,813,079 -- 7.3 6.4
75 State Street
Boston, MA 02109
Stuart T. Weisbrod...... 1,245,200 -- 5.0 4.4
230 Park Avenue, Suite
928
New York, NY 10169
</TABLE>
40
<PAGE>
<TABLE>
<CAPTION>
Shares Beneficially Owned
-------------------------------------------------------
Total Shares Subject Percent Percent
Name of Beneficial Owner Number to Options Before Offering After Offering
------------------------ --------- -------------- --------------- --------------
Directors and Officers
<S> <C> <C> <C> <C>
Hunter Jackson,
Ph.D.(3)............... 553,825 279,600 2.2% 1.9%
David L. Clark.......... 23,765 22,500 * *
N. Patricia Freston,
Ph.D................... 52,192 36,700 * *
James U. Jensen, J.D.... 107,089 47,230 * *
Thomas B. Marriott,
Ph.D.(4)............... 137,219 122,800 * *
Robert K. Merrell....... 41,800 35,800 * *
Edward F. Nemeth,
Ph.D................... 246,656 204,800 1.0 *
Paul J. Van Damme....... 13,808 13,713 * *
Santo J. Costa, J.D..... 5,740 4,740 * *
John R. Evans, M.D...... 143,032 14,183 * *
James G. Groninger(5)... 14,259 10,920 * *
Tamar Howson............ 8,000 8,000 * *
Joseph Klein, III....... 116,130 11,730 * *
Donald E. Kuhla, Ph.D... 61,240 13,740 * *
Thomas N. Parks,
Ph.D.(6)............... 350,240 19,740 1.4 1.2
Edward K. Rygiel(7)..... 136,202 11,660 * *
Calvin R. Stiller, C.M.,
M.D.(8)................ 578,040 1,296 2.3 2.0
Peter G. Tombros........ 16,400 8,400 * *
All executive officers
and directors as a
group (18 persons)..... 2,605,637 867,552 10.1 8.9
</TABLE>
------------------
* Represents beneficial ownership of less than 1%.
(1) These securities are owned by various individual and institutional
investors, including T. Rowe Price New Horizons Fund, Inc., which owns
1,400,000 shares, for which T. Rowe Price Associates, Inc. serves as
investment adviser with power to direct investments and/or sole power to
vote the securities. For purposes of the reporting requirements of the
Securities Exchange Act of 1934, T. Rowe Price Associates is deemed to be a
beneficial owner of such securities; however, T. Rowe Price Associates
expressly disclaims that it is, in fact, the beneficial owner of such
securities.
(2) Wellington Management Company, LLP, a registered investment adviser, is
deemed to have beneficial ownership of 1,813,079 shares of our common
stock. Such shares are owned of record by clients of Wellington Management,
including Wellington Trust Company, NA, a bank as defined in Section
3(a)(6) of the Act which is deemed to have beneficial ownership of 915,024
shares of our common stock. Wellington Management shares voting power with
respect to 1,652,551 of such shares and dispositive power with respect to
all of such shares.
(3) Includes 274,223 shares held in a trust and two shares held by Dr.
Jackson's children, of which he disclaims beneficial ownership.
(4) Includes 2,141 shares held by Dr. Marriott's spouse, and 721 shares held by
his children, of which Mr. Marriott disclaims beneficial ownership.
(5) Includes 10,000 shares owned by Mr. Groninger's spouse for which Mr.
Groninger disclaims beneficial ownership.
(6) Includes 10,000 shares held in a trust, of which Dr. Parks disclaims
beneficial ownership.
(7) Includes 124,542 shares held by NeuroScience Partners, L.P., MDS Health
Ventures (TC) Inc. and MDS Health Ventures (FC) Inc., of which Mr. Rygiel
disclaims beneficial ownership.
(8) Includes 576,744 shares held by Canadian Medical Discoveries Fund, of which
Dr. Stiller disclaims beneficial ownership.
41
<PAGE>
Related-Party Transactions
Consulting Agreement with Plexus
Dr. Kuhla, one of our directors since 1991, was a Vice President of Plexus
Ventures from February 1994 through June 1998. We had a consulting agreement
with Plexus through December 31, 1995, under which Plexus assisted us with our
efforts to establish a collaboration for our hyperparathyroidism program.
Plexus may earn an additional $400,000 in fees as we receive payments from
Amgen. We also granted Plexus an option to purchase 20,000 shares of our common
stock at $10.50 per share, with vesting contingent on milestone payments from
Amgen. Dr. Kuhla holds a one-third interest in Plexus.
Consulting Agreement with Dr. Kuhla
We also entered into a Consultant Services Agreement with Dr. Kuhla, effective
November 1, 1996, under which Dr. Kuhla provides us with scientific consulting
services. In return for those services, Dr. Kuhla is paid with shares of our
common stock. In fiscal year 1999, Dr. Kuhla received no shares of our common
stock under the consulting services agreement.
Pharmaceutical Services Agreement with MDS
Dr. Evans, a director and vice-chairman of our board since December 1999, is a
director of MDS, Inc. In addition, Mr. Rygiel, a director since December 1999
is Executive Vice President of MDS, Inc. In February 2000, NPS Allelix entered
into a Pharmaceutical Services Agreement with MDS, Inc. for clinical laboratory
services related to clinical trials with ALX1-11. In March 2000, NPS Allelix
also entered into a Clinical Laboratory Analysis Agreement with Harris
Laboratories, a subsidiary of MDS, Inc. Under the agreements, NPS Allelix
expects to pay to MDS approximately $1.8 million over the next three years for
services rendered under the agreements.
Contract Research Agreement with Quintiles
Mr. Costa, a director since 1995, is Vice Chairman of Quintiles Transnational
Corporation. NPS Allelix entered into an agreement with Quintiles Canada, Inc.,
a subsidiary of Quintiles, under which Quintiles will provide certain contract
research services with respect to clinical trials of ALX1-11. Under the terms
of the agreement, NPS Allelix expects to pay approximately $7.3 million to
Quintiles over the next three years for services rendered under the agreement.
Consulting Agreement with Tamar Howson
Ms. Howson, who was recently appointed to our board of directors, has entered
into a one-year consulting services agreement with us under which she will
provide general consulting services. We agreed to pay Ms. Howson $144,000 per
year under the agreement and granted her an option to purchase 24,000 shares of
our common stock at $28.50 per share.
42
<PAGE>
Description of Capital Stock
General
We are authorized to issue 45,000,000 shares of common stock, $0.001 par value,
and 5,000,000 shares of preferred stock, $0.001 par value.
Common Stock
Each holder of common stock is entitled to one vote for each share held on all
matters to be voted upon by the stockholders and there are no cumulative voting
rights. Subject to preferences that may be applicable to any outstanding
preferred stock, holders of common stock are entitled to receive ratably the
dividends, if any, that are declared from time to time by the board of
directors out of funds legally available for that purpose. If there is a
liquidation, dissolution, or winding up of the company, the holders of common
stock are entitled to share in our assets remaining after the payment of
liabilities and the satisfaction of any liquidation preference granted to the
holders of any outstanding shares of preferred stock. Holders of common stock
have no preemptive or conversion rights or other subscription rights. There are
no redemption or sinking fund provisions applicable to the common stock. All
outstanding shares of common stock are fully paid and nonassessable. The
rights, preferences and privileges of the holders of common stock are subject
to, and may be adversely affected by, the rights of the holders of shares of
any series of preferred stock that we may designate in the future.
Preferred Stock
Our board of directors has the authority, without action by our stockholders,
to designate and issue preferred stock in one or more series and to designate
the rights, preference and privileges of each series, which may be greater than
the rights of the common stock. It is not possible to state the actual effect
of the issuance of any shares of preferred stock upon the rights of holders of
the common stock until the board of directors determines the specific rights of
the holders of this preferred stock. However, the effects might include, among
other things:
. restricting dividends on the common stock
. diluting the voting power of the common stock
. impairing the liquidation rights of the common stock
. delaying or preventing a change in our control without further action by
our stockholders
We have designated 350,000 shares of our preferred stock as Series A Junior
Participating Preferred Stock in connection with the stockholders rights plan,
described below. No other shares of preferred stock are outstanding, and we
have no present plans to issue any additional shares of preferred stock.
Exchangeable Shares
In connection with the acquisition of Allelix, NPS Allelix issued 3,476,009
exchangeable shares. Each of the exchangeable shares is exchangeable one-for-
one into our common shares, and are, as nearly as practicable, the functional
and economic equivalent of our common stock.
We designated a single share of preferred stock as special voting preferred
stock of NPS in connection with our acquisition of Allelix in December 1999.
The NPS special voting share possesses a number of votes equal to the number of
exchangeable shares of our Canadian subsidiary outstanding from time to time.
Such votes may be exercised on all matters submitted to a vote of the
registered holders of our common stock. The registered holders of our common
stock and the holder of the NPS special voting share vote together as a class
on all
43
<PAGE>
matters. The holder shall exercise the voting rights only on the basis of
instructions received from the holders of the exchangeable shares. If no
instructions are received, then the holder shall not exercise any of the voting
rights. In the event of a liquidation, all outstanding exchangeable shares will
automatically be exchanged for our common stock. The holder of the NPS special
voting share is not entitled to receive dividends, and in the event of any
liquidation, dissolution, or winding-up of NPS, will receive an amount equal to
the par value thereof. At such time as the NPS special voting share has no
votes attached to it because there are no exchangeable shares outstanding that
we or our affiliates do not own, the NPS special voting share will cease to
have any rights.
Stockholder Rights Plan
On December 4, 1996, our board of directors adopted a stockholder rights plan
and declared a distribution of one preferred stock purchase right for each
share of our common stock outstanding on December 31, 1996, and each share of
common stock issued after that date. The rights are transferable with our
common stock until they become exercisable, but are not exercisable until the
distribution date described in the plan. Generally, the plan distribution date
will not occur until a person or group acquires or makes a tender offer for 20%
or more of our outstanding common stock. The rights expire on December 31, 2001
unless we redeem them at an earlier date. The expiration date may be extended
by our board. When a right becomes exercisable, its holder is entitled to
purchase from us 1/100th of a share of preferred stock at a purchase price of
$50.00, subject to adjustment in certain circumstances.
Until the plan distribution date, the purchase rights will be evidenced by the
certificates for common stock registered in the names of holders of our common
stock. As soon as practical following the plan distribution date, we will mail
separate certificates evidencing the rights to common stockholders of record.
If any person or group acquires 20% or more of our common stock, the rights
holders will be entitled to receive upon exercise, that number of shares of
common stock that at the time have a market value equal to twice the purchase
price of the right. The shares of preferred stock acquired upon exercise of a
purchase right are not redeemable and are entitled to preferential quarterly
dividends. They are also entitled to preferential rights in the event of our
liquidation. Finally, if any business combination occurs in which our common
shares are exchanged for shares of another company, each preferred share will
be entitled to receive 100 times the amount per common share of our company.
If we are acquired in a business combination, the purchase rights holders will
be entitled to acquire, for the purchase price, that number of shares of common
stock of the acquiring corporation that, at the time, have a market value equal
to twice the purchase price of the purchase right. Our board has the right to
redeem the purchase rights in certain circumstances for $0.01 per share,
subject to adjustment.
The rights plan is designed to protect our stockholders in the event of
unsolicited offers to acquire us and other coercive takeover tactics, which, in
the board's opinion, would impair its ability to represent our stockholders'
interests. The rights plan may make an unsolicited takeover more difficult or
less likely to occur or may prevent a takeover, even though it may offer our
stockholders the opportunity to sell their stock at a price above the
prevailing market rate and may be favored by a majority of our stockholders.
Warrants and Other Obligations to Issue Capital Stock
We currently have two warrants outstanding. The first is a warrant which
expires in June 2002. That warrant allows its holder to purchase up to 32,542
shares of our common stock at a price of $3.69 per share. The other warrant
expires in June 2005. That warrant allows its holder to purchase up to 3,815
shares of our common stock (or NPS Allelix's exchangeable stock) at a price of
$21.51 per share.
We have adopted and maintain equity incentive plans pursuant to which we are
authorized to issue stock, stock options and other types of compensation for
employees, consultants and other persons who provide services to
44
<PAGE>
us. Our employees are also given the right to purchase our common stock at
favorable purchase prices under these plans. As of June 30, 2000, we have
outstanding options to acquire 2,673,385 shares of common stock under these
plans. We have reserved an additional 2,143,291 shares of common stock for
future issuance under these plans.
Registration Rights
We filed a resale registration statement for 3,900,000 shares of our common
stock in connection with the private placement of those shares in April 2000.
We also filed a resale registration statement for 264,650 shares of our common
stock issued in connection with the exercise of warrants assumed in the Allelix
acquisition. We are also obligated to file a resale registration statement
covering 992,018 shares of common stock issued in private placements to
SmithKline and Johnson & Johnson. SmithKline also has "piggyback" registration
rights, but has waived those rights with respect to this offering. Johnson &
Johnson's rights consist of both "demand" and "piggyback" registration rights.
Johnson & Johnson's "piggyback" rights are not currently exercisable.
Anti-Takeover Provisions
Delaware Law
We are subject to the provisions of Section 203 of the Delaware General
Corporation Law, an anti-takeover law. In general, the statute prohibits a
publicly-held Delaware corporation from engaging in a "business combination"
with an "interested stockholder" for a period of three years after the date of
the transaction in which the person became an interested stockholder, unless
the business combination is approved in a prescribed manner. For purposes of
Section 203, a "business combination" includes a merger, asset sale, or other
transaction resulting in a financial benefit to the interested stockholder, and
an "interested stockholder" is a person who, together with affiliates and
associates, owns (or within three years prior, did own) 15% or more of the
corporation's voting stock. A corporation may "opt out" of this statute, which
we have not done.
Certificate of Incorporation and Bylaws Provisions
Our amended and restated certificate of incorporation and amended and restated
bylaws include the following provisions, among others, that could discourage
potential acquisition proposals and could delay or prevent a change of control
of NPS.
. Our board of directors or any individual director may be removed from
office only by the affirmative vote of the holders of a majority of the
voting power of all the then-outstanding shares of voting stock.
. The number of directors which shall constitute the whole board of
directors shall be fixed exclusively by one or more resolutions adopted by
the board of directors.
. Vacancies on our board of directors, including those resulting from an
increase in the number of directors, shall be filled only by the
affirmative vote of a majority of the directors then in office, even
though less than a quorum of the board of directors, and not by the
stockholders.
. A stockholder's notice of the stockholder's intent to bring business
before an annual meeting or to nominate a person for election to the board
of directors must be received by NPS within strict guidelines which may
make it more difficult for stockholders to bring items before the
meetings.
. Our certificate of incorporation and bylaws do not provide for cumulative
voting in the election of directors.
In addition, the authorization of undesignated preferred stock makes it
possible for the board of directors to issue preferred stock with voting or
other rights or preferences that could impede the success of any attempt to
change control of NPS.
45
<PAGE>
Underwriting
We have agreed to enter into an underwriting agreement with the underwriters
named below. CIBC World Markets Corp., Prudential Securities Incorporated and
Robertson Stephens, Inc. are acting as representatives of the underwriters.
The underwriting agreement provides for the purchase of a specific number of
shares of common stock by each of the underwriters. The underwriters'
obligations are several, which means that each underwriter is required to
purchase a specified number of shares but is not responsible for the commitment
of any other underwriter to purchase shares. Subject to the terms and
conditions of the underwriting agreement, each underwriter has severally agreed
to purchase the number of shares of common stock set forth opposite its name
below:
<TABLE>
<CAPTION>
Underwriter Number of Shares
----------- ----------------
<S> <C>
CIBC World Markets Corp. ...................................
Prudential Securities Incorporated..........................
Robertson Stephens, Inc. ...................................
------------
Total..................................................... 3,500,000
============
</TABLE>
The underwriters have agreed to purchase all of the shares offered by this
prospectus (other than those covered by the over-allotment option described
below) if any are purchased. Under the underwriting agreement, if an
underwriter defaults in its commitment to purchase shares, the commitments of
non-defaulting underwriters may be increased or the underwriting agreement may
be terminated, depending on the circumstances.
The shares should be ready for delivery on or about , 2000
against payment in immediately available funds. The underwriters are offering
the shares subject to various conditions and may reject all or part of any
order. The representatives have advised us that the underwriters propose to
offer the shares directly to the public at the public offering price that
appears on the cover page of this prospectus. In addition, the representatives
may offer some of the shares to other securities dealers at such price less a
concession of $ per share. The underwriters may also allow, and such
dealers may reallow, a concession not in excess of $ per share to other
dealers. After the shares are released for sale to the public, the
representatives may change the offering price and other selling terms at
various times.
We have agreed to grant the underwriters an over-allotment option. This option,
which is exercisable for up to 30 days after the date of this prospectus,
permits the underwriters to purchase a maximum of 525,000 additional shares
from us to cover over-allotments. If the underwriters exercise all or part of
this option, they will purchase shares covered by the option at the public
offering price that appears on the cover page of this prospectus, less the
underwriting discount. If this option is exercised in full, the total price to
the public will be $ , and the total proceeds to us will be $ . The
underwriters have severally agreed that, to the extent the over-allotment
option is exercised, they will each purchase a number of additional shares
proportionate to the underwriter's initial amount reflected in the foregoing
table.
The following table provides information regarding the amount of the discount
we will pay to the underwriters:
<TABLE>
<CAPTION>
Total without Exercise of Total with Full Exercise of
Per Share Over-Allotment Option Over-Allotment Option
--------- ------------------------- ---------------------------
<S> <C> <C> <C>
NPS Pharmaceuticals,
Inc. ..................
</TABLE>
We estimate that our total expenses of the offering, excluding the underwriting
discount, will be approximately $420,000.
46
<PAGE>
We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act of 1933.
Our officers and directors have agreed with the underwriters to a 90-day "lock
up" with respect to substantially all shares of common stock and other
securities that they beneficially own, including securities that are
convertible into shares of common stock and securities that are exchangeable or
exercisable for shares of common stock. This means that, subject to certain
exceptions, for a period of 90 days following the date of this prospectus, we
and such persons may not offer, sell, pledge or otherwise dispose of these
securities without the prior written consent of CIBC World Markets Corp.
Rules of the Securities and Exchange Commission may limit the ability of the
underwriters to bid for or purchase shares before the distribution of the
shares is completed. The underwriters may, however, engage in the following
activities in accordance with the rules:
. Stabilizing transactions--The representatives may make bids or purchases
for the purpose of pegging, fixing or maintaining the price of the shares,
so long as stabilizing bids do not exceed a specified maximum.
. Over-allotments and syndicate covering transactions--The underwriters may
sell more shares of our common stock in connection with this offering than
the number of shares that they have committed to purchase. This over-
allotment creates a short position for the underwriters. This short sales
position may involve either "covered" short sales or "naked" short sales.
Covered short sales are short sales made in an amount not greater than the
underwriters' over-allotment option to purchase additional shares in this
offering. The underwriters may close out any covered short position either
by exercising their over-allotment option or by purchasing shares in the
open market. To determine how they will close the covered short position,
the underwriters will consider, among other things, the price of shares
available for purchase in the open market, as compared to the price at
which they may purchase shares through the over-allotment option. Naked
short sales are short sales in excess of the over-allotment option. The
underwriters must close out any naked short position by purchasing shares
in the open market. A naked short position is more likely to be created if
the underwriters are concerned that, in the open market after pricing,
there may be downward pressure on the price of the shares that could
adversely affect investors who purchase shares in this offering.
. Penalty bids--If the representatives purchase shares in the open market in
a stabilizing transaction or syndicate covering transaction, they may
reclaim a selling concession from the underwriters and selling group
members who sold those shares as part of this offering.
. Passive market making--Market makers in the shares who are underwriters or
prospective underwriters may make bids for or purchases of shares, subject
to limitations, until the time, if ever, at which a stabilizing bid is
made.
Similar to other purchase transactions, the underwriters' purchases to cover
the syndicate short sales or to stabilize the market price of our common stock
may have the effect of raising or maintaining the market price of our common
stock or preventing or mitigating a decline in the market price of our common
stock. As a result, the price of our shares may be higher than the price that
might otherwise exist in the open market. The imposition of a penalty bid might
also have an effect on the price of the shares if it discourages resales of the
shares.
Neither we nor the underwriters makes any representation or prediction as to
the effect that the transactions described above may have on the price of the
shares. These transactions may occur on the Nasdaq National Market or
otherwise. If these transactions are commenced, they may be discontinued
without notice at any time.
Prudential Securities Incorporated facilitates the marketing of new issues
online through its PrudentialSecurities.com division. Clients of Prudential
AdvisorSM, a full service brokerage firm program, may view offering terms and a
prospectus online and place orders through their financial advisors.
47
<PAGE>
Legal Matters
Parsons Behle & Latimer, Salt Lake City, Utah, will pass on the validity of our
common stock being offered by this prospectus. Skadden, Arps, Slate, Meagher &
Flom (Illinois) will pass upon certain legal matters on behalf of the
underwriters.
Experts
Our consolidated financial statements as of December 31, 1999 and 1998, and for
each of the years in the three-year period ended December 31, 1999 and for the
period from October 22, 1986 (inception) to December 31, 1999 have been
incorporated by reference herein and in the registration statement in reliance
upon the report of KPMG LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as
experts in accounting and auditing.
Where You Can Find More Information
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You can inspect and copy the registration statement
on Form S-3 of which this prospectus is a part (File No. 333-45274), as well as
reports, proxy statements and other information filed by us (which are
maintained under the general file number 0-23272), at the public reference
facilities maintained by the SEC at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C., 20549, and at the following regional offices of the SEC: 7
World Trade Center, Suite 1300, New York, New York, 10048 and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois, 60661. You can obtain
copies of this material from the Public Reference Room of the SEC at 450 Fifth
Street N.W., Washington, D.C., 20549, at prescribed rates. You can call the SEC
at 1-800-732-0330 for information regarding the operation of its Public
Reference Room. The SEC also maintains a world wide web site at
http://www.sec.gov that contains our reports, proxy and information statements,
and information regarding registrants like our company that file
electronically. In addition, we maintain a website at "http://www.npsp.com."
The contents of our website are not part of this prospectus.
The SEC allows us to "incorporate by reference" the information that we file
with it, which means that we can disclose important information to you by
referring to those documents. The information incorporated by reference is an
important part of this prospectus, and information that we file later with the
SEC will automatically update and replace this information. We incorporate by
reference the documents listed below and any future filings made by us with the
SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934 until we have sold all of the securities that we have registered:
. Our Annual Report on Form 10-K for the fiscal year ended December 31,
1999, as amended
. Our Quarterly Report on Form 10-Q for the quarter ended March 31, 2000
. Our Quarterly Report on Form 10-Q for the quarter ended June 30, 2000
. Our Proxy Statement for the June 21, 2000 Annual Meeting of Stockholders
. Our report on Form 8-K dated January 7, 2000
. Our report on Form 8-K dated October 16, 2000
. The description of our common stock contained in our Registration
Statement on Form 8-A filed May 23, 1994
. The description of our Stockholder Rights Agreement contained in our
report on Form 8-K dated December 19, 1996
The reports and other documents, including amendments to previously filed
reports and documents, that we file after the date of this prospectus will
update and supersede the information in this prospectus.
48
<PAGE>
If you make a request for this information in writing or by telephone, we will
provide you without charge, a copy of any or all of the information
incorporated by reference in the registration statement of which this
prospectus is a part. Requests for this information should be submitted to:
James U. Jensen
Corporate Secretary
NPS Pharmaceuticals, Inc.
420 Chipeta Way,
Salt Lake City, Utah, 84108
(801) 583-4939.
You should rely only on the information provided or incorporated by reference
in this prospectus or any prospectus supplement. We have not authorized anyone
to provide you with different information. You should not assume that
information in this prospectus is accurate as of any date other than the date
of this prospectus.
49
<PAGE>
CIBC World Markets
Prudential Vector Healthcare
a unit of Prudential Securities
Robertson Stephens
---------------------------------------------------------------
[LOGO OF NPS PHARMACEUTICALS]
NPS Pharmaceuticals, Inc.
3,500,000 Shares
Common Stock
--------------
PROSPECTUS
--------------
, 2000
---------------------------------------------------------------
You should rely only on the information contained in this
prospectus. No dealer, salesperson or other person is
authorized to give information that is not contained in
this prospectus. This prospectus is not an offer to sell
nor is it seeking an offer to buy these securities in any
jurisdiction where the offer or sale is not permitted.
The information contained in this prospectus is correct
only as of the date of this prospectus, regardless of the
time of the delivery of this prospectus or any sale of
these securities.
<PAGE>
PART II.
Information Not Required In Prospectus
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the estimated costs and expenses payable by us
in connection with the issuance and distribution of the common stock pursuant
to this registration statement. All amounts are estimates except the SEC
registration fee, the Nasdaq Stock Market additional listing fee and the
National Association of Securities Dealers filing fee.
<TABLE>
<S> <C>
Securities and Exchange Commission Registration.................... $ 45,739
Nasdaq Stock Market Additional Listing Fee......................... 17,500
NASD Filing Fee.................................................... 14,914
Accountant's Fees and Expenses..................................... 50,000
Legal Fees and Expenses............................................ 200,000
Miscellaneous Expenses............................................. 91,847
--------
Total.......................................................... $420,000
========
</TABLE>
Item 15. Indemnification of Directors and Officers.
Under Section 145 of the Delaware General Corporation Law, the Company has
broad powers to indemnify its directors and officers against liabilities they
may incur in such capacities, including liabilities under the Securities Act.
The Company's Bylaws also provide that the Company will indemnify its directors
and executive officers and may indemnify its other officers, employees and
other agents to the fullest extent not prohibited by Delaware law.
The Company's Certificate of Incorporation provides for the elimination of
liability for monetary damages for breach of the directors' fiduciary duty of
care to the Company and its stockholders. These provisions do not eliminate the
directors' duty of care and, in appropriate circumstances, equitable remedies
such as injunctive or other forms of non-monetary relief will remain available
under Delaware law. In addition, each director will continue to be subject to
liability for breach of the director's duty of loyalty to the Company, for acts
or omissions not in good faith or involving intentional misconduct, for known
violations of law, for any transaction from which the director derived an
improper personal benefit and for payment of dividends or approval of stock
repurchases or redemptions that are unlawful under Delaware law. The provision
does not affect a director's responsibilities under any other laws, such as the
federal securities laws or state or federal environmental laws.
The Company has entered into agreements with its directors and executive
officers that require the Company to indemnify such persons against expenses,
judgments, fines, settlements and other amounts actually and reasonably
incurred, including expenses of a derivative action in connection with any
proceeding, whether actual or threatened, to which any such person may be made
a party by reason of the fact that such person is or was a director or officer
of the Company or any of its affiliated enterprises, provided such person acted
in good faith and in a manner such person reasonably believed to be in or not
opposed to the best interests of the Company and, with respect to any criminal
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
The indemnification agreements also set forth certain procedures that will
apply in the event of a claim for indemnification thereunder.
II-1
<PAGE>
Item 16. Exhibits.
<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<C> <S>
1.1 Underwriting Agreement between NPS Pharmaceuticals and CIBC World
Markets, dated , 2000(1)
3.3 Certificate of Amendment of the Amended and Restated Certificate of
Incorporation of the Registrant, dated December 16, 1999.(2)
4.5 Amendment to Certificate of Designation of Series A Junior
Participating Preferred Stock, dated September 2000.(2)
5.1 Opinion of Counsel(1)
23.1 Consent of independent certified public accountants
23.2 Consent of Counsel
24.1 Power of Attorney (incorporated in the signature page of this S-3)
</TABLE>
(1) To be filed by amendment.
(2) Previously filed.
Item 17. Undertakings.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers, and persons controlling the
registrant pursuant to the foregoing provisions or otherwise, the registrant
has been informed that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Company of expenses incurred or
paid by a director, officer or controlling person of the Company in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
The undersigned registrant hereby undertakes that, for purposes of determining
any liability under the Securities Act of 1933, each filing of the registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act
of 1934) that is incorporated by reference in the registration statement shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
The undersigned registrant hereby undertakes that:
(1) For the purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-2
<PAGE>
Signatures
Pursuant to the requirements of the Securities Act, the Registrant certifies
that it has reasonable grounds to believe that it meets all of the requirements
for filing on Form S-3 and has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Salt Lake, County of Salt Lake, State of Utah, on the 20th day of October,
2000.
NPS Pharmaceuticals, Inc.
/s/ James U. Jensen
By: _________________________________
James U. Jensen, Vice President
Corporate
Development and Legal Affairs and
Secretary
Power Of Attorney
Each person whose signature appears below constitutes and appoints Hunter
Jackson, Ph.D., and James U. Jensen, J.D. his true and lawful attorneys-in-fact
and agents, each acting alone, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments (including post-effective amendments)
to this Registration Statement, and to file the same with all exhibits thereto,
and all documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, each acting alone, or
his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act, this Registration Statement
has been signed by the following persons in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Hunter Jackson President, Chief Executive October 20, 2000
______________________________________ Officer and Chairman of
Hunter Jackson the Board
/s/ Robert K. Merrell Vice President, Finance, October 20, 2000
______________________________________ Chief Financial Officer
Robert K. Merrell and Treasurer (Principal
Accounting Officer)
/s/ James U. Jensen Vice President, Corporate October 20, 2000
______________________________________ Development and Legal
James U. Jensen Affairs, Secretary and
Director
/s/ Santo J. Costa Director October 20, 2000
______________________________________
Santo J. Costa
/s/ John R. Evans Director October 20, 2000
______________________________________
John R. Evans
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ James G. Groninger Director October 20, 2000
______________________________________
James G. Groninger
/s/ Tamar Howson Director October 20, 2000
______________________________________
Tamar Howson
/s/ Joseph Klein Director October 20, 2000
______________________________________
Joseph Klein, III
/s/ Donald E. Kuhla Director October 20, 2000
______________________________________
Donald E. Kuhla
/s/ Thomas N. Parks Director October 20, 2000
______________________________________
Thomas N. Parks
/s/ Edward Rygiel Director October 20, 2000
______________________________________
Edward Rygiel
/s/ Calvin R. Stiller Director October 20, 2000
______________________________________
Calvin R. Stiller
/s/ Peter G. Tombros Director October 20, 2000
______________________________________
Peter G. Tombros
</TABLE>
II-4
