<PAGE>
As filed with the Securities and Exchange Commission on February 4, 2000
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
NPS PHARMACEUTICALS, INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware 420 Chipeta Way 87-0439579
(State or other jurisdiction of Salt Lake City, Utah 84108-1256 (IRS Employer Identification No.)
incorporation or organization) (801) 583-4939
</TABLE>
(Address and telephone number of principal executive offices)
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
(Name, address, and telephone number of agent for service of process)
Copies to:
Rodd M. Schreiber, Skadden, Arps, Slate, Meagher & Flom (Illinois)
333 West Wacker Drive, Chicago, Illinois 60606
(312) 407-0700
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. [X]
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
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Proposed Maximum Proposed Maximum
Amount to be Offering Price Aggregate Offering Amount of
Title of Securities to be Registered Registered Per Share (1) Price (1) Registration Fee
- --------------------------------------------------------------------------------------------------------------
Common Stock (par value $ .001) 3,900,000 $13.8125 $53,868,750 $14,221.35
- --------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(c). The price per share and aggregate
offering price are based upon the average of the high and low prices of the
Registrant's Common Stock on January 31, 2000 as reported on the Nasdaq
Stock Market.
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.
<PAGE>
PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION DATED FEBRUARY 4, 2000
- ----------------------
3,900,000 Shares
[LOGO]
NPS PHARMACEUTICALS
Common Stock
This prospectus relates to the public offering, which is not being underwritten,
of 3,900,000 shares of our common stock by some of our current stockholders.
These stockholders acquired the shares directly from us in a private placement
completed on February 3, 2000. We will not receive any proceeds from sale of
these shares.
The selling stockholders may sell the shares at prices determined by the
prevailing market price for the sales or in negotiated transactions. The
selling stockholders may also sell the shares to or with the assistance of
broker-dealers, who may receive compensation in excess of their customary
commissions.
Our Common Stock is traded on the Nasdaq Stock Market under the symbol NPSP. On
February 3, 2000 the last reported sale price of our Common Stock on Nasdaq was
$15.3125 per share.
Before buying any shares you should read the discussion of material risks
of investing in common stock in "Risk Factors" beginning on page 12.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this Prospectus is February 4, 2000
The information in this preliminary 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
preliminary prospectus is not an offer to sell nor does it seek an offer to buy
these securities in any jurisdiction where the offer or sale is not permitted.
1
<PAGE>
TABLE OF CONTENTS
Page
----
Forward-Looking Statements................................................ 3
Selling Stockholders...................................................... 3
Use of Proceeds........................................................... 4
Business.................................................................. 5
Risk Factors.............................................................. 12
Plan of Distribution...................................................... 18
Legal Matters............................................................. 19
Experts................................................................... 19
Where You Can Find More Information....................................... 19
Information Not Required in Prospectus.................................... 22
Signatures................................................................ 24
Power of Attorney......................................................... 24
Exhibit Index............................................................. 26
_________________________________________
We have not authorized any person to give you any information or to make any
representations other than those contained in this prospectus. You should not
rely on any information or representations other than this prospectus. This
prospectus is not an offer to sell or a solicitation of an offer to buy any
securities other than the common stock. It is not an offer to sell or a
solicitation of an offer to buy securities if the offer or solicitation would be
unlawful. The affairs of NPS Pharmaceuticals, Inc. may have changed since the
date of this prospectus. You should not assume that the information in this
prospectus is correct at any time subsequent to its date.
2
<PAGE>
FORWARD-LOOKING STATEMENTS
This prospectus includes forward-looking statements concerning our operations,
economic performance and financial condition, including, in particular, our
business strategy and means to implement the strategy, our goals, the markets we
intend to compete in and the likelihood of our success in developing and
expanding our business. These statements are based on a number of assumptions
and estimates which are inherently subject to significant risks and
uncertainties, many of which are beyond our control and reflect future business
conditions which are subject to change. A variety of factors, some of which are
set forth under "Risk Factors" in this prospectus, could cause actual results to
differ materially from those anticipated and reflected in our forward-looking
statements.
Consequently, all of the forward-looking statements made or incorporated by
reference in this prospectus are qualified by these cautionary statements, and
you are cautioned not to place undue reliance on these forward-looking
statements, which reflect management's analysis, judgment, belief or expectation
only as of the date of this prospectus. We undertake no obligation to publicly
revise these forward-looking statements to reflect events or circumstances that
arise after the date of this prospectus or to publicly release the results of
any revisions to the forward-looking statements that may be made to reflect
events or circumstances after the date of this prospectus. In addition to the
disclosure contained in this prospectus, you should carefully review any
disclosure of risks and uncertainties contained in other documents we file or
have filed from time to time with the Securities and Exchange Commission
according to the Securities Exchange Act of 1934, as amended.
SELLING STOCKHOLDERS
We are registering all 3,900,000 shares covered by this prospectus on behalf
of the selling stockholders named in the table below. We issued all of the
shares to the selling stockholders in a private placement transaction. We have
registered the shares to permit the selling stockholders and their pledgees,
donees, transferees or other successors-in-interest that receive their shares
from a selling stockholder as a gift, partnership distribution or other non-sale
related transfer after the date of this prospectus to resell the shares when
they deem appropriate.
The following table sets forth the name of each of the selling stockholders,
the number of shares owned by each of the selling stockholders, the number of
shares that may be offered under this prospectus, and the number of shares of
our common stock owned by each of the selling stockholders as of February 3,
2000, the number of shares that may be offered under this prospectus and the
number of shares of our common stock owned by each of the selling stockholders
after this offering is completed. Except as set forth in the table below, none
of the selling stockholders has had a material relationship with us within the
past three years other than as a result of the ownership of the shares or other
securities of NPS. The number of shares in the column "Number of Shares Being
Offered" represent all of the shares that each selling stockholder may offer
under this prospectus. We do not know how long the selling stockholders will
hold the shares before selling them and we currently have no agreements,
arrangements or understandings with any of the selling stockholders regarding
the sale of any of the shares. The shares offered by this prospectus may be
offered from time to time by the selling stockholders named below.
<PAGE>
<TABLE>
<CAPTION>
Shares Beneficially
Owned Prior to Offering
-----------------------
Name of Selling Number of Shares Shares Beneficially
Stockholder Number Percent Being Offered Owned After Offering
----------- ------ ------- ------------- --------------------
<S> <C> <C> <C> <C>
AIM Global Fund Inc. 84,000 * 84,000 --
AIM Global Health Sciences Fund 168,000 * 168,000 --
Aries Domestic Fund II, L.P. 2,569 * 2,569 --
Aries Domestic Fund, L.P. 15,241 * 15,241 --
Ashton Partners, L.L.C. 10,000 * 10,000 --
BayStar Capital, L.P. 150,000 * 150,000 --
BayStar International, Ltd. 50,000 * 50,000 --
Bershaw & Co., c/o Citibank Canada 20,000 * 20,000 --
Caduceus Capital II, L.P. 23,000 * 23,000 --
Casurina Limited Partnership 20,000 * 20,000 --
Clarion Partners, L.P. 14,400 * 14,400 --
Clarion Offshore Fund, Ltd. 5,600 * 5,600 --
EGM Medical Technology Fund LP 14,000 * 14,000 --
EGM Medical Technology Offshore Fund 11,000 * 11,000 --
Goldfischer, Carl 10,000 * 10,000 --
Invesco Global Health Sciences Fund 263,000 1.1 263,000 --
Invesco Health Sciences Fund 596,700 2.5 596,700 --
Invesco Small Company Growth Fund 141,350 * 141,350 --
Invesco VIF - Health Sciences Fund 13,300 * 13,300 --
Invesco VIF - Small Company Growth Fund 850 * 850 --
IRT Small Company Growth Fund 3,600 * 3,600 --
Janus Investment Fund 850,000 3.6 850,000 --
Kelly, James C. 10,000 * 10,000 --
Maxim Invesco Small-Cap Growth Portfolio 29,200 * 29,200 --
MCP Global Corp., Ltd. 25,000 * 25,000 --
Meriken Nominees Ltd. 15,000 * 15,000 --
Merlin BioMed International 60,000 * 60,000 --
Merlin BioMed, L.P. 40,000 * 40,000 --
Moore Global Investments, Ltd. 160,000 * 160,000 --
MRM Life 10,000 * 10,000 --
Narragansett I, L.P. 36,500 * 36,500 --
Narragansett Offshore, Ltd. 13,500 * 13,500 --
Oakpoint Asset Management 10,000 * 10,000 --
Park Place International, Ltd. 50,000 * 50,000 --
Prism Partners I Offshore Fund 7,500 * 7,500 --
Prism Partners I, L.P. 52,500 * 52,500 --
Prism Partners II Offshore Fund 15,000 * 15,000 --
Putnam Capital Appreciation Fund 68,200 * 68,200 --
Putnam Health Sciences Trust 476,000 2.0 476,000 --
Putnam Investment Funds - Putnam
Capital Opportunities Fund 31,800 * 31,800 --
Putnam Variable Trust - Putnam
VT Health Sciences Fund 24,000 * 24,000 --
PW Eucalyptus Fund, LLC 70,500 * 70,500 --
PW Eucalyptus Fund, Ltd. 4,500 * 4,500 --
Remington Investment Strategies, L.P. 40,000 * 40,000 --
Salerno, Deborah 10,000 * 10,000 --
The Aries Master Fund 32,190 * 32,190 --
The Great-West Life Assurance Company 136,900 * 52,300 84,600
The Great-West Life Assurance Company 20,000 * 7,700 12,300
United Capital Management, Inc. 60,000 * 60,000 --
Winchester Global Trust Company Limited
As Trustee for Caduceus Capital Trust 22,000 * 22,000 --
</TABLE>
*means less than 1%
3
<PAGE>
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the shares by the
selling stockholders.
BUSINESS
Overview
NPS Pharmaceuticals, Inc. is a biopharmaceutical company with headquarters
in Salt Lake City, Utah, and additional operations in Toronto (Mississauga),
Ontario, Canada. We conduct our operations in Canada under the name "NPS
Allelix Corp". We engage in drug discovery and development of small, orally
active drug candidates and of recombinant peptides. The Company uses a blend of
partnered initiatives and proprietary efforts to fund and pursue its discovery,
development and market efforts
On December 23, 1999 the Company acquired Allelix Biopharmaceuticals Inc.,
a biopharmaceutical company based in Ontario, Canada. Under the arrangement,
Allelix shareholders who were U.S. residents received NPS common shares. Allelix
shareholders who were Canadian residents could elect to receive either NPS
common shares or shares of NPS Allelix Inc., the Canadian parent of NPS Allelix
Corp. and which company is a subsidiary of NPS, that are exchangeable one for
one into NPS common shares. The exchangeable shares are, as nearly as
practicable, the functional and economic equivalent of NPS common shares. NPS
common shares trade on Nasdaq, while shares of NPS Allelix Corp., which mirror
the NPS common shares, trade on The Toronto Stock Exchange under the symbol
"NX".
At the conclusion of the acquisition the name of Allelix Biopharmaceuticals
was changed to NPS Allelix Corp. The discussion contained in this section
reflects the combined company and does not distinguish between what was formerly
NPS' business and what was formerly Allelix's business. References to "us,"
"the Company," "we" or "NPS" refer to the combined company.
We are engaged in the discovery and development of human therapeutics that
are intended to address a variety of important diseases. Our most advanced
programs focus on the development of human therapeutics for the treatment of
hyperparathyroidism (HPT) and osteoporosis. We also have ongoing clinical
development efforts for drugs to treat gastrointestinal disorders and disorders
of the central nervous system, including neuroprotection in stroke and head
trauma as well as epilepsy and bipolar disorder. In addition, we are pursuing
several discovery programs that are extensions of our research on calcium
receptors and ion channels, and we periodically consider other late-stage
development candidates for potential in-license or collaboration opportunities.
We currently have three products in late-stage clinical trials: a second
generation Calcimimetic for HPT, ALX 1-11 (recombinant human parathyroid
hormone) for osteoporosis, and ALX 0600 for short bowel syndrome and intestinal
atrophy due to chemotherapy treatment.
Our Calcimimetic program for HPT is partnered with Amgen Inc. and Kirin
Brewery Company, Ltd. Calcimimetics are small molecules that stimulate calcium
receptors on parathyroid cells to regulate the secretion of parathyroid hormone.
Amgen is currently conducting Phase II trials under the Calcimimetic program.
The HPT program arose from our pioneering work on a cell surface receptor,
termed the "calcium receptor." This receptor senses levels of extracellular
calcium and plays a key role in regulating the amount of calcium in the body
involved in numerous physiological processes.
We are approaching osteoporosis on two fronts: development of injectable
recombinant parathyroid hormone and development of small molecule therapeutics.
We are preparing to start Phase III clinical trials with our injectable
recombinant parathyroid hormone, ALX 1-11. We also have a collaboration with
SmithKline Beecham centered on discovery and development of small molecules
active at the calcium receptor of parathyroid tissue for the treatment of
osteoporosis.
Our efforts to develop therapeutics to treat gastrointestinal disorders are
focused on the development of ALX 0600. This product is a glucagon-like
peptide-2 (GLP-2), a proprietary peptide which is an analog of the natural
peptide hormone but with significantly enhanced biological activity. We are
currently engaged in a pilot Phase II study with ALX 0600 in patients with short
bowel syndrome.
4
<PAGE>
Our neuroprotection program is based on our work on small molecules with
novel activity at the NMDA (N-methyl-D-aspartate) subtype of glutamate receptor-
operated calcium channels. Our NMDA receptor technology forms the basis for our
neuroprotection program for ischemic stroke and head trauma. The
epilepsy/bipolar disorder program is based on our work on small molecules that
belong to the same chemical class as valproic acid but are structurally distinct
and have significantly different biological properties.
Clinical Development Programs and Partnered Preclincal Programs
The following chart summarizes the status of our clinical development programs
and partnered clinical programs:
<TABLE>
<CAPTION>
Development Program Compound Classification Status Commercial Rights
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Hyperparathyroidism
Primary HPT Calcimimetics Parathyroid hormone release Phase II Amgen, Kirin
inhibitors
Secondary HPT Calcimimetics Parathyroid hormone release Phase II Amgen, Kirin
inhibitors
- ------------------------------------------------------------------------------------------------------
Osteoporosis
Increased Bone ALX 1-11 Recombinant human Phase II NPS
Mineral Density and parathyroid hormone complete
Fracture Reduction
Increased Bone TBA Stimulator of endogenous Preclinical SmithKline, NPS
Mineral Density and parathyroid hormone release
Fracture Reduction
- ------------------------------------------------------------------------------------------------------
GI Disorders
Short Bowel ALX 0600 Glucagon-like Peptide 2 Phase II NPS
Syndrome Analog
- ------------------------------------------------------------------------------------------------------
CNS Disorders
Stroke, Head NPS 1506 NMDA receptor antagonists Phase Ib NPS
Trauma
Epilepsy, Bipolar NPS 1776 Valproic acid substitute Phase Ib NPS
Disorder (Depakote(R))
Migraine ALX 0646 5HT - Selective agonist Phase I NPS
- ------------------------------------------------------------------------------------------------------
</TABLE>
Hyperparathyroidism Program
Overview. HPT is typically characterized as being either primary or
secondary. Primary HPT is an age-related disorder that results from excessive
secretion of parathyroid hormone (PTH). PTH acts in the kidney and on bone to
elevate the levels of calcium in the blood.) Symptoms of primary HPT may
include bone loss, muscle weakness, depression, and cognitive dysfunction. There
are currently no pharmaceutical therapies for the treatment of primary HPT. In
severe cases, surgical removal of the affected parathyroid gland from the neck
region is the only effective treatment.
Secondary HPT results from other disease states and is most often
associated with renal failure. Symptoms of secondary HPT include excessive bone
loss, bone pain, and chronic, severe itching. Secondary HPT affects the vast
majority of dialysis patients. Studies have shown that secondary HPT develops
early in the course of renal failure, before patients start dialysis. Current
treatments for secondary HPT address the disease indirectly and involve drug
therapy with phosphate binders and/or Vitamin D. We believe that these therapies
have certain disadvantages. For example, phosphate binders are not well
tolerated by many people and calcitriol often leads to hypercalcemia and
hyperphosphatemia, which can exacerbate the
5
<PAGE>
underlying disease and in many patients is ineffective. In severe cases, surgery
may be required to remove all or some of the parathyroid glands.
Calcimimetics
The results of preclinical and clinical trials conducted by us, Kirin, and
Amgen have indicated that calcimimetic compounds could be effective in treating
both types of HPT. We have entered into agreements with Amgen and Kirin
relating to the development and commercialization of these calcimimetic
compounds for treating HPT.
Development Status. Amgen began Phase II trials in primary and in secondary
HPT in 1998 with a compound licensed from NPS. These trials are presently
ongoing. In 1998, Amgen completed a Phase I safety trial of this second
generation compound early in the Calcimimetic program, NPS and Amgen conducted a
series of trials with a first generation Calcimimetic compound, NPS R-568. These
trials included two Phase I safety and tolerance studies, a multisite Phase I/II
study in women with mild, primary HPT and a pilot Phase I/II study in kidney
dialysis patients with secondary HPT. Kirin has conducted clinical trials in
Japan, including a Phase I/II study in dialysis patients with secondary HPT. NPS
believes the second-generation compound has a more favorable metabolic and
kinetic profile than NPS R-568 in the HPT patient population. Kirin is also
developing a second generation compound. The use of Calcimimetics by either
Amgen or Kirin is subject to royalty and milestone obligations to NPS. There can
be no assurance that clinical trials will proceed as indicated or that any
compound for the treatment of HPT will prove safe and/or effective, meet
applicable regulatory standards, or be successfully marketed. See "Risk Factors-
Our product development programs are novel and, consequently, inherently risky.
If we are unable to advance our products beyond the early stages of product
development or demonstrate clinical efficacy, we will never commercialize a
product." and "Risk Factors-If we lose our collaborative partners or if they do
not apply adequate resources to our collaborations, our product development and
profitability may suffer."
Osteoporosis Program
Overview. Osteoporosis is characterized by the loss of bone mass and bone
mineral density thereby increasing the risk of fractures. It is believed to
affect more than 200 million people worldwide. In women, this condition
typically occurs after menopause and the complications from these fractures can
lead to hospitalization and death. Approximately 20% of osteoporosis patients
are male.
Demographic studies have shown that 50% of women over the age of 50 will
suffer an osteoporosis-related fracture during their lifetime. In North
America, 1.5 million individuals sustain a fracture related to this disease each
year, including 300,000 hip fractures, resulting in a significant economic
burden on the health care system. The National Osteoporosis Foundation in the
United States estimates that a woman's risk of suffering a hip fracture is equal
to her combined risk of developing breast, uterine and ovarian cancer. The
National Institutes of Health estimate that, on a worldwide basis, more than 200
million people suffer from reduced bone mass, which contributes to more than 4
million fractures annually. Mortality in the first year following a hip
fracture is 15% to 20%. The successful treatment of osteoporosis would result in
the reduction of bone fractures, significantly improving quality of life and
reducing health care costs associated with treatment and chronic care.
Traditional treatments for osteoporosis include calcium supplements,
Vitamin D compounds, estrogen replacement therapy, calcitonin, diet and
exercise. In addition, a class of drugs known as bisphosphonates has been
developed which slow the resorption of bone and, over several years, can
increase bone mass by amounts ranging from 3% to 8%. Alendronate, marketed by
Merck and Co., Inc. under the brand name Fosamax, is the most recently approved
bisphosphonate and has demonstrated an increase in bone mineral density of 8%
over three years and a reduction in the incidence of bone fractures by 50%.
However, there is a widely recognized need for a treatment that can prevent
fractures by replacing lost bone more rapidly. The Company believes that ALX 1-
11, injectable recombinant human parathyroid hormone, may address this need. If
approved for commercial sale, ALX 1-11 would be positioned as a therapy for
postmenopausal osteoporosis in patients who either have suffered a fracture due
to osteoporosis or have been diagnosed to have significantly decreased bone
mass. Once bone mass is restored, patients could be treated with anti-
resorptive therapeutics.
ALX 1-11
We are developing ALX 1-11, an 84 amino acid protein, as a treatment for
postmenopausal osteoporosis. Parathyroid hormone (PTH) plays an important role
in the regulation of bone mineral metabolism in the body. Recently published
studies have shown that PTH has a marked stimulatory effect on new bone
formation in animals when administered as a single daily injection.
6
<PAGE>
Furthermore, several clinical investigators have demonstrated in independent
studies that a fragment of the PTH molecule enhances bone formation in humans.
We believe that these results, published over the past 20 years, suggest that
PTH is able to reverse bone loss in osteoporosis sufferers. We also believe that
PTH increases the number of bone-forming cells and may also increase the
activity of such cells. We confirmed the increase in bone density observed in
earlier studies in a Phase II clinical trial. ALX 1-11 may represent a
significant treatment alternative for osteoporosis sufferers.
Development status. In 1994, the Company conducted a Phase I clinical trial
in The Netherlands that demonstrated the safety of ALX 1-11 in humans. The
Phase II clinical trial for ALX 1-11 was initiated in June 1995 in 18 centers
throughout Canada and the United States and involved over 200 women suffering
from postmenopausal osteoporosis. The trial was a double blind, placebo-
controlled, dose-ranging safety and efficacy study and the course of treatment
was 12 months. Patients self-administered one of three different dosages of ALX
1-11 or a placebo by subcutaneous injection in a manner similar to self-
administered daily insulin injections by diabetics. The goal of the clinical
trial was to compare the relative effectiveness of the three dose levels on
spinal bone mineral density. Blood samples were taken in the clinical trial to
monitor the effects of the drug on several biochemical markers of bone growth
and bone metabolism.
In June 1996, the Company entered into a collaboration agreement with Astra
AB ("Astra") for the development and commercialization of ALX 1-11 for
osteoporosis. The Phase II trial was completed in February 1997. The results of
the Phase II study demonstrated an average increase in bone mineral density of
nearly 7% in the spine over the twelve month period of the study. The final
report was submitted to Astra in June 1997 and Astra conveyed its decision to
conduct a Phase III trial with ALX 1-11 to the Company in September 1997. In
September 1998, Astra notified the Company that it would return all of the
assets associated with the program and all related proprietary rights to the
Company at no cost and paid a 4,800,000 Netherlands Guilders cancellation
penalty.
The Company intends to begin a Phase III trial with ALX 1-11 in the U.S.
and Canada in the first half of 2000. The Phase III study design is based on a
double blind, placebo-controlled study for measuring increases in bone mineral
density and reductions in clinical fractures.
Since PTH is a protein, it must be administered by subcutaneous injection
at the present time. Alternative routes of administration such as inhalation,
intranasal or transdermal may be feasible. A number of companies are
investigating alternative routes of administration for a variety of peptides.
In particular, insulin has been shown to be absorbed by the inhalation route and
calcitonin is commercially available in an intranasal form. We believe that
there is at least one company working on an inhalation form of PTH. The
feasibility of administering PTH by one of these other routes is unknown and
will need to be investigated. See "Risk Factors-Our product development programs
are novel and, consequently, inherently risky. If we are unable to advance our
products beyond the early stages of product development or demonstrate clinical
efficacy, we will never commercialize a product." and "Risk Factors-If we lose
our collaborative partners or if they do not apply adequate resources to our
collaborations, our product development and profitability may suffer."
SmithKline Beecham Collaboration
In conjunction with SmithKline Beecham, we are also pursuing a treatment of
osteoporosis focusing on small molecule drugs called calcilytic compounds
(calcium receptor antagonists) that, in contrast to calcimimetic compounds,
stimulate PTH secretion. This novel approach, which is intended to manipulate
the body's own PTH reserves, could provide an effective anabolic therapy for
osteoporosis by stimulating new bone formation and replacing bone that has been
lost to the disease.
While chronically high levels of PTH are known to cause bone loss, PTH
levels fluctuate daily and this is thought to play a key role in regulating the
balance between bone resorption and bone formation. Recent studies in animals,
and in humans by other organizations, have shown that frequent, usually daily,
injections of exogenous PTH are sufficient to cause a transient increase in
circulating PTH levels, resulting in significant stimulation of new bone
formation. Several published animal studies have evaluated the structural
integrity of this newly formed bone and have found that the increases in bone
mass achieved with PTH injections are accompanied by improvements in
biomechanical strength and in certain indices of bone structure thought to be
related to biomechanical strength.
In in vivo animal studies, our scientists, together with SmithKline
Beecham, have demonstrated that intermittent increases in circulating levels of
PTH can be obtained through the use of proprietary small molecules which act in
vitro as calcimimetics.
7
<PAGE>
Increased levels of PTH achieved by this mechanism are equivalent to levels of
PTH achieved by an injection of PTH sufficient to cause bone growth.
This approach to the treatment of osteoporosis fits nicely with the
approach we are also taking with ALX 1-11. We believe that orally administered,
calcilytic drugs that act on the parathyroid cell calcium receptor to increase
PTH release from the body's own PTH reserves could provide a cost-effective
means of intermittently increasing PTH levels.
Preclinical Research Status. In January 1996, we received the first
milestone payment of $3.0 million from SmithKline Beecham for progress made in
our osteoporosis collaboration. Medicinal chemistry efforts are being applied to
various lead compounds with the goal of identifying clinical development
candidates. We have produced a cell line that expresses the human parathyroid
calcium receptor and that serves as a proprietary tool for the high throughput
screening of compounds to identify new drug candidates. We continue to screen
SmithKline Beecham and NPS compound libraries to discover, identify, and
characterize additional compounds with calcilytic activity. NPS and SmithKline
Beecham are also involved in medicinal chemistry efforts to optimize compound
leads obtained from such screening activities. There can be no assurance that
lead compounds will be identified, that preclinical and clinical trials will
proceed, or that these candidates will prove safe and/or effective, meet
applicable regulatory standards, or be successfully marketed. See "Risk
Factors-Our product development programs are novel and, consequently, inherently
risky. If we are unable to advance our products beyond the early stages of
product development or demonstrate clinical efficacy, we will never
commercialize a product." and "Risk Factors-If we lose our collaborative
partners or if they do not apply adequate resources to our collaborations, our
product development and profitability may suffer."
GI Disorders
Short Bowel Syndrome
Approximately 20,000 to 40,000 patients in North America have undergone
surgical resection (removal) of a portion of the small intestine because of
gastrointestinal problems that cause the intestine to malfunction. Patients
with this condition often do not have enough small intestine remaining after
resection to allow for the absorption of sufficient nutrients from the diet
since the epithelium of the small intestine is the primary site of nutrient
absorption. This results in a condition known as short bowel syndrome (SBS).
There are currently no effective therapies available for enhancing the growth
and repair of the small intestine epithelium. In extreme cases, the remaining
intestine is no longer able to perform its normal function of transporting vital
nutrients into the blood stream.
Patients with severely impaired intestinal function caused by SBS often
must be fed intravenously by a technique called total parenteral nutrition
("TPN") for a period of time and, in some cases permanently. TPN costs can
exceed $100,000 annually per patient. Approximately 100,000 people in North
America are on long-term TPN.
ALX 0600: GLP-2 Analog
We are currently developing ALX 0600. This drug candidate is a proprietary
analog of a naturally occurring hormone having 33 amino acids and known as
Glucagon-Like Peptide-2 or GLP-2. We are developing ALX 0600 for the treatment
of short bowel syndrome (SBS), a condition caused by removal of large segments
of the small intestine. A published study by one of our academic collaborators
demonstrated that the use of ALX 0600 in animals resulted in a marked
stimulatory effect on the rate of growth of epithelial cells lining the small
intestine. In this study, ALX 0600 induced an approximately 50% increase in
weight of small intestine epithelium within ten days of administration. We
believe that ALX 0600 may have the ability to induce a similar effect in humans.
Furthermore, the growth-promoting properties of ALX 0600 appear to be highly
tissue-specific, predominantly affecting the small intestine, thereby reducing
the risk of adverse side effects.
We are presently conducting a pilot Phase II study with ALX 0600 in
patients with SBS. In November 1999, the Company entered into an agreement with
the Canadian government through a program known as Technology Partnerships
Canada. Under the agreement, a $5.78 million (U.S.) investment was made in NPS
for the purpose of supporting clinical research and development of ALX 0600. As
a result of the investment, we will pay a small royalty to the Canadian
government from worldwide commercial sales of ALX 0600.
We are also investigating the use of ALX 0600 for the replenishment of
epithelial cells of the small intestine which are
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damaged by chemotherapy treatment for cancer. ALX 0600 may be suitable as an
adjunct therapy to cancer chemotherapy if it can ameliorate the toxic
gastrointestinal side effects, thereby improving patient compliance with the
chemotherapy regimen and possibly allowing for dose escalation of the
chemotherapy agent. The patients that would benefit from such an adjunctive
therapy are those patients receiving 5-fluorouracil (administered to
approximately 1 million patients per year) or CPT-11 (approximately 500,000
patients per year and increasing). Approximately 16% and 50% of patients
receiving these respective therapies experience extreme gastrointestinal side
effects sufficient to warrant treatment with an agent such as ALX 0600 should
its safety and efficacy be proven in clinical trials.
We licensed the rights to ALX 0600 from an academic collaborator who is
entitled to participate in the proceeds of commercialization of the product
candidates, if successfully developed and approved. The Company completed a
Phase I clinical trial of ALX 0600 in healthy subjects in November 1998. The
Company is developing a recombinant production system that may be used to
produce the product. See "Risk Factors-Our product development programs are
novel and, consequently, inherently risky. If we are unable to advance our
products beyond the early stages of product development or demonstrate clinical
efficacy, we will never commercialize a product."
CNS Disorders
Neuroprotection Program: NPS 1506
Overview. Stroke is the third leading cause of death in the United
States, with over 500,000 cases reported each year. In stroke, a blood vessel
becomes blocked, which leads to inadequate blood supply to the brain (ischemia).
Many stroke victims survive and approximately 100,000 to 150,000 per year are
left severely and permanently disabled by nerve damage resulting from stroke.
Much of this damage occurs within the first 24 to 48 hours after the stroke and
is caused in part by the excessive release of glutamate and the resultant influx
of calcium into nerve cells. Published research in animals has shown that much
of this damage can be prevented by blocking the influx of calcium into cells, in
particular, the influx that results from activation of NMDA (N-methyl-D-
aspartate) receptor-operated calcium channels. Calcium influx resulting from the
activation of NMDA receptor-operated calcium channels also appears to cause the
neuronal damage associated with head trauma. Approximately two million traumatic
brain injuries occur each year in the United States, with 25% of these injuries
requiring hospitalization, and about 1% resulting in death.
Certain medical procedures are associated with an increased risk of stroke.
For example, strokes occur in 3% to 7% of coronary artery bypass, carotid
endarterectomy, and heart valve replacement surgeries. Mild to severe central
nervous system dysfunction occurs in up to 80% of these procedures. This is
thought to result from multiple micro strokes caused by the release of numerous
tiny blood clots into the bloodstream. Our research indicates that it might be
possible to lessen the severity of neuronal damage and cognitive impairment that
occurs as a result of these procedures by using a prophylactic treatment with
neuroprotective compounds.
NMDA receptor-operated calcium channels play critical roles in normal
excitatory neurotransmission and in events that lead to much of the neurological
damage associated with stroke and head trauma. Several pharmaceutical companies
have recognized the potential of NMDA receptor-operated calcium channels as
molecular targets. These companies have begun development of drugs to treat
neurological disorders and have identified various lead compounds. However, no
such drug has successfully completed clinical trials or been marketed. Work in
this field is all the more challenging because NMDA receptor-operated calcium
channels are also the site of action of phencyclidine (PCP or angel dust) and
most clinically tested compounds that target NMDA receptor-operated calcium
channels exhibit undesirable PCP-like side effects (inducing symptoms of
psychosis). There are currently no safe and/or effective neuroprotective
therapeutics available that slow or stop the progression of brain damage once a
stroke or head trauma has occurred.
Systemic administration of our proprietary class of lead compounds,
particularly NPS 1506, has demonstrated significant neuroprotectant activity in
certain animal models of ischemic stroke and head trauma. In these animal
studies, significant neuroprotectant activity was still observed when
administration of the compound was delayed for two hours following the ischemic
event. In addition, our compounds have not exhibited PCP-like side effects in a
variety of in vitro and in vivo studies in animal models intended to identify
those effects.
Development Status. In July 1997, we began a Phase I clinical trial for
NPS 1506 in healthy male volunteers. This trial was completed in early 1998.
Results of the trial indicated that the drug was safe and well tolerated. In
addition, we began a Phase Ib
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study in patients who have suffered a stroke within a 48-hour period to assess
safety and tolerability of the drug in stroke patients. The clinical phase of
this trial has been completed and the data are being evaluated. We are currently
searching for a corporate partner to participate in the development of this
program. Our ability to secure a development partner for this program will
affect our development plan and time line for this program. There can be no
assurance that NPS 1506 or any other lead compounds will advance through
clinical development, will prove to be safe and/or effective, meet applicable
regulatory standards, or be successfully marketed. See "Risk Factors-Our product
development programs are novel and, consequently, inherently risky. If we are
unable to advance our products beyond the early stages of product development or
demonstrate clinical efficacy, we will never commercialize a product."
Epilepsy and Bipolar Disorder-NPS 1776
Overview-Epilepsy. Many types of epileptic seizures have been medically
defined. They range from mild cases of nearly imperceptible behavior, such as
staring into space, to dramatic "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. The most frequently used drug therapies include
carbamazepine, phenytoin, valproate, barbiturates, and benzodiazepines. Roughly
half of all epilepsy patients can control their seizures with available chemical
therapies. However, other patients achieve less than adequate control. An
estimated 15% of all patients are virtually resistant to drug treatment. Even
when some level of seizure control is achieved, it often comes with the
disadvantage of serious side effects.
Overview-Bipolar Disorder. Bipolar disorder is part of a class of diseases
referred to as affective illnesses or mood disorders. Affective illnesses
include all forms of depression, dysthmia (chronic, moderate depression) manic
disease, and bipolar disorder. The most responsive disease in this class of
illnesses is bipolar disorder. Until recently, bipolar disorder was known as
manic-depressive disorder. It 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 continue to increase each year. In the United States,
approximately 17.5 million people have affective disorders. Of these,
approximately 2.2 million to 2.6 million people have been diagnosed as having
bipolar disorder.
Development Status. Our scientists have identified a lead compound for the
treatment of epilepsy. Studies of this small, organic molecule, designated NPS
1776, show that it is effective in a number of animal models of epilepsy and
that, importantly, there appears to be a wide margin between doses that control
seizures and doses that produce side effects. The compound also exhibited a
high margin of safety in animal models when compared to standard epilepsy
treatments, including valproate, as measured by a lack of motor impairment side
effects following drug administration. Recent research studies have indicated
that some drugs normally used in seizure control can offer hope for many bipolar
disorder patients. Valproic acid has received FDA approval for the treatment of
manic episodes in bipolar disorder. Based on data generated by us and relevant
literature, we believe that NPS 1776 may be useful for the treatment of
affective mood disorders such as bipolar disorder and for the treatment of
epilepsy. NPS 1776 is a branched chain, low molecular weight alifatic amide.
Thus, it has some structural similarities to valproic acid (Depakote/a/).
However, we believe that NPS 1776 has pharmacologically significant structural
distinctions that will provide a better safety profile in comparison to
Depakote/a/, such as the lack of teratogenic (birth defect) potential and
hepatotoxicity (liver damage). Currently, we are conducting specific studies to
address these issues.
A Phase I clinical trial in healthy male volunteers was completed in
December 1998 in the United Kingdom. The purpose of the trial was to evaluate
the safety and pharmacokinetics of NPS 1776. A preliminary analysis of the data
indicates that the drug was safe and well tolerated. A Phase Ib study was
commenced in the United Kingdom in December 1998 to confirm safety and
tolerability in volunteers receiving multiple doses of the drug. We are seeking
a partner to share in the development of NPS 1776. Future development of NPS
1776 may be dependent on our ability to find a development partner. There can be
no assurance that NPS 1776 will advance through clinical development, will prove
safe and/or effective, meet applicable regulatory standards, or be successfully
marketed. See "Risk Factors-Our product development programs are novel and,
consequently, inherently risky. If we are unable to advance our products beyond
the early stages of product development or demonstrate clinical efficacy, we
will never commercialize a product.
Other Programs.
We also have other early stage programs. For example, in the field of
migraine we have a compound that has completed a phase Ia trial in the United
Kingdom for which we are seeking a development partner. We are also working
with Janssen
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Pharmaceutica N.V. to identify prospective drug candidates selective for the
GlyT-1 transporter for schizophrenia and dementia. We continue to work with Eli
Lilly to identify excitatory amino acid receptors as therapeutic targets for
various central nervous system disorders. Finally, we have made advances in the
elucidation of the neurophysiological roles of metabotropic glutamate receptors.
Our scientists have cloned a novel mGluR and developed a proprietary screening
technology for identifying molecules active at this receptor and in fact have
had success in identifying such molecules.
RISK FACTORS
You should carefully consider the following risk factors and warnings
before making an investment decision. The risks described below are not the only
risks we face. Additional risks that we do not yet know of or that we currently
think are immaterial may also impair our business operations. If any of the
events or circumstances described in the following risks actually occur, our
business, financial condition, or results of operations could be materially
adversely affected. In such case, the trading price of our common stock could
decline, and you may lose all or part of your investment.
We have a history of operating losses and may never reach
profitability. We have not been profitable since our inception in 1986. As of
September 30, 1999, we had an accumulated deficit of approximately $58.7
million. We expect to continue to incur losses for the next several years. We
may never realize significant revenues or be profitable. Factors that will
influence the timing and amount of our profitability include:
. the success of our product candidates placed with Amgen, Kirin, SmithKline
Beecham, Janssen and Eli Lilly;
. the development and commercialization of additional products, especially
our most advanced non-partnered product candidates ALX 1-11 and ALX 0600,
which relate to the treatment of osteoporosis and short bowel syndrome,
respectively;
. our ability to secure corporate partners to share the expense of
development of our non-partnered programs;
. timing and difficulty of obtaining regulatory approvals; and
. competition.
We may require additional financing and it is uncertain whether that
financing will be available. Most of our funding has come from research and
development fees and the sale of stock. No material revenues have been generated
from product sales. We have expended and will continue to expend significant
sums for preclinical work and clinical trials. We may have to raise additional
funds through collaborative relationships or public and private financings.
Additional financing may not be available on favorable terms, or at all. If we
raise additional funds by selling equity securities, the share ownership of our
existing investors could be diluted or the new equity purchasers may obtain
terms that are better than those of our existing investors. Lack of financing
may delay, reduce or eliminate some of our programs or force us to relinquish
rights to technology, product candidates or products.
Our product development programs are novel and consequently,
inherently risky. If we are unable to advance our products beyond the early
stages of product development or demonstrate clinical efficacy, we will never
commercialize a product. Extensive and costly clinical trials must be conducted
to demonstrate safety and efficacy for a pharmaceutical product before it can be
approved by the FDA or other regulatory authorities. If we are unable to advance
our products beyond the early stages of product development or demonstrate
clinical efficacy, we will never commercialize a product. A product candidate
that appears to be safe and/or effective in preclinical in vivo tests and early
clinical trials may not ultimately prove to be safe and/or effective when tested
in a larger number of patients. All of our product candidates could prove to be
unsafe and/or ineffective. The failure of one or more of our product candidates
could postpone profitability indefinitely. We may also encounter problems in a
clinical trial that might significantly delay or cause us to terminate the
clinical trial program. Any adverse clinical event could cause delays or prevent
us from commercializing additional products. This would have a substantial
adverse effect on the operations of our business. Additionally, those product
candidates that are successful in the clinic and obtain FDA approval may not be
as effective as other products on the market or otherwise be successful in the
marketplace.
If we lose our collaborative partners or if they do not apply adequate
resources to our collaborations, our product development and profitability will
suffer. Our corporate partners have full control over the development and
commercialization activities in their territories. Because we have granted
exclusive development, commercialization, and marketing rights to these
licensees, the success of the programs are dependent upon their efforts. If the
licensees do not satisfactorily perform under the agreements, our financial
condition will be materially and adversely affected. Our licensees could
terminate these agreements before related lead candidates are identified or any
related candidate drugs are developed. If our licensees were to terminate their
respective agreements (which is allowed pursuant to the terms of the agreements
at any time ), we might not have the financial resources
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necessary to continue development of those programs. The termination of any or
all of these agreements could have a material adverse effect on our business.
Much of the revenue that we may receive under these partnerships depends upon
our partners' successful development and commercialization of the compounds. Our
partners may develop alternative technologies or products outside of their
partnerships with us, and the technologies or products may be used to develop
treatments for the diseases targeted by our partnerships. This could have a
material adverse effect on our business.
We may not successfully integrate the operations of NPS and Allelix.
As a result of the acquisition of Allelix in December, 1999, it is necessary to
integrate two companies that previously operated independently. Such integration
will require significant effort from each company including the coordination of
their efforts in research and development, business development, intellectual
property, finance, and administration efforts. There can be no assurance that
we will integrate the respective operations of NPS and Allelix without
encountering difficulties or experiencing loss of personnel, or that the
benefits expected from such integration will be realized. The diversion of the
attention of management and any difficulties encountered in the transition
process (including the interruption of, or a loss of momentum in, Allelix's or
our activities and problems associated with employee uncertainty and the
potential loss of key personnel) could have an adverse impact on our ability to
realize anticipated benefits from the acquisition.
The acquisition of Allelix will result in integration costs and
transaction expenses that could adversely affect combined financial results. If
the benefits of the acquisition do not exceed the costs associated with it,
including the dilution to our stockholders resulting from the issuance of shares
of NPS Common stock in connection with the acquisition of Allelix, our financial
results, including earnings per share, could be adversely affected. We expect
to incur significant costs associated with integrating the operations of NPS and
Allelix. Such costs may include:
. elimination of duplicate operations; and
. consolidation of certain administration, support, and research and development
activities.
Actual costs may substantially exceed preliminary estimates. In addition,
unanticipated expenses associated with integrating the two companies may arise.
We expect to incur a charge currently estimated to be $19.5 million in the
fourth quarter of 1999 to reflect our write-off of Allelix's in-process research
and development efforts. This write-off will not be accompanied by outward cash
flow, but may be seen by investors as increasing the net loss of the Company.
We may also incur additional charges in subsequent quarters to reflect costs
associated with the acquisition.
If we are not permitted to write-off a significant amount of the purchase
price of Allelix as attributable to in-process research and development,
estimates of future period results and actual future period results could be
burdened with additional costs, and the price of our common stock could decline.
If current accounting rules as interpreted by our auditors and the SEC do not
permit us to immediately write off a significant amount of the purchase price
for the Allelix acquisition as attributable to in-process research and
development, we would have to amortize a correspondingly higher amount of the
purchase price over several years. Such amortization would be reflected as an
expense item on our statement of operations, and cause it to report higher
losses, which may adversely affect our stock price.
We may experience delay or ineffectiveness in efforts to manage our burn
rate and the attendant requirement to reduce costs, delay expenditures (for
example in clinical development), or raise additional equity financing. We
have announced our intention to devote considerable cash resources to late-stage
clinical development, including for example, a Phase III trial for ALX 1-11 for
osteoporosis. If our cost estimates are exceeded or incurred earlier than
planned, the Company may be required to reduce costs (for example, by reducing
head count), to delay developments or to seek additional financing. Failure to
manage the mix of this cash expenditure and clinical progress may cause the
price of our stock to decline.
We will need to find corporate partners for new product candidates, the
failure to do so may reduce our rate of product development. Our strategy for
the development, clinical testing, manufacturing and commercialization of our
products requires that we enter into various collaborations with partners,
licensors, licensees, and others. There can be no assurance that we will be able
to negotiate further collaborative arrangements on acceptable terms, if at all,
or that current or future collaborative arrangements will be successful. If we
are not able to establish such arrangements, we would experience increased
capital requirements to undertake the activities at our own expense. In
addition, we may encounter significant delays in introducing our products into
certain markets or find that the development, manufacture or sale of our
products in certain markets is adversely affected by the absence of
collaborative agreements. To the extent we enter into co-promotion or other
licensing arrangements, revenues received by us will depend upon the efforts of
third parties, and there can be no assurance that such parties will devote such
efforts or that such efforts will be successful.
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Difficulty of acquiring rights to external technologies, programs, and
development candidates will adversely impact our ability to maintain or expand
our product pipeline. We are actively evaluating product acquisition
opportunities in order to establish and maintain an appropriate portfolio or
pipeline of product candidates. We seek optimum diversity of materials,
timetables, development costs, applicability to current medical needs, and other
select criteria. We may be unsuccessful in our efforts to identify, acquire and
exploit third-party technologies or product opportunities. There can be no
assurance that we will be able to negotiate acceptable license and/or
collaborative agreements in the future or that efforts under those agreements
will be successful. If we choose to and are successful in entering into future
agreements, we will also experience increased capital requirements to undertake
research, development, and marketing of any in-licensed technologies, programs,
and development candidates. In addition, significant delays may be encountered
in introducing any in-licensed product candidates into certain markets or we may
find that the development, manufacture and sale of these product candidates are
adversely affected by competition from others.
We are subject to extensive government regulation which can be costly, time
consuming, and subject us to unanticipated delays. As a result, our products
may not be approved, which would seriously impact the value of our company.
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 and other countries. Prior to
marketing in the United States, a drug must undergo rigorous preclinical and
clinical testing and an extensive regulatory approval process implemented by the
FDA under federal law, including the Federal Food, Drug, and Cosmetic Act.
Receipt of such regulatory approval involves, among other things, satisfying the
FDA that the product is both safe and/or effective. Typically, this process
takes several years depending upon the type, complexity and novelty of the
product and the nature of the disease or other indication to be treated. The
process also requires an expenditure of substantial resources. Preclinical
studies must be conducted in accordance with the FDA's Good Laboratory Practice
regulations. Clinical testing is also subject to FDA regulations and must meet
requirements for Institutional Review Board oversight and informed consent by
clinical trial subjects and patients. Clinical trials may require large numbers
of test subjects. We or the FDA may suspend clinical trials at any time if
either believes that clinical trial subjects are being exposed to unacceptable
health risks, including undesirable or unintended side effects.
Before receiving FDA approval to market a product, we may have to
demonstrate that the product represents an improved form of treatment when
compared to existing therapies. Data obtained from preclinical and clinical
activities are susceptible to varying interpretations that could delay, limit,
or prevent regulatory approvals. In addition, delays or rejections may be
encountered based upon additional government regulation from future legislation,
administrative action, or changes in FDA policy during the period of product
development, clinical trials, and FDA regulatory review. If regulatory approval
of a product is granted, such approval will be limited to those disease states
and conditions for which the product is useful, as demonstrated through clinical
studies. Furthermore, approval may entail ongoing requirements for post-
marketing studies. Even if regulatory approval is obtained, a marketed product,
its manufacturer, and its manufacturing facilities are subject to continual
review and periodic inspections. The Quality System Regulations ("QSR") will be
applicable to us or our manufacturers and suppliers. The discovery of previously
unknown problems with a product, manufacturer, or facility may result in
restrictions on that product or manufacturer, including costly recalls or
withdrawal of the product from the market. There can be no assurance that any
compound developed by us alone or in conjunction with others will prove to be
safe and/or effective in clinical trials and will meet all of the applicable
regulatory requirements needed for marketing approval.
Outside the United States, our ability to market a product is contingent
upon receiving marketing authorization from the appropriate foreign regulatory
authorities. The requirements governing the conduct of clinical trials,
marketing authorization, pricing and reimbursement vary widely from country to
country. This foreign regulatory approval process includes all of the risks
associated with FDA approval set forth above.
We face intense competition and technological change which will impact the
acceptance of our products in marketplace and our ability to compete against
other companies in our industry. The pharmaceutical industry is intensely
competitive. Existing and future products, therapies, technological approaches
and delivery systems will compete directly with our products. Competing products
may provide greater therapeutic benefits for a specific indication or may offer
comparable performance at a lower cost.
We compete with fully integrated pharmaceutical companies, smaller
companies that are collaborating with larger pharmaceutical companies, academic
institutions, government agencies and other public and private research
organizations. Many of these competitors have drug products already approved or
in development and operate large, well-funded research and development programs
in these fields. Our competitors may develop safer or more effective drugs and
achieve faster or broader regulatory
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approval. In addition, many of these competitors have wider availability of
supply, more effective marketing and sales and/or superior proprietary
positions. Any products that we develop may become obsolete before we recover
any expenses incurred in connection with development of these products.
Our success depends on the scope of our intellectual property rights and
not infringing the intellectual property rights of others. The validity,
enforceability and commercial value of these rights are highly uncertain. Our
success will depend, in part, on our ability to obtain and protect patents,
maintain trade secrets and operate without infringing the proprietary rights of
others. Our patents or patent applications may be challenged, invalidated or
circumvented by our competitors. These patents may also fail to provide
meaningful competitive advantages to us.
Intellectual property rights are uncertain and involve complex legal and
factual questions. particularly with respect to biotechnology and pharmaceutical
patents. Generally, patent applications in the United States are maintained in
secrecy until patents issue and publication of discoveries in the scientific or
patent literature often lag behind actual discoveries. Accordingly, we cannot be
certain that the inventors named in our patent applications were the first to
invent, or that we were the first to pursue patent coverage for those
inventions. We may unknowingly infringe the proprietary rights of others and may
be liable for that infringement, which could result in significant liability for
us. We could be forced to either seek a license to intellectual property rights
of others or alter our products or processes so that they no longer infringe the
proprietary rights of others. A license could be very expensive to obtain, or
may not be available at all.
Similarly, changing our products or processes to avoid infringing the
rights of others may be costly or impractical. If we were to become involved in
a dispute regarding intellectual property, whether ours or that of another
company, we may have to participate in interference proceedings declared by the
U.S. Patent and Trademark Office to determine who had the claimed rights first.
We may also be forced to seek a judicial determination concerning the rights in
question. These types of proceedings may be costly and time consuming for us,
even if we eventually prevail. If we do not prevail, we might be forced to pay
significant damages, obtain a license or stop making a certain product.
We also rely on trade secrets, proprietary know-how, and confidentiality
provisions in agreements with collaborative partners, employees, and consultants
to protect our intellectual property. However, other parties may not comply with
the terms of their agreements with us and we might not be able to adequately
enforce our rights against these people, or obtain adequate compensation in
respect of the damages caused by such unauthorized disclosure.
We do not have the capability to manufacture, so we must rely on third
parties. This may adversely impact our ability to commercialize products. We
do not have any internal manufacturing capacity, and we rely on third-party
manufacturers for the manufacture of all of our clinical trial material. If we
were unable to contract for a sufficient supply of our compounds on acceptable
terms, or if delays and difficulties in our relationships with manufacturers are
encountered, our preclinical and human clinical testing schedule would be
delayed. Such delay would adversely affect the schedule for submission of
products for regulatory approval, the market introduction, and subsequent sales
of these products, which would have a materially adverse effect on our business.
We will need to expand our existing relationships or to establish relationships
with additional third-party manufacturers for products that we successfully
develop. We may be unable to establish or maintain relationships with third-
party manufacturers on acceptable terms, and third-party manufacturers may be
unable to manufacture products in commercial quantities on a cost effective
basis. Our dependence upon third parties may adversely affect our profit
margins and our ability to develop and commercialize products on a timely and
competitive basis. Furthermore, third-party manufacturers may encounter
manufacturing or quality control problems in connection with the manufacture of
our products and they may be unable to maintain the necessary governmental
licenses and approvals to continue manufacturing our products. Our business
could be adversely affected if we fail to establish or maintain relationships
with third parties for our manufacturing requirements on acceptable terms.
Also, our corporate collaborators, licensees, or contract manufacturers may
be unable to manufacture any developed compounds on a commercial scale, or to
manufacture products in quantities, or at prices that will be commercially
viable or beneficial to us. The licensees are responsible for manufacturing any
products developed under their respective agreements. If we or our collaborators
and licensees encounter difficulty in obtaining third-party manufacturing on
commercially acceptable terms, their ability to commercialize products may be
delayed or foreclosed.
We will need additional capital to complete development of our unlicensed
product candidates. Failure to obtain such capital could delay the development
and commercialization of such products. Substantial expenditures will be
required to continue
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existing and planned research and development activities, preclinical and
clinical trials, to manufacture or have products manufactured, and to market
products from current research and development efforts. Our current resources
are inadequate to finance all of the work planned and needed to continue
development of our current programs. If we are unable to find licensees or
collaborators for one or more of these efforts, we will be required to suspend
activities or to raise additional equity capital. There can be no assurances
that we can succeed in such efforts.
We do not have the capability to market and sell products which makes us
dependent on third parties for their expertise in this area. We will have to
develop a sales force or rely on arrangements with third parties for the
marketing, distribution, and sale of any products we develop. We currently lack
sales, marketing, and distribution capability. In order to market any products
directly, it would be necessary to develop a marketing and sales force with
technical expertise and supporting distribution capability. We might not be able
to establish in-house sales and distribution capabilities, relationships with
third parties for these tasks, or we may be unsuccessful in gaining market
acceptance for our products. Additionally, our licensees currently have
marketing and distribution rights with respect to products under development for
the treatment of HPT and osteoporosis; however, such commercialization rights
may revert to us, under certain circumstances, including termination of any
agreements.
Uncertainty of pharmaceutical pricing, reimbursement, and healthcare reform
measures may result in our being 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. This policy may
adversely affect the market for products designed to treat patients with age-
related disorders, such as HPT and osteoporosis. In addition, third-party payors
are increasingly challenging the price and cost-effectiveness of medical
products and services. Significant uncertainty exists with the reimbursement
status of newly approved health care products. We might not be able to sell our
products profitably if reimbursement is unavailable or limited in scope.
We need to attract and retain key employees and consultants and manage
growth. If we lose key management and scientific personnel on whom we depend,
our business could suffer. We are highly dependent on the principal members of
our scientific and management staff. Loss of any of these persons could
adversely affect our operations. Nonetheless, we do not have long-term
employment contracts. Our future success will also depend in large part upon our
continued ability to attract and retain highly qualified scientific and
management personnel. We face competition for personnel from other companies,
academic institutions, government entities, and other organizations. Anticipated
growth and expansion into areas and activities requiring additional expertise,
such as clinical trials, government approvals, production and marketing, and
general pharmaceutical company management, will place increased demands on our
resources. These demands may require the addition of new management; research
and development, and administrative personnel; and the development of additional
expertise by existing management personnel. The failure to acquire such services
or develop such expertise could adversely affect prospects for success. Certain
of these anticipated future needs are expected to be met through agreements with
the licensees and potential additional corporate collaborations, but there can
be no assurance that any services provided by them will be sufficient to meet
our personnel or management needs.
We face product liability risks and may not be able to obtain adequate
insurance to cover such risks. The testing and commercial use of human
therapeutic products entail significant risks. If we succeed in developing
products, the use of the products in clinical trials and the sale of products,
following regulatory approval, may expose us to liability claims allegedly
resulting from use of these products. These claims might be made directly by
consumers or others. We have obtained limited product liability insurance
coverage for our human clinical trials. This coverage may be insufficient to
protect against damages for liability. 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 damages for liability. Agreements with
our licensees provide for indemnification against damage claims, but claims
arising from products sold by a collaborative partner or licensee may also
include claims directly against us and may not be indemnifiable under the
agreement.
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 that our safety procedures
for these materials comply with governmental standards, we cannot 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. We disposed radioactive
waste at a site in Denver, Colorado, which is evidently
15
<PAGE>
currently in remediation. Although we were a small contributor to the site and
there are a number of other financially responsible contributors, there can be
no assurance that we will not be held liable for all or a portion of the clean-
up cost or any other costs or damages associated with this disposal site.
Our stock price has a history of volatility. You should consider an
investment in our stock as risky and invest only if you can withstand a
significant loss. We receive little attention by securities analysts and
frequently experience an imbalance between supply and demand for our stock. We
also experience volatility in our stock price. The market price of our common
stock has been highly volatile and is likely to continue to be volatile. Factors
affecting our stock price include:
. fluctuations in our operating results;
. announcements of technological innovations or new commercial therapeutic
products by us or our competitors;
. published reports by securities analysts or the lack thereof;
. progress with clinical trials;
. governmental regulation;
. changes in reimbursement policies;
. developments in patent or other proprietary rights;
. publicity, or the lack thereof, concerning the discovery and clinical
development activities by our licensees;
. public concern as to the safety and efficacy of drugs developed by us and our
competitors; and
. general market conditions.
Issuance of shares under employee stock incentive plans will dilute current
stockholders. We maintain stock incentive plans whereby employees, directors,
and consultants can acquire shares of NPS common stock through the exercise of
stock options, grants, and purchases.
Antitakeover provisions in our articles, bylaws, Delaware Law, and
shareholders rights plan may adversely effect a potential takeover and prevent a
stockholder from receiving a favorable price for his or her shares. Certain
provisions of our Certificate of Incorporation and Bylaws and Section 203 of the
Delaware General Corporation Law could discourage potential acquisition
proposals and could delay or prevent a change in control of the Company. Such
provisions could diminish the opportunities for a stockholder to participate in
tender offers, including those at a price above the then current market value of
the common stock. These provisions may also inhibit fluctuations in the market
price of the common stock that could result from takeover attempts. In addition,
the Board of Directors, without further stockholder approval, may issue
preferred stock that could delay or prevent a change in control of NPS as well
as adversely affecting the voting power of the holders of common stock,
including the loss of control to others. In addition, the Board of Directors has
adopted a Shareholder Rights Plan, commonly known as a "poison pill," that may
have the effect of delaying or preventing a change in control.
We have never paid cash dividends on our common stock. We intend to
retain any future earnings to finance the growth and development of our
business, and we do not plan to pay cash dividends in the foreseeable future.
Unexpected Year 2000 related problems could still arise and, if
significant, could result in a material adverse effect During 1999, we planned,
inventories and evaluated systems, remediated, replaced where and when necessary
and tested such remediation and replacements. We used internal information
systems technology personnel and other personnel. As a result, we experienced
no year 2000 related issues on January 1, 2000. However, we recognize that
there may be residual effects related to year 2000 issues. We do not have any
way to assess the costs related to remediation where possible. We may in the
future identity a significant internal or external year 2000 residual issue
which, if not remedied in a timely manner, could have a material adverse effect
on our business, financial condition and results of operations.
PLAN OF DISTRIBUTION
The selling stockholders may sell the shares from time to time. The
selling stockholders will act independently of us in making decisions regarding
the timing, manner and size of each sale. The sales may be made on one or more
exchanges or in the over-the-counter market or otherwise, at prices and at terms
then prevailing or at prices related to the then current market price, or in
negotiated transactions. The selling stockholders may effect these transactions
by selling the shares to or through broker-dealers. The shares may be sold by
one or more of, or a combination of, the following:
. a block trade in which the broker-dealer will attempt to sell the shares as
agent but may position and resell a portion of the
16
<PAGE>
block as principal to facilitate the transaction,
. purchases by a broker-dealer as principal and resale by a broker-dealer for
its account under this prospectus,
. an exchange distribution in accordance with the rules of an exchange,
. ordinary brokerage transactions and transactions in which the broker
solicits purchasers, and
. in privately negotiated transactions.
To the extent required, this prospectus may be amended or supplemented from
time to time to describe a specific plan of distribution. If the plan of
distribution involves an arrangement with a broker-dealer for the sale of shares
through a block trade, special offering, exchange distribution or secondary
distribution or a purchase by a broker or dealer, the amendment or supplement
will disclose:
. the name of each selling stockholder and of the participating broker-
dealer(s),
. the number of shares involved,
. the price at which the shares were sold,
. the commissions paid or discounts or concessions allowed to the broker-
dealer(s), where applicable,
. that a broker-dealer(s) did not conduct any investigation to verify the
information set out or incorporated by reference in this prospectus, and
. other facts material to the transaction.
In addition, upon being notified by a selling stockholder that a donee or
pledgee intends to sell more than 500 shares, we will file a supplement to this
prospectus. In effecting sales, broker-dealers engaged by the selling
stockholders may arrange for other broker-dealers to participate in the resales.
The selling stockholders may enter into hedging transactions with broker-
dealers in connection with distributions of the shares or otherwise. In these
transactions, broker-dealers may engage in short sales of the shares in the
course of hedging the positions they assume with selling stockholders. The
selling stockholders also may sell shares short and redeliver the shares to
close out short positions. The selling stockholders may enter into option or
other transactions with broker-dealers which require the deliver to the broker-
dealer of the shares. The broker-dealer may then resell or otherwise transfer
the shares under this prospectus. The selling stockholders also may loan or
pledge the shares to a broker-dealer. The broker-dealer may sell the loaned
shares, or upon a default the broker-dealer may sell the pledged shares under
this prospectus.
Broker-dealers or agents may receive compensation in the form of
commissions, discounts or concessions from selling stockholders. Broker-dealers
or agents may also receive compensation from the purchasers of the shares for
whom they act as agents or to whom they sell as principals, or both.
Compensation as to a particular broker-dealer might be in excess of customary
commissions and will be in amounts to be negotiated in connection with the sale.
Broker-dealers or agents and any other participating broker-dealers or the
selling stockholders may be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act of 1933, as amended, in connection with
sales of the shares. Accordingly, any commission, discount or concession
received by them and any profit on the resale of the shares purchased by them
may be deemed to be underwriting discounts or commissions under the Securities
Act. Because selling stockholders may be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act, the selling stockholders will be
subject to the prospectus delivery requirements of the Securities Act. In
addition, any securities covered by this prospectus which qualify for sale under
Rule 144 promulgated under the Securities Act may be sold under Rule 144 rather
than under this prospectus. The selling stockholders have advised us that they
have not entered into any agreements, understandings or arrangements with any
underwriters or broker-dealers regarding the sale of their securities. There is
no underwriter or coordinating broker acting in connection with the proposed
sale of shares by the selling
17
<PAGE>
stockholders.
The shares will be sold only through registered or licensed brokers or
dealers if required under applicable state securities laws. In addition, in
some states the shares may not be sold unless they have been registered or
qualified for sale in the applicable state or an exemption from the registration
or qualification requirement is available and is complied with.
Each selling stockholder will be subject to applicable provisions of the
Exchange Act and the associated rules and regulations under the Exchange Act,
including Regulation M, which provisions may limit the timing of purchases and
sales of shares of our common stock by the selling stockholders. We will make
copies of this prospectus available to the selling stockholders and have
informed them of the need to deliver copies of this prospectus to purchasers at
or prior to the time of any sale of the shares.
We will bear all costs, expenses and fees in connection with the
registration of the shares. The selling stockholders will bear all commissions
and discounts, if any, attributable to the sales of the shares. The selling
stockholders may agree to indemnify any broker-dealer or agent that participates
in transactions involving sales of the shares against specific liabilities,
including liabilities arising under the Securities Act. The selling
stockholders have agreed to indemnify specific persons, including broker-dealers
and agents, against specific liabilities in connection with the offering of the
shares, including liabilities arising under the Securities Act.
LEGAL MATTERS
James U. Jensen, Vice President, Corporate Development & Legal Affairs,
will pass on the validity of our common stock being registered.
EXPERTS
Our financial statements as of December 31, 1998 and 1997, and for each of
the years in the three-year period ended December 31, 1998 and for the period
from October 22, 1986 (inception) to December 31, 1998 have been incorporated by
reference in this prospectus and the related registration statement in reliance
upon the report of KPMG LLP, independent auditors, incorporated by reference
herein, and upon the authority of KPMG LLP 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-___), as well as
reports, proxy statements and other information filed by us, 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 reports, proxy and information statements, and
other information regarding registrants like our company that file
electronically.
The SEC allows us to "incorporate by reference" other 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:
1. Our Annual Report on Form 10K/A for the fiscal year ended December 31,
1998, including information in our Proxy Statement in connection with our 1999
Annual Meeting of Stockholders;
2. Our Quarterly Reports on Form 10-Q for the quarterly periods ended
March 31, 1999, June 30, 1999, and September 30,
18
<PAGE>
1999;
3. Our Current Reports on Form 8-K filed on October 1, 1999, November 12
1999, November 18, 1999, and January 10, 2000;
4. Our Proxy Statement for the December 15, 1999 Special Stockholders
Meeting.
5. The description of our common stock contained in our Registration
Statement on Form 8-A filed May 23, 1994.
The reports and other documents that we file after the date of this
prospectus will update and supersede the information in this prospectus.
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 in writing to:
Corporate Secretary, NPS Pharmaceuticals, Inc., 420 Chipeta Way, Salt Lake City,
Utah, 84108, (801) 583-4939.
19
<PAGE>
You should rely only on the
information contained in this
prospectus. We have not authorized
anyone to provide you with
information different from that
contained in this prospectus. The
selling stockholders are offering to
sell, and seeking offers to buy 3,900,000 Shares
shares of NPS Pharmaceuticals, Inc.
common stock only in jurisdictions
where offers and sales are
permitted. The information [LOGO]
contained in this prospectus is
accurate only as of the date of this NPS PHARMACEUTICALS, INC.
prospectus, regardless of the time
of delivery of this prospectus or of
any sale of the NPS common stock.
COMMON STOCK
_________________
TABLE OF CONTENTS
Page
----
Forward-Looking Statements............ 3 _______________________
Selling Stockholders.................. 3 PRELIMINARY
PROSPECTUS
Use of Proceeds....................... 4
February 4, 2000
Business.............................. 5 _______________________
Risk Factors.......................... 12
Plan of Distribution.................. 18
Legal Matters......................... 19
Experts............................... 19
Where You Can Find More Information... 19
20
<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
Item 4. Other Expenses of Issuance and Distribution.
The following table sets forth the costs and expenses, other than
underwriting discounts payable by the registrant in connection with the sale of
common stock being registered. All amounts are estimates except the SEC
registration fee and the Nasdaq National Market additional listing fee.
Securities and Exchange Commission Registration Fee......... $10,773.75
Nasdaq National Market Listing Fee.......................... $17,500.00
Accountant's Fees and Expenses.............................. $ 5,000.00
Legal Fees and Expenses..................................... $ 5,000.00
Miscellaneous Expenses...................................... $ 2,000.00
----------
Total................................. $40,273.75
==========
Item 5. 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 knowing
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.
Item 6. Exhibits.
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -------------------------------------------------------------------------------------------
<C> <S>
5.1 Opinion of Counsel
10.36 Form of Stock Purchase Agreement dated February 3, 2000 between NPS Pharmaceuticals, Inc.
and the Purchaser
23.1 Consent of independent auditors.
23.2 Consent of counsel (included in Exhibit 5.1).
24.1 Power of Attorney (incorporated in the signature page of this Form S-3).
- -----------
</TABLE>
Item 7. Undertakings.
A. The undersigned Registrant hereby undertakes:
21
<PAGE>
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the Registration Statement;
(iii) To include any material information with respect to the
Plan of Distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act that
are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment 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.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered that remain unsold at the
termination of the offering.
B. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act 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.
C. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the SEC such indemnification
is against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant 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 Registrant 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 whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
D. The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act, 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, 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.
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 4th day of February,
2000.
22
<PAGE>
NPS PHARMACEUTICALS, INC.
By: /s/ James U. Jensen
------------------------------------
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>
President, Chief Executive Officer and
/s/ Hunter Jackson Chairman of the Board February 4, 2000
- ------------------------
Hunter Jackson
Vice President, Finance, Chief Financial
/s/ Robert K. Merrell Officer and Treasurer February 4, 2000
- ------------------------
Robert K. Merrell
Vice President, Corporate Development
/s/ James U. Jensen and Legal Affairs, Secretary and Director February 4, 2000
- ------------------------
James U. Jensen
/s/ Santo J. Costa Director February 4, 2000
- ------------------------
Santo J. Costa
/s/ John R. Evans Director February 4, 2000
- ------------------------
Dr. John R. Evans
/s/ James G. Groninger Director February 4, 2000
- ------------------------
James G. Groninger
/s/ Joseph Klein, III Director February 4, 2000
- ------------------------
Joseph Klein, III
/s/ Donald E. Kuhla Director February 4, 2000
- ------------------------
Donald E. Kuhla
/s/ Thomas N. Parks Director February 4, 2000
- ------------------------
Thomas N. Parks
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
- ------------------------ ----------------------------------------- -------------------
<S> <C> <C>
/s/ Edward Rygiel Director February 4, 2000
- ------------------------
Edward Rygiel
/s/ Calvin R. Stiller Director February 4, 2000
- ------------------------
Dr. Calvin R. Stiller
/s/ Peter G. Tombros Director February 4, 2000
- ------------------------
Peter G. Tombros
</TABLE>
24
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
<C> <S>
5.1 Opinion of Counsel
10.36 Form of Stock Purchase Agreement dated February 4, 2000 between NPS Pharmaceuticals, Inc. and
the Purchaser.
23.1 Consent of independent auditors.
23.2 Consent of counsel (included in Exhibit 5.1).
24.1 Power of Attorney (incorporated in the signature page of this Form S-3).
- -----------
</TABLE>
25
<PAGE>
Exhibit 5.1
[Letterhead of NPS Pharmaceuticals, Inc.]
Opinion of Counsel
February 4, 2000
Ladies and Gentlemen:
The undersigned ("Counsel") has acted as counsel to NPS Pharmaceuticals,
Inc., a Delaware corporation (the "Company"), in connection with the preparation
and filing of the Registration Statement on Form S-3 (the "Registration
Statement") with the Securities and Exchange Commission (the "Commission"). The
Company is filing this Registration Statement with the Commission under the
Securities Act of 1933, as amended, for the registration of 3,900,000 shares
(the "Shares") of the Company's Common Stock, $0.001 par value per share (the
"Common Stock"), for certain selling stockholders. This opinion is delivered to
you in connection with the Registration Statement on Form S-3 for the
aforementioned sales.
In rendering the opinion set forth herein, Counsel has made such
investigations of fact and law, and examined such documents and instruments, or
copies thereof established to Counsel's satisfaction to be true and correct
copies thereof, as Counsel has deemed necessary under the circumstances.
Based upon the foregoing and such other examination of law and fact as
deemed necessary, and in reliance thereon, Counsel is of the opinion that the
Shares are duly authorized, validly issued, fully paid and nonassessable.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to Counsel under the caption "Legal
Matters" in the Prospectus which is a part of the Registration Statement.
Very truly yours,
/s/ James U. Jensen, Esq.
Vice President, Corporate Development & Legal Affairs
Utah State Bar No. 1675
<PAGE>
Exhibit 10.36
PURCHASE AGREEMENT
THIS AGREEMENT is made as of the 3rd day of February 2000, by and between
NPS Pharmaceuticals Inc. (the "Company"), a corporation organized under the laws
of the State of Delaware, with its principal offices at 420 Chipeta Way, Salt
Lake City, Utah, 84108, and the purchaser whose name and address is set forth on
the signature page hereof (the "Purchaser").
IN CONSIDERATION of the mutual covenants contained in this Agreement, the
Company and the Purchaser agree as follows:
SECTION 1. Authorization of Sale of the Shares. Subject to the terms and
-----------------------------------
conditions of this Agreement, the Company has authorized the sale of up to
4,000,000 shares (the "Shares") of common stock, par value US$0.001 per share
(the "Common Stock"), of the Company.
SECTION 2. Agreement to Sell and Purchase the Shares. At the Closing (as
-----------------------------------------
defined in Section 3), the Company will sell to the Purchaser, and the Purchaser
will buy from the Company, upon the terms and conditions hereinafter set forth,
the number of Shares (at the purchase price) shown below:
Number to Be Price Per Share Aggregate Purchase Price
Purchased In U.S. Dollars in U.S. Dollars
------------ --------------- ------------------------
The Company proposes to enter into this same form of purchase agreement
with certain other investors (the "Other Purchasers") and expects to complete
sales of the Shares to them. The Purchaser and the Other Purchasers are
hereinafter sometimes collectively referred to as the "Purchasers," and this
Agreement and the agreements executed by the Other Purchasers are hereinafter
sometimes collectively referred to as the "Agreements." The term "Placement
Agent" shall mean Prudential Vector Healthcare Group, a unit of Prudential
Securities Incorporated.
SECTION 3. Delivery of the Shares at the Closing. The completion of the
-------------------------------------
purchase and sale of the Shares (the "Closing") shall occur as soon as
practicable and as agreed by the parties hereto following notification by the
staff of the U.S. Securities and Exchange Commission (the "Commission") to the
Company of the staff's willingness to declare effective the registration
statement to be filed by the Company pursuant to Section 7.1 hereof (the
"Registration Statement") at a place and time (the "Closing Date") to be agreed
upon by the Company and the Placement Agent and of which the Purchasers will be
notified by facsimile transmission or otherwise.
At the Closing, the Company shall deliver to the Purchaser one or more
stock certificates registered in the name of the Purchaser, or in such nominee
name(s) as may be designated by the Purchaser in writing, representing the
number of Shares set forth in Section 2 above and bearing an appropriate legend
referring to the fact that the Shares were sold in reliance upon the exemption
from registration under the Securities Act of 1933, as amended (the "Securities
Act") provided by Section 4(2) thereof and Rule 506 thereunder. The Company
will promptly substitute one or more replacement certificates without the legend
at such time as the Registration State-
1
<PAGE>
ment becomes effective. The name(s) in which the stock certificates are to be
registered are set forth in the Stock Certificate Questionnaire attached hereto
as part of Appendix I. The Company's obligation to complete the purchase and
sale of the Shares and deliver such stock certificate(s) to the Purchaser at the
Closing shall be subject to the following conditions, any one or more of which
may be waived by the Company: (a) receipt by the Company of same-day funds in
the full amount of the purchase price for the Shares being purchased hereunder;
(b) completion of the purchases and sales under the Agreements with all of the
Other Purchasers; and (c) the accuracy of the representations and warranties
made by the Purchasers and the fulfillment of those undertakings of the
Purchasers to be fulfilled prior to the Closing. The Purchaser's obligation to
accept delivery of such stock certificate(s) and to pay for the Shares evidenced
thereby shall be subject to the following conditions: (a) the staff of the
Commission having notified the Company of the staff's willingness to declare the
Registration Statement effective on or prior to the 75th day after the date the
Registration Statement was filed by the Company; and (b) the accuracy in all
material respects of the representations and warranties made by the Company
herein and the fulfillment in all material respects of those undertakings of the
Company to be fulfilled prior to Closing, including the Company's undertaking to
prepare and file the Registration Statement pursuant to Section 7.1(a) hereof.
The Purchaser's obligations hereunder are expressly not conditioned on the
purchase by any or all of the Other Purchasers of the Shares that they have
agreed to purchase from the Company.
SECTION 4. Representations, Warranties and Covenants of the Company. The
-------------------------------------------------------
Company hereby represents and warrants to, and covenants with, the Purchaser, as
of the date hereof and as of the Closing, as follows:
4.1 Organization and Qualification. The Company is a corporation duly
------------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware. NPS Holdings Company, a wholly owned subsidiary of the Company, is an
unlimited liability company existing under the laws of the Province of Nova
Scotia, and is validly existing and in good standing under the laws of Nova
Scotia. NPS Allelix Inc., a direct wholly-owned subsidiary of NPS Holdings, is
a company limited by shares, existing under the laws of the Province of Nova
Scotia, and is validly existing and in good standing under the laws of Nova
Scotia. NPS Allelix Corp. is a majority owned subsidiary of NPS Allelix Inc.,
existing under the laws of the Province of Ontario, and is validly existing and
in good standing under the laws of Ontario. Allelix Neuroscience, Inc. is a
wholly owned subsidiary of NPS Allelix Corp., existing under the laws of the
State of New Jersey, and is a corporation duly organized, validly existing and
in good standing under the laws of the State of New Jersey. The Company has no
subsidiaries (as defined in the Securities Act) other than NPS Holdings Company,
NPS Allelix Inc., NPS Allelix Corp, and Allelix Neuroscience Inc. (collectively
referred to herein as the "Subsidiaries"). The Company and each of its
Subsidiaries has the power and authority, corporate or otherwise, as
appropriate, to own, lease and operate its properties and to conduct its
business as described in the Confidential Private Placement Memorandum, dated
January 27, 2000 prepared by the Company, including all Exhibits, supplements
and amendments thereto and documents expressly incorporated by reference in any
Exhibits (the "Private Placement Memorandum") and to enter into and perform its
obligations under this Agreement; and the Company and each of its Subsidiaries
is duly qualified as a foreign corporation or other appropriate entity to
transact business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure to so qualify
would not individually or in the aggregate have a material adverse effect on the
condition (fi-
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nancial or otherwise), earnings, properties, business, prospects or results of
operations of the Company and the Subsidiaries (a "Material Adverse Effect").
4.2 Authorized Capital Stock. The Company had authorized and outstanding
------------------------
capital stock as set forth under the heading "Capitalization" in the Private
Placement Memorandum as of the date set forth therein; the issued and
outstanding shares of the Company's Common Stock have been duly authorized and
validly issued, are fully paid and nonassessable, have been issued in compliance
with all U.S. federal and state securities laws, were not issued in violation of
or are not otherwise subject to any preemptive or other similar rights or other
rights to subscribe for or purchase securities, and conform in all material
respects to the description thereof contained in the Private Placement
Memorandum. Except as disclosed in the Private Placement Memorandum and options
issued under the Company's stock plans after January 27, 2000, the Company does
not have outstanding any options or warrants to purchase, or any preemptive
rights or other rights to subscribe for or to purchase, any securities or
obligations convertible into, or any contracts or commitments to issue or sell,
shares of its capital stock or any shares of capital stock of any subsidiary and
there is no commitment, plan or arrangement to issue any securities or
obligations convertible into any shares of capital stock of the Company or its
Subsidiaries or any such options, rights, convertible securities or obligations.
The description of the Company's capital stock, stock bonus and other stock
plans or arrangements and the options or other rights granted and exercised
thereunder, contained in the Private Placement Memorandum accurately and fairly
presents the information required to be shown with respect to such capital
stock, plans, arrangements, options and rights.
4.3 Issuance, Sale and Delivery of the Shares. The Shares have been duly
-----------------------------------------
authorized and, when issued, delivered and paid for in the manner set forth in
this Agreement, will be duly authorized, validly issued, fully paid and
nonassessable, and will conform in all material respects to the description
thereof set forth in the Private Placement Memorandum. The issued shares of
capital stock of each of the Company's Subsidiaries have been duly authorized
and validly issued, are fully paid and nonassessable and are owned by the
Company free and clear of any perfected security interest, or any other security
interests, liens, encumbrances, equities or claims. No preemptive rights or
other rights to subscribe for or purchase exist with respect to the issuance and
sale of the Shares by the Company pursuant to this Agreement. Except for rights
disclosed in the Private Placement Memorandum, no stockholder of the Company has
any right (which has not been waived or has not expired by reason of lapse of
time following notification of the Company's intent to file the Registration
Statement) to request or require the Company to register the sale of any shares
owned by such stockholder under the United States Securities Act in the
Registration Statement. No further approval or authority of the stockholders or
the Board of Directors of the Company will be required for the issuance and sale
of the Shares to be sold by the Company as contemplated herein.
4.4 Due Execution, Delivery and Performance of the Agreements. The
---------------------------------------------------------
Company has full legal right, corporate power and authority to enter into the
Agreements and perform the transactions contemplated hereby and thereby. The
Agreements have been duly authorized, executed and delivered by the Company.
The execution, delivery and performance of the Agreements by the Company and the
consummation of the transactions herein and therein contemplated will not
violate any provision of the organizational documents of the Company or any of
its Subsidiaries and will not result in the creation of any lien, charge,
security interest or encumbrance upon any assets or property of the Company or
any of its Subsidiaries pursuant to the
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terms or provisions of, or will not conflict with, result in the breach or
violation of, or constitute, either by itself or upon notice or the passage of
time or both, a default under any agreement, mortgage, deed of trust, lease,
franchise, license, indenture, permit or other instrument to which the Company
or any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries or any of their respective assets or properties may be bound or
affected or, to the Company's knowledge, any statute or any authorization,
judgment, decree, order, rule or regulation of any court or any regulatory body,
administrative agency or other governmental body applicable to the Company or
any of its Subsidiaries or any of their respective properties. No consent,
approval, authorization or other order of any court, regulatory body,
administrative agency or other governmental body is required for the execution,
delivery and performance of the Agreements or the consummation of the
transactions contemplated hereby or thereby, except for compliance with the Blue
Sky laws and U.S. federal securities laws applicable to the offering of the
Shares. Upon their execution and delivery, and assuming the valid execution
thereof by the respective Purchasers, the Agreements will constitute legal,
valid and binding obligations of the Company, enforceable in accordance with
their respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally and except as enforceability may be subject to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law) and except as the
indemnification agreements of the Company in Section 7.3 hereof may be legally
unenforceable.
4.5 Accountants. KPMG LLP have expressed their opinion with respect to
-----------
the audited consolidated financial statements to be incorporated by reference
into the Registration Statement and the Prospectus which forms a part thereof
from the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1998, and are independent accountants as required by the Securities Act and
the rules and regulations promulgated thereunder (the "Rules and Regulations").
The financial statements consisting of the Allelix and NPS Unaudited Pro Forma
Condensed Consolidated Financial Statements and the Allelix Audited Consolidated
Financial Statements for the year ended August 31, 1999 (including all notes and
schedules thereto) included in the Private Placement Memorandum present fairly
the financial position, the results of operations, the statements of cash flows
and the statements of stockholders' equity and the other information purported
to be shown therein of the Company and its Subsidiaries at the respective dates
and for the respective periods to which they apply and such consolidated
financial statements have been prepared in conformity with generally accepted
accounting principles, consistently applied throughout the periods involved.
4.6 No Defaults. Neither the Company nor any of its Subsidiaries is (i)
-----------
in violation or default of any provision of its certificate of incorporation,
bylaws or other organizational documents, or (ii) in breach of or default with
respect to any provision of any agreement, judgment, decree, order, mortgage,
deed of trust, lease, franchise, license, indenture, permit or other instrument
to which it is a party or by which it or any of its assets or properties are
bound, except for violations, breaches and defaults which individually or in the
aggregate would not have a Material Adverse Effect; and there does not exist any
state of fact which, with notice or lapse of time or both, would constitute an
event of default on the part of the Company or any of its Subsidiaries as
defined in such documents, except such defaults which individually or in the
aggregate would not have a Material Adverse Effect.
4
<PAGE>
4.7 Contracts. The contracts described in the Private Placement
---------
Memorandum as being in effect on the date hereof that are material to the
Company, are in full force and effect on the date hereof, and neither the
Company nor any of its Subsidiaries, nor to the Company's knowledge, is any
other party in breach of or default under any of such contracts which would have
a Material Adverse Effect.
4.8 No Actions. There are no legal or governmental actions, suits or
----------
proceedings pending or, to the Company's knowledge, threatened to which the
Company or any of its Subsidiaries are or may be a party or of which property
owned or leased by the Company or any of its Subsidiaries are or may be the
subject, or related to environmental or discrimination matters, which actions,
suits or proceedings, individually or in the aggregate, might prevent or might
reasonably be expected to materially and adversely affect the transactions
contemplated by this Agreement or result in a material adverse change in the
condition (financial or otherwise), properties, business, prospects or results
of the operations of the Company and its Subsidiaries, taken as a whole (a
"Material Adverse Change"); and no labor disturbance by the employees of the
Company or any of its Subsidiaries exists or, to the Company's knowledge, is
imminent which might reasonably be expected to have a Material Adverse Effect.
Except as disclosed in the Private Placement Memorandum, neither the Company nor
any of its Subsidiaries is a party to or subject to the provisions of any
material injunction, judgment, decree or order of any court, regulatory body
administrative agency or other governmental body.
4.9 Properties. Each of the Company and its Subsidiaries has good and
----------
marketable title to all the properties and assets required for the continued
conduct of its business as described in the Private Placement Memorandum,
subject to no lien, mortgage, pledge, charge or encumbrance of any kind except
(i) those, if any, reflected in the Financial Statements (including the notes
thereto), or (ii) those which are not material in amount and do not materially
and adversely affect the use made and intended to be made of such property by
the Company or its Subsidiaries. Each of the Company and its Subsidiaries holds
its leased properties under valid and binding leases, with such exceptions as
are not materially significant in relation to the business of the Company and
its Subsidiaries, taken as a whole. Except as disclosed in the Private
Placement Memorandum, each of the Company and its Subsidiaries owns or leases
all such properties as are necessary to its operations as now conducted.
4.10 No Material Change. Since September 30, 1999 (i) neither the Company
------------------
nor its Subsidiaries have incurred any liabilities or obligations, indirect, or
contingent, or entered into any verbal or written agreement or other transaction
which is not in the ordinary course of business or which could reasonably be
expected to result in a material reduction in the future earnings of the Company
or its Subsidiaries or in a Material Adverse Effect; (ii) neither the Company
nor its Subsidiaries have sustained any material loss or interference with its
businesses or properties from fire, flood, windstorm, accident or other calamity
not covered by insurance; (iii) neither the Company nor its Subsidiaries have
paid or declared any dividends or other distributions with respect to its
capital stock and neither the Company nor its Subsidiaries is in default in the
payment of principal or interest on any outstanding debt obligations; (iv) there
has not been any change in the capital stock of the Company or any of its
Subsidiaries other than the issuance of capital stock in connection with the
acquisition of Allelix Biopharmaceuticals Inc., the sale of the Shares hereunder
and shares or options issued pursuant to exercise of outstanding warrants or
employee and director stock option plans approved by the Company's or such
Subsidiaries' Board of Directors, as the case may be, or indebtedness material
to the Company or any of its
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<PAGE>
Subsidiaries (other than in the ordinary course of business); and (v) there has
not been a change that would result in a Material Adverse Change.
4.11 Intellectual Property. Except as otherwise specifically disclosed in
---------------------
the Private Placement Memorandum, (i) the Company and its Subsidiaries own or
have obtained valid licenses, options or rights to use for the material
inventions, patent applications, patents, trademarks (both registered and
unregistered), trade names, copyrights and trade secrets necessary for the
conduct of the Company's and its Subsidiaries' respective businesses as
currently conducted and as the Private Placement Memorandum indicates the
Company and its Subsidiaries contemplate conducting in all material respects
(collectively, the "Intellectual Property"); (ii) neither the Company nor any of
its Subsidiaries has received notice of any third parties who have any ownership
rights to any Intellectual Property that is owned by, or has been licensed to,
the Company or its Subsidiaries for the product indications described in the
Private Placement Memorandum that would preclude the Company or its Subsidiaries
from conducting their respective businesses as currently conducted and as the
Private Placement Memorandum indicates the Company and its Subsidiaries
contemplate conducting in all material respects; (iii) to the Company's
knowledge there are currently no sales of any products that would constitute an
infringement by third parties of any material Intellectual Property owned,
licensed or optioned by the Company or its Subsidiaries; (iv) there is no
pending or, to the Company's knowledge, threatened action, suit, proceeding or
claim by others challenging the rights of the Company or its Subsidiaries in or
to any material Intellectual Property owned, licensed or optioned by the Company
or its Subsidiaries; (v) there is no pending or, to the Company's knowledge,
threatened action, suit, proceeding or claim by others challenging the validity
or scope of any material Intellectual Property owned, licensed or optioned by
the Company or its Subsidiaries; and (vi) there is no pending or, to the
Company's knowledge, threatened action, suit, proceeding or claim by others that
the Company or its Subsidiaries infringe or otherwise violate any patent,
trademark, copyright, trade secret or other proprietary right of others as would
reasonably be expected to result in a Material Adverse Effect.
4.12 Compliance. Neither the Company nor any of its Subsidiaries has been
----------
advised, and has no reason to believe, that it is not conducting its business in
compliance with all applicable laws, rules and regulations of the jurisdictions
in which it is conducting business, including, without limitation, all
applicable local, state and federal environmental laws and regulations; except
where failure to be so in compliance would not individually or in the aggregate
have a Material Adverse Effect.
4.13 Taxes. Each of the Company and its Subsidiaries has filed or obtained
-----
filing extensions with respect to all federal, state, provinical, local and
foreign income and franchise tax returns material to the Company and the
Subsidiaries, and has paid or accrued all taxes shown as due thereon, and
neither the Company nor any of its Subsidiaries has knowledge of a tax
deficiency which has been or might be asserted or threatened against it which
would reasonably be expected to have a Material Adverse Effect.
4.14 Transfer Taxes. On the Closing Date, all stock transfer or other
--------------
taxes (other than income taxes) which are required to be paid in connection with
the sale and transfer of the Shares to be sold to the Purchaser hereunder will
be, or will have been, fully paid or provided for by the Company and all laws
imposing such taxes will be or will have been fully complied with.
6
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4.15 Insurance. Each of the Company and its Subsidiaries maintains
---------
insurance of the type and in the amount that the Company reasonably believes is
adequate for its business, including, but not limited to, insurance covering all
real and personal property owned or leased by the Company or its Subsidiaries
against risks customarily insured against by similarly situated companies, all
of which insurance is in full force and effect.
4.16 Contributions. Neither the Company at any time since its
-------------
incorporation nor its Subsidiaries at any time since they were acquired or
formed by the Company have, directly or indirectly, (i) made any unlawful
contribution to any candidate for public office, or failed to disclose fully
where required by law any contribution in violation of law, or (ii) made any
payment to any federal or state governmental officer or official, or other
person charged with similar public or quasi-public duties, other than payments
required or permitted by the laws of the United States or any jurisdiction
thereof.
4.17 Investment Company. The Company is not an "investment company" or an
------------------
"affiliated person" of, or "promoter" or "principal underwriter" for an
investment company, within the meaning of the United States Investment Company
Act of 1940, as amended.
4.18 Offering Materials. The Company has not distributed and will not
------------------
distribute prior to the Closing Date any offering material in connection with
the offering and sale of the Shares other than the Private Placement Memorandum
or any amendment or supplement thereto. The Company has not nor will it take
any action independent of the Placement Agent to sell, offer for sale or solicit
offers to buy any securities of the Company which would bring the offer,
issuance or sale of the Shares, as contemplated by this Agreement, within the
provisions of Section 5 of the Securities Act.
4.19 Related Party Transactions. No transaction has occurred between or
--------------------------
among the Company and its affiliates, officers or directors or any affiliate or
affiliates of any such officer or director that is required to be described in
the Company's reports and other filings under the United States Securities
Exchange Act of 1934 (the "Exchange Act") attached as Exhibits to the Private
Placement Memorandum that is not so described.
4.20 Books and Records. The books, records and accounts of the Company
-----------------
accurately and fairly reflect, in reasonable detail, the transactions in, and
dispositions of, the assets of, and the results of operations of, the Company,
all to the extent required by generally accepted accounting principles. The
Company maintains a system of internal accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with management's general
or specific authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
4.21 Additional Information. The Company represents and warrants that each
----------------------
of the following documents, which the Placement Agent has furnished to the
Purchaser, or will furnish prior to the Closing, as of its date (or date of
filing with the Commission, as applicable), does not or will not contain an
untrue statement of a material fact or omit or will omit to state a material
7
<PAGE>
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were or will be made, not misleading:
(a) the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998;
(b) the Company's Quarterly Reports on Form 10-Q for the periods ended
March 31, 1999, June 30, 1999 and September 30, 1999;
(c) the Company's Proxy Statement dated April 21, 1999 for the 1999 Annual
Meeting of Stockholders;
(d) the Company's Proxy Statement dated November 17, 1999 for the special
Meeting of Stockholders related to the acquisition by NPS of Allelix
Biopharmaceuticals Inc.;
(e) the Company's current reports on Form 8-K filed with the Commission on
October 1, 1999, November 12, 1999, November 18, 1999 and January 10,
2000;
(f) the Resale Registration Statement on Form S-3;
(g) the Private Placement Memorandum, including all addenda and exhibits
thereto (other than the Appendices); and
(h) all other documents, if any, filed by the Company with the Securities
and Exchange Commission since January 27, 2000, pursuant to the
reporting requirements of the Exchange Act.
4.23 Legal Opinions. Prior to the Closing and as a condition to the
--------------
Purchaser's obligation hereunder, counsel to the Company will deliver to the
Placement Agent said counsel's legal opinion concerning the issuance of the
Shares in form and substance as agreed with the Placement Agent. The opinion
shall also state that each of the Purchasers may rely thereon as though it were
addressed directly to such Purchaser.
4.24 Certificate. At the Closing, the Company will deliver to the
-----------
Purchaser a certificate executed by the Chairman of the Board or President and
the chief financial or accounting officer of the Company, dated the Closing
Date, in form and substance reasonably satisfactory to the Purchasers, to the
effect that the representations and warranties of the Company set forth in this
Section 4 are true and correct in all material respects as of the date of this
Agreement and as of the Closing Date and the Company has complied with all the
agreements and satisfied all the conditions herein on its part to be performed
or satisfied on or prior to such Closing Date.
4.25 Year 2000 Compliance. The Company has not experienced, nor does the
--------------------
Company have reason to believe that one will arise, a Year 2000 Problem that
would have a Material Adverse Effect on the Company. The "Year 2000 Problem" as
used herein means any significant risk that computer hardware or software used
in the receipt, transmission, processing, manipulation, storage, retrieval,
retransmission or other utilization of data or in the operation of mechanical or
electrical systems of any kind will not, in the case of dates or time periods
occurring after
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December 31, 1999, function at least as effectively as in the case of dates or
time periods occurring prior to January 1, 2000.
SECTION 5. Representations, Warranties and Covenants of the Purchaser.
----------------------------------------------------------
(a) The Purchaser represents and warrants to, and covenants with, the
Company that: (i) the Purchaser is knowledgeable, sophisticated and
experienced in making, and is qualified to make, decisions with
respect to investments in shares representing an investment decision
like that involved in the purchase of the Shares, including
investments in securities issued by the Company, and has requested,
received, reviewed and considered all information it deems relevant in
making an informed decision to purchase the Shares; (ii) the Purchaser
is acquiring the number of Shares set forth in Section 2 above in the
ordinary course of its business and for its own account for investment
(as defined for purposes of the Hart-Scott-Rodino Antitrust
Improvement Act of 1976 and the regulations thereunder) only and with
no present intention of distributing any of such Shares or any
arrangement or understanding with any other persons regarding the
distribution of such Shares within the meaning of Section 2(11) of the
Securities Act; (iii) the Purchaser will not directly or indirectly,
offer, sell, pledge, transfer or otherwise dispose of (or solicit any
offers to buy, purchase or otherwise acquire or take a pledge of) any
of the Shares except in compliance with the Securities Act and the
Rules and Regulations thereunder; (iv) the Purchaser has completed or
caused to be completed the Registration Statement Questionnaire and
the Stock Certificate Questionnaire, both attached hereto as Appendix
I, for use in preparation of the Registration Statement, and the
answers thereto are true and correct as of the date hereof and will be
true and correct as of the effective date of the Registration
Statement; (v) the Purchaser has, in connection with its decision to
purchase the number of Shares set forth in Section 2 above, relied
solely upon the Private Placement Memorandum and the documents
included therein and the representations and warranties of the Company
contained herein and not on any other information concerning the
Company or the offering; (vi) the Purchaser is an "accredited
investor" within the meaning of Rule 501(a) of Regulation D
promulgated under the Securities Act.
(b) The Purchaser hereby covenants with the Company not to make any sale
of the Shares under the Registration Statement without effectively
causing the prospectus delivery requirement under the Securities Act,
and the Purchaser acknowledges and agrees that such Shares are not
transferable on the books of the Company unless the certificate
submitted to the transfer agent evidencing the Shares is accompanied
by a separate officer's certificate: (i) in the form of Appendix II
hereto, (ii) executed by an officer of, or other authorized person
designated by, the Purchaser, and (iii) to the effect that (A) the
Shares have been sold in accordance with the Registration Statement,
the Securities Act and the Rules and Regulations and any applicable
state securities or blue sky laws and (B) the requirement of
delivering a current prospectus has been satisfied. The Purchaser
acknowledges that there may occasionally be times when the Company
must suspend the use of the prospectus forming a part of the
Registration Statement until such time as an amendment or supplement
to the Registration Statement or the Prospectus has
9
<PAGE>
been filed by the Company and any such amendment to the Registration
Statement is declared effective by the Commission, or until such time
as the Company has filed an appropriate report with the Commission
pursuant to the Exchange Act. The Purchaser hereby covenants that it
will not sell any Shares pursuant to said prospectus during the period
commencing at the time at which the Company gives the Purchaser
written notice of the suspension of the use of said prospectus and
ending at the time the Company gives the Purchaser written notice that
the Purchaser may thereafter effect sales pursuant to said prospectus.
The Purchaser further covenants to notify the Company promptly of the
sale of all of its Shares.
(c) The Purchaser further represents and warrants to, and covenants with,
the Company that (i) the Purchaser has full right, power, authority
and capacity to enter into this Agreement and to consummate the
transactions contemplated hereby and has taken all necessary action,
obtained all necessary consents and has satisfied or will satisfy all
notification and filing requirements necessary to authorize the
execution, delivery and performance of this Agreement by the
Purchaser, and (ii) upon the execution and delivery of this Agreement,
this Agreement shall constitute a legal, valid and binding obligation
of the Purchaser, enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law) and except as the
indemnification agreements of the Purchaser in Section 7.3 hereof may
be legally unenforceable.
(d) If the Purchaser is resident in Canada, then such Purchaser hereby
represents and warrants, together with the other representations and
warranties herein, to the Company and every agent who is receiving a
commission in respect of the sale of Shares to such Purchaser and any
ultimate purchaser for whom such Purchaser is acting as agent:
(A) is resident in the Province of Ontario, Quebec or British
Columbia (collectively, the "Private Placement Provinces");
(B) is entitled under applicable provincial securities laws to
purchase Shares without the benefit of a prospectus qualified
under the securities laws of the relevant Private Placement
Province and, in the case of Private Placement Province other
than Ontario, without the services of a dealer registered
pursuant to such securities laws;
(C) has reviewed the terms referred to in the Private Placement
Memorandum under the heading "Resale Restrictions", and
understands that the Shares have not been qualified for
distribution to the public in any province or territory of
Canada, and that any resale of the Shares must be made (i)
through an appropriately registered dealer or in accordance with
an exemption from the registration requirements of applicable
securities laws, and (ii) in accordance with, or pursuant to an
exemption from, the prospectus requirements of such laws, which
vary depending on the province,
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provided that such resale restrictions may not apply to resales
made outside of Canada, depending on the circumstances;
(D) if in Ontario, (i) is purchasing Shares as principal having an
aggregate acquisition cost of not less than Cdn.$150,000, (ii)
has been recognized by the Ontario Securities Commission as an
"exempt purchaser" and is purchasing as principal, or (iii) is a
"portfolio adviser" within the meaning of Ontario Securities
Commission Rule 45-504 ("Rule 45-504") and is purchasing Shares
on behalf of a "managed account" within the meaning of Rule 45-
504;
(E) if in Quebec, (i) is purchasing Shares for his own account with
an aggregate acquisition cost of not less than Cdn.$150,000, in
accordance with section 51 of the Securities Act (Quebec), and is
not a company established solely to purchase securities on the
basis of the prospectus exemption provided for therein; (ii) is a
"sophisticated purchaser" within the meaning of Section 44 of the
Securities Act (Quebec) purchasing as principal, or (iii) is a
"sophisticated purchaser" within the meaning of Section 45 of the
Securities Act (Quebec) purchasing for the portfolio of a person
managed solely by it;
(F) if in British Columbia, is not an individual and (i) is
purchasing as principal Shares having an aggregate acquisition
cost of not less than Cdn.$97,000, or (ii) has been designated as
an "exempt purchaser" in an order made by the executive director
of the British Columbia Securities Commission and is purchasing
Shares as principal; provided that the Purchaser shall be deemed
to be acting as principal where the Purchaser is a portfolio
manager purchasing Shares as agent for an account that is fully
managed by the Purchaser; and
(G) it is the Purchaser's express wish, and the Purchaser agrees,
that all documents evidencing or relating in any way to the sale
of the Shares be drafted in the English language only. L'acheteur
des action reconnait que c'est sa volonte expresse que tous les
documents faisant foi ou se rapportant de quelque maniere a la
vente des actions soient rediges uniquement en anglais.
SECTION 6. Survival of Representations, Warranties and Agreements.
------------------------------------------------------
Notwithstanding any investigation made by any party to this Agreement or by the
Placement Agent, all covenants, agreements, representations and warranties made
by the Company and the Purchaser herein and in the certificates for the Shares
delivered pursuant hereto shall survive the execution of this Agreement, the
delivery to the Purchaser of the Shares being purchased and the payment
therefor.
11
<PAGE>
SECTION 7. Registration of the Shares; Compliance with the Securities Act.
--------------------------------------------------------------
7.1 Registration Procedures and Expenses. The Company shall:
------------------------------------
(a) as soon as practicable, prepare and file with the Commission the
Registration Statement on Form S-3 relating to the sale of the Shares
by the Purchaser from time to time on the Nasdaq National Market or
the facilities of any national securities exchange on which the
Company's Common Stock is then traded or in privately-negotiated
transactions;
(b) use its reasonable efforts, subject to receipt of necessary
information from the Purchasers, to cause the staff of the Commission
to notify the Company of the staff's willingness to declare the
Registration Statement effective within 75 days after the Registration
Statement is filed by the Company;
(c) prepare and file with the Commission such amendments and supplements
to the Registration Statement and the prospectus used in connection
therewith as may be necessary to keep the Registration Statement
effective until the earlier of (i) two years after the effective date
of the Registration Statement or (ii) the date on which the Shares may
be resold by the Purchasers without registration by reason of Rule
144(k) under the Securities Act or any other rule of similar effect;
(d) furnish to the Purchaser with respect to the Shares registered under
the Registration Statement (and to each underwriter, if any, of such
Shares) such number of copies of prospectuses and such other documents
as the Purchaser may reasonably request, in order to facilitate the
public sale or other disposition of all or any of the Shares by the
Purchaser; provided, however, that the obligation of the Company to
deliver copies of prospectuses to the Purchaser shall be subject to
the receipt by the Company of reasonable assurances from the Purchaser
that the Purchaser will comply with the applicable provisions of the
Securities Act and of such other securities or blue sky laws as may be
applicable in connection with any use of such prospectuses;
(e) file documents required of the Company for normal blue sky clearance
in states specified in writing by the Purchaser; provided, however,
that the Company shall not be required to qualify to do business or
consent to service of process in any jurisdiction in which it is not
now so qualified or has not so consented; and
(f) bear all expenses in connection with the procedures in paragraphs (a)
through (e) of this Section 7.1 and the registration of the Shares
pursuant to the Registration Statement, other than fees and expenses,
if any, of counsel or other advisers to the Purchaser or the Other
Purchasers or underwriting discounts, brokerage fees and commissions
incurred by the Purchaser or the Other Purchasers, if any.
7.2 Transfer of Shares After Registration. The Purchaser agrees that it
-------------------------------------
will not effect any disposition of the Shares or its right to purchase the
Shares that would constitute a sale within the meaning of the Securities Act,
except as contemplated in the Registration Statement
12
<PAGE>
referred to in Section 7.1, and that it will promptly notify the Company of any
changes in the information set forth in the Registration Statement regarding the
Purchaser or its plan of distribution.
7.3 Indemnification. For the purpose of this Section 7.3:
---------------
(i) the term "Purchaser/Affiliate" shall mean the Purchaser and any
person who controls the Purchaser within the meaning of Section
15 of the Securities Act; and
(ii) the term "Registration Statement" shall include any final
prospectus, exhibit, supplement or amendment included in or
relating to the Registration Statement referred to in Section
7.1.
(a) The Company agrees to indemnify and hold harmless each of the
Purchasers and each Purchaser/Affiliate, against any losses, claims,
damages, liabilities or expenses, joint or several, to which such
Purchasers or such Purchaser/Affiliate may become subject, under the
Securities Act, the Exchange Act, or any other federal or state
statutory law or regulation, or at common law or otherwise (including
in settlement of any litigation, if such settlement is effected with
the written consent of the Company), insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof as
contemplated below) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained
in the Registration Statement, including the prospectus, financial
statements and schedules, and all other documents filed as a part
thereof, as amended at the time of effectiveness of the Registration
Statement, including any information deemed to be a part thereof as of
the time of effectiveness pursuant to paragraph (b) of Rule 430A, or
pursuant to Rule 434, of the Rules and Regulations, or the prospectus,
in the form first filed with the Commission pursuant to Rule 424(b) of
the Regulations, or filed as part of the Registration Statement at the
time of effectiveness if no Rule 424(b) filing is required (the
"Prospectus"), or any amendment or supplement thereto, or arise out of
or are based upon the omission or alleged omission to state in any of
them a material fact required to be stated therein or necessary to
make the statements in any of them not misleading in light of the
circumstances under which they were made, or arise out of or are based
in whole or in part on any inaccuracy in the representations and
warranties of the Company contained in this Agreement, or any failure
of the Company to perform its obligations hereunder or under law, and
will reimburse the Purchaser and each such Purchaser/Affiliate for any
legal and other expenses as such expenses are reasonably incurred by
such Purchaser or such Purchaser/Affiliate in connection with
investigating, defending, settling, compromising or paying any such
loss, claim, damage, liability, expense or action; provided, however,
that the Company will not be liable in any such case to the extent
that any such loss, claim, damage, liability or expense arises out of
or is based upon (i) an untrue statement or alleged untrue statement
or omission or alleged omission made in the Registration Statement,
the Prospectus or any amendment or supplement thereto in reliance upon
and in conformity with written information furnished to the Company by
the Purchaser expressly for use therein, or (ii) the failure of such
Purchaser to comply with the covenants and agreements contained in
Sections 5(b) or 7.2 hereof re-
13
<PAGE>
specting the sale of the Shares, or (iii) the inaccuracy of any
representations made by such Purchaser herein or (iv) any statement or
omission in any Prospectus that is corrected in any subsequent
Prospectus that was delivered to the Purchaser prior to the pertinent
sale or sales by the Purchaser.
(b) Each of the Purchasers will severally indemnify and hold harmless the
Company, each of its directors, each of its officers who signed the
Registration Statement and each person, if any, who controls the
Company within the meaning of the Securities Act against any losses,
claims, damages, liabilities or expenses to which the Company, each of
its directors, each of its officers who signed the Registration
Statement or controlling person may become subject, under the
Securities Act, the Exchange Act, or any other federal or state
statutory law or regulation, or at common law or otherwise (including
in settlement of any litigation, if such settlement is effected with
the written consent of such Purchaser) insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof as
contemplated below) arise out of or are based upon (i) any failure to
comply with the covenants and agreements contained in Sections 5(b) or
7.2 hereof respecting the sale of the Shares or (ii) the inaccuracy of
any representation made by such Purchaser herein or (iii) any untrue
or alleged untrue statement of any material fact contained in the
Registration Statement, the Prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission
was made in the Registration Statement, the Prospectus, or any
amendment or supplement thereto, in reliance upon and in conformity
with written information furnished to the Company by or on behalf of
any Purchaser expressly for use therein, and will reimburse the
Company, each of its directors, each of its officers who signed the
Registration Statement or controlling person for any legal and other
expense reasonably incurred by the Company, each of its directors,
each of its officers who signed the Registration Statement or
controlling person in connection with investigating, defending,
settling, compromising or paying any such loss, claim, damage,
liability, expense or action.
(c) Promptly after receipt by an indemnified party under this Section 7.3
of notice of the threat or commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made
against an indemnifying party under this Section 7.3 promptly notify
the indemnifying party in writing thereof; but the omission so to
notify the indemnifying party will not relieve it from any liability
which it may have to any indemnified party for contribution or
otherwise than under the indemnity agreement contained in this Section
7.3 or to the extent it is not prejudiced as a result of such failure.
In case any such action is brought against any indemnified party and
such indemnified party seeks or intends to seek indemnity from an
indemnifying party, the indemnifying party will be entitled to
participate in, and, to the extent that it may wish, jointly with all
other indemnifying parties similarly notified, to assume the defense
thereof with counsel reasonably satisfactory to such indemnified
party; provided, however, if the defendants in any such action include
both the indemnified party and the indemnifying party and the indemni-
14
<PAGE>
fied party shall have reasonably concluded that there may be a
conflict between the positions of the indemnifying party and the
indemnified party in conducting the defense of any such action or that
there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to
the indemnifying party, the indemnified party or parties shall have
the right to select separate counsel to assume such legal defenses and
to otherwise participate in the defense of such action on behalf of
such indemnified party or parties. Upon receipt of notice from the
indemnifying party to such indemnified party of its election so to
assume the defense of such action and approval by the indemnified
party of counsel, the indemnifying party will not be liable to such
indemnified party under this Section 7.3 for any legal or other
expenses subsequently incurred by such indemnified party in connection
with the defense thereof unless (i) the indemnified party shall have
employed such counsel in connection with the assumption of legal
defenses in accordance with the proviso to the preceding sentence (it
being understood, however, that the indemnifying party shall not be
liable for the expenses of more than one separate counsel, approved by
such indemnifying party in the case of paragraph (a), representing all
of the indemnified parties who are parties to such action, or (ii) the
indemnified party shall not have employed counsel reasonably
satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of commencement of action,
in each of which cases the reasonable fees and expenses of counsel
shall be at the expense of the indemnifying party.
(d) If the indemnification provided for in this Section 7.3 is required by
its terms but is for any reason held to be unavailable to or otherwise
insufficient to hold harmless an indemnified party under paragraphs
(a), (b) or (c) of this Section 7.3 in respect to any losses, claims,
damages, liabilities or expenses referred to herein, then each
applicable indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of any losses, claims,
damages, liabilities or expenses referred to herein (i) in such
proportion as is appropriate to reflect the relative benefits received
by the Company and the Purchaser from the placement of Common Stock or
(ii) if the allocation provided by clause (i) above is not permitted
by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but the
relative fault of the Company and the Purchaser in connection with the
statements or omissions or inaccuracies in the representations and
warranties in this Agreement that resulted in such losses, claims,
damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the
Company on the one hand and each Purchaser on the other shall be
deemed to be in the same proportion as the amount paid by such
Purchaser to the Company pursuant to this Agreement for the Shares
purchased by such Purchaser that were sold pursuant to the
Registration Statement bears to the difference (the "Difference")
between the amount such Purchaser paid for the Shares that were sold
pursuant to the Registration Statement and the amount received by such
Purchaser from such sale. The relative fault of the Company on the one
hand and each Purchaser on the other shall be determined by reference
to, among other things, whether the untrue or alleged statement of a
material fact or the omission or alleged omission to state a material
fact or the inaccurate or the alleged inaccurate representation and/or
war-
15
<PAGE>
ranty relates to information supplied by the Company or by such
Purchaser and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The amount paid or payable by a party as a result of the
losses, claims, damages, liabilities and expenses referred to above
shall be deemed to include, subject to the limitations set forth in
paragraph (c) of this Section 7.3, any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or
defending any action or claim. The provisions set forth in paragraph
(c) of this Section 7.3 with respect to the notice of the threat or
commencement of any threat or action shall apply if a claim for
contribution is to be made under this paragraph (d); provided,
however, that no additional notice shall be required with respect to
any threat or action for which notice has been given under paragraph
(c) for purposes of indemnification. The Company and each Purchaser
agree that it would not be just and equitable if contribution pursuant
to this Section 7.3 were determined solely by pro rata allocation
(even if the Purchaser were treated as one entity for such purpose) or
by any other method of allocation which does not take account of the
equitable considerations referred to in this paragraph.
Notwithstanding the provisions of this Section 7.3, no Purchaser shall
be required to contribute any amount in excess of the amount by which
the Difference exceeds the amount of any damages that such Purchaser
has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
The Purchasers' obligations to contribute pursuant to this Section 7.3 are
several and not joint.
7.4 Termination of Conditions and Obligations. The restrictions imposed
-----------------------------------------
by Section 5 or this Section 7 upon the transferability of the Shares shall
cease and terminate as to any particular number of the Shares on the date all
such Shares are eligible for sale under Rule 144(k) or at such time as an
opinion of counsel satisfactory in form and substance to the Company shall have
been rendered to the effect that such conditions are not necessary in order to
comply with the Securities Act.
7.5 Information Available. So long as the Registration Statement is
---------------------
effective covering the resale of Shares owned by the Purchaser, the Company will
furnish to the Purchaser:
(a) as soon as practicable after available (but in the case of the
Company's Annual Report to Stockholders, within 120 days after the end
of each fiscal year of the Company), one copy of (i) its Annual Report
to Stockholders (which Annual Report shall contain financial
statements audited in accordance with generally accepted accounting
principles by a national firm of certified public accountants), (ii)
if not included in substance in the Annual Report to Stockholders, its
Annual Report on Form 10-K, (iii) its Quarterly Reports on Form 10-Q,
(iv) its Current Reports on Form 8-K, and (v) a full copy of the
particular Registration Statement covering the Shares (the foregoing,
in each case, excluding exhibits);
16
<PAGE>
(b) upon the reasonable request of the Purchaser, all exhibits excluded by
the parenthetical to subparagraph (a)(v) of this Section 7.5;
(c) upon the reasonable request of the Purchaser, a reasonable number of
copies of the prospectuses to supply to any other party requiring such
prospectuses; and
(d) upon the reasonable request of the Purchaser, the Company will meet
with the Purchaser or a representative thereof at the Company's
headquarters to discuss information relevant for disclosure in the
Registration Statement covering the Shares, subject to appropriate
confidentiality limitations as the Company may reasonably require.
SECTION 8. Broker's Fee. The Purchaser acknowledges that the Company
------------
intends to pay to the Placement Agent a fee in respect of the sale of the Shares
to the Purchaser and that the Placement Agent intends to enter into agreements
with the parties listed on Exhibit A attached hereto, and that such parties may
receive a portion of the fee payable by the Company to the Placement Agent. Each
of the parties hereto hereby represents that, on the basis of any actions and
agreements by it, there are no other brokers or finders entitled to compensation
in connection with the sale of the Shares to the Purchaser.
SECTION 9. Notices. All notices, requests, consents and other
-------
communications hereunder shall be in writing, shall be mailed by first-class
registered or certified airmail, confirmed facsimile or nationally recognized
overnight express courier postage prepaid, and shall be deemed given when so
mailed and shall be delivered as addressed as follows:
(a) if to the Company, to:
NPS Pharmaceuticals, Inc.
420 Chipeta Way
Salt Lake City, UT 84108
Attention: V.P. Corporate Development and Legal Affairs
Facsimile: (801) 583-4961
or to such other person at such other place as the Company shall designate
to the Purchaser in writing; and
(b) if to the Purchaser, at its address as set forth at the end of this
Agreement, or at such other address or addresses as may have been
furnished to the Company in writing.
SECTION 10. Changes. This Agreement may not be modified or amended except
-------
pursuant to an instrument in writing signed by the Company and the Purchaser.
SECTION 11. Headings. The headings of the various sections of this
--------
Agreement have been inserted for convenience of reference only and shall not be
deemed to be part of this Agreement.
17
<PAGE>
SECTION 12. Severability. In case any provision contained in this
------------
Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
SECTION 13. Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of New York and the federal
law of the United States of America, without regard to conflicts of law
provisions.
SECTION 14. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
NPS PHARMACEUTICALS, INC.
By:_______________________________________
Name:_____________________________________
Title:____________________________________
Print or Type:
Name of Purchaser (Individual or Institution):
________________________________________
Name of Individual representing Purchaser (if an Institution)
________________________________________
Title of Individual representing Purchaser (if an Institution)
________________________________________
Signature by:
Individual Purchaser or Individual
representing Purchaser:
________________________________________
Address: ____________________________
____________________________
Telephone: ____________________________
Facsimile: ____________________________
18
<PAGE>
Appendix I
(one of two)
NPS PHARMACEUTICALS, INC.
STOCK CERTIFICATE QUESTIONNAIRE
Pursuant to Section 3 of this Agreement, please provide us with the
following information:
1. The exact name that your Shares are to be registered in (this is the name
that will appear on your stock certificate(s)). You may use a nominee name
if appropriate:
___________________________________________________________________________
1. The relationship between the Purchaser of the Shares and the Registered
Holder listed in response to item 1 above:
___________________________________________________________________________
1. The mailing address of the Registered Holder listed in response to item 1
above:
___________________________________________________________________________
1. The Social Security Number or Tax Identification Number of the Registered
Holder listed in response to item 1 above:
___________________________________________________________________________
19
<PAGE>
NPS PHARMACEUTICALS INC.
REGISTRATION STATEMENT QUESTIONNAIRE
In connection with the preparation of the Registration Statement, please
provide us with the following information:
1. Pursuant to the "Selling Stockholder" section of the Registration
Statement, please state your or your organization's name exactly as it
should appear in the Registration Statement:
2. Please provide the number of shares that you or your organization will own
immediately after Closing, including those Shares purchased by you or your
organization pursuant to this Agreement and those shares purchased by you
or your organization through other transactions:
3. Have you or your organization had any position, office or other material
relationship within the past three years with the Company or its
affiliates?
_____ Yes _____ No
If yes, please indicate the nature of any such relationships below:
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
<PAGE>
APPENDIX II
Attention:
PURCHASER'S CERTIFICATE OF SUBSEQUENT SALE
The undersigned, [an officer of, or other person duly authorized by]
__________________ [fill in official name of individual or institution] hereby
certifies that he/she [said institution] is the Purchaser of the shares
evidenced by the attached certificate, and as such, sold such shares on ________
[date] in accordance with Registration Statement number _______ [fill in the
number of or otherwise identify Registration Statement] and the requirement of
delivering a current prospectus by the Company has been complied with in
connection with such sale.
Print or Type:
Name of Purchaser
(Individual or Institution):
________________________________________
Name of Individual representing Purchaser (if an Institution)
________________________________________
Title of Individual representing Purchaser (if an Institution):
________________________________________
Signature by:
Individual Purchaser or Individual representing Purchaser:
________________________________________
<PAGE>
Consent of Independent Auditors
The Board of Directors
NPS Pharmaceuticals, Inc.:
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the prospectus.
KPMG LLP
Salt Lake City, Utah
February 4, 2000
