-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UvPbHewFjAzNqlM1vx2m+RqNQKFBXeaTbwxTthrkSkfWAmdr97KlwQY9qhNdbmTK 3gyyREmPXlos0k6jxKS9KA== 0000912057-96-026174.txt : 19961118 0000912057-96-026174.hdr.sgml : 19961118 ACCESSION NUMBER: 0000912057-96-026174 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: NPS PHARMACEUTICALS INC CENTRAL INDEX KEY: 0000890465 STANDARD INDUSTRIAL CLASSIFICATION: BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836] IRS NUMBER: 870439579 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-23272 FILM NUMBER: 96662699 BUSINESS ADDRESS: STREET 1: 420 CHIPETA WAY SUITE 240 CITY: SALT LAKE CITY STATE: UT ZIP: 84108-1256 BUSINESS PHONE: 8015834939 10-Q 1 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) / X / Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the quarterly period ended September 30, 1996 or / / Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from ________________ to ______________ Commission file number 0-23272 NPS PHARMACEUTICALS, INC. (Exact name of Registrant as Specified in Its Charter) DELAWARE 87-0439579 - ------------------------------------------------------------------------------- (State or Other Jurisdiction of (I.R.S. Employer Identification No.) Incorporation or Organization) 420 CHIPETA WAY, SALT LAKE CITY, UTAH 84108-1256 - ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (801) 583-4939 - ------------------------------------------------------------------------------- (Registrant's Telephone Number, Including Area Code) N/A - ------------------------------------------------------------------------------- (Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report) Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ------ ------ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at September 30, 1996 ----- --------------------------------- Common Stock $.001 par value 11,800,629 Preferred Stock $.001 par value -0- NPS PHARMACEUTICALS, INC. TABLE OF CONTENTS Page No. -------- PART I FINANCIAL INFORMATION Item 1 Financial Statements Balance Sheets 3 Statement of Operations 4 Statement of Cash Flows 5 Notes to Financial Statements 7 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 8 PART II OTHER INFORMATION Item 6 Exhibits and Reports on Form 8-K (a) Exhibits - None (b) Reports on Form 8-K - None SIGNATURES 11 -2- NPS PHARMACEUTICALS, INC. (A DEVELOPMENT STAGE COMPANY) BALANCE SHEET
September 30, December 31, Assets 1996 1995 ------------- ------------ (Unaudited) (Audited) Current assets: Cash and cash equivalents $ 60,567,414 $ 8,039,625 Marketable investment securities 9,327,796 300,000 Accounts receivable 197,305 23,000 ------------- ------------ Total current assets 70,092,515 8,362,625 Plant and equipment: Equipment 2,849,114 2,272,006 Leasehold improvements 1,864,759 1,635,189 ------------- ------------ 4,713,873 3,907,195 Less accumulated depreciation and amortization 2,291,551 1,711,551 ------------- ------------ Net plant and equipment 2,422,322 2,195,644 Other assets 39,854 42,154 ------------- ------------ $ 72,554,691 $ 10,600,423 ------------- ------------ ------------- ------------ Liabilities and Stockholders' Equity Current liabilities: Current installments of obligations under capital leases $ 84,771 $ 435,230 Current installments of long-term debt 365,691 331,746 Accounts payable 524,252 1,036,464 Accrued expenses 253,437 139,714 Deferred income 633,438 587,500 Income tax payable 200,000 - ------------- ------------ Total current liabilities 2,061,589 2,530,654 Obligations under capital leases, excluding current installments 43,423 53,761 Long-term debt, excluding current installments 415,943 693,528 ------------- ------------ Total liabilities 2,520,955 3,277,943 Stockholders' equity: Common stock 11,793 7,073 Additional paid-in capital 84,114,443 28,067,130 Deferred compensation (42,833) (234,458) Deficit accumulated during development stage (14,049,667) (20,517,265) ------------- ------------ Net stockholders' equity 70,033,736 7,322,480 ------------- ------------ $ 72,554,691 $ 10,600,423 ------------- ------------ ------------- ------------
See accompanying note to financial statements. -3- NPS PHARMACEUTICALS, INC. (A Development Stage Company) Statements of Operations
October 22, 1986 (inception) Three Months Ended September 30, Nine Months Ended September 30, through -------------------------------- ------------------------------- September 30, 1996 1995 1996 1995 1996 ------------- ------------ ------------- ----------- ------------- Revenues from research and license agreements $ 1,330,768 $ 1,355,194 $ 17,196,705 $ 8,179,194 $ 39,512,554 Operating expenses: Research and development 2,414,393 2,392,216 8,232,579 5,939,725 38,592,769 General and administrative 1,246,247 824,702 3,924,219 2,867,777 16,712,664 ------------- ------------ ------------- ----------- ------------- Total operating expenses 3,660,640 3,216,918 12,156,798 8,807,502 55,305,433 ------------- ------------ ------------- ----------- ------------- Operating income (loss) (2,329,872) (1,861,724) 5,039,907 (628,308) (15,792,879) Other income (expense): Interest income 939,954 123,068 1,737,205 359,141 2,994,049 Interest expense (31,082) (54,652) (109,514) (105,413) (585,227) Other - - - - 34,390 ------------- ------------ ------------- ----------- ------------- Total other income 908,872 68,416 1,627,691 253,728 2,443,212 ------------- ------------ ------------- ----------- ------------- Income (loss) before taxes (1,421,000) (1,793,308) 6,667,598 (374,580) (13,349,667) Income taxes - 200,000 500,000 700,000 ------------- ------------ ------------- ----------- ------------- Net income (loss) $ (1,421,000) $ (1,793,308) $ 6,467,598 $ (874,580) $(14,049,667) ------------- ------------ ------------- ----------- ------------- ------------- ------------ ------------- ----------- ------------- Net income (loss) per common share - primary $ (0.12) $ (0.26) $ 0.59 $ (0.13) ------------- ------------ ------------- ----------- ------------- ------------ ------------- ----------- Weighted average shares outstanding - primary 11,765,600 6,966,600 10,896,800 6,876,200 ------------- ------------ ------------- ----------- ------------- ------------ ------------- -----------
See accompanying note to financial statements. -4- NPS PHARMACEUTICALS, INC. (A Development Stage Company) Statements of Cash Flows (Unaudited)
Nine Months Ended September 30, October 22, 1986 ------------------------------- (inception) through 1996 1995 September 30, 1996 ------------- ------------ ------------------- Cash flows from operating activities: Net income (loss) $ 6,467,598 $ (874,580) $ (14,049,667) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 580,000 505,000 2,993,028 Gain on sale of equipment - - (28,720) Issuance of stock in lieu of cash for services 319,400 - 533,939 Amortization of deferred compensation 191,625 191,625 723,667 Decrease (increase) in receivables (174,305) 163,716 (197,305) Decrease (increase) in other assets 2,300 23,698 (43,454) Increase (decrease) in accounts payable and accrued expenses (398,489) (167,218) 777,689 Increase (decrease) in deferred income 45,938 500,000 633,438 Increase (decrease) in taxes payable 200,000 - 200,000 ------------- ------------ -------------- Net cash provided by (used in) operating activities 7,234,067 342,241 (8,457,385) Cash flows from investing activities: Net purchase of marketable investment securities (9,027,796) 3,392,135 (9,327,796) Acquisition of equipment and leasehold improvements (774,178) (310,436) (4,833,304) Proceeds from sale of equipment - - 1,048,484 ------------- ------------ -------------- Net cash provided by (used in) investing activities (9,801,974) 3,081,699 (13,112,616) Cash flows from financing activities: Proceeds from note payable to bank - - 123,855 Proceeds from issuance of preferred stock - - 17,581,416 Proceeds from issuance of common stock 55,732,633 190,495 65,544,381 Proceeds from long-term debt - 1,115,290 1,166,434 Principal payments on note payable to bank - - (123,855) Principal payments under capital lease obligations (393,297) (315,287) (1,272,712) Principal payments on long-term debt (243,640) (67,846) (582,104) Repurchase of preferred stock - - (300,000) ------------- ------------ -------------- Net cash provided by financing activities 55,095,696 922,652 82,137,415 ------------- ------------ -------------- Net increase in cash and cash equivalents 52,527,789 4,346,592 60,567,414 Cash and cash equivalents at beginning of period 8,039,625 5,931,082 - ------------- ------------ -------------- Cash and cash equivalents at end of period $ 60,567,414 $ 10,277,674 $ 60,567,414 ------------- ------------ -------------- ------------- ------------ --------------
See accompanying note to financial statements. -5- NPS PHARMACEUTICALS, INC. (A Development Stage Company) Statements of Cash Flows (Unaudited)
Nine Months Ended June 30, October 22, 1986 ------------------------------- (inception) through 1996 1995 September 30, 1996 ------------- ------------ ------------------- SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for interest $ 109,514 $ 31,311 $ 585,227 Cash paid for taxes - - $ 500,000 SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES: Acquisition of equipment through incurrence of capital lease obligations 32,500 62,945 1,400,906 Acquisition of leasehold improvements through incurrence of debt - - 197,304
See accompanying note to financial statements. -6- NPS Pharmaceuticals, Inc. (A Development Stage Company) Note to Financial Statements (Unaudited) (1) Basis of Presentation The accompanying financial statements of NPS Pharmaceuticals, Inc. ("NPS" or the "Company") are unaudited, except as specifically noted. The financial statements reflect all adjustments (consisting solely of normal recurring adjustments) which are, in the opinion of management, necessary to present fairly the financial position and results of operations for the interim periods presented. The results of operations for the three month and nine month periods ended September 30, 1996, are not necessarily indicative of the results to be expected for the full year. The financial information included herein should be read in conjunction with the Company's Form 10-K for 1995 which includes the audited financial statements and the notes thereto for the year ended December 31, 1995. -7- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THIS QUARTERLY REPORT ON FROM 10-Q CONTAINS, IN ADDITION TO HISTORICAL INFORMATION, FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THE RESULTS DISCUSSED IN THE FORWARD-LOOKING STATEMENTS. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE THOSE DISCUSSED HEREIN AS WELL AS THOSE DISCUSSED IN THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1995 UNDER THE HEADING "RISK FACTORS". OVERVIEW Since its inception in 1986, NPS has devoted substantially all of its resources to its research and development programs. To date, the Company has not completed development of any pharmaceutical products for sale and has incurred substantial losses. NPS has incurred cumulative losses through September 30, 1996, of $14.0 million net of cumulative revenues from research and license agreements of $39.5 million. The Company expects to incur significant operating losses over at least the next several years as the Company continues and expands its research and development and preclinical and clinical testing activities. Substantially all of the Company's revenues are derived from license fees, milestone payments and research support payments from its licensees and collaborators, and these revenues fluctuate from quarter to quarter. Accordingly, the Company expects that income or losses will fluctuate from quarter to quarter, that such fluctuations may be substantial, and that results from prior quarters may not be indicative of future operating results. The Company's ability to achieve profitability depends in part on its ability, alone and/or with others, to complete development of its proposed products, to obtain required regulatory approvals and to manufacture and market such products, as to which matters there can be no assurance. RESULTS OF OPERATIONS Revenues were $1.3 million for the three-month period ended September 30, 1996, compared to $1.4 million for the three-month period ended September 30, 1995 and $17.2 million for the nine-month period ended September 30, 1996, compared to $8.2 million for the same nine-month period of 1995. The increase in revenues in the nine-month period of 1996 compared to the same period in 1995 was primarily due to the receipt by NPS of a license fee from Amgen Inc. ("Amgen") and a milestone payment from SmithKline Beecham Corporation ("SmithKline") in the first quarter of 1996. See "Liquidity and Capital Resources" below for further discussion of payments that may be received by the Company in the future. Research and development expenses were $2.4 million in both three-month periods ended September 30, 1996 and 1995, and $8.2 million compared to $5.9 million for the nine-month periods ended September 30, 1996 and 1995, respectively. The increase in the current nine-month period was primarily due to ongoing clinical trials for NPS R-568 in early 1996, increased expenditures for the preclinical development of NPS 1506, and the hiring of additional personnel. The Company's research and development expenses are expected to increase significantly in the future as NPS conducts discovery, preclinical development and clinical trials for non-licensed product candidates, sponsors research or obtains licenses for technology from third-party institutions, and hires more research and development personnel. General and administrative expenses increased to $1.2 million for the three-month period ended September 30, 1996, from $825,000 in the comparable period of 1995, and to $3.9 million for the nine-month period ended September 30, 1996, from $2.9 million in the comparable period of 1995. The increases were primarily due to the hiring of additional personnel in the areas of business development, investor relations, and legal affairs during 1996, costs incurred in finalizing the agreement with Amgen in March 1996 and costs associated with a follow-on offering of the Company's common stock which was completed in May 1996. The Company expects that general and administrative expenses will continue to increase in the future as more personnel and facilities are needed to support research and development activities. Interest income increased to $940,000 and $1.7 million for the three-month and nine-month periods ended September 30, 1996, respectively, from $123,000 and $359,000 for the same periods in 1995. The increases were -8- primarily due to higher average cash balances resulting from the net proceeds of the stock offering in May 1996 in which the Company sold 3.45 million shares of its common stock with net proceeds to the Company of approximately $48.4 million (includes proceeds from the exercise of the underwriters' over-allotment). LIQUIDITY AND CAPITAL RESOURCES The Company has financed its operations since inception primarily through collaborative research and license agreements and the private and public placement of equity securities. As of September 30, 1996, the Company had recognized approximately $39.5 million of cumulative revenues from research and license agreements and approximately $84.1 million as consideration for the placement of equity securities. The Company's principal sources of liquidity are its cash, cash equivalents, and marketable investment securities which totaled $69.9 million at September 30, 1996. The Company receives quarterly payments under its agreements with Kirin and SmithKline to support the Company's research efforts in HPT and osteoporosis, respectively. The Kirin payments are currently $500,000 per quarter with total potential payments of up to $7 million over the five years of the research term of the Kirin Agreement. The scheduled expiration date of the SmithKline agreement has been extended for an additional year to October 31, 1997, and NPS expects to receive approximately $500,000 per quarter from SmithKline. Amgen will reimburse the Company up to $400,000 per year for a period not to exceed five years for certain costs which may be incurred by the Company in the development of NPS R-568 for primary hyperparathyroidism in the Amgen territory, with such participation occurring under the direction of Amgen. The Company could receive additional payments of up to $56.0 million in the aggregate from Amgen, Kirin, and SmithKline upon the accomplishment of specified research and/or development milestones under the respective agreements. NPS does not control the subject matter, timing or resources applied by its licensees (SmithKline, Kirin and Amgen) under their respective development contracts. Thus, the Company's potential receipt of milestone payments from these licensees is largely beyond the control of NPS. Progress under these agreements is subject to risk and each of these support agreements may be terminated before the scheduled expiration date by the respective licensee. Therefore, no assurance can be given that any future milestone or research or development support payments will be received thereunder. The Company has entered into certain sponsored research and license agreements which obligate the Company to make research support payments to third-party institutions. Additional payments may be required upon the accomplishment of research milestones by the institutions or as license fees or royalties to maintain the licenses. As of September 30, 1996, the Company had a total commitment of approximately $700,000 for future research support payments. The Company expects to enter into additional sponsored research and license agreements in the future. As of September 30, 1996, the Company's net investment in leasehold improvements, equipment and furnishings was approximately $2.4 million. The Company has financed a portion of such expenditures through capital leases and long-term debt with a total principal obligation of approximately $910,000 as of September 30, 1996. Additional equipment and facilities will be needed as the Company increases its research and development activities, a portion of which may be financed with debt. Equipment and leasehold improvements subject to the capital leases and the long-term debt have been pledged in support of the obligations. The Company anticipates that its existing capital resources, including interest earned thereon and expected research and development support payments from its licensees will be sufficient to enable it to maintain its current and planned operations through at least 1998. However, actual needs are dependent on numerous factors, including the progress of the Company's research and development programs, the magnitude and scope of these activities, progress with preclinical and clinical trials, the cost of preparing, filing, prosecuting, maintaining and enforcing patent claims and other intellectual property rights, competing technological and market developments, changes in or terminations of existing research and license arrangements, the establishment of additional license arrangements and the cost of manufacturing scale-up and development of marketing activities, if undertaken by the Company. Substantial expenditures will be required to conduct preclinical studies and clinical trials, manufacture or have manufactured and market any proprietary products of NPS which may be derived from NPS's current research and development efforts and to perform research and development activities in additional areas. In addition, if Amgen terminates its agreement, -9- the Company may not have sufficient capital to complete the development and commercialization of a drug for hyperparathyroidism in Amgen's territory. NPS may need to raise additional funds to support its long-term product development and commercialization programs. The Company also intends to seek additional funding through collaborations and licensing agreements and the Company may seek additional funding through public or private financing. There can be no assurance that additional financing will be available on acceptable terms, if at all. If adequate funds are not available, the Company may be required to delay, reduce the scope of or eliminate one or more of its research and development programs or to obtain funds through arrangements with licensees or others that may require the Company to relinquish rights to certain of its technologies, product candidates or products that the Company may otherwise seek to develop or commercialize on its own. CERTAIN BUSINESS RISKS The Company is currently in the early stage of product development. NPS R-568 is the only product candidate currently under development by the Company or its licensees that is in human clinical trials. All of the Company's remaining technologies are new and will require significant additional research and development efforts prior to any commercial use, including extensive preclinical and clinical testing as well as lengthy regulatory approval. In addition, because the Company has granted exclusive development, commercialization and marketing rights to its licensees in the fields of hyperparathyroidism and osteoporosis, the success of its existing hyperparathyroidism and osteoporosis programs is entirely dependent upon the efforts of its licensees. All public releases of project status, updates and other information generated under the license agreements are entirely in the control of the licensees. Other risks include the Company's lack of product sales, a history of operating losses, the uncertainty of regulatory approvals, rapid technological change and competition, the uncertainty of protection of the Company's patents and proprietary technology, the Company's dependence on third parties for manufacturing, the Company's future capital needs and the uncertainty of additional funding, the Company's lack of marketing capabilities, the uncertainty of third-party reimbursement, the Company's dependence on key personnel and the Company's ability to manage growth. A more detailed discussion of factors that could cause actual results to differ materially from those in the forward-looking statements is contained in the Company's SEC filings, including the Company's annual report on Form 10-K for the year ended December 31, 1995. -10- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: November 6, 1996 NPS PHARMACEUTICALS, INC. By: /S/ James U. Jensen ---------------------------------------- James U. Jensen Vice President, Corporate Development and Legal Affairs (Executive Officer) By: /S/ Robert K. Merrell ---------------------------------------- Robert K. Merrell Vice President, Finance, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) -11- EX-27 2 EXHIBIT 27 FDS
5 9-MOS DEC-31-1996 SEP-30-1996 60,567,414 9,327,796 197,305 0 0 70,092,515 4,713,873 2,291,551 72,554,691 2,061,589 0 0 0 11,793 70,021,943 72,554,691 0 17,196,705 0 0 12,156,798 0 109,514 6,667,598 200,000 6,467,598 0 0 0 6,467,598 0.59 0
-----END PRIVACY-ENHANCED MESSAGE-----