-----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, GSWTZyY3YzdC3WHrr/paGng9C3IyeOrkOsHxD4k9f09JGOYckRoey8usynHBE/Nl rNcOzHsPvo5pi65ii8kTVg== 0000912057-97-028868.txt : 19970825 0000912057-97-028868.hdr.sgml : 19970825 ACCESSION NUMBER: 0000912057-97-028868 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970822 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/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-23272 FILM NUMBER: 97668304 BUSINESS ADDRESS: STREET 1: 420 CHIPETA WAY SUITE 240 CITY: SALT LAKE CITY STATE: UT ZIP: 84108-1256 BUSINESS PHONE: 8015834939 10-Q/A 1 10-Q/A SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 AMENDED FORM 10-Q/A Amendment No. 1 (Mark One) /X/ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the quarterly period ended June 30, 1997 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 June 30, 1997 ----- ---------------------------- Common Stock $.001 par value 11,928,574 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 5 Other Information 11 Item 6 Exhibits and Reports on Form 8-K (a) Exhibits Exhibit No. ----------- +10.32* Research and Development Agreement between Systems Integration Drug Discovery Company, Inc. (doing business as SIDDCO Inc.) and NPS Pharmaceuticals, Inc. ____________________________ + Previously filed. * Confidential treatment has been requested with respect to this exhibit. (b) Reports on Form 8-K - None SIGNATURES 12 -2- NPS PHARMACEUTICALS, INC. (A Development Stage Company) Balance Sheets
June 30, December 31, Assets 1997 1996 ------------ ------------- (Unaudited) (Audited) Current assets: Cash and cash equivalents $ 62,811,774 $ 68,961,764 Accounts receivable 106,350 415,208 Prepaid expenses 343,750 - ------------ ------------ Total current assets 63,261,874 69,376,972 Plant and equipment: Equipment 3,997,884 3,259,376 Leasehold improvements 2,427,974 1,997,994 ------------ ------------ 6,425,858 5,257,370 Less accumulated depreciation and amortization 2,987,665 2,477,665 ------------ ------------ Net plant and equipment 3,438,193 2,779,705 Other assets 5,461 3,267 ------------ ------------ $ 66,705,528 $ 72,159,944 ------------ ------------ ------------ ------------ Liabilities and Stockholders' Equity Current liabilities: Current installments of obligations under capital leases $ 43,377 $ 53,339 Current installments of long-term debt 392,517 369,467 Accounts payable 565,000 619,120 Accrued expenses 294,592 271,677 Deferred income 250,000 500,000 Income tax payable 20,000 150,000 ------------ ------------ Total current liabilities 1,565,486 1,963,603 Obligations under capital leases, excluding current installments 35,690 27,295 Long-term debt, excluding current installments 97,905 299,534 ------------ ------------ Total liabilities 1,699,081 2,290,432 Stockholders' equity: Common stock 11,929 11,807 Additional paid-in capital 84,618,270 84,270,283 Deficit accumulated during development stage (19,623,752) (14,412,578) ------------ ------------ Net stockholders' equity 65,006,447 69,869,512 ------------ ------------ $ 66,705,528 $ 72,159,944 ------------ ------------ ------------ ------------
See accompanying note to financial statements. -3- NPS PHARMACEUTICALS, INC. (A Development Stage Company) Statements of Operations (Unaudited)
October 22, 1986 (inception) Three Months Ended June 30, Six Months Ended June 30, through ---------------------------- ------------------------------ June 30, 1997 1996 1997 1996 1997 ------------ ------------ ------------ ------------- ------------- Revenues from research and license agreements $ 1,075,000 $ 1,410,625 $ 2,150,000 $ 15,865,937 $ 44,808,179 Operating expenses: Research and development 3,143,548 2,642,285 6,544,461 5,818,186 47,863,535 General and administrative 1,314,918 1,331,062 2,533,775 2,677,972 20,801,031 ------------ ------------ ------------ ------------- ------------- Total operating expenses 4,458,466 3,973,347 9,078,236 8,496,158 68,664,566 ------------ ------------ ------------ ------------- ------------- Operating income (loss) (3,383,466) (2,562,722) (6,928,236) 7,369,779 (23,856,387) Other income (expense): Interest income 903,787 654,910 1,758,072 797,251 5,705,484 Interest expense (19,140) (32,421) (41,010) (78,432) (658,428) Other - - 35,579 ------------ ------------ ------------ ------------- ------------- Total other income 884,647 622,489 1,717,062 718,819 5,082,635 ------------ ------------ ------------ ------------- ------------- Income (loss) before taxes (2,498,819) (1,940,233) (5,211,174) 8,088,598 (18,773,752) Income tax expense - - - 200,000 850,000 ------------ ------------ ------------ ------------- ------------- Net income (loss) $ (2,498,819) $ (1,940,233) $ (5,211,174) $ 7,888,598 $ (19,623,752) ------------ ------------ ------------ ------------- ------------- ------------ ------------ ------------ ------------- ------------- Net income (loss) per common share $ (0.21) $ (0.19) $ (0.44) $ 0.79 ------------ ------------ ------------ ------------- ------------ ------------ ------------ ------------- Weighted average shares outstanding 11,901,000 10,447,000 11,883,000 9,964,400 ------------ ------------ ------------ ------------- ------------ ------------ ------------ -------------
See accompanying note to financial statements. -4- NPS PHARMACEUTICALS, INC. (A Development Stage Company) Statements of Operations (Unaudited)
Six Months Ended June 30, October 22, 1986 ------------------------------ (inception) through 1997 1996 June 30, 1997 ------------ ------------- ------------------- Cash flows from operating activities: Net income (loss) $ (5,211,174) $ 7,888,598 $ (19,623,752) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 510,000 370,000 3,696,241 Gain on sale of equipment - - (29,909) Issuance of stock in lieu of cash for services 119,600 319,400 798,054 Amortization of deferred compensation - 127,750 766,500 Decrease (increase) in receivables 308,858 (390,410) (106,350) Decrease (increase) in other assets (345,944) - (352,811) Increase (decrease) in accounts payable and accrued expenses (31,205) (373,479) 859,592 Increase (decrease) in taxes payable (130,000) 200,000 20,000 Increase (decrease) in deferred income (250,000) (78,750) 250,000 ------------ ------------- ------------- Net cash provided by (used in) operating activities (5,029,865) 8,063,109 (13,722,435) Cash flows from investing activities: Net purchase of marketable investment securities - (8,620,078) - Acquisition of equipment and leasehold improvements (1,134,453) (411,006) (6,544,553) Proceeds from sale of equipment - - 1,075,621 ------------ ------------- ------------- Net cash used in investing activities (1,134,453) (9,031,084) (5,468,932) 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 228,509 55,700,535 65,784,229 Proceeds from long-term debt - - 1,166,434 Principal payments on note payable to bank - - (123,855) Principal payments under capital lease obligations (35,602) (306,322) (1,355,622) Principal payments on long-term debt (178,579) (159,385) (873,316) Repurchase of preferred stock - - (300,000) ------------ ------------- ------------- Net cash provided by financing activities 14,328 55,234,828 82,003,141 ------------ ------------- ------------- Net increase (decrease) in cash and cash equivalents (6,149,990) 54,266,853 62,811,774 Cash and cash equivalents at beginning of period 68,961,764 8,039,625 - ------------ ------------- ------------- Cash and cash equivalents at end of period $ 62,811,774 $ 62,306,478 $ 62,811,774 ------------ ------------- ------------- ------------ ------------- -------------
See accompanying note to financial statements. -5- NPS PHARMACEUTICALS, INC. (A Development Stage Company) Statements of Operations (Unaudited)
Six Months Ended June 30, October 22, 1986 ------------------------------ (inception) through 1997 1996 June 30, 1997 ------------ ------------- ------------------- SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for interest $ 41,010 $ 78,432 $ 658,428 Cash paid for taxes 130,000 - 830,000 SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES: Acquisition of equipment through incurrence of capital lease obligations 34,035 32,500 1,434,689 Acquisition of leasehold improvements through incurrence of debt - - 197,304 Issuance of preferred stock for stock subscription receivable - - 4,000,000 Accrual of deferred offering costs - - 150,000
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 six month period ended June 30, 1997, 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 1996 which includes the audited financial statements and the notes thereto for the year ended December 31, 1996. -7- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THIS QUARTERLY REPORT ON FORM 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, 1996 UNDER THE HEADING "RISK FACTORS." 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 June 30, 1997, of $19.6 million net of cumulative revenues from research and license agreements of $44.8 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 and development support payments from its licensees and these revenues fluctuate from quarter to quarter. Accordingly, the Company expects that income or loss 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 and the efforts of its licensees, to complete development of its 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 $1.1 million for the three-month period ended June 30, 1997 compared to $1.4 million for the three-month period ended June 30, 1996 and $2.2 million for the six-month period ended June 30, 1997 compared to $15.9 million for the same six-month period in 1996. The decrease in revenues for the six-month period was primarily due to the receipt by NPS in 1996 of a $10 million license fee from Amgen Inc. ("Amgen") and a $3 million milestone payment from SmithKline Beecham Corporation ("SmithKline Beecham"); these payments reflected one time events under agreement with these parties and are non-recurring. See "Liquidity and Capital Resources" below for further discussion of payments that may be received by the Company in the future under the separate agreements with these parties. Research and development expenses increased to $3.1 million for the three-month period ended June 30, 1997 from $2.6 million in the comparable period of 1996, and to $6.5 million for the six-month period ended June 30, 1997 from $5.8 million in the comparable period of 1996. 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 academia or research institutions and hires more research and development personnel. General and administrative expenses were $1.3 million in both three-month periods ended September 30, 1997 and 1996, and $2.5 million compared to $2.7 million for the six-month periods ended September 30, 1997 and 1996, respectively. The Company expects that general and administrative expenses will increase in the future as more personnel and facilities are needed to support research and development activities. Interest income increased to $904,000 and $1.8 million for the three-month and six-month periods ended June 30, 1997 respectively, from $655,000 and $798,000 for the same periods of 1996. The increases were primarily due to a higher average cash balance resulting from the net proceeds of the follow-on offering of stock completed in May 1996. The Company anticipates that interest income will decrease in the future as the Company's cash is utilized for operations. -8- 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 June 30,1997, the Company had recognized $44.8 million of cumulative revenues from research and license agreements and $84.6 million in consideration for the sale of equity securities for cash and services. The Company's principal sources of liquidity are its cash, cash equivalents, and marketable investment securities which totaled $62.8 million at June 30, 1997. The Company receives quarterly payments under its agreements with the pharmaceutical division of Kirin Brewery Company, Limited ("Kirin") and SmithKline Beecham to support the Company's research efforts in hyperparathyroidism ("HPT") and osteoporosis, respectively. The Kirin payments are scheduled to be $500,000 per quarter through June 30, 1997 and $250,000 per quarter thereafter through the remaining three years of the research term of the Kirin agreement. The scheduled expiration date of the SmithKline Beecham agreement is October 31, 1997 and NPS expects to receive $475,000 per quarter through that date from SmithKline Beecham. Amgen will reimburse the Company up to $400,000 per year for a period not to exceed five years for costs incurred by the Company for designation of NPS personnel to be able to participate in the development of a compound for primary HPT in the Amgen territory, with such participation occurring under the direction of Amgen. The Company could receive future payments of up to $51.0 million in the aggregate from Amgen, Kirin, and SmithKline Beecham 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 under their respective development programs. 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 agreements may be terminated before the scheduled expiration date by the respective licensee. No assurance can be given that any future milestone or research or development support payments will be received from any of them or under any other licensing agreement then in effect. The Company has entered into certain sponsored research and license agreements which obligate the Company to make research support payments to academic and/or commercial research 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 June 30, 1997, the Company had a total commitment of approximately $1.0 million for future research support payments. These commitments have been increased by $3.6 million due to the Research and Development Agreement with SIDDCO Inc. entered into on July 16, 1997. The Company expects to enter into additional sponsored research and license agreements in the future. As of June 30, 1997, the Company's net investment in leasehold improvements, equipment and furnishings was $3.4 million. The Company has financed a portion of such expenditures through capital leases and long-term debt with a total principal obligation of $569,000 as of June 30, 1997. 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 such 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 1999. 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 current research and development efforts and perform research and development activities in additional areas. In addition, if Amgen terminates its agreement, the Company may not have sufficient capital to complete the development and commercialization of a drug for HPT in the Amgen territory. -9- 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 corporate 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 and NPS 1506 are the only product candidates under development by the Company or its licensees that ares in human clinical trials. There is no guarantee that NPS R-568 or NPS 1506 will prove to be safe or efficacious or that back-up or later generation compounds will be identified. All of the Company's remaining technologies are new and will require significant additional research and development efforts prior to any commercial use. Because the Company has granted exclusive development, commercialization and marketing rights in the fields of HPT and osteoporosis, the success of its existing HPT and osteoporosis programs is entirely dependent upon the efforts of Amgen, Kirin and SmithKline Beecham. 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'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 forward-looking statements is contained in the Company's SEC filings, including the Risk Factors in the Company's Annual Report on Form 10-K. PART II ITEM 5. OTHER INFORMATION NEUROPROTECTION PROGRAM On July 25, 1997, the Company commenced Phase I clinical trials for the Company's lead compound, NPS 1506, selected by NPS from a class of proprietary compounds being developed for neuroprotection in stroke. The trail is being conducted with healthy volunteers to evaluate the safety and pharmacokinetics of various intravenous doses of the compound. The Company is seeking to establish a collaboration with another company for the development and commercialization of NPS 1506 and/or back-up or second generation compounds. There can be no assurance that NPS will be successful in finding a partner to collaborate in the development and commercialization of NPS 1506 or that NPS 1506 or any other of the lead compounds will prove safe and effective, meet applicable regulatory standards or be successfully marketed. SIDDCO AGREEMENT On July 16, 1997 the Company and Systems Integration Drug Discovery Company, Inc. ("SIDDCO") entered into a Research and Development Agreement (the "SIDDCO Agreement"). Under the SIDDCO Agreement, the companies will work together to develop combinatorial chemistry databases, identify novel compounds, develop automated chemical synthesis systems, and generate computational and analytical methods. The Company is obligated to pay to SIDDCO the sum of $1.2 million per year (on a quarterly basis) for a period of three years. The Company has the right to extend the SIDDCO Agreement for an additional two years at an adjusted rate based on SIDDCO costs at that time. -10- FINANCIAL ADVISOR AGREEMENT The Company entered into an exclusive financial advisor agreement with Vector Securities International, Inc. ("Vector") for a period of six months, with a possible extension of an additional six months, effective July 11, 1997. Under the terms of the agreement, Vector will assist the Company in evaluating and seeking potential acquisition, merger and/or joint venture candidates. The Company has not sought an evaluation or assistance for a sale of the Company nor does the agreement provide for such. Vector will also provide financial advisory services to the Company in the event the Company undertakes negotiations leading to an acquisition, merger and/or joint venture during the term of the agreement. 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: August 20, 1997 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- INDEX TO EXHIBITS Exhibit Number Description of Document - -------------- ----------------------- +10.32* Research and Development Agreement between Systems Integration Drug Discovery Company, Inc. (doing business as SIDDCO Inc.) and NPS Pharmaceuticals, Inc. ____________________ + Previously filed. * Confidential treatment has been requested with respect to this exhibit. -----END PRIVACY-ENHANCED MESSAGE-----