-----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, O3a9sPK3hTGAamPXGYwS7RnvaZleqk8C+1FlC737jaezcERXD9wJiYsUtzSVrhkf Z7cNYnDUZ+mDyac+oB6qrQ== 0000927356-00-000169.txt : 20000208 0000927356-00-000169.hdr.sgml : 20000208 ACCESSION NUMBER: 0000927356-00-000169 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20000207 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: S-3 SEC ACT: SEC FILE NUMBER: 333-96253 FILM NUMBER: 525026 BUSINESS ADDRESS: STREET 1: 420 CHIPETA WAY SUITE 240 CITY: SALT LAKE CITY STATE: UT ZIP: 84108-1256 BUSINESS PHONE: 8015834939 S-3 1 REGISTRATION STATEMENT 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) 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
(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
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 - --------------------------------------------------------------------------------------------------------------
(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. 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 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 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.
Shares Beneficially Owned Prior to Offering ----------------------- Name of Selling Number of Shares Shares Beneficially Stockholder Number Percent Being Offered Owned After Offering ----------- ------ ------- ------------- -------------------- 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 --
*means less than 1% 3 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 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:
Development Program Compound Classification Status Commercial Rights - ------------------------------------------------------------------------------------------------------ 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 - ------------------------------------------------------------------------------------------------------
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 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 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 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 8 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 9 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 10 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 11 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. 12 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 13 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 14 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 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 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 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 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 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 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.
Exhibit No. Description - ----------- ------------------------------------------------------------------------------------------- 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). - -----------
Item 7. Undertakings. A. The undersigned Registrant hereby undertakes: 21 (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 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.
Signature Title Date - ------------------------ ----------------------------------------- ------------------- 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
23
Signature Title Date - ------------------------ ----------------------------------------- ------------------- /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
24 EXHIBIT INDEX
Exhibit No. Description 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). - -----------
25 EX-5.1 2 OPINION OF COUNSEL 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 EX-10.36 3 STOCK PURCHASE AGREEMENT 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 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- 2 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 3 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 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 5 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 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 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 8 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 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, 10 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 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 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 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 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 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 (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 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 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 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: ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ 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: ________________________________________ EX-23.1 4 CONSENT OF INDEPENDENT AUDITORS 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 -----END PRIVACY-ENHANCED MESSAGE-----