10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

       x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2013

Commission File Number 0-23272

NPS PHARMACEUTICALS, INC.
(Exact Name of Registrant as Specified in its Charter)

 

Delaware	87-0439579
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

550 Hills Drive, 3^rd Floor, Bedminster, NJ    07921
(Address of Principal Executive Offices including Zip Code)

(908) 450-5300
(Registrant's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title Of Each Class	Name Of Each Exchange On Which Registered
Common Stock, $.001 Par Value Per Share	The NASDAQ Stock Market LLC (NASDAQ Global Market)

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    YES  x     NO  o

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange Act.    YES  o     NO  x

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for at least the past 90 days.    YES  x    NO  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     YES  x     NO  o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  x

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," and large "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer    x Accelerated filer    ¨ Non-accelerated filer    ¨
(Do not check if a smaller reporting company) Smaller reporting company    ¨

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    YES  o     NO  x

The aggregate market value of the common stock held by non-affiliates of the Registrant was $1,540,963,266 as of June 30, 2013, based upon the closing price for the shares of common stock reported on The NASDAQ Global Market on such date.

As of February 11, 2014, there were 102,801,552 shares of common stock, par value $0.001 per share, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE:

Portions of the Registrant's definitive Proxy Statement for its 2014 Annual Meeting of Stockholders are incorporated by reference into Part II - "Securities Authorized For Issuance Under Equity Compensation Plans" and Part III of this Form 10-K.

     PDF provided as courtesy

TABLE OF CONTENTS

	Item		Page
PART I	1.	Business	3
	1A.	Risk Factors	26
	1B.	Unresolved Staff Comments	41
	2.	Properties	41
	3.	Legal Proceedings	41
	4.	Mine Safety Disclosures	43
PART II	5.	Market for the Company's Common Equity, Related Stockholder Matters and Company Purchases of Equity Securities	44
	6.	Selected Financial Data	45
	7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	46
	7A.	Quantitative and Qualitative Disclosures About Market Risk	61
	8.	Financial Statements and Supplementary Data	62
	9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	95
	9A.	Controls and Procedures	95
	9B.	Other Information	96
PART III	10.	Directors, Executive Officers and Corporate Governance	96
	11.	Executive Compensation	96
	12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	96
	13.	Certain Relationships and Related Transactions, and Director Independence	96
	14.	Principal Accountant Fees and Services	96
PART IV	15.	Exhibits and Financial Statement Schedules	97
SIGNATURES

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PART I

Unless the context requires otherwise, references in this report to "NPS", the "Company", "we", "us", "our" and similar terms mean NPS Pharmaceuticals, Inc. and its subsidiaries.

This Annual Report on Form 10-K and the documents incorporated by reference into this report contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on our current expectations and are subject to uncertainty and changes in circumstances. We cannot guarantee the accuracy of such statements, and you should be aware that results and events could differ materially from those contained in such statements. You should consider carefully the statements set forth in Item 1A of this report entitled "Risk Factors" and Item 7 of this report entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations".

ITEM 1. Business

Overview

We are a biopharmaceutical company focused on pioneering and delivering therapies that transform the lives of patients with rare diseases worldwide. Our strategy is focused on the global development and commercialization of `first-in' or `best-in' rare disease therapeutics. We incorporated in Utah in 1986 and reincorporated in Delaware in 1992. Our marketed product, Gattex® 0.05 mg/kg/d (teduglutide [rDNA origin]) for injection, for subcutaneous use was approved by the U.S. Food and Drug Administration (FDA) in December 2012 for the treatment of adult patients with Short Bowel Syndrome (SBS) who are dependent on parenteral support. SBS is an ultra-rare potentially fatal disorder in which the body is unable to absorb enough nutrients and fluids through the gastrointestinal tract. In the EU, teduglutide (trade name: Revestive®) is approved for the treatment of adult patients with SBS; patients should be stable following a period of intestinal adaptation after surgery. We expect commercial sales of Revestive to begin in certain ex-US territories in 2014. We plan to begin pricing and reimbursement discussions in certain EU countries during the first half of 2014. In addition, named-patient programs have been initiated in a number of countries and we are implementing our regulatory strategy for Japan, which includes filing for orphan drug status. We are also seeking to expand our SBS franchise by evaluating the safety and efficacy of Gattex/Revestive in a global registration study of pediatric patients with SBS patients.

Our second product, Natpara® (rhPTH[1-84]) for injection, has been developed for hypoparathyroidism, a rare multidimensional disorder characterized by deficient or absent parathyroid hormone (PTH). The review of our Biologic License Application for Natpara is ongoing and the Prescription Drug User Fee Act (PDUFA) goal date for a decision by FDA is October 24, 2014. Within our Filing Review Notification, also referred to as the Day-74 letter, the FDA told us they plan to discuss our Natpara application at an advisory committee meeting. We expect to file our Marketing Authorization Application (MAA) for Natpara in hypoparathyroidism with the European Medicines Agency (EMA) in 2014.

We are actively pursuing in-licensing opportunities to build a global pipeline of `first-in' or `best-in' therapies for rare disorders of high unmet medical need. Our lead clinical-stage product candidate is NPSP795, a calcilytic compound with potential application in rare disorders involving increased calcium receptor activity, such as autosomal dominant hypocalcemia (ADH).

We have collaborations or royalty agreements with a number of pharmaceutical companies. In 2013, we recorded $123.8 million of royalty revenue that was driven by (i) Amgen's sales of Sensipar^® and Mimpara^® (cinacalcet HCl), (ii) Kyowa Hakko Kirin's sales of REGPARA^® (cinacalcet HCl) in Japan, and (iii) Janssen's sales of Nucynta® (tapentadol) in the U.S. As described further herein, we have partially monetized our royalty rights related to Sensipar and Mimpara under our agreement with Amgen through the issuance of non-recourse debt and we have sold certain of our rights to receive royalty payments arising from sales of REGPARA under our agreement with Kyowa Hakko Kirin.

We consider our operations to be a single reportable segment. Financial results of this reportable segment are presented in our audited consolidated financial statements.

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Significant Developments

• In February 2013, we launched and initiated commercial sales of Gattex in the US and we reported net sales of $31.8 million for the year ended December 31, 2013. At December 31, 2013, 530 Gattex/Revestive prescriptions had been received and 303 patients were on therapy in the U.S. We expect commercial sales of Revestive to begin in certain ex-US territories during the first half of 2014 with meaningful sales to begin in the later part of the year.

• In March 2013, we entered into an agreement, with Takeda GmbH and Takeda Pharma A/S (together, Takeda), which, among other things, terminated our existing license agreements with Takeda with respect to teduglutide and rhPTH 1-84. As a result of the transaction, we now have the exclusive worldwide rights, excluding Israel, to develop and commercialize teduglutide and rhPTH 1-84. Takeda received 6.1 million shares of NPS common stock that were valued at $54.9 million as of the date of the transaction. Takeda will also earn a $30.0 million milestone, payable in cash or stock at our option, in the first calendar year that combined worldwide net sales of both products exceed $750 million.

• In May 2013, we completed a public sale of 6,900,000 shares of our common stock at a per share price of $14.53. We received net proceeds from the sale of approximately $93.5 million, after deducting expenses and the commission in connection with the offering.

• In January 2014, the FDA accepted and filed for review our BLA for Natpara. Under PDUFA, the goal date for a decision by the FDA is October 24, 2014. Within our Filing Review Notification, also referred to as the Day-74 letter, the FDA also noted that they plan to hold an advisory committee meeting to discuss our Natpara application.

Product and Development Programs and Royalty-Based Agreements

The table below includes our proprietary product and development programs:

Product	Indication	Status	Market
Gattex® (teduglutide) for injection	Adult SBS	Commercial	U.S.
Revestive (teduglutide)	Adult SBS	Approved	EU
Gattex/Revestive (teduglutide)	SBS (Registry)	Phase 4	Worldwide ex-Israel
Gattex/Revestive (teduglutide)	Pediatric SBS	Registration study	Worldwide ex-Israel
Natpara® (recombinant human parathyroid hormone 1-84)	Hypoparathyroidism	BLA filed	U.S.
Natpara	Hypoparathyroidism	Phase 3	Ex-U.S.
NPSP795	ADH	Phase 2	Worldwide

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The table below includes certain of our royalty-based agreements:

Product	Indication	Status	Market	Rights
Sensipar®/Mimpara® (cinacalcet HCl)1	Secondary hyperparathyroidism	Commercial	Worldwide Ex-Asia	Amgen
Sensipar® (cinacalcet HCl)1	Hypercalcemia in parathyroid cancer	Commercial	Worldwide Ex-Asia	Amgen
Cinacalcet HCl1	Primary hyperparathyroidism	Commercial	Worldwide Ex-Asia	Amgen
REGPARA® (cinacalcet HCl)2	Secondary hyperparathyroidism	Commercial	Asia	Kyowa Hakko Kirin
NUCYNTA® (tapentadol) and	Moderate to severe acute pain	Commercial	U.S.	Janssen
Nucynta ER	Moderate to severe chronic pain
	Neuropathic pain associated with diabetic peripheral neuropathy in adults
Ronacaleret (calcilytic compound)	Stem cell mobilization	Phase 2	Worldwide	GlaxoSmith Kline

1	We currently receive cash payments for royalties earned in excess of $8.0 million per quarter related to Amgen's sales of Sensipar and Mimpara. The $8.0 million per quarter services non-recourse debt.
2	We currently do not receive cash payments related to our REGPARA royalties as we have sold certain of our rights to receive these payments to service our non-recourse debt.

Product and Development Programs

Gattex/Revestive (Teduglutide [rDNA] origin]) for injection

Gattex is a novel recombinant analog of human glucagon-like peptide 2 (GLP-2), a protein involved in the rehabilitation of the intestinal lining. SBS results from surgical resection, congenital defect or disease-associated loss of absorption in the bowel in which patients are subsequently unable to maintain fluid, electrolyte, and nutrient balances on a conventional diet. Despite an adaptation that occurs generally in the two years after resection, many SBS patients require parenteral support to supplement and stabilize their nutritional and hydration needs.

We launched Gattex in the US in February 2013 and we expect commercial sales of Revestive to begin in certain ex-US countries in 2014. In December 2012, the FDA approved Gattex for the treatment of adult patients with SBS who are dependent on parenteral support. In August 2012, the European Commission approved Revestive® for the treatment of adult patients with SBS; patients should be stable following a period of intestinal adaptation after surgery.

Significant reductions in mean parenteral support volume from baseline to end of treatment were seen in the Phase 3 studies of Gattex. In addition, some patients were able to achieve independence from parenteral support during these trials. The most common side effects of Gattex include stomach area (abdomen) pain or swelling, skin reaction where the injection was given, nausea, headache, cold or flu like symptoms, vomiting, and holding too much fluid in the body (swelling of face, ankles, hands or feet).

In 2007, we granted Takeda, the rights to develop and commercialize teduglutide outside the United States, Canada, Mexico and Israel. We regained these rights in March 2013 and now have worldwide, excluding Israel, rights to teduglutide.

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SBS Market Opportunity

SBS is a very rare and highly disabling condition that can impair a patient's quality of life and lead to serious life-threatening complications. SBS typically arises after extensive resection of the bowel due to Crohn's disease, ischemia or other conditions. SBS patients often suffer from malnutrition, severe diarrhea, dehydration, fatigue, osteopenia, and weight loss due to the reduced intestinal capacity to absorb nutrients, water and electrolytes. Before the approval of Gattex/Revestive, the only long-term treatment available for SBS was parenteral support to supplement and stabilize hydration and nutritional needs.

Parenteral support does not improve the body's own ability to absorb nutrients and it is associated with shortened life span, life-threatening complications including sepsis, blood clots or liver damage, and reduced quality-of-life due to the time required for, and consequences of, frequent access to an intravenous pump. A National Institute of Health (NIH) publication reported that the annual mean costs of lifelong, complex home healthcare associated with PN/IV support ranged from $185,000 to $568,000, not including the indirect costs associated with disability and/or the dollar value that could be ascribed to the challenging daily living for these patients (Piamjariyakul 2010).

We have estimated that there are between 9,000 and 17,000 addressable SBS patients worldwide who are eligible for Gattex/Revestive therapy with an estimated 3,000 to 5,000 patients in the U.S. market. Gattex/Revestive is the first long-term therapy approved for adult SBS patients. Currently two products - somatropin (rDNA origin) for injection (human growth hormone) and L-glutamine powder for oral solution - are approved for the treatment of SBS for up to four and 16 weeks, respectively. The goal of treatment with Gattex/Revestive is to enhance absorption by increasing villus height and crypt depth of the intestinal mucosa and to reduce or eliminate dependence on parenteral support.

We believe the SBS market is attractive because of the lack of effective long-term drug therapies in this rare indication, the high cost of parenteral support, the serious complications and morbidities associated with parenteral support, and the clinical benefits and improvements that we believe patients will experience with Gattex/Revestive therapy.

Gattex/Revestive for adult SBS

Gattex/Revestive is the first and only analog of GLP-2 proven to increase intestinal absorption and decrease or eliminate the need for parenteral support.

Our clinical development program for Gattex/Revestive is the largest and most comprehensive conducted in adult SBS patients to date, consisting of 15 clinical studies. Across all clinical studies, 566 subjects were exposed to at least one dose of Gattex, of whom 134 had SBS and were treated with 0.05 mg/kg/day Gattex/Revestive. The U.S. and EU approvals of Gattex/Revestive were based on an international, 24- week, double-blind, placebo-controlled, pivotal Phase 3 trial, known as STEPS. The primary endpoint of STEPS was defined as a 20 percent or greater reduction in parenteral support volume demonstrated at week 20 and sustained at week 24. The study's other endpoints included reductions in parenteral support volume and additional days off therapy. Key findings from the STEPS trial include:

• In an intent-to-treat analysis at weeks 20 and 24, 63 percent of patients treated with Gattex/Revestive achieved at least a 20 percent reduction in weekly parenteral support volume when compared to baseline, versus 30 percent of patients on placebo (p=0.002).
• After 24 weeks of treatment, parenteral support volume declined by 32 percent (4.4 L/week) in Gattex/Revestive-treated patients, versus 21 percent (2.3 L/week) in the placebo group (p<0.001).
• After 24 weeks of treatment, 54 percent of Gattex/Revestive-treated patients were able to reduce the number of infusion days per week by one or more days, compared to 23 percent of those treated with placebo (p=0.005).

The most common adverse reactions (≥10 percent) across all studies with Gattex/Revestive include stomach area (abdomen) pain or swelling, skin reaction where the injection was given, nausea, headache, cold or flu like symptoms, vomiting, and holding too much fluid in the body (swelling of face, ankles, hands or feet). In addition, vomiting and fluid overload were reported in the Phase 3 SBS studies at rates ≥ 10 percent.

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In October 2013, we reported new findings from our STEPS 2 study of Gattex/Revestive at the American College of Gastroenterology (ACG) Annual Scientific Meeting and Postgraduate Course. STEPS 2 was a two-year open-label extension study of 88 adult patients with SBS. Investigators reported that the long-term use of Gattex/Revestive in patients with SBS resulted in additional, clinically meaningful reductions in the volume and days per week of parenteral support requirements in this extension study. In addition, 10 of 13 patients who achieved complete independence from parenteral support were those who received 30 months of Gattex in the 6-month STEPS pivotal study and the 24-month STEPS 2 study. Two patients who received placebo in STEPS and 24 months of Gattex/Revestive in STEPS 2 and one patient who bypassed STEPS and was enrolled directly into STEPS 2 also achieved independence from parenteral support. No new unexpected safety concerns were observed with long-term Gattex/Revestive treatment and the product's safety profile remains consistent with the product's label. We have submitted these data to the FDA and the EMA to include long-term data from STEPS 2 in our U.S. and EU prescribing information.

The FDA and European Commission have granted orphan drug status for Gattex and Revestive, respectively for the treatment of SBS.

Gattex/Revestive for pediatric SBS

We are also evaluating the safety and efficacy of Gattex/Revestive in pediatric SBS. In December 2013 we initiated an open-label 4- cohort study that will enroll approximately 36 pediatric SBS patients between the ages of 1 and 17. Non-randomized patients will receive Gattex/Revestive in 3 active cohorts. We are also planning to enroll additional patients into an observational fourth cohort who will receive standard of care. The three doses of Gattex/Revestive will be investigated for 12 weeks. The patients will be screened prior to the start of treatment to establish baseline characteristics including safety, eligibility and nutritional support. The primary outcome is safety, based on the number of reported adverse events after 12 weeks of teduglutide. In addition we will look at the pharmacodynamics based on the changes in parenteral and enteral support requirements after 12 weeks of treatment. We would expect to report top-line data from the study in late-2014 or early 2015.

Pediatric SBS is a complex and highly morbid condition with significant mortality rates. Patients suffer from repeated episodes of sepsis, dehydration, and metabolic derangements. Pediatric SBS is also associated with diarrhea or stomal output that can be traumatizing and socially debilitating. Researchers from the University of Michigan reported in a publication that in the US, over a five-year period the mean cost of care for a child with SBS is $1.6 million and over that same period pediatric SBS patients spend an average of 146 days in the hospital (Spencer et al. 2008). In December 2013, we initiated a global registration study of Gattex/Revestive in pediatric patients with SBS who are dependent on parenteral support.

Natpara® (recombinant human parathyroid hormone 1-84 [rDNA origin] injection)

Natpara is our bioengineered replacement for endogenous PTH that we have developed for the treatment of hypoparathyroidism, a rare endocrine disorder in which the body produces insufficient levels of PTH, a principal regulator of the body's mineral homeostasis.

PTH plays a central role in a variety of critical physiological functions, including closely modulating serum calcium and phosphate, regulating renal excretion of calcium and phosphate, activating vitamin D, and maintaining normal bone turnover. In patients with hypoparathyroidism, insufficient levels of PTH lead to low serum calcium, high serum phosphate, increased urinary calcium excretion, and decreased urinary phosphorus excretion. PTH deficiency can also disrupt skeletal homeostasis, leading to bone abnormalities. In addition, patients with insufficient levels of PTH are unable to convert native vitamin D into its active state to properly absorb dietary calcium.

Acute symptoms of hypoparathyroidism are largely due to hypocalcemia and include fatigue, muscle spasms and cramps, tingling, tetany, seizures, brain fog/mental lethargy, anxiety, and depression. In the absence of an approved parathyroid replacement therapy, the standard approach focuses on using high doses of calcium and active vitamin D to increase calcium levels in the blood and reduce the severity of hypocalcemic symptoms. However, balancing the administration of supplements is challenging due to calcium fluctuations and the long-term use of high doses of calcium and vitamin D may lead to serious complications, including long-term renal damage. In addition, because serum phosphate levels are elevated when PTH is missing, increasing serum calcium may lead to irreversible calcium-phosphate deposits in the kidneys, arteries or brain. Further, supplements do not correct the abnormal bone metabolism due to PTH deficiency or enable the activation of vitamin D.

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Hypoparathyroidism Market Opportunity

Epidemiological data on hypoparathyroidism are limited given its rarity and the variability in the severity of the symptoms associated with this disorder. Based on market research we have conducted, we believe the prevalence of chronic hypoparathyroidism in our targeted global markets is 180,000 patients of which approximately 70,000 patients are considered highly symptomatic despite current management approaches, which represents our initial target. The most common cause of hypoparathyroidism is injury to or removal of the parathyroid glands during neck surgery. The definition of permanent post-surgical hypoparathyroidism is generally accepted to be insufficient parathyroid hormone to maintain normal calcium levels six months after surgery. Hypoparathyroidism can also be associated with autoimmune or other disorders or it can be idiopathic in nature.

Hypoparathyroidism is one of the few hormonal deficiency syndromes in which replacement therapy using the native hormone is not clinically available. Treatment of hypoparathyroidism is further complicated by the lack of national or international consensus management guidelines.

In the absence of an approved parathyroid replacement therapy, the standard approach focuses on using high doses of calcium and active vitamin D to increase calcium levels in the blood and reduce the severity of hypocalcemic symptoms. However, balancing the administration of supplements is challenging due to calcium fluctuations and the long-term use of high doses of calcium and vitamin D may lead to serious complications, including long-term renal damage. In addition, because serum phosphate levels are elevated when PTH is missing, increasing serum calcium may lead to irreversible calcium-phosphate deposits in the kidneys, arteries or brain. Further, supplements do not correct the abnormal bone metabolism due to PTH deficiency or enable the activation of vitamin D.

As is the case for most rare diseases, the burden of illness for hypoparathyroidism has not been well described or studied. Considering the need to better understand the burden of illness associated with this condition, we conducted an extensive quantitative study known as PARADOX in conjunction with the Hypoparathyroidism Association and the Mayo Clinic. This study is the largest ever conducted in this condition and included 374 patients with hypoparathyroidism. Key findings from PARADOX suggest that patients with hypoparathyroidism have a high burden of illness, as 99% continue to experience multiple symptoms despite the use of calcium and vitamin D supplements and other medications. On average, patients reported experiencing a collection of 16 of the 38 symptoms reported in the analysis. The most common physical symptoms reported included fatigue (82%), muscle pain or cramping (78%), paresthesia (76%), tetany (70%), and joint or bone pain (67%), and pain/heaviness/weakness in extremities (53%). Cognitive and emotional symptoms were also prevalent. Brain fog/mental lethargy (72%), inability to focus or concentrate (65%), and memory loss or forgetfulness (61%), and sleep disturbances (57%) were common, while anxiety (59%) and depression (53%) were also reported. The findings also showed that symptoms persist for an average of 13 hours over the course of a day. While patients indicated that they were managing their symptoms with calcium and vitamin D, they continued to develop comorbidities of hypoparathyroidism and suffer from acute episodes requiring emergency care and/or hospitalization. Sixty-nine percent of patients experienced comorbidities since diagnosis. Common comorbid conditions that were most frequently reported by patients in PARADOX included heart arrhythmias (66%) and kidney stones (36%). Bone fractures (16%) were also reported. Seventy-nine percent of patients reported hospital stays or emergency department visits, with the annualized rate for patients who classified their condition as severe exceeding those of patients with mild or moderate condition. Patients exceeded the national average for the general population for emergency department visits and hospital stays.

A study of the long-term follow-up of 120 patients with hypoparathyroidism was recently published (Mitchell et al, 2012). Hypoparathyroidism was confirmed by documented hypocalcemia with a simultaneous low or inappropriately normal PTH level for at least 1 year. Of those with renal imaging (n = 54), 31% had renal calcifications, and 52% of those with head imaging (n = 31) had basal ganglia calcifications. Rates of chronic kidney disease Stage 3 or higher were 2 to 17 fold greater than age-appropriate norms.

The risks of renal complication and cardiovascular disease in subjects with hypoparathyroidism were also evaluated in a case study gleaned from the Danish National Patient Registry and a prescription database. From 1988 to the present, 688 patients were identified who manifested symptoms of hypocalcemia and inappropriately low PTH levels necessitating treatment with calcium and/or vitamin D supplementation following neck surgery. Compared with age- and gender-matched controls, patients with hypoparathyroidism had an increased risk of renal complications and hospitalization due to seizures (Underbjerg et al, 2013).

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The direct and indirect health care costs for persons with hypoparathyroidism are substantial. In a study conducted by the Mayo Clinic, the mean and median costs for persons with hypoparathyroidism were approximately three-fold those for unaffected persons of similar age/sex.

The PARADOX study and other epidemiological research show that hypoparathyroidism has a significant impact on patients in many ways: physical, emotional, quality of life, social life, and productivity. Despite the currently available medical management, symptoms persist and occur frequently, even daily and, when experienced on a moderate or severe level, can negatively affect the patients' life. In addition to associated symptoms, patients report comorbidities that are directly related to their hypoparathyroidism. These concurrent conditions necessitate further medical treatment. Given the chronicity of hypoparathyroidism patients are faced with a lengthy affliction with chronic and debilitating symptoms and complications.

To help illustrate the fundamental aspects of hypoparathyroidism, we initiated enrollment in a global natural history registry for patients with hypoparathyroidism. The objective of the study, known as PARADIGHM, is to characterize the natural history of chronic hypoparathyroidism, including its treatment, clinical outcomes, comorbidities and mortality as observed in a typical clinical setting. The ultimate goal for compiling the PARADIGHM registry is to assist healthcare practitioners in optimizing clinical decision making for patients with hypoparathyroidism. The registry is designed to help healthcare practitioners better understand the variability, progression and natural history of the disorder. Patients will be enrolled and followed for at least 10 years to characterize this rare, complex endocrine disorder under conditions of normal clinical practice.

Natpara for Hypoparathyroidism

Natpara is a bioengineered replica of human parathyroid hormone designed to replace the missing hormone, which is a practice used successfully in treating other classic endocrine disorders. Because Natpara is identical in structure to the 84-amino acid single-chain polypeptide human parathyroid hormone and mimics the action of natural parathyroid hormone, we believe it has the ideal mechanism of action to fulfill the unmet need of this chronic condition and offer a more physiological treatment outcome than is possible with existing treatments.

In January 2014, the FDA accepted and filed for review our BLA for Natpara. Under PDUFA, the goal date for a decision by the FDA is October 24, 2014. Within our Filing Review Notification, also referred to as the Day-74 letter, the FDA also noted that they plan to discuss our Natpara application at an advisory committee meeting.

The company's clinical development program for Natpara includes 12 pharmacology studies, five efficacy and safety studies in hypoparathyroidism, and a supporting development program consisting of seven studies in osteoporosis. The pivotal Phase 3 study known as REPLACE, was a randomized, double-blind, placebo controlled study of 134 patients with hypoparathyroidism.

The results from the REPLACE study were recently published in The Lancet Diabetes & Endocrinology (Mannstadt et al. 2013). Key findings from the study are summarized below.

• Fifty-three percent of Natpara-treated patients achieved the primary endpoint by decreasing doses of oral calcium and active vitamin D by 50 percent or more, while maintaining serum calcium levels by the end of the treatment phase. In contrast, only 2 percent of the placebo group (P<0.001) met the primary endpoint.
• Among secondary endpoints, by Week 24, 43 percent (36/84) of patients treated with Natpara were able to achieve independence from active vitamin D therapy and required only 500 mg/day or less of oral calcium, as compared to five percent (2/37) of patients treated with placebo (p<0.0001).
• From baseline, patients treated with Natpara reduced their oral calcium dose by an average of 52 percent (P<0.001), whereas those treated with placebo increased their average dose by 6 percent.
• The between-group differences in the average decrease from baseline for prescribed doses of both calcium and active vitamin D were apparent from week three until week 24 (p<0.002). Despite the large reductions in oral calcium and active vitamin D doses, serum calcium remained at or above baseline levels for the Natpara-treated patients without increasing mean urinary calcium excretion.
• Mean serum phosphate concentrations were similar (at the upper limit of normal) for both Natpara and placebo at baseline, but fell within normal in the Natpara group upon treatment and remained lower than in the placebo group throughout treatment (P<0.003 at all time points).
• At week 24, mean serum phosphate levels (±SD) had decreased by 0.46 (0.80) mg/dL and 0.09 (0.66) mg/dL for the Natpara and placebo groups, respectively (P<0.001).

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• Natpara also showed a reduced calcium-phosphate product and replicated another effect of endogenous PTH by maintaining the serum level of 1,25-dihydroxyvitamin D despite a statistically significant mean reduction in active vitamin D doses.
• The overall incidence of adverse events (AE) and percentage of patients with an AE was similar between placebo (100 percent) and Natpara (93 percent) groups. By study end, 93 percent (84/90) of patients in the Natpara group and 100 percent (44/44) in the placebo group had at least one adverse event. The most common AEs were nervous system, metabolism and nutrition, musculoskeletal and connective tissue, and gastrointestinal disorders.
• During the maintenance phase of the study (weeks 16-24), a smaller proportion of Natpara-treated patients reported clinical symptoms associated with hypocalcaemia than those in the placebo-treated group; however, the difference was not statistically significant. Serious adverse event (SAE) rates were also similar between the placebo-treated (9 percent) and Natpara-treated (11 percent) groups. Only one serious AE of hypercalcemia in the Natpara group was considered treatment-related, and did not lead to study discontinuation. Three of 90 (3 percent) patients in the Natpara group discontinued treatment due to an AE, but only one of these patients' events were thought to be related to treatment.

Based on these data, we believe Natpara has the potential to be the first hormone replacement therapy for chronic hypoparathyroidism.

We have completed an eight-week randomized, dose-blinded study, known as RELAY, which investigated the safety and efficacy of Natpara at fixed doses of 25 mcg and 50 mcg for the treatment of hypoparathyroidism. The primary endpoint of RELAY is to demonstrate oral calcium supplementation of 500 mg or less per day, a reduction in active vitamin D metabolite/analog therapy of 0.25 mcg or less per day, and serum calcium concentrations of between 7.5 mg/dL and the upper limit of normal. The results from RELAY showed that Natpara was well- tolerated and that a 25 mcg dose may be appropriate for a small subset of hypoparathyroidism patients.

We are advancing a long-term, open-label study, known as RACE, which is investigating the long-term safety and tolerability of Natpara.

The FDA and European Commission have granted orphan drug status for Natpara for the treatment of hypoparathyroidism.

NPSP795 in autosomal dominant hypocalcemia (ADH)

Autosomal dominant hypocalcemia, or ADH, is a life-long genetic disorder related to the calcium-sensing receptor. It affects children and adults. Regardless of serum calcium or PTH levels, patients with ADH continuously excrete calcium through the renal system because their receptors are always sensing that serum calcium levels are too high. This results in hypocalcemia and hypercalciuria.

Symptoms of ADH can be severe and life-threatening and include tetany, convulsions, and renal impairment. There is no approved therapy for ADH and supportive approaches usually involve carefully adjusting calcium and active vitamin D. These efforts are not always effective and can worsen the condition by increasing calcium excretion and renal complications. For these reasons, physicians sometimes choose not to treat patients with ADH in order to avoid these complications.

NPSP795 is a calcilytic agent, which is a small molecule antagonist of the calcium-sensing receptors on the parathyroid glands. Calcilytics work by triggering a release of the body's stores of PTH. Initially developed to stimulate parathyroid hormone secretion and bone formation for the treatment of osteoporosis and other bone metabolism disorders, calcilytics have been shown to increase serum calcium and decrease urinary calcium excretion in a Phase 2 study of patients with osteoporosis.

We believe NPSP795 could be a novel treatment for disorders involving increased calcium receptor activity like ADH. We expect to begin a Phase 2a proof-of-concept dose-ranging study in the middle of 2014.

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Royalty-Based Agreements

We have agreements with Amgen, Janssen, GlaxoSmithKline and Kyowa Hakko Kirin. Generally, these agreements provide for payments to us for the achievement of specified milestones, and royalties on sales of products developed under the terms of the particular agreement. In return for these financial benefits, we grant the particular company a license to the technology that is the subject of the collaboration or to intellectual property that we own or control. Additional information about these arrangements is set forth in Note 2, Collaborative and License Agreements, in "Notes to Consolidated Financial Statements" in Part II of this annual report on Form 10-K, which information is incorporated into this item by reference.

Amgen and Kyowa Hakko Kirin (Cinacalcet HCl)

Cinacalcet HCl is a small molecule compound used in treating hyperparathyroidism in patients with chronic kidney disease on dialysis and hypercalcemia in patients with parathyroid cancer. Hyperparathyroidism is a medical condition in which excessive amounts of parathyroid hormone circulate in the blood. It is typically characterized as being either primary or secondary hyperparathyroidism. Cinacalcet HCl is a calcimimetic compound that interacts with the calcium receptor on parathyroid cells and thereby decreases the production of parathyroid hormone in such cells.

In 1995, we licensed cinacalcet HCl to Kyowa Hakko Kirin Pharma, a wholly-owned subsidiary of Kyowa Hakko Kirin Holdings, on an exclusive basis for the drug's development and commercial sale in China, Japan, North and South Korea, and Taiwan. In 1996, we licensed worldwide rights (with the exception of the previously licensed Asian territories) to Amgen, Inc. on an exclusive basis to develop and commercialize cinacalcet HCl for the treatment of hyperparathyroidism.

Cinacalcet HCl is approved in the U.S. under the brand name Sensipar® and is indicated for (i) secondary hyperparathyroidism in patients with chronic kidney disease on dialysis, (ii) hypercalcemia in patients with parathyroid carcinoma, and (iii) severe hypercalcemia in patients with primary HPT who are unable to undergo parathyroidectomy.

The European Medicines Agency has approved Cinacalcet HCl under the brand name Mimpara® for the treatment of secondary hyperparathyroidism in patients with end-stage renal disease on maintenance dialysis therapy. Mimpara is also indicated for the reduction of hypercalcemia in patients with (i) parathyroid carcinoma or (ii) primary hyperparathyroidism for whom parathyroidectomy would be indicated on the basis of serum calcium levels (as defined by relevant treatment guidelines), but in whom parathyroidectomy is not clinically appropriate or is contraindicated.

Cinacalcet is approved and commercialized by Kyowa Hakko Kirin as REGPARA® for the treatment of secondary hyperparathyroidism in Japan, Hong Kong, Malaysia, Macau, Singapore, and Taiwan.

Cinacalcet HCl for Secondary Hyperparathyroidism 

Parathyroid hormone is produced by the four parathyroid glands located in the neck. Serum levels of parathyroid hormone directly influence serum levels of calcium. The parathyroid glands regulate the amount of parathyroid hormone in the body by releasing more parathyroid hormone as the body needs additional calcium and less when there is excess serum calcium.

Secondary hyperparathyroidism most commonly results from chronic renal disease, which can develop in hemodialysis patients. Chronic hypocalcemia and secondary hyperparathyroidism can also be products of pseudohypoparathyroidism, vitamin D deficiency, and intestinal malabsorption syndromes that are characterized by inadequate vitamin D and calcium absorption. Parathyroid hormone acts in the kidneys and bones to elevate levels of calcium in the blood.  Normal functioning healthy kidneys convert the parent vitamin D into the active form of vitamin D. Vitamin D helps in intestinal absorption of dietary calcium. Chronic kidney disease generally results in (i) reduced intestinal absorption of calcium due to reduced vitamin D levels, and (ii) reduced removal of phosphorus from the blood, elevating serum phosphate, which then combines with serum calcium to further reduce serum calcium levels. This in turn leads to the chronic overproduction of parathyroid hormone as the body tries to raise serum calcium levels. Symptoms of secondary hyperparathyroidism include excessive bone loss, bone pain and chronic, severe itching. Current treatments for secondary hyperparathyroidism, in addition to cinacalcet HCl, include phosphate binders and vitamin D supplements.

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In October 2003, the National Kidney Foundation released Clinical Practice Guidelines for Bone Metabolism and Disease in Chronic Kidney Disease. These guidelines set goals for the four key measures involved in managing secondary hyperparathyroidism: the serum level of parathyroid hormone; the serum level of calcium; the serum level of phosphorus; and the product of the serum level of calcium multiplied by the serum level of phosphorus ("Ca x P"). Traditional therapies such as phosphate binders and vitamin D supplements lower parathyroid hormone levels only by increasing one or more of the other measures, particularly calcium and/or Ca x P levels. Thus, under traditional therapies, patients and their physicians have typically had to choose between elevated parathyroid hormone or elevated calcium and/or Ca x P levels. Elevated parathyroid hormone levels cause excessive bone loss, bone pain and chronic, severe itching, while elevated calcium and/or Ca x P levels can lead to calcification of the heart and blood vessels and increases the risk of kidney stones.

Cinacalcet HCl is the only FDA-approved medication that simultaneously lowers all four of the key measures. By directly suppressing production of parathyroid hormone, cinacalcet HCl also causes serum levels of calcium, phosphorus and Ca x P to decline, providing patients and their physicians an effective treatment to avoid elevated parathyroid hormone, calcium and Ca x P.

Cinacalcet HCl for Primary Hyperparathyroidism 

Generally, primary hyperparathyroidism is an age-related disorder that results from one or more non-cancerous tumor(s) causing the affected parathyroid gland(s) to become enlarged and overactive, secreting excessive levels of parathyroid hormone. As a result, serum calcium levels become high, bones may lose calcium, and kidneys may excrete too much calcium. Symptoms may include loss of bone density, muscle weakness, depression and cognitive dysfunction. Surgical removal of the affected parathyroid gland(s) from the neck region is presently the only effective treatment.

Payments from Amgen for Cinacalcet HC1

Cumulatively through December 31, 2013, Amgen has paid us $40.5 million, which consists of license fees, research support payments, milestone payments (including the milestone payment for the filing of an NDA) and equity purchases of our common stock. Amgen will pay us up to an additional $5.0 million if it achieves other development and regulatory milestones. In addition to these milestones, we earn royalties on Amgen's sales of cinacalcet HCl in its licensed territories. This agreement was amended in June 2012, whereby we exchanged our rights to receive royalties under the license agreement that are earned after December 31, 2018 in all countries except for Japan, China, North Korea, South Korea and Taiwan in return for a one-time non-refundable $25.0 million payment that we received in July 2012.

We have partially monetized our royalty revenue and future milestone payments from Amgen through the issuance of non-recourse debt that is both serviced and secured by our Sensipar and Mimpara royalty revenue and future milestone payments. In December 2004, we completed a private placement of $175.0 million in Secured 8.0% Notes due March 30, 2017, or Class A Notes, and in August 2007, we completed a private placement of $100.0 million in Secured 15.5% Class B Notes due 2017, or Class B Notes. The Class A Notes and Class B Notes were non-recourse to us and were secured by our royalty and milestone payment rights under our agreement with Amgen. The Class A Notes and the Class B Notes were paid in full on March 30, 2011 and September 30, 2011, respectively.

In August 2011, we amended our agreement with Amgen that became effective after the retirement of the Class B Notes. Under the Amgen agreement, Amgen advanced $145.0 million of Sensipar and Mimpara royalties to us (which we refer to as the Sensipar Notes). The repayment of the royalty advance and discount shall be satisfied solely by Amgen's withholding of royalties and except in the event of default, we will have no obligation to repay any unsettled amount. We further amended the agreement with Amgen in June 2012, limiting the royalty offset of the royalty advance up to $8.0 million per quarter with royalties in excess of $8.0 million paid to us for the respective quarter, thereby extending the royalty advance repayment period. After the payment of the royalty advance and a 9% per annum discount on the balance of the advance, Amgen will resume paying us all royalties earned through December 31, 2018. We received net proceeds from the issuance of the Sensipar Notes of approximately $144.9 million, after deducting costs associated with the transaction. The Sensipar Notes accrue interest at an annual rate of 9%, compounded quarterly and payable forty-five days after the close of each quarter, which is satisfied solely by the withholding of royalties by Amgen. The outstanding principal balance on the Sensipar Notes, were $54.4 million and $80.2 million as of December 31, 2013 and 2012, respectively. Under our agreements for the Sensipar Notes, we would potentially be liable for our breaches or defaults, if any.

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Payments from Kyowa Hakko Kirin for Cinacalcet HC1

Cumulatively through December 31, 2013, Kyowa Hakko Kirin has paid us $25.0 million in license fees, research and development support payments and milestone payments, which include a $2.0 million milestone payment we received in October 2007 after the approval of cinacalcet HCl in Japan. Under the terms of our agreement, Kyowa Hakko Kirin is required to pay royalties on any sales of cinacalcet HCl in its territories.

On February 26, 2010, we sold our royalty rights from sales of REGPARA^® (brand name for cinacalcet HCl in Japan) to an affiliate of DRI Capital, Inc. or DRI for $38.4 million. Royalties will revert to us once DRI receives cumulative royalties of $96 million or 2.5 times the amount paid to us. Under the agreement, DRI is entitled to receive royalty payments related to net sales of REGPARA occurring on or after July 1, 2009. In connection with this agreement, we granted DRI a security interest in our license agreement with Kyowa Hakko Kirin and certain of our patents related to REGPARA and other intellectual property underlying that agreement. As of December 31, 2013 and 2012, the outstanding principal balances on REGPARA-secured debt were $35.2 million and $36.3 million, respectively. In the event of a default by us under the agreement with DRI, DRI would be entitled to enforce its security interest against us and the property described above.

Takeda GmbH (Preotact^® (parathyroid hormone 1-84 [rDNA origin] injection)) and Teduglutide, ex-North America Development

On March 18, 2013, we entered into a Termination and Transition Agreement (the "Transition Agreement"), with Takeda GmbH ("Takeda GmbH"), and Takeda Pharma A/S ("Takeda Pharma" and, together with Takeda GmbH, "Takeda"). The Transition Agreement provides for the termination of the license agreement, dated as of July 2, 2007, as amended, which granted Takeda Pharma the exclusive license to sell, market and commercialize recombinant parathyroid hormone 1-84 [rDNA origin] ("PTH") worldwide, except for the U.S., Israel, and Japan, and a non-exclusive license to manufacture and develop PTH (the "PTH License Agreement"), and the license agreement, dated as of September 24, 2007, as amended, which granted Takeda GmbH the exclusive license to develop and commercialize teduglutide worldwide, except for North America and Israel (the "Revestive License Agreement," and together with the PTH License Agreement, the "License Agreements").

Preotact is the brand name that Takeda Pharma had used to market PTH for the treatment of osteoporosis in certain of its licensed territories. We are seeking FDA approval of PTH in the U.S. under the trade name Natpara for the treatment of hypoparathyroidism. Takeda GmbH developed and obtained approval in the EU in August 2012 for teduglutide under the trade name Revestive for the treatment of short bowel syndrome ("SBS") in adults who are stable following a period of intestinal adaptation after surgery. We obtained FDA approval in the U.S. in December 2012 for teduglutide under the trade name Gattex for adult patients with SBS who are dependent on parenteral support. We are not marketing PTH for the treatment of osteoporosis.

As a result of the termination of the License Agreements, we have the exclusive rights worldwide, excluding Israel, to develop and commercialize teduglutide and PTH. In addition, under the Transition Agreement we acquired certain assets related to the products covered by the License Agreements, including, but not limited to, all of Takeda's inventory, patents, and regulatory approvals related to such products. We were also assigned Takeda's rights and assumed Takeda's obligations under certain contracts related to such assets.

Pursuant to the Transition Agreement, we issued 6,067,961 shares of our common stock to Takeda in a private placement transaction, which approximated $50 million based upon the 30-day volume weighted average share price of our common stock as calculated pursuant to the Transition Agreement. We will be obligated to make an additional $30 million milestone payment to Takeda in the event world-wide net sales of the products covered by the License Agreements exceed $750 million in a single calendar year; provided that such milestone payment will become due upon a change in control of the Company. Such milestone payment may be made at our discretion in the form of either cash, shares of our common stock or a combination of both, subject to certain restrictions, including a limit on the maximum number of shares that may be offered under the Transition Agreement.

On December 20, 2013, we entered into an amendment and restatement (the "Amendment and Restatement") to our Agreement for the Sale and Assignment of Rights (the "2007 Agreement"), dated as of July 16, 2007, between NPS Allelix Corp., Drug Royalty L.P. 3 ("DRLP3"), an investment fund managed by DRI Capital Inc. ("DRI"), and NPS.

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Under the 2007 Agreement, we sold to DRLP3 our rights to receive future royalty payments arising from the sale of recombinant human parathyroid hormone 1-84 [rDNA origin] ("PTH") under the PTH License Agreement.

Pursuant to the Amendment and Restatement, (i) DRLP3 has consented to the commercialization of PTH by NPS, (ii) the terms of the 2007 Agreement are tolled, and (iii) the parties' rights and obligations regarding PTH and related technology are governed by the Amendment and Restatement. We will be required to pay royalties in the mid-single digits to DRLP3 based upon sales of PTH by us and our licensees (if any) worldwide, excluding Israel. We have agreed to undertake certain efforts to commercialize PTH. If we do not submit a Marketing Authorization Application to the European Medicines Agency for PTH in the European Union by an agreed upon date, DRLP3 will have the right to revoke the consent granted in the Amendment and Restatement, reinstate the 2007 Agreement, and either cause us to enter into a new license agreement with a third party with respect to PTH on terms that are substantially similar and no more extensive (when taken as a whole) than the terms contained in the terminated PTH License Agreement, or negotiate such an agreement on our behalf.

Our obligation to pay royalties to DRLP3 under the Amendment and Restatement shall expire on a country-by-country basis upon the later of (i) the last to expire patent controlled by us with claims covering PTH in such country or (ii) the expiration of any period of regulatory exclusivity applicable to PTH in such country. Our obligation to pay royalties to DRLP3 under the Amendment and Restatement shall terminate in its entirety once cumulative royalty payments made to DRLP3 by Takeda and us total $125 million. As of December 31, 2013, $45.5 million in royalties had been paid to DRLP3.

DRLP3 continues to maintain a security interest in NPS patents that contain claims covering PTH and certain other NPS intellectual property related to PTH. In the event of a default by us under the Amendment and Restatement, DRLP3 would be entitled to enforce its security interest against us and such intellectual property.

Ronacaleret (751689)

Ronacaleret (751689) is a calcilytic compound developed under a November 1993 collaborative research and worldwide exclusive license agreement with GlaxoSmithKline or GSK for the research, development and commercialization of calcium receptor active compounds for the treatment of osteoporosis and other bone metabolism disorders, excluding hyperparathyroidism. Calcilytic compounds are small molecule antagonists of the calcium receptor that temporarily increase the secretion of the body's own parathyroid hormone, which may result in the formation of new bone. In animal studies, we demonstrated that intermittent increases in circulating levels of parathyroid hormone could be obtained using calcilytics. In these studies, increased levels of parathyroid hormone were achieved by this mechanism and were equivalent to those achieved by an injection of parathyroid hormone sufficient to cause bone growth.

In August 2011, we formed a new agreement with GSK that replaced the 1993 agreement and expanded the licensed field of research for ronacaleret, which was discovered under the 1993 agreement and studied as a treatment for osteoporosis in post-menopausal women. The new agreement allows GSK to pursue stem cell mobilization, in addition to osteoporosis and other bone disorders. GSK will be responsible for all development, manufacturing and commercialization of ronacaleret. We are entitled to development milestones and royalties on any future sales of ronacaleret. GSK will no longer have rights to other calcilytic compounds discovered or developed under the 1993 agreement. GSK has the right to terminate the license upon 30 days notice, on a country-by-country basis for countries for which GSK has reasonably determined that continued development or commercialization in such country is not justified.

Janssen Pharmaceuticals, Inc.

In December 2006, we entered into an agreement with Janssen Pharmaceuticals, Inc. formerly known as Ortho-McNeil Pharmaceutical (Janssen) pertaining to certain of our patents. Under this agreement, Janssen is required to pay us royalties on any product sales of tapentadol hydrochloride and other related compounds in all countries in which we have patents whose claims cover such sales of such products. We also received an up-front licensing fee. Janssen pays us its royalty on a quarterly basis. We are responsible for patent prosecution and maintenance of the related patents. In November 2008, the U.S. Food and Drug Administration approved tapentadol immediate-release tablets for the relief of moderate to severe acute pain in adults 18 years of age or older. In August 2011, the FDA approved Nucynta ER (tapentadol extended-release) tablets for the management of moderate-to-severe chronic pain in adults. In August 2012, the label for Nucynta ER was amended to provide for the use of the product for the management of neuropathic pain associated with diabetic peripheral neuropathy in adults. Tapentadol is a centrally acting oral analgesic.

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Hoffman-La Roche Inc. and F. Hoffmann-La Roche Ltd.

In December 2008, we entered into an agreement with Hoffman-La Roche Inc. and F. Hoffmann-La Roche Ltd. (Roche), under which we granted Roche a non-exclusive license (with the right to grant sublicenses) to develop, make, import, use for sale or sell products covered by patents relating to the modulation of NMDA receptor activity using glycine uptake antagonists. In return, Roche paid us an upfront licensing fee of $2.0 million in 2008 and agreed to pay us for the achievement of certain regulatory milestones. Further, Roche agreed to pay a royalty on any future sales of licensed products on a quarterly basis.

In-licensing Agreements

In February 1993, we entered into a patent license agreement with The Brigham and Women's Hospital, an affiliate of Harvard University Medical School. The patent license agreement grants us an exclusive license to certain calcium receptor and inorganic ion receptor technology covered by patents we jointly own with the hospital. Under the patent license agreement, we are responsible for all costs relating to obtaining regulatory approval from the FDA or any other federal, state or local government agency and carrying out any clinical studies, relating to the technology. The Brigham and Women's Hospital is also entitled to a royalty on any sales of certain products under the patent license agreement, and we have committed to promote sales of any licensed products for hyperparathyroidism for which we receive regulatory approval. We are required to pay royalties on the sales of cinacalcet HC1 up to a cumulative maximum of $15.0 million. To date, $15.0 million has been accrued for related royalties payable on sales of cinacalcet HC1, of which $9.4 million has been paid. Annual payments due are limited to a maximum of $1.0 million. Brigham and Women's Hospital may terminate the patent license agreement if we breach the terms of the agreement and do not cure the breach within 60 days of receiving notice of the breach. Certain violations of terms of the patent agreement, if pursued by Brigham and Women's Hospital, might result in the exclusive, royalty-free license of the technology to Brigham and Women's Hospital or other adverse consequences.

We have a license agreement with Daniel J. Drucker, MD, and his Canadian corporation 1149336 Ontario Inc. The license agreement grants to us an exclusive worldwide license under Dr. Drucker's patent portfolio for glucagon-like peptide-2, or GLP-2, and its therapeutic uses. Under the license agreement, we have agreed to ensure that reasonable commercial efforts are used to develop and commercialize any product covered by the licensed patents. The agreement requires us to pay annual non-refundable license maintenance fees, royalties on sales and licensing fees, and milestone payments. During the period commencing upon our acquisition of Allelix Biopharmaceuticals Inc., the original licensee under this agreement, on December 23, 1999 through December 31, 2013, we have paid license maintenance fees, milestone payments and sublicense fees totaling $10.8 million under this license agreement. We are obligated to pay a royalty that represents a percentage in the single digits of our sales of Gattex and Revestive. The license agreement is perpetual but we may terminate the agreement at any time upon 60 days written notice. In addition, if we default on any of the material obligations under the agreement Dr. Drucker may terminate the license agreement and all rights granted under the agreement will revert to Dr. Drucker. In addition, if Dr. Drucker terminates the license agreement for our default, or if we terminate the license agreement for our convenience, we will be obligated to assign to Dr. Drucker all intellectual property relating to GLP-2 that is owned by us, and we will be prohibited from developing, making or selling a GLP-2 product for a period of 15 years.

Government Regulation

New Drug Development and Approval Process

Regulation by governmental authorities in the U.S. and other countries is a significant factor in the manufacture and marketing of pharmaceuticals and in our ongoing research and development activities. All of our product candidates will require regulatory approval by governmental agencies prior to commercialization. In particular, all of our drug candidates are subject to rigorous preclinical testing, clinical trials, and other pre-marketing approval requirements by the FDA and regulatory authorities in other countries. In the U.S., various federal, and in some cases state statutes and regulations also govern or affect the manufacturing, safety, labeling, storage, record keeping and marketing of such products. The lengthy process of seeking required approvals and the continuing need for compliance with applicable statutes and regulations require the expenditure of substantial resources. Regulatory approval, when and if obtained, will dictate the approved uses of the product for marketing purposes. Further, approved drugs, as well as their manufacturers, are subject to ongoing review and discovery of previously unknown problems with such products may result in restrictions on their manufacture, sale or use or in their withdrawal from the market.

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The steps required by the FDA before our drug candidates may be marketed in the U.S. include, among other things:

• The performance of preclinical laboratory and animal tests and formulation studies;

• The submission to the FDA of an Investigational New Drug application, or IND, which must become effective before human clinical trials may commence;

• The completion of adequate and well-controlled human clinical trials to establish the safety and efficacy of the drug; and

• The submission and FDA approval of an application for marketing approval.

In addition to the above, the Food and Drug Administration Amendment Act (FDAAA) of 2007 requires new chemical entities to be evaluated by an FDA Advisory Committee, unless the FDA justifies differently in writing. The testing and approval process requires substantial time, effort and financial resources and we cannot be certain that any approvals for any of our proposed products will be granted on a timely basis, if at all.

Prior to commencing a clinical trial, we must submit an IND to the FDA. The IND becomes effective 30 days after receipt by the FDA, unless within the 30-day period, the FDA raises concerns or questions with respect to the conduct of the trial. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the study can begin. As a result, the submission of an IND may not necessarily result in FDA authorization to commence a clinical trial. Further, an independent institutional review board at the medical center or centers proposing to conduct the trial must review and approve the plan for any clinical trial before it commences.

Human clinical trials are typically conducted in three sequential phases that may overlap:

• Phase 1: the drug is initially introduced into healthy human subjects or patients and tested for safety, dosage tolerance, absorption, metabolism, distribution and excretion.

• Phase 2: involves studies in a limited patient population to identify possible adverse effects and safety risks, to determine the efficacy of the product for specific targeted diseases and to determine optimal dosage.

• Phase 3: when Phase 2 evaluations demonstrate that a dosage range of the product is effective and has an acceptable safety profile, Phase 3 trials are undertaken to further evaluate dosage and clinical efficacy and to further test for safety in an expanded patient population at geographically dispersed clinical study sites.

We cannot be certain that we, or any of our collaborative partners, will successfully complete Phase 1, Phase 2 or Phase 3 testing of any compound within any specific period, if at all. Furthermore, the FDA or the study sponsor may suspend clinical trials at any time on various grounds, including a finding that the subjects or patients are being exposed to an unacceptable health risk.

The results of product development, preclinical studies and clinical trials are submitted to the FDA as part of a marketing authorization application (an NDA for new drugs or a BLA for new biologics). FDA approval of the NDA or BLA is required before marketing of the product may begin in the U.S. If the NDA or BLA contains all pertinent information and data, the FDA will "file" the application and begin review. The FDA may "refuse to file" the NDA or BLA if it does not contain all pertinent information and data or if in the wrong format. In that case, the applicant may resubmit the NDA or BLA when it contains the missing information and data in the correct format. Once the submission is accepted for filing, the FDA begins an in-depth review. The FDA has agreed to certain performance goals in the review of new drug applications. Following a 60-day review period after the submission of an application, priority drug products are intended to be reviewed within 6 months and non-priority drug products are intended to be reviewed within 10 months or for a total of 8 and 12 months, respectively. The review process, however, may be substantially extended by FDA requests for additional information, preclinical or clinical studies and or clarification regarding information already provided in the submission, submission of a risk evaluation and mitigation strategy or proposed labeling. The submission of data after the initial submission may automatically trigger an additional 90-days to the assigned action date. The FDA may refer an application to an advisory committee for review, evaluation and recommendation as to whether the application should be approved.

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The FDA may withhold approval if the applicable regulatory criteria are not satisfied or may require additional testing or data. Even if such data are submitted, the FDA may ultimately decide that the application data do not satisfy the risk-to-benefit criteria for approval. The FDA may also limit the indications for use and/or require post-marketing testing and surveillance to monitor the safety and or efficacy of a product. If approved, the FDA may withdraw product approval if compliance with regulatory standards is not maintained or if problems occur after the product reaches the market. In addition, the FDA may require testing and surveillance programs to monitor approved products even after they have been commercialized, and the FDA has the power to prevent or limit further marketing of a product based on the results of these post- marketing programs.

Satisfaction of the above FDA requirements or similar requirements of state, local and foreign regulatory agencies typically takes several years and the actual time required may vary substantially, based upon the type, complexity and novelty of a product or indication.

Government regulation may delay or prevent marketing of potential products for a considerable period and impose costly procedures upon our or our partner's activities. The FDA or any other regulatory agency may not grant any approvals on a timely basis, if at all. Success in early-stage clinical trials does not assure success in later-stage clinical trials. Data obtained from clinical activities are not always conclusive and may be susceptible to varying interpretations, which could delay, limit or prevent regulatory approval. Even if a product receives regulatory approval, the approval may be significantly limited to specific indications and dosages. Further, even if regulatory approval is obtained, later discovery of previously unknown problems with a product may result in restrictions on the product or even complete withdrawal of the product from the market. Delays in obtaining, or failures to obtain regulatory approvals may have a material adverse effect on our business. In addition, we cannot predict what adverse governmental regulations may arise from future U.S. or foreign governmental action.

Any products manufactured or distributed by us or our partners pursuant to health authority approvals are subject to pervasive and continuing regulation by that Health Authority, including record-keeping requirements and reporting of adverse experiences with the drug. In the U.S., drug manufacturers are required to register their establishments with the FDA and certain state agencies, and are subject to periodic unannounced inspections by the FDA for compliance with current Good Manufacturing Practice, or cGMP, regulations, which impose certain procedural and documentation requirements. We cannot be certain that we, or our present or future suppliers, will be able to comply with the cGMP regulations and other FDA regulatory requirements.

Failure to comply with the applicable U.S. regulatory requirements at any time during the product development process, approval process or after approval may subject an applicant to administrative or judicial sanctions. These sanctions could include the imposition by the FDA or an institutional review board of a clinical hold on trials, the FDA's refusal to approve pending applications or supplements, withdrawal of an approval, warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, civil penalties or criminal prosecution. Any agency or judicial enforcement action could have a material adverse effect on us.

Under the Orphan Drug Act, the FDA may grant orphan drug designation to drugs intended to treat a rare disease or condition, which is a disease or condition that affects fewer than 200,000 individuals in the U.S. Orphan drug designation must be requested before submitting a marketing authorization application. After the FDA grants orphan drug designation, the non-proprietary identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA. Orphan drug designation does not convey any advantage in or shorten the duration of the regulatory review and approval process. If a product that has orphan drug designation subsequently receives FDA approval for the disease for which it has such designation, the product is entitled to orphan drug market exclusivity from the time of approval. For example, the FDA may not approve any other applications to market the same drug for the same disease, except in very limited circumstances, for seven years. We intend to file for orphan drug designation for those diseases that meet the criteria for orphan exclusivity. Although obtaining FDA approval to market a product with orphan drug exclusivity can be advantageous, there can be no assurance that it would provide us with a material commercial advantage.

Steps similar to those in the U.S. must be undertaken in virtually every other country comprising the market for our product candidates before any such product can be commercialized in those countries. The approval procedure and the time required for approval vary from country to country and may involve additional testing. There can be no assurance that approvals will be granted on a timely basis, or at all. In addition, regulated approval of prices is required in most countries other than the U.S. There can be no assurance that the resulting prices would be sufficient to generate an acceptable return to us.

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Patient Protection and Affordable Health Care Act

In March 2010, the Patient Protection and Affordable Health Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, or collectively PPACA, was enacted, which includes measures that have or will significantly change the way health care is financed by both governmental and private insurers. Among the provisions of PPACA of greatest importance to the pharmaceutical industry are the following:

• The Medicaid Drug Rebate Program requires pharmaceutical manufacturers to enter into and have in effect a national rebate agreement with the Secretary of the Department of Health and Human Services as a condition for states to receive federal matching funds for the manufacturer's outpatient drugs furnished to Medicaid patients. Effective in 2010, PPACA made several changes to the Medicaid Drug Rebate Program, including increasing pharmaceutical manufacturers' rebate liability by raising the minimum basic Medicaid rebate on most branded prescription drugs and biologic agents from 15.1% of average manufacturer price, or AMP, to 23.1% of AMP and adding a new rebate calculation for "line extensions" (i.e., new formulations, such as extended release formulations) of solid oral dosage forms of branded products, as well as potentially impacting their rebate liability by modifying the statutory definition of AMP. PPACA also expanded the universe of Medicaid utilization subject to drug rebates by requiring pharmaceutical manufacturers to pay rebates on Medicaid managed care utilization as of 2010 and by expanding the population potentially eligible for Medicaid drug benefits, to be phased in by 2014. The Centers for Medicare and Medicaid Services, or CMS, have proposed to expand Medicaid rebate liability to the territories of the United States as well. In addition, PPACA provides for the public availability of retail survey prices and certain weighted average AMPs under the Medicaid program. The implementation of this requirement by the CMS may also provide for the public availability of pharmacy acquisition cost data, which could negatively impact our sales.

• In order for a pharmaceutical product to receive federal reimbursement under the Medicare Part B and Medicaid programs or to be sold directly to U.S. government agencies, the manufacturer must extend discounts to entities eligible to participate in the 340B drug pricing program. The required 340B discount on a given product is calculated based on the AMP and Medicaid rebate amounts reported by the manufacturer. Effective in 2010, PPACA expanded the types of entities eligible to receive discounted 340B pricing, although, under the current state of the law, with the exception of children's hospitals, these newly eligible entities will not be eligible to receive discounted 340B pricing on orphan drugs when used for the orphan indication. In addition, as 340B drug pricing is determined based on AMP and Medicaid rebate data, the revisions to the Medicaid rebate formula and AMP definition described above could cause the required 340B discount to increase.

• Effective in 2011, PPACA imposed a requirement on manufacturers of branded drugs and biologic agents to provide a 50% discount off the negotiated price of branded drugs dispensed to Medicare Part D patients in the coverage gap (i.e., "donut hole").

• Effective in 2011, PPACA imposed an annual, nondeductible fee on any entity that manufactures or imports certain branded prescription drugs and biologic agents, apportioned among these entities according to their market share in certain government healthcare programs, although this fee would not apply to sales of certain products approved exclusively for orphan indications.

• Effective in 2012, PPACA required pharmaceutical manufacturers to track certain financial arrangements with physicians and teaching hospitals, including any "transfer of value" made or distributed to such entities, as well as any investment interests held by physicians and their immediate family members. Manufacturers will be required to report this information beginning in 2013.

• As of 2010, a new Patient-Centered Outcomes Research Institute was established pursuant to PPACA to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research. The research conducted by the Patient- Centered Outcomes Research Institute may affect the market for certain pharmaceutical products.

• PPACA created the Independent Payment Advisory Board which, beginning in 2014, will have authority to recommend certain changes to the Medicare program to reduce expenditures by the program that could result in reduced payments for prescription drugs. Under certain circumstances, these recommendations will become law unless Congress enacts legislation that will achieve the same or greater Medicare cost savings.

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• PPACA established the Center for Medicare and Medicaid Innovation within CMS to test innovative payment and service delivery models to lower Medicare and Medicaid spending, potentially including prescription drug spending. Funding has been allocated to support the mission of the Center for Medicare and Medicaid Innovation from 2011 to 2019.

Many of the details regarding the implementation of PPACA are yet to be determined, and at this time, it remains unclear the full effect that PPACA would have on our business.

Biologics Price Competition and Innovation Act of 2009

The PPACA included the Biologics Price Competition and Innovation Act of 2009, or BPCIA. The BPCIA amended the Public Health Service Act, the law pursuant to which the FDA regulates biologics, to create an abbreviated approval pathway for two types of "generic" biologics-biosimilars and interchangeable biologic products, and provides for a twelve-year exclusivity period for the first approved biological product, or reference product, against which a biosimilar or interchangeable application is evaluated; however if pediatric studies are performed and accepted by the FDA, the twelve-year exclusivity period will be extended for an additional six months. A biosimilar product is defined as one that is highly similar to a reference product notwithstanding minor differences in clinically inactive components and for which there are no clinically meaningful differences between the biological product and the reference product in terms of the safety, purity and potency of the product. An interchangeable product is a biosimilar product that may be substituted for the reference product without the intervention of the health care provider who prescribed the reference product.

The biosimilar applicant must demonstrate that the product is biosimilar based on data from (1) analytical studies showing that the biosimilar product is highly similar to the reference product; (2) animal studies (including toxicity); and (3) one or more clinical studies to demonstrate safety, purity and potency in one or more appropriate conditions of use for which the reference product is approved. In addition, the applicant must show that the biosimilar and reference products have the same mechanism of action for the conditions of use on the label, route of administration, dosage and strength, and the production facility must meet standards designed to assure product safety, purity and potency.

An application for a biosimilar product may not be submitted until four years after the date on which the reference product was first approved. The first approved interchangeable biologic product will be granted an exclusivity period of up to one year after it is first commercially marketed, but the exclusivity period may be shortened under certain circumstances.

In February 2012, the FDA issued three draft guidance documents on biosimilar product development. The draft guidance documents are: "Scientific Considerations in Demonstrating Biosimilarity to a Reference Product," "Quality Considerations in Demonstrating Biosimilarity to a Reference Protein Product," and "Biosimilars: Questions and Answers Regarding Implementation of the Biologics Price Competition and Innovation Act of 2009." The guidance documents provide FDA's current thinking on approaches to demonstrating that a proposed biological product is biosimilar to a reference product. The FDA received public comments on the draft documents and intends to issue final guidance documents in the future. Nevertheless, the absence of a final guidance document does not prevent a sponsor for seeking licensure of a biosimilar under the BPCIA.

Sales and Marketing Regulation

In February 2013, we launched and initiated commercial sales of Gattex, the first NPS product to be commercialized and sold directly by NPS. In the past, we entered into agreements with third parties who have been responsible for commercialization of our products. As an organization that sells and markets its products directly, we are now subject to additional sales and marketing regulation and will be subject to similar regulations as we expand internationally into new markets.

The FDA regulates all advertising and promotion activities for products under its jurisdiction, including Gattex and Natpara. Broadly speaking, a company may not commercially promote a product prior to its approval, and after approval can make only those claims relating to safety and efficacy that are consistent with the labeling approved by the FDA. Physicians may, on their own choice and responsibility, prescribe drugs for uses that are not described in the drug's labeling and that differ from those tested by the product's manufacturer and approved by the FDA. Such "off-label" uses are common across medical specialties and may reflect a physician's belief that the "off-label" use is the best treatment for the patients. The FDA does not regulate the behavior of physicians in their choice of treatments, but FDA regulations do impose stringent restrictions on manufacturers' promotion and communications regarding such "off-label" uses. Generally speaking, a manufacturer may not promote a drug for "off-label" use, but may engage in non-

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promotional, balanced communication regarding "off-label" use under certain conditions. If a company is found to have promoted "off-label" uses, it may become subject to adverse publicity and enforcement action by the FDA, the Department of Justice, or the Office of the Inspector General of the Department of Health and Human Services, as well as state authorities. Such actions could subject a company to a range of penalties that could result in a significant commercial impact, corrective advertising, consent decrees and the full range of civil and criminal penalties available to the FDA and other government agencies, including those related to false claims, any one of which could materially restrict the manner in which a company promotes or distributes drug products.

Several states have also enacted legislation requiring pharmaceutical companies operating within the state to establish marketing and promotional compliance programs or codes of conduct and/or file periodic reports with the state or make periodic public disclosures on sales, marketing, pricing, clinical trials and other activities. Similar legislation is being considered by additional states and by Congress. We will also be required to publicly report certain payments and gifts, including those made to physicians and teaching hospitals. Many of these requirements are new and uncertain, and the penalties for failure to comply with these requirements are not always clear.

We also are subject to various federal and state laws pertaining to health care "fraud and abuse," including anti-kickback laws and false claims laws. Anti-kickback laws make it illegal for a prescription drug manufacturer to solicit, offer, receive, or pay any remuneration in exchange for, or to induce, the referral of business, including the purchase or prescription of a particular drug. Due to the breadth of the statutory provisions and the absence of guidance in the form of regulations and very few court decisions addressing industry practices, it is possible that our practices might be challenged under anti-kickback or similar laws. False claims laws prohibit anyone from knowingly and willingly presenting, or causing to be presented for payment to third-party payers (including Medicare and Medicaid) claims for reimbursed drugs or services that are false or fraudulent, claims for items or services not provided as claimed, or claims for medically unnecessary items or services. Our activities relating to the sale and marketing of our products may be subject to scrutiny under these laws.

Similar restrictions are imposed on the promotion and marketing of medicinal products in the EU and other countries. Laws (including those governing promotion, marketing and anti-kickback provisions), industry regulations and professional codes of conduct often are strictly enforced. The specific regulations for sales and marketing vary from country to country, and compliance with such regulations may impose additional costs and time delays with respect to international commercialization of our products. Even in those countries where we are not directly responsible for the promotion and marketing of our products, inappropriate activity by our international distribution partners can have implications for us.

Patents and Other Proprietary Technology

Our intellectual property portfolio includes patents, patent applications, trade secrets, know-how and trademarks. Our success will depend in part on our ability to obtain additional patents, maintain trade secrets and operate without infringing the proprietary rights of others, both in the U.S. and in other countries. We periodically file patent applications to protect the technology, inventions and improvements that may be important to the development of our business. We rely on trade secrets, know-how, continuing technological innovations and licensing opportunities to develop and maintain our competitive position.

We file patent applications on our own behalf as assignee and, when appropriate, have filed and expect to continue to file, applications jointly with our collaborators. These patent applications cover compositions of matter, methods of treatment, methods of discovery, use of novel compounds and novel modes of action, as well as recombinantly expressed receptors and gene sequences that are important in our research and development activities. Some of our principal intellectual property rights related to processes, compounds, uses and techniques related to calcium receptor science are protected by issued U.S. patents. We intend to file additional patent applications relating to our technology and to specific products, as we think appropriate.

We hold patents directed to potential therapeutic products such as new chemical entities, pharmaceutical compositions and methods of treating diseases. We hold patents directed also to nucleic acid and amino acid sequences of novel cellular receptors and methods of screening for compounds active at such cellular receptors. We continue actively to seek patent protection for these and related technologies in the U.S. and in foreign countries. Our intellectual property portfolio also includes patents in countries outside the U.S., which also cover the technology referenced above.

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Our Patent Portfolio

The following is a description of patents we own or license from third parties which contain claims that cover our material products and product candidates.

Gattex/Revestive: Twenty-five issued U.S. patents include claims that cover technology related to Gattex and GLP-2, certain of which we license from 1149336 Ontario Inc. These patents have expiration dates (not including any patent term extensions) ranging from 2015 to 2026. We have been issued foreign counterparts of these patents. Our issued principal patents which contain claims that cover our product, Gattex, its formulation, and/or method of use, are summarized in the following table:

Territory	General Subject Matter	Expiration
U.S.	Glucagon-like peptide-2 analogs	20151
U.S.	GLP-2 formulations	20221
Europe	Glucagon-like peptide-2 analogs	20172
Europe	GLP-2 formulations	2020
Japan	Glucagon-like peptide-2 analogs	20173
Japan	GLP-2 formulations	20203

1 We are eligible for patent term extension of up to five years on one U.S. patent due to Gattex' marketing approval by the FDA.
² Does not include any supplementary protection. Applications for supplementary protection have been filed in most major European countries. In countries that have granted our applications, we have received approximately five years of supplementary protection.
³ Does not include any supplementary protection.

Natpara: Six issued U.S. patents include claims that cover technology related to parathyroid hormone. These patents have expiration dates ranging from 2014 to 2021. We have been issued foreign counterparts of these patents. Our issued principal patents which contain claims that cover formulations of Natpara and Preotact are summarized in the following table:

Territory	General Subject Matter	Expiration
U.S.	Parathyroid hormone formulation	20141
Europe	Parathyroid hormone formulation	2014
Europe	Protein formulations	20212
Japan	Parathyroid hormone formulation	20143
Japan	Protein formulations	20193

1 Includes one year of interim patent term extension. We are eligible for up to four additional years of patent term extension if Natpara is approved for marketing by the FDA.
² Includes approximately two years of supplementary protection, which varies by country. Applications for supplementary protection have been granted in most major European countries.
³ Does not include any supplementary protection.

Calcimimetics: Eleven issued U.S. patents cover calcimimetics and calcium receptor technology. These patents and their foreign counterparts have been licensed to Amgen, Inc. and cover their products Sensipar® (cinacalcet) and Mimpara® (cinacalcet) worldwide except for certain Asian countries. The patents in those territories have been licensed to Kyowa-Hakko Kirin and cover their product Regpara® (cinacalcet.) Our calcimimetics patents have expiration dates (including 449 days of patent term extension for U.S. Patent No. 6,011,068) ranging from 2014 to 2020. Our issued principal patents that cover cinacalcet, its formulation and/or method of use, are summarized in the following table:

Territory	General Subject Matter	Expiration
U.S.	Calcium receptor-active compounds	2015
U.S.	Calcium receptor-active molecules	2016
U.S.	Methods of use	2016
U.S.	Calcium receptor-active molecules	20181
Europe	Calcium receptor-active compounds	20192
Japan	Calcium receptor-active molecules	20173
Japan	Calcium receptor-active molecules	20173
Japan	Calcium receptor-active compounds	20203

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1 Includes 449 days of patent term extension.
² Includes approximately four years of supplementary protection, which varies by country. Applications for supplementary protection have been granted in most major European countries.
³ Includes five years of supplementary protection

Calcilytics, including NPSP795: Five issued U.S. patents contain claims that cover technology related to calcilytic compounds we have under development and have licensed to GlaxoSmithKline LLC. These patents have expiration dates (not including any patent term extensions) ranging from 2016 to 2021. The products covered by these patents are in very early stages of development and the patents are not considered material at this time.

We do not believe that the expiration during the near term (2014 through 2015) of our principal patents relating to our material products will have a material adverse impact on our business, products or product candidates due to several factors. As noted above, one of the principal U.S. patents expiring in this time period that covers Gattex is eligible for up to five years of patent term extension as a result of the FDA's marketing approval of Gattex in December 2012 and one of the principal U.S. patents expiring in this time period that covers Natpara was granted one year of interim patent term extension and will be eligible for up to four additional years of patent term extension if Natpara is approved by the FDA. In addition, each of Gattex and Natpara has been designated as an orphan drug by the FDA and, as a result, Gattex will receive seven years of marketing exclusivity in the U.S. based upon the FDA's marketing approval of Gattex in December, 2012 and Natpara will receive seven years of marketing exclusivity in the U.S. in the event it is approved by the FDA. As a biologic product, Natpara is expected to receive 12 years of marketing exclusivity in the U.S in the event it is approved by the FDA. In Europe, Revestive and Natpara have each been granted orphan designation. Market exclusivity for orphan drugs is generally granted for a period of ten years.

In connection with our research and development activities, we have sponsored research at various university and government laboratories. For example, we have executed license and research agreements regarding research in the area of calcium and other ion receptors with The Brigham and Women's Hospital. We have also sponsored work at other government and academic laboratories for various evaluations, assays, screenings and other tests. Generally, under these agreements, we fund the work of investigators in exchange for the results of the specified work and the right or option to a license to any patentable inventions that may result in certain designated areas. If the sponsored work produces patentable subject matter, we generally have the first right to negotiate for license rights related to that subject matter. Any resulting license would be expected to require us to pay royalties on net sales of licensed products.

Competition

Competition in the pharmaceutical industry is intense and is expected to continue to increase. Competition is based to a significant degree on technological and scientific factors, including, the availability of patent and other protection of products, product candidates, processes and other technologies, the ability to commercialize products and other technological developments, the ability to obtain governmental approval for testing, manufacturing and marketing of products, and the ability to enter into licensing and similar arrangements to facilitate the development of products and meet other business objectives. Many competitors, including biotechnology and pharmaceutical companies, are actively engaged in research and development in areas that we, or our partners, are also developing or commercializing products. These companies, as well as academic institutions, governmental entities and other organizations, also compete with us in recruiting and retaining highly qualified scientific management, personnel and consultants. Many of our competitors are larger than we are and have substantially greater financial and management resources, superior intellectual property positions and greater manufacturing, marketing and sales capabilities.

We have focused our internal research and development on rare indications of significant unmet medical need where we believe a company of our size can successfully compete. For example, we have been granted orphan drug designation for Gattex and Revestive in the treatment of SBS, where there are a limited number of competing therapies. Gattex/Revestive is the first and only analog of GLP-2 proven to increase intestinal absorption and decrease or eliminate the need for parenteral support in adult SBS. Further, Gattex is the only pharmaceutical approved for long-term treatment of adult SBS. Other therapies for SBS include parenteral support and somatropin (rDNA origin) for injection, a human growth hormone marketed by Serono and L-glutamine in combination with somatropin (rDNA origin) for injection. Parenteral support does not address the issue of malabsorption for adult SBS. Further, a NIH publication reported that the annual mean costs of lifelong, complex home healthcare associated with PN/IV support ranged from $185,000 to $568,000, not including the indirect costs associated with disability and/or the dollar value that could be ascribed to the challenging daily living for these patients (Piamjariyakul 2010). In addition, parenteral support is

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associated with shortened life span, life-threatening complications including sepsis, blood clots or liver damage, and reduced quality-of-life due to the time required for and consequences of frequent access to an intravenous pump. Treatment with somatropin (rDNA origin) for injection is limited to 28 days and requires a specialized diet. Gattex will compete directly with somatropin (rDNA origin) for injection. Parental support-dependent pediatric SBS, pediatric feeding intolerance, and gastrointestinal mucositis or GIM are other specialty indications where few competitors exist. We are aware of two GLP-2 peptide analogs under development by Zealand Pharma, specifically ZP1846, which was licensed to Helsinn Healthcare, is in Phase 1 clinical development for chemotherapy-induced diarrhea and ZP1848 is in Phase 1 clinical development for inflammatory bowel diseases.

We have been granted orphan drug status for Natpara for the treatment of hypoparathyroidism. Presently, there is no approved treatment for hypoparathyroidism. It is currently managed with large doses of oral calcium and active vitamin D supplementation to raise the calcium levels in the body and reduce the severity of symptoms. Over time, calcium may build up in the body and result in serious health risks, including calcifications in the kidneys, heart or brain. Severe hypocalcemia can be life threatening and is treated with intravenous calcium. Natpara is a bioengineered replica of human parathyroid hormone that we believe has the potential to be the first hormone replacement therapy for hypoparathyroidism and that we believe will meet the unmet need of this chronic condition.

Many of our competitors have substantially greater financial, technical, marketing and personnel resources. In addition, some of them have considerable experience in preclinical testing, human clinical trials and other regulatory approval procedures. Moreover, certain academic institutions, governmental agencies and other research organizations are conducting research in the same areas in which we are working. These institutions are becoming increasingly aware of the commercial value of their findings and are more actively seeking patent protection and licensing arrangements to collect royalties for the technology that they have developed. These institutions may also market competitive commercial products on their own or through joint ventures and will compete with us in recruiting highly qualified personnel. Our ability to compete successfully will depend, in part, on our ability to:

• outsource activities critical to the advancement of our product candidates and manage those companies to whom such activities are outsourced;

• outsource manufacturing capabilities for our proprietary products;

• leverage our established collaborations and enter into new collaborations for the development of our products;

• identify new product candidates;

• develop products that reach the market first;

• develop products that are superior to other products in the market;

• develop products that are cost-effective and competitively priced;

• obtain and enforce patents covering our technology; and

• successfully market products we develop that receive regulatory approval or secure marketing partners who are successful in marketing our products.

Sales and Marketing

We have established a small commercial organization to support sales of Gattex in the U.S. Our field force is comprised of 33 employees calling on a small prescriber base who are primarily gastrointestinal specialists. We have begun executing our international strategy for Revestive, which includes building commercial infrastructure, and are currently in the process of evaluating the commercial strategy outside of the U.S. for rhPTH 1-84. We expect commercial sales of Revestive to begin in certain ex-US territories in the first half of 2014. We plan to begin pricing and reimbursement discussions in selected EU countries during the first half of 2014 and our expected initial launch sequencing is Germany, UK, Denmark, Norway, and Austria. In parallel we are initiating named-patient programs in certain countries, including Turkey and Brazil, and we are preparing our development and regulatory strategy for Japan. We believe the size of our U.S. sales force is appropriate to effectively market Gattex in the U.S. given the limited adult SBS population.

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Customers

Our customers are primarily specialty pharmacies who supply home infusion services to adult SBS patients. Gattex is shipped directly from our third-party warehouse to our limited distribution network. Our current network includes Accredo Health Group, Inc.; BioScrip; Inc.; Coram, LLC; ThriveRx; and Walgreens Infusion Services. In addition to dispensing Gattex, these contracted providers will provide clinical services to support the use of Gattex in reducing parenteral support for adult patients with SBS.

We have begun the process of identifying our customers for Revestive as well as setting up our distribution network for the rest of the world. We plan on launching Revestive in the first half of 2014.

Manufacturing

We rely on corporate collaborators and contract manufacturing organizations to supply drug product for our clinical trials and future commercial supply chain. We have established all of our commercial supply chain for Gattex/Revestive and Natpara. We have agreements in place with Boehringer Ingelheim Austria GmbH ("Boehringer") for Gattex/Revestive and Boehringer and SynCo Bio Partners B.V. ("Synco") for Natpara for the production of bulk supplies of the active pharmaceutical ingredients for our clinical and future commercial requirements. In addition, we have manufacturing agreements in place with Hospira Worldwide, Inc. ("Hospira") and Patheon, Inc. ("Patheon") for the production of our fill and finish clinical and commercial supplies of Gattex/Revestive and Vetter Pharma International GmbH ("Vetter") for the production of our fill and finish clinical and commercial supplies of Natpara. We have also established agreements with other third parties to perform additional steps in the manufacturing process, including sterile water for injection, packaging, testing and storage of our product candidates.

We have developed an injection pen device for the delivery of Natpara and we have a manufacturing agreement in place. We filed for U.S. market authorization as a drug-device combination, combining our proprietary product Natpara with an injection pen device delivery system. Due to a technical production issue during parts of 2012 and 2013 we were unable to have batches of Natpara finished product manufactured that were consistently within our specifications. These manufacturing problems caused a delay in the filing of our BLA for Natpara. Although we were able to resolve this manufacturing issue and submit our BLA in October 2013, we cannot assure you that we will not encounter manufacturing problems with respect to Natpara or any of our products or product candidates in the future.

We believe that our existing supplies of drug product, our contract manufacturing relationships, and potential contract manufacturers, who we are in discussions with, will be sufficient to accommodate our clinical trials and our commercial supply chain for Gattex and Natpara.

We are dependent on third parties for the manufacture of our products, product candidates and injection devices and in several instances we are sole sourced to these manufacturers, including Hospira, Patheon and Vetter, who produce fill and finish supplies of Gattex, Revestive and Natpara, respectively. If we are unable to contract for a sufficient supply of our products, product candidates or injection devices on acceptable terms, or encounter delays or difficulties in the manufacturing or supply process, we may not have sufficient product or injection devices to be able to continue to sell our products or to conduct or complete our clinical trials or support preparations for the commercial launch of our product candidates, if approved. Based on the highly-specialized and proprietary nature of the products provided to us by certain of our manufacturing partners, we could be subject to significant added costs and delays if we are required to replace our existing agreements or arrangements with those partners for any reason. For a more complete discussion of the various risks and uncertainties related to our manufacturing and supply relationships, see the discussion in Item 1A of this Annual Report under the heading "Risk Factors." Under our existing manufacturing agreements we pay an agreed-upon fee to our suppliers based upon the amount of ingredients or product produced.

Boehringer Ingelheim Austria GmbH

In October 2002 we entered into an agreement with Boehringer for the production of bulk supplies of the active pharmaceutical ingredient in Natpara. In March 2004, we entered into an amending agreement with Boehringer to provide for the production of the bulk supplies of the active pharmaceutical ingredient in Gattex. The initial term of the agreement expired on December 31, 2010 but was extended by the parties to December 31, 2018. Either party may terminate the agreement at any time upon twenty-four months' advance notice.

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Hospira Worldwide, Inc.

In March 2009 we entered into an agreement with Hospira for production of our fill and finish clinical and commercial supplies of Gattex. The agreement has a term of seven years following the first commercial sale of Gattex and automatically renews for subsequent three-year terms unless either party sends advanced notice of non-renewal. Hospira has the right to terminate the agreement if we do not order a specified amount of Gattex in any 12 month period following the first commercial sale.

Patheon UK Limited

In September 2013 we were assigned an agreement with Patheon from Takeda for production of our fill and finish clinical and commercial supplies of Revestive. This agreement, which was originally entered into in February 2010, has a term of ten years and automatically renews for subsequent two-year terms unless either party sends advanced notice of non-renewal. Either party may terminate the agreement at any time upon twenty-four months' advance notice.

SynCo Bio Partners B.V.

In August 2009 we entered into an agreement with SynCo for the production of the bulk supplies of the active pharmaceutical ingredient in Gattex and Natpara. We are not currently obtaining the commercial active pharmaceutical ingredient in Gattex from SynCo. The agreement may be terminated by either party after December 31, 2016 by providing at least 12 months' advanced notice.

Vetter Pharma International GmbH

In December 2009 we entered into an agreement with Vetter for the production of our fill and finish clinical and commercial supplies of Natpara. The agreement has a term of five years and automatically renews for subsequent three-year terms unless either party provides advanced notice of non-renewal.

Employees

As of February 11, 2014, we had approximately 207 employees. None of our employees is covered by a collective bargaining agreement and we believe that our relationship with our employees is good.

Trademarks

"NPS", the "NPS Logo", "NPS Pharmaceuticals", "NPS Pharma", "Gattex", "Revestive", "Natpara", "Preotact" and "PREOS" are our trademarks. All other trademarks, trade names or service marks appearing in this Annual Report on Form 10-K are the property of their respective owners.

Available Information

Our Internet address is www.npsp.com. We make available free of charge on or through our Internet website our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. These items also can be read and copied at the SEC's Public Reference Room at 100 F Street, N.E., Washington, DC 20549. Information on the operation of the Public Reference Room is available by calling the SEC at (800) SEC-0330. The SEC maintains a website (www.sec.gov) that contains reports, proxy and information statements, and other information.

ITEM 1A. Risk Factors.

The following information sets forth risk factors that could cause our actual results to differ materially from those contained in forward-looking statements we have made in this Annual Report on Form 10-K and those we may make from time to time. If any of the following risks actually occur, our business, results of operation, prospects or financial condition could be harmed. These are not the only risks we face. Additional risks not presently known to us, or that we currently deem immaterial, may also affect our business operations, operating results and financial condition.

Risks Related to Our Business

We have a history of operating losses and we anticipate that we will incur substantial expenses in connection with our commercial launch of Revestive in countries outside of the United States, our pre-launch initiatives for Natpara, the build-out of our infrastructure and core competencies to support our continued growth as a global organization, and the further development of our product candidates and potential in-licensing or product acquistions. If we do not generate significant revenues from the sale of Gattex/Revestive, we will not be able to achieve and then maintain profitability.

With the exception of 1996, we have not been profitable since our inception in 1986. As of December 31, 2013, we had an accumulated deficit of approximately $1.0 billion. To date, our revenue has been primarily from royalty payments from our collaborators on sales of Sensipar and Mimpara (cinacalcet HCl), Preotact (rhPTH[1-84]), REGPARA and Nucynta, sales of Gattex which was launched in the United States in February of 2013, and milestone revenue under our collaborative agreements. As described further herein, we have non-recourse debt that is secured by our royalty rights related to sales of Sensipar and Mimpara under our agreement with Amgen. In addition, we have sold to DRI our rights to receive royalty payments under our agreements with Kyowa Hakko Kirin for REGPARA. The right to receive the full royalty on Amgen's Sensipar and Mimpara sales will only be achieved if those royalties are sufficient to repay the royalty advance and a 9 percent per annum discount on the balance of the advance. The right to royalties on Kyowa Hakko Kirin's REGPARA sales will only be returned to us if the amount of royalties received by DRI exceeds two and a half times the amounts paid to us by DRI. We received no royalties from sales of Preotact (rhPTH[1-84]) by Takeda in 2013, and in March 2013, Takeda's rights to rhPTH[1-84] were returned to us and we are now developing as Natpara in the United States for the treatment of hypoparathyroidism.

Our ability to achieve profitability in the future depends on the successful commercialization and further development of Gattex/Revestive and Natpara. We expect to incur significant expenditures in connection with the commercialization of Revestive outside of the United States, the commercial launch of Natpara in the United States, if it receives regulatory approval, and the further development and effort to seek regulatory approval for Natpara outside of the United States. If sales revenue from Gattex/Revestive is insufficient, we may never achieve profitability. Even if we do become profitable, we may not be able to sustain or increase our profitability on a quarterly or annual basis.

Pursuant to the Company's license agreement with Amgen, so long as a patent infringement proceeding by a third party against Amgen continues for the manufacture, use or sale of a compound under the agreement in any country, Amgen may reserve up to 50% of the royalties otherwise payable by Amgen with respect to the affected compound in the country in question until the proceedings are concluded. If the third party's patent is finally determined to be uninfringed, unenforceable or invalid, Amgen is required to promptly pay the reserved royalties to us. If the third party's patent is held to be valid and infringed or if Amgen enters into a settlement of such infringement claim, then Amgen may deduct any damages or settlement amount with respect to such claim from the reserved royalties prior to payment of any remaining amount. In the event any damages and/or settlement amounts exceed the amount of reserved royalties, Amgen could withhold such excess from its future royalty obligations in that country. If Amgen reserves or reduces the royalties paid on Sensipar sales as a result of a third party claim, our ability to repay the non-recourse Sensipar Notes on a timely basis could be adversely affected.  In addition, if any such claim is successful or if Amgen settles the claim, the right to receive future royalty payments on the sales of Sensipar may never be returned to us.

We may require additional funds.

Historically, we have not been a self-sustaining business and certain economic, operational and strategic factors may require us to secure additional funds. If we are unable to obtain sufficient funding at any time in the future, we may not be able to develop or commercialize our products, take advantage of business opportunities, including in-licensing or acquisition opportunities, or respond to competitive pressures.

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Our current and anticipated operations require substantial capital. We expect that our existing cash, cash equivalents, and short-term investments and anticipated cash flow will sufficiently fund our current and planned operations through at least January 1, 2015. However, our future capital needs will depend on many factors, including the extent to which we are able to grow sales of Gattex, generate sales of Revestive, receive royalty and milestone payments from our collaborators, make progress in our development and commercialization activities and find and execute on our business development initiatives to build our pipeline. Our capital requirements will also depend on the magnitude and scope of these activities and our expansion as a global company, our ability to maintain existing collaborations, the success of our collaborators in developing and marketing products under their respective collaborations with us, the success of our contract manufacturers in producing commercial and clinical supplies of our products, drug delivery devices and product candidates on a timely basis and in sufficient quantities to meet our requirements, competing technological and market developments, the time and cost of obtaining regulatory approvals, the cost of preparing, filing, prosecuting, maintaining and enforcing patent and other rights and our success in acquiring and integrating complementary products, technologies or companies. We do not have committed external sources of funding, and we cannot assure you that we will be able to obtain additional funds on acceptable terms, if at all. If adequate funds are not available, we may be required to:

• engage in equity financings that would be dilutive to current stockholders;
• delay or reduce the scope of our efforts to commercialize Gattex/Revestive;
• delay or reduce the scope of our efforts to obtain regulatory approvals of Natpara and Revestive outside the U.S and EU and, if and when such regulatory approvals are obtained, delay or reduce the scope of our efforts to commercialize Natpara or Revestive;
• delay, reduce the scope of or eliminate one or more of our development programs and/or business development initiatives, including potential in-licensing or acquisition opportunities;
• obtain funds through arrangements with collaborators or others that may require us to relinquish rights to technologies, product candidates or products that we would otherwise seek to develop or commercialize ourselves; or
• license rights to technologies, product candidates or products on terms that are less favorable to us than might otherwise be available.

In addition, the capital and credit markets have experienced extreme volatility and historical disruptions have led to uncertainty and liquidity issues for both companies seeking equity or debt refinancing and investors and lenders. In the future, we may not be able to obtain capital market financing on favorable terms, or at all, which could have a material adverse effect on our business and results of operations.

We have limited marketing and sales experience and our ability to successfully commercialize Gattex/Revestive and other products is important to our future success.

We are commercializing Gattex/Revestive ourselves in the United States and in certain countries outside the United States. Towards that end we have developed a small internal sales force that will call upon targeted physicians and have executed distribution agreements with five of the leading home infusion companies in the United States and plan to build a small internal sales force in select countries outside the United Sates. Prior to 2013, we had no prior experience commercializing a pharmaceutical product and we may be unable to continue to successfully commercialize Gattex/Revestive or to commercialize Natpara if and when it obtains regulatory approval. Gattex and Natpara have each been designated an "orphan drug" in the United States by the FDA, Revestive and Natpara has been designated an "orphan drug" in the European Union by the European Commission and we may seek additional "orphan drug" or similar designations for our products in the future. Accordingly, the number of patients who could benefit from treatment with Gattex/Revestive and Natpara is small. We will need to penetrate a significant portion of this potential patient population in order to successfully commercialize Gattex/Revestive and if and when it obtains regulatory approval, Natpara. If we are unable to successfully commercialize Gattex/Revestive, our business and financial results and condition will be adversely affected.

If the market opportunities for any products we develop are smaller than we believe they are, then our revenues may be adversely affected and our business may suffer.

Each of the diseases that Gattex/Revestive has been developed to address, and that Natpara and our other product candidates are being developed to address, is relatively rare. Our projections of both the number of people who have these diseases, as well as the subset of people with these diseases who have the potential to benefit from treatment with Gattex/Revestive, Natpara and our other product candidates, are based on estimates.

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Currently, most reported estimates of the prevalence of these diseases are based on studies of small numbers or small subsets of the population of specific geographic areas, which are then extrapolated to estimate the prevalence of the diseases in the broader world population. If our estimates of the prevalence of short bowel syndrome or hypoparathyroidism, or of the number of patients who may benefit from treatment with Gattex/Revestive, Natpara and our other product candidates prove to be incorrect, the market opportunities for Gattex/Revestive, Natpara and our product candidates may be smaller than we believe they are and our prospects for generating revenue may be adversely affected and our business may suffer.

Adverse safety events involving Gattex/Revestive or Natpara or our other product candidates can negatively affect our business and stock price.

Adverse safety events involving Gattex/Revestive or Natpara or any of our other product candidates which may receive marketing approval in the future may have a negative impact on our commercialization efforts. Later discovery of safety issues with Gattex/Revestive, Natpara or our other product candidates that were not known at the time of their approval by the FDA or comparable regulatory agencies in other countries could cause product liability events, additional regulatory scrutiny and requirements for additional labeling, withdrawal of products from the market and the imposition of fines or criminal penalties. Any of these actions could result in material write-offs of inventory, material impairments of intangible assets, goodwill and fixed assets, material restructuring charges and other adverse impacts on our results of operations. In addition, the reporting of adverse safety events involving our products and public rumors about such events could cause our stock price to decline or experience periods of volatility.

If we do not receive regulatory approval to market our product candidates in a timely manner, or at all, or if we obtain regulatory approval to market those product candidates but the approved label is not competitive with then existing competitive products, our business will be materially harmed and our stock price may be adversely affected.

Our future success is dependent on our ability to successfully develop additional product candidates. We are developing Natpara as a potential treatment for hypoparathyroidism and have one other product candidate in early stages of clinical development.

In November 2011, we reported positive top-line results from our Phase 3 registration study of Natpara, known as REPLACE, as the first hormone replacement therapy for hypoparathyroidism. Based on the REPLACE results, we filed our BLA for U.S. marketing approval of Natpara in October 2013 and were advised by the FDA in January 2014 that it has accepted and filed our BLA for review. Under the Prescription Drug User Fee Act (PDUFA), the goal date for a decision by the FDA is October 24, 2014.

There may be delays in the FDA review process. The FDA is not bound by, and has in the past missed, its PDUFA goals, and it is unknown whether the review of our BLA filing for Natpara, or for any of our other drug candidates, will be completed within the FDA review goals or will be delayed.

For more information on the development of our product candidates, see "Item 1 - Business - Product and Development Programs and Royalty-Based Agreements."

The regulatory review and approval process conducted by the FDA and comparable regulatory agencies in foreign countries is extensive, lengthy, expensive and inherently uncertain. To receive approval for a product candidate, we must, among other things, demonstrate to the satisfaction of the FDA and comparable regulatory agencies in foreign countries with substantial evidence from well-controlled pre-clinical and clinical trials that the product candidate is both safe and effective for each indication for which approval is sought. We cannot predict if or when we might receive regulatory approvals for any of our product candidates currently under development.

Even if our product candidates receive regulatory approval from the FDA and comparable regulatory agencies in foreign countries, any approvals that we obtain could contain significant limitations in the form of narrow indications, warnings, precautions or contra-indications with respect to conditions of use, or the requirement that we implement a risk evaluation and mitigation strategy. In such an event, our ability to generate revenues from such products could be greatly reduced and our business could be harmed.

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The FDA and comparable regulatory agencies in foreign countries have substantial discretion in the approval process and may either refuse to consider any applications we may file with respect to Natpara or any of our other product candidates for substantive review or may form the opinion after review of our data for Natpara or any of our other product candidates that our application is insufficient to allow approval of Natpara or our other product candidates. Even if we believe that data collected from our preclinical studies and clinical trials of our product candidates are promising, our data may not be sufficient to support marketing approval by the FDA and comparable regulatory agencies in foreign countries, or regulatory interpretation of these data and procedures may be unfavorable. If the FDA and comparable regulatory agencies in foreign countries do not accept or approve an application that we submit, they may require that we conduct additional clinical, pre- clinical or manufacturing validation studies and submit that data before they will reconsider our application. Depending on the extent of these or any other studies, approval of any applications that we submit may be delayed by several years, or may require us to expend more resources than we have available. It is also possible that additional studies, if performed and completed, may not be successful or considered sufficient for approval or even to make our applications approvable. If any of these outcomes occur, we may be forced to abandon one or more of our future applications for approval, which might significantly harm our business and prospects. As a result, we cannot predict when or whether regulatory approval will be obtained for any product candidate we develop.

Obtaining approval of a NDA or other submission by the FDA or a comparable foreign regulatory authority is inherently uncertain. Even after completing clinical trials and other studies, our product candidates could fail to receive regulatory approval for many reasons, including the following:

• we may not be able to demonstrate to the satisfaction of the FDA or comparable foreign regulatory authorities that our product candidates are safe and effective for any indication;

• the FDA or comparable foreign regulatory authorities may disagree with the design or implementation of our clinical trials or other studies;

• the results of our clinical trials or other studies may not demonstrate that a product candidate's clinical and other benefits outweigh its safety risks;

• the FDA or comparable foreign regulatory authorities may disagree with our interpretation of data from clinical trials or other studies;

• the data collected from clinical trials and other studies of our product candidates may not be sufficient to support the submission of an NDA or BLA or other submission or to obtain regulatory approval in the United States or elsewhere;

• the approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner rendering our clinical and other study data insufficient for approval; and

• the FDA or comparable foreign regulatory authorities may not approve the proposed manufacturing processes and facilities for a product candidate.

If we are ultimately unable to obtain regulatory approval to commercialize our product candidates in a timely manner, or at all, or if the approved indication, side effect and adverse events profile, and product distribution requirements are not competitive with existing competitor products or therapies:

• Our ability to generate revenues to sustain our operations will be substantially impaired, which would increase the likelihood that we would need to obtain additional financing for our other development efforts;

• Our reputation among investors might be harmed, which might make it more difficult for us to obtain equity capital on attractive terms or at all; and
• Our profitability would be delayed, our business will be materially harmed and our stock price may be adversely affected.

Biotechnology stock prices, including our stock price, have declined significantly in certain instances where companies have failed to meet expectations with respect to FDA approval or the timing for FDA approval.

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We may never develop any more commercial drugs or other products that generate revenues.

To date, royalties on sales of Sensipar (Mimpara in Europe), REGPARA in Japan, Preotact and Nucynta, and our sales of Gattex have been our only sources of commercial revenues. Our product candidates under development will require significant additional development, clinical trials, regulatory approvals and additional investment before their commercialization. Our product development efforts may not lead to commercial drugs for a number of reasons, including our inability to demonstrate that our product candidates are safe and effective in clinical trials or a lack of financial or other resources to pursue the programs through the clinical trial process. Even if we are able to successfully develop one or more of our product candidates, our ability to generate sales of any such products will depend on many factors, including the extent to which such product is accepted by the medical community. We cannot assure you that acceptance of Gattex/Revestive in the medical community will increase or continue or that Natpara or any other product candidate we may be able to develop will find acceptance in the medical community.

Our dependence on contract research organizations could result in delays in and additional costs for our drug development efforts.

We rely almost entirely on contract research organizations, or CROs, to perform preclinical testing and clinical trials for drug candidates that we choose to develop without a collaborator. If the CROs that we hire to perform our preclinical testing and clinical trials or our collaborators or licensees do not meet deadlines, do not follow proper procedures, or a conflict arises between us and our CROs, our preclinical testing and clinical trials may take longer than expected, may be delayed or may be terminated. If we were forced to find a replacement CRO to perform any of our preclinical testing or clinical trials, we may not be able to find a suitable replacement on favorable terms, if at all. Even if we were able to find another CRO to perform a preclinical test or clinical trial, any material delay in a test or clinical trial may result in significant additional expenditures that could adversely affect our operating results. Events such as these may also delay regulatory approval for our drug candidates or our ability to commercialize our products.

In addition, we may enter into agreements with collaborators or licensees to advance certain of our drug candidates through the later- stage, more expensive clinical trials, rather than invest our own resources to conduct these clinical trials. Depending on the terms of our agreements with these collaborators or licensees, we may have little or no control over the manner in which these clinical trials are conducted, and would be subject to other risks that are similar to those associated with our reliance on CROs, as described above.

We depend exclusively on third parties, including a number of sole suppliers, for the manufacture, supply, testing, and storage of Gattex/Revestive, Natpara, our other product candidates and our drug delivery devices; if these third parties fail to supply us with sufficient quantities of products and devices on a timely basis, or if the products and devices they provide do not meet our specifications, our product sales may be reduced and our clinical trials and product introductions may be delayed or suspended

We do not have the internal manufacturing capabilities to produce the supplies of Gattex/Revestive that are needed to support the commercialization of this product or the supplies of Natpara that are needed to support the commercial launch of this product candidate, if it is approved. We also do not have internal manufacturing capabilities to produce supplies of the injection devices used to administer Gattex/Revestive and Natpara. We are dependent on third parties for the manufacture, supply, testing, and storage of our products, product candidates and injection devices. If we are unable to contract for a sufficient supply of our products, product candidates or injection devices on acceptable terms, or if we encounter delays or difficulties in the manufacturing or supply process we may not have sufficient product or injection devices to support the commercial launch of our products which may receive marketing approval or conduct or complete clinical trials of our product candidates.

We depend on a number of contract manufacturers to supply key components of Gattex/Revestive and Natpara. For a description of our agreements with these manufacturers, see "Item 1. - Business - Manufacturing." The process for manufacturing biological products is complex and no assurances can be provided that our manufacturers will be able to produce the required quantities in a timely manner or at all.

We have experienced certain instances where our contract manufacturers have produced product and injection devices that have not met our required specifications and could not be used in clinical trials or for commercialization. Any extended disruption or termination of our relationship with any of our contract manufacturers could materially harm our business and financial condition and adversely affect our stock price.

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Due to a technical production issue, during parts of 2012 and 2013 we were unable to have batches of Natpara finished product manufactured that were consistently within our specifications. These manufacturing problems caused a delay in the filing of our BLA for Natpara. Although we were able to resolve this manufacturing issue and submit our BLA for Natpara in October 2013, we cannot assure you that we will not encounter manufacturing problems with respect to Natpara or any of our products or product candidates in the future.

Dependence on contract manufacturers for commercial production involves a number of additional risks, many of which are outside our control. These additional risks include:

• there may be delays as manufacturers scale-up to quantities needed for clinical trials and the commercial launch of our product candidates; manufacturers may be unable to manufacture such quantities to our specifications, or to deliver such quantities on the dates we require;

• our current and future manufacturers are subject to ongoing, periodic, unannounced inspection by the FDA and corresponding state and international regulatory authorities for compliance with strictly enforced cGMP regulations and similar foreign standards, and we are unable to ensure their compliance with these regulations and standards;

• our current and future manufacturers may not be able to comply with applicable regulatory requirements, which would prohibit them from manufacturing products or drug delivery devices for us;

• if we need to change to other commercial manufacturing contractors, the FDA and comparable foreign regulators must first approve these contractors, which would require new testing and compliance inspections, and the new manufacturers would have to be educated in, or themselves develop substantially equivalent processes necessary for, the production of our products and drug delivery devices;

• our manufacturers might not be able to fulfill our commercial needs, which would require us to seek new manufacturing arrangements that could result in substantial delays and higher costs; and

• we may not have intellectual property rights, or may have to share intellectual property rights, to any improvements in the manufacturing processes or new manufacturing processes for our products or drug delivery devices.

Any of these factors could cause us to delay or suspend commercialization of our approved products or the clinical trials, regulatory submission or required approvals of our products candidates under development, entail higher costs and result in our inability to commercialize our products effectively.

We are subject to extensive government regulations that may cause us to cancel or delay the introduction of our products to market or which could have a material negative impact on our ability to sell our products.

Our business is subject to extensive regulation by governmental authorities in the U.S. and other countries. Prior to marketing in the United States, a drug must undergo rigorous testing and an extensive regulatory approval process implemented by the FDA under federal law, including the Federal Food, Drug and Cosmetic Act. To receive approval, we or our collaborators must demonstrate, among other things, with substantial evidence from well-controlled clinical trials that the product is both safe and effective for each indication where approval is sought. Depending upon the type, complexity and novelty of the product and the nature of the disease or disorder to be treated, the approval process can take several years and require substantial expenditures. Data obtained from testing are susceptible to varying interpretations that could delay, limit or prevent regulatory approvals of our products. Drug testing is subject to complex FDA rules and regulations, including the requirement to conduct human testing on a large number of test subjects. We, our collaborators, or the FDA may suspend human trials at any time if a party believes that the test subjects are exposed to unacceptable health risks. We cannot assure you that any of our product candidates will be safe for human use. Other countries also have extensive requirements regarding clinical trials, market authorization and pricing. These regulatory requirements vary widely from country to country, but, in general, are subject to all of the risks associated with U.S. approvals.

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With respect to any of our products that may receive regulatory approval, the approval will be limited to those disease states and conditions for which the product is safe and effective, as demonstrated through clinical trials and as defined by the regulatory agency. In addition, results of preclinical studies and clinical trials with respect to our products could subject us to adverse product labeling requirements that could harm the sale of such products. Even if regulatory approval is obtained, later discovery of previously unknown problems may result in restrictions of the product, including withdrawal of the product from the market. Further, governmental approval may subject us to ongoing requirements for post-marketing studies. Even if we obtain governmental approval, a marketed product, its respective manufacturer and its manufacturing facilities are subject to unannounced inspections by the FDA and must comply with the FDA's cGMP and other regulations. These regulations govern all areas of production, record keeping, personnel and quality control. If a manufacturer fails to comply with any of the manufacturing regulations, it may be subject to, among other things, product seizures, recalls, fines, injunctions, suspensions or revocations of marketing licenses, operating restrictions and criminal prosecution. Other countries also impose similar manufacturing requirements. Our promotional materials and sales activities are governed by FDA regulation. The FDA may require us to withdraw promotional material, to issue corrected material, or to cease promotion resulting in loss of credibility with our customers, reduced sales revenue or increased costs. Other countries also regulate our promotional materials and sales activities.

Steps similar to those in the U.S. must be undertaken in virtually every other country comprising the market for our product candidates before any such product can be commercialized in those countries. The approval procedure and the time required for approval vary from country to country and may involve additional testing. There can be no assurance that approvals will be granted on a timely basis, or at all.

In addition to FDA and related regulatory requirements in the U.S. and abroad, we are subject to extensive additional federal, state and foreign healthcare regulation, which includes but is not limited to, the Federal False Claims Act, the Federal Anti-Kickback Statute, the FCPA and similar laws in countries outside of the U.S. Similar laws and regulations exist in many other countries throughout the world in which we commercialize and intend to commercialize our products, including Revestive. We have developed and implemented a corporate compliance program based on what we believe are current best practices in the pharmaceutical industry, but cannot guarantee that we, our employees, our consultants or our third-party contractors are or will be in compliance with all federal, state and foreign regulations. If we, our representatives or our partners fail to comply with any of these laws or regulations, a range of fines, penalties and/or other sanctions could be imposed on us and/or our partners, including, but not limited to, restrictions on how we and/or our partners market and sell our products, significant fines, exclusions from government healthcare programs, including Medicare and Medicaid, litigation or other sanctions. Even if we are not determined to have violated these laws, government investigations into these issues typically require the expenditure of significant resources and generate negative publicity, which could also have an adverse effect on our business, financial condition and results of operations.

Clinical trials are long, expensive and have uncertain outcomes; if the data collected from preclinical and clinical trials of our product candidates are not sufficient to support approval by the FDA and comparable foreign regulatory authorities, our future profitability and stock price could be adversely affected.

Before we receive regulatory approval for the commercial sale of our product candidates, our product candidates are subject to extensive preclinical testing and clinical trials to demonstrate their safety and efficacy. Clinical trials are long, expensive and uncertain processes. Clinical trials may not be commenced or completed on schedule and the FDA and comparable regulatory authorities in foreign countries may not ultimately approve our product candidates for commercial sale.

Further, even if the results of our preclinical studies or clinical trials are initially positive, it is possible that we will obtain different results in the later stages of drug development or that results seen in clinical trials will not continue with longer-term treatment. Drugs in late stages of clinical development may fail to show the desired safety and efficacy traits despite having progressed through initial clinical testing. For example, positive results in early Phase 1 or Phase 2 clinical trials may not be repeated in larger Phase 2 or Phase 3 clinical trials. All of our potential drug candidates are prone to the risks of failure inherent in drug development. The clinical trials of any of our drug candidates could be unsuccessful, which would prevent us from commercializing the drug. Our failure to develop safe, commercially viable drugs would substantially impair our ability to generate revenues and sustain our operations and would materially harm our business and adversely affect our stock price.

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If we fail to maintain our existing collaborative relationships, or if our existing collaborations fail, or if our collaborators do not devote adequate resources to the commercialization of our licensed drug candidates, we may have to reduce our rate of product development and may not see products brought to market or be able to achieve profitability.

We have granted development, commercialization and marketing rights to a number of our collaborators for some of our key product development programs, including cinacalcet HCl and calcilytics. Our collaborators typically have full control over those efforts in their territories and the resources they commit to the programs. Accordingly, the success of the development and commercialization of product candidates in those programs depends on the efforts of our collaborators and is beyond our control. For us to receive any significant milestone or royalty payments from our collaborators, they must advance drugs through clinical trials, establish the safety and efficacy of our drug candidates, obtain regulatory approvals and achieve market acceptance of those products. As a result, if a collaborator elects to terminate its agreement with us with respect to a research program, our ability to advance the program may be significantly impaired or we may elect to discontinue funding the program altogether. The counterparties to certain of our collaborative research, development or commercial agreements have the right to terminate those agreements prior to their expiration after providing us with the requisite notice. See the description of these agreements under "Item 1 - Business - Royalty-Based Products and Product Candidates."

Collaborative agreements, including our existing collaborative agreements, pose the following risks:

• our contracts with collaborators may be terminated and we may not be able to replace our collaborators;

• the terms of our contracts with our collaborators may not be favorable to us in the future;

• our collaborators may not pursue further development and commercialization of compounds resulting from their collaborations with us or may pursue the same on a different regulatory pathway from us;

• a collaborator with marketing and distribution rights to one or more of our product candidates may not commit enough resources to the marketing and distribution of such candidates;

• disputes with our collaborators may arise, leading to delays in or termination of the research, development or commercialization of our product candidates, or resulting in significant litigation or arbitration;

• contracts with our collaborators may fail to provide significant protection if one or more of them fail to perform;

• in some circumstances, if a collaborator terminates an agreement, or if we are found to be in breach of our obligations, we may be unable to secure all of the necessary intellectual property rights and regulatory approval to continue developing the same compound or product;

• our collaborators could independently develop, or develop with third parties, drugs that compete with our products; and

• we may be unable to meet our financial or other obligations under our collaborative agreements.

We cannot assure you that our current or future collaborative efforts will be successful. If our collaborative efforts fail, our business and financial condition would be materially harmed.

Changes in our effective income tax rate could adversely affect our results of operations.

We are subject to income taxes in the Unites States and various foreign jurisdictions. Taxes will be incurred as income is earned among these different jurisdictions. Various factors may have favorable or unfavorable effects on our effective income tax rate. These factors include, but are not limited to, interpretations of existing tax laws, changes in tax laws and rates, the accounting for stock options and other share-based compensation, changes in accounting standards, future levels of research and development spending, changes in the mix and level of pre-tax earnings by taxing jurisdiction, the outcome of examinations by the U.S. Internal Revenue Service and other jurisdictions, the accuracy of our estimates for unrecognized tax benefits, the realization of deferred tax assets, or by changes to our ownership or capital structure. The impact on our income tax provision resulting from the above- mentioned factors and others may be significant and could adversely affect our results of operations.

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Because of the uncertainty of pharmaceutical pricing, reimbursement and healthcare reform measures, we or our licensees may be unable to sell our products profitably.

The availability of reimbursement by governmental and other third-party payers affects the market for any pharmaceutical product. These third-party payers continually attempt to contain or reduce the costs of healthcare. There have been a number of significant legislative and regulatory changes to the healthcare system enacted in recent years and further proposals and changes are likely. Medicare's policies may decrease the market for our products. Significant uncertainty exists with respect to the reimbursement status of newly approved healthcare products.

In addition, third-party payers are increasingly challenging the price and cost-effectiveness of medical products and services. We might not be able to sell our products profitably or recoup the value of our investment in product development if reimbursement is unavailable or limited in scope, particularly for product candidates addressing small patient populations, such as Gattex/Revestive for the treatment of short bowel syndrome and Natpara for hypoparathyroidism. We have established a price for Gattex in the U.S. based upon its status as an orphan drug which has generally been accepted to date but could be viewed as excessive by third-party payers in the future and could have a negative impact on our ability to sell Gattex. We cannot assure you concerning the level of reimbursement we will be able to obtain from third-party payers for Revestive in markets outside the U.S.

In addition, in some foreign countries, the proposed pricing for a drug must be approved before it may be lawfully marketed. The requirements governing drug pricing vary widely from country to country. We expect that there will continue to be a number of U.S. federal and state proposals to implement governmental pricing controls. While we cannot predict whether such legislative or regulatory proposals will be adopted, the adoption of such proposals could have a material adverse effect on our business, financial condition and profitability. Also, we cannot predict whether we will be able to secure reimbursement in certain ex-US markets within an acceptable range.

On July 15, 2008, the Medicare Improvements for Patients and Providers Act of 2008 became law with a number of Medicare and Medicaid reforms to establish a bundled Medicare payment rate that includes services and drug/labs that are currently separately billed. A rule by the Centers for Medicare and Medicaid Services requires the inclusion of certain oral drugs such as Sensipar® (cinacalcet HCl) as part of the end stage renal disease Program of Medicare bundled payment. The implementation of this program is currently not expected to begin until at least 2016. Bundling initiatives that have been implemented in other healthcare settings have occasionally resulted in lower utilization of services that had not previously been a part of the bundled payment. We cannot speculate on the sales impact to Sensipar based on the new rule.

Changes in government regulations or private third-party payers' reimbursement policies may reduce reimbursement for our products and adversely affect our future results. In addition, when a new medical product is approved, the availability of government and private reimbursement for that product is uncertain, as is the amount for which that product will be reimbursed. We cannot predict the availability or amount of reimbursement for our product candidates.

In the U.S., federal and state legislatures, health agencies and third-party payers continue to focus on containing the cost of health care. In March 2010, President Obama signed into law the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, collectively PPACA, a sweeping law intended to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against healthcare fraud and abuse, add new transparency requirements for healthcare and health insurance industries, impose new taxes and fees on the health industry and impose additional health policy reforms. We will not know the full effects of PPACA until applicable federal and state agencies issue regulations or guidance under the new law. Although it is too early to determine the effect of PPACA, the new law appears likely to continue the downward pressure on pharmaceutical pricing, especially under the Medicare program, and may also increase our regulatory burdens and operating costs.

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In addition, the Budget Control Act of 2011 mandates, among other things, reductions in Medicare payment rates if a sufficient deficit reduction plan is not approved and a reduction in funding for Medicare, Medicaid or similar government programs may adversely affect our future results. Economic pressure on state budgets may result in states increasingly seeking to achieve budget savings through mechanisms that limit coverage or payment for our drugs. In recent years, some states have considered legislation that would control the prices of drugs. State Medicaid programs are increasingly requesting manufacturers to pay supplemental rebates and requiring prior authorization by the state program for use of any drug for which supplemental rebates are not being paid. Managed care organizations continue to seek price discounts and, in some cases, to impose restrictions on the coverage of particular drugs. Government efforts to reduce Medicaid expenses may lead to increased use of managed care organizations by Medicaid programs. This may result in managed care organizations influencing prescription decisions for a larger segment of the population and a corresponding constraint on prices and reimbursement for our products.

In the European Union and some other international markets, the government provides health care at low cost to consumers and regulates pharmaceutical prices, patient eligibility or reimbursement levels to control costs for the government-sponsored health care system. Many countries are reducing their public expenditures and we expect to see strong efforts to reduce healthcare costs in international markets, including patient access restrictions, suspensions on price increases, prospective and possibly retroactive price reductions and other recoupments and increased mandatory discounts or rebates, recoveries of past price increases, and greater importation of drugs from lower-cost countries to higher-cost countries. These cost control measures could reduce our revenues. In addition, certain countries set prices by reference to the prices in other countries where our products are marketed. Thus, our inability to secure adequate prices in a particular country may not only limit the marketing of our products within that country, but may also adversely affect our ability to obtain acceptable prices in other markets. This may create the opportunity for third party cross border trade or influence our decision to sell or not to sell a product, thus adversely affecting our geographic expansion plans and revenues.

Because of intense competition and technological change in the pharmaceutical industry, the marketplace may not accept our products, and we may not be able to compete successfully against other companies in our industry and achieve profitability.

The pharmaceutical and biotechnology industries are intensely competitive, with many companies in our industry having substantially greater financial and management resources, superior intellectual property positions and greater manufacturing, marketing and sales capabilities, areas in which we have limited or no experience. In addition, many companies have significantly greater experience than we do in undertaking preclinical testing and clinical trials of new or improved pharmaceutical products and obtaining required regulatory approvals. Consequently, competitors may obtain FDA and other regulatory approvals for product candidates sooner and may be more successful in manufacturing and marketing their products than we or our collaborators, which could render our products and product candidates obsolete and non-competitive.

Existing and future products, therapies and technological approaches may compete directly or indirectly with any of the products we develop. Existing and prospective competing products or other therapies may provide greater therapeutic benefits for a specific problem, may offer easier delivery or may offer comparable performance at a lower cost. Products approved for other indications may be used "off- label" in competition with our products. Any product candidate that we develop and that obtains regulatory approval must then compete for market acceptance and market share. Any products we develop may not gain market acceptance among physicians, patients, healthcare payers and the medical community. Further, any products we develop may become obsolete before we recover any expenses we incurred in connection with the development of these products. As a result, we may never achieve profitability.

We may be unable to obtain patents to protect our technologies from other companies with competitive products, our patents may be challenged or circumvented by third parties, and patents of other companies could prevent us from manufacturing, developing or marketing our products.

The patent positions of pharmaceutical and biotechnology firms are uncertain and involve complex legal and factual questions. The U.S. Patent and Trademark Office has not established a consistent policy regarding the breadth of claims that it will allow in biotechnology patents. If it allows broad claims, the number and cost of patent administrative proceedings in the U.S. and the risk of infringement litigation may increase. If it allows narrow claims, the risk of infringement may decrease, but the value of our rights under our patents, licenses and patent applications may also decrease. In addition, the scope of the claims in a patent application can be significantly modified during prosecution before the patent is issued. For example, third parties may submit prior art during prosecution of our patent applications that affects the scope of any allowed claims. Consequently, we cannot know whether our pending

35

applications will result in the issuance of patents or, if any patents are issued, whether they will provide us with significant proprietary protection or will be circumvented, invalidated, or found to be unenforceable. Patent applications in the U.S. used to be maintained in secrecy until the patents were issued, and publication of discoveries in scientific or patent literature often lags behind discoveries. Patent applications filed in the U.S. after November 2000 generally will be published 18 months after the filing date unless the applicant certifies that the invention will not be the subject of a foreign patent application. We cannot assure you that, even if published, we will be aware of all such literature. Accordingly, we cannot be certain that the named inventors of our products and processes were the first to invent that product or process or that we were the first to pursue patent coverage for our inventions.

Our commercial success depends in part on our ability to maintain and enforce our proprietary rights. If third parties engage in activities that infringe our proprietary rights we may incur significant costs in asserting our rights. We may not be successful in asserting our proprietary rights, which could result in our patents being held invalid or a court holding that the third party is not infringing, either of which would harm our competitive position. In addition, we cannot assure you that others will not design around our patented technology.

Moreover, we may have to participate in derivation, reexamination, inter parties review, post grant review, or other U.S. Patent and Trademark Office administrative proceedings in other parts of the world to determine priority of invention and the validity of patent rights granted or applied for, which could result in substantial cost and delay, even if the eventual outcome is favorable to us. We cannot assure you that our pending patent applications, if issued, would be held valid or enforceable. Additionally, many of our foreign patent applications have been published as part of the patent prosecution process in such countries. Protection of the rights revealed in published patent applications can be complex, costly and uncertain.

Additionally, under the Drug Price Competition and Patent Term Restoration Act (Hatch-Waxman Act), a generic pharmaceutical manufacturer may file an Abbreviated New Drug Application, or ANDA, seeking permission to market a generic version of one of our products prior to the expiration of our relevant patents. For example, on June 15, 2008, we reported the receipt of Paragraph IV certification notification letters related to ANDAs submitted to the FDA by Barr Laboratories and Teva Pharmaceuticals USA, Inc. requesting approval to market and sell generic versions of cinacalcet HCl. Such a filing is an act of patent infringement and resulted in our filing patent infringement litigation to enforce our proprietary rights. Although we were ultimately successful in our patent infringement lawsuit against Barr Laboratories and Teva Pharmaceuticals USA, Inc., we could face additional challenges from generic pharmaceutical manufacturers seeking approval for generic versions of our products.  Defending such challenges could be costly and the results uncertain.

Additionally the legislative implications of the Biologic Price Competition and Innovation Act of 2009 that became effective in March 2010 are still being defined and regulatory precedence is limited. Manufacturers of biosimilar or other competing products may seek FDA approval for such products, and the process for challenging such products is evolving and uncertain.

In order to protect goodwill associated with our company and product names, we rely on trademark protection for our marks. We have registered the "PREOS", "Gattex" and "Natpara" trademarks with the U.S. Patent and Trademark Office and registered the "Revestive" trademark in the European Union and other jurisdictions. A third party may assert a claim that one of those marks is confusingly similar to its mark, and such claims or the failure to timely register a mark or objections by the FDA could force us to select a new name for our product candidates, which could cause us to incur additional expense or delay the introduction of a product candidate to market.

We also rely on trade secrets, know-how and confidentiality provisions in our agreements with our collaborators, employees and consultants to protect our intellectual property. However, these and other parties may not comply with the terms of their agreements with us, and we might be unable to adequately enforce our rights against these people or obtain adequate compensation for the damages caused by their unauthorized disclosure or use. Our trade secrets or those of our collaborators may also become known or may be independently discovered by others.

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We granted security interests in our intellectual property in connection with the agreements to monetize PTH 1-84 and REGPARA, and these security interests could be enforced against us if we default on these agreements.

In connection with our July 2007 agreement, as amended in December 2013, with DRI Capital, or DRI (formerly Drug Royalty L.P.3) to monetize PTH 1-84, we granted DRI a security interest in certain of our patents related to PTH 1-84 and other intellectual property underlying that agreement.  In the event of our default under the agreement with DRI, DRI would be entitled to enforce its security interest against us and the property described above.  If DRI validly enforced its security interest, we could potentially lose rights to our PTH 1-84 intellectual property.

In addition, in connection with our February 2010 agreement with an affiliate of DRI or DRI, we granted DRI a security interest in our license agreement with Kyowa Hakko Kirin and certain of our patents related to REGPARA and other intellectual property underlying that agreement.  In the event of our default under the agreement with DRI, DRI would be entitled to enforce its security interest against us and the property described above.  If DRI validly enforced its security interest, we could potentially lose rights to our REGPARA intellectual property.

Our products and product candidates may infringe the intellectual property rights of others, which could increase our costs and negatively affect our profitability.

Our success also depends on avoiding infringement of the proprietary technologies of others. In particular, there may be certain issued patents and patent applications claiming subject matter that we or our collaborators may be required to license in order to research, develop or commercialize at least some of our products or product candidates, including Gattex/Revestive and Natpara. In addition, third parties may assert infringement or other intellectual property claims against us based on our patents or other intellectual property rights. An adverse outcome in these proceedings could subject us to significant liabilities to third parties, require disputed rights to be licensed from third parties or require us to cease or modify our use of the technology. If we are required to license such technology, we cannot assure you that a license under such patents and patent applications will be available on acceptable terms or at all. Further, we may incur substantial costs defending ourselves in lawsuits against charges of patent infringement or other unlawful use of another's proprietary technology.

If we fail to attract and retain key executives and employees, the development and commercialization of our products may be adversely affected.

We depend heavily on our executive, managerial, commercial and clinical personnel. To the extent that we lose any of these key personnel, our ability to develop products and become profitable may suffer. The risk of being unable to retain key personnel may be increased by the fact that, other than with respect to our CEO, we have not entered into long-term employment contracts with our executives or employees. Our future success will also depend in large part on our ability to attract and retain qualified executives and employees in the future. We face competition for personnel from other companies, academic institutions, government entities and other organizations. In particular, we are highly dependent on members of our executive team to manage our business. Each member of our executive team is highly qualified, important to our business and would be difficult to replace. We are also dependent on several key employees who would also be difficult to replace. If we are unable to retain our executives and key employees, our ability to operate under the outsourcing business model we have adopted and compete in our industry may be hindered and our business may suffer. Each of our executives and key employees is an employee at will and, despite our retention efforts; we cannot assure you that they will remain with the company. We are seeking to hire executives to manage our operations in certain countries outside of the United States and employees of those respective operations. We face additional challenges in our hiring efforts outside the United States due to the fact that we have limited operations and resources and are not well-known outside of the United States.

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If product liability claims are brought against us or we are unable to obtain or maintain product liability insurance, we may incur substantial liabilities that could reduce our financial resources.

The clinical testing and commercial use of pharmaceutical products involves significant exposure to product liability claims. We have obtained product liability insurance coverage for commercial sales of Gattex/Revestive we consider adequate and in conformance with industry standards and limited product liability insurance coverage for the clinical trials of our product candidates; however, our insurance coverage may be insufficient to protect us against all product liability damages. Further, liability insurance coverage is becoming increasingly expensive and we might not be able to obtain or maintain product liability insurance in the future on acceptable terms or in sufficient amounts to protect us against product liability damages. Regardless of merit or eventual outcome, liability claims may result in decreased demand for a future product, injury to our reputation, withdrawal of clinical trial volunteers, loss of revenue, costs of litigation, distraction of management and substantial monetary awards to plaintiffs. Additionally, if we are required to pay a product liability claim, we may not have sufficient financial resources to complete development or commercialization of any of our product candidates and our business and results of operations will be adversely affected.

Research and development involves hazardous materials and we must comply with environmental laws and regulations, which can be expensive and restrict how we do business.

Research and development activities involve the controlled use of hazardous materials, radioactive compounds and other potentially dangerous chemicals and biological agents. We utilize contractors to dispose of the hazardous materials we use in our research and development activities and although we believe our contractors' safety procedures for these materials comply with governmental standards, we cannot eliminate the risk of accidental contamination or injury from these materials. We currently have insurance, in amounts and on terms typical for companies in businesses that are similarly situated, that could cover all or a portion of a damage claim arising from our use of hazardous and other materials. However, if an accident or environmental discharge occurs, and we are held liable for any resulting damages, the associated liability could exceed our insurance coverage and our financial resources.

We have limited experience operating internationally, are subject to a number of risks associated with our international activities and operations and may not be successful in our efforts to expand internationally.

We have manufacturing, collaboration, clinical trial and other relationships outside the United Sates but we currently have very limited operations outside of the United States. In order to meet our long-term goals, we will need to grow our international operations significantly over the next several years. Consequently, we are and will continue to be subject to additional risks related to operating in foreign countries, including:

• the fact that we have limited experience operating our business internationally;
• we may not achieve the optimal pricing and reimbursement for Revestive;
• it may take longer than expected to process prescriptions for named patient sales of Revestive;
• there may be fewer addressable SBS patients than were originally forecasted;
• unexpected adverse events related to Gattex/Revestive, Natpara or our other products that occur in foreign markets that we have not experienced in the United States;
• local, economic and political conditions, including geopolitical events, such as war and terrorism, foreign currency fluctuations, which could result in increased or unpredictable operating expenses and reduced revenues and other obligations incident to doing business in, or with a company located in, another country;
• unexpected changes in reimbursement and pricing requirements, tariffs, trade barriers and regulatory requirements;
• economic weakness, including foreign currency exchange risks, inflation or political instability in particular foreign economies and markets; and
• compliance with foreign or U.S. laws, rules and regulations, including data privacy requirements, labor relations laws, tax laws, anti- competition regulations, import, export and trade restrictions, anti-bribery/anti-corruption laws, regulations or rules, which could lead to actions by us or our licensees, distributors, manufacturers, other third parties who act on our behalf or with whom we do business in foreign countries or our employees who are working abroad that could subject us to investigation or prosecution under such foreign or U.S. laws.

These and other risks associated with our international operations may materially adversely affect our business and results of operations.

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Risks Related to Our Common Stock

Our stock price has been and likely will continue to be volatile and an investment in our common stock could suffer a decline in value.

You should consider an investment in our common stock as risky and invest only if you can withstand a significant loss and wide fluctuations in the market value of your investment. The market price of our common stock has been highly volatile and is likely to continue to be volatile. Factors affecting our common stock price include:

• fluctuations in our operating results;

• our ability to meet market expectations with respect to our sales of Gattex and Revestive outside of the U.S.;

• our ability to meet market expectations with respect to FDA approval or the timing for FDA approval for Natpara and our other product candidates;

• announcements of technological innovations or new commercial products by us, our collaborators or our competitors;

• published reports by securities analysts;

• the progress of our and our collaborators' clinical trials, including our and our collaborators' ability to produce clinical supplies of our product candidates on a timely basis and in sufficient quantities to meet our clinical trial requirements;

• governmental regulation and changes in medical and pharmaceutical product reimbursement policies;

• developments in patent or other intellectual property rights;

• publicity concerning the discovery and development activities by our licensees;

• public concern as to the safety and efficacy of drugs that we and our competitors develop and;

• general market conditions.

Anti-takeover provisions in our Certificate of Incorporation, Bylaws and under Delaware law may discourage or prevent a change of control.

Provisions of our Certificate of Incorporation and Bylaws and Section 203 of the Delaware General Corporation Law could delay or prevent a change of control of us. For example, our Board of Directors, without further stockholder approval, may issue preferred stock that could delay or prevent a change of control as well as reduce the voting power of the holders of common stock, even to the extent of losing control to others.

Substantial future sales of our common stock by us or by our existing stockholders could cause our stock price to fall.

Additional equity financings or other share issuances by us could adversely affect the market price of our common stock. From time to time we may issue our previously authorized and unissued securities, including shares of our common stock or securities convertible into or exchangeable for our common stock, resulting in the dilution of the ownership interests of our existing stockholders. We have an effective shelf registration statement from which additional shares of our common stock and other securities can be issued at any time. We may also issue additional shares of our common stock or securities convertible into or exchangeable for our common stock in connection with future strategic alliances or acquisitions, future private placements of our securities for capital raising purposes or for other business purposes. In addition, existing shareholders could sell a large number of our shares into the public market. Future issuances or sales of our common stock, or the perception that such issuances or sales could occur, could cause a decline in the price of our common stock.

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Royalty revenues received from Amgen on sales of cinacalcet HCl may not be sufficient to cover the interest and principal payments on our Sensipar Notes; we would have to either voluntarily make such payments out of available cash resources or risk forfeiture of certain royalty rights under the Amgen agreement.

Our outstanding Sensipar Notes are non-recourse to us and are secured by our royalty and milestone payment rights under our agreement with Amgen. Until the Sensipar Notes are repaid, all royalties earned in excess of $8.0 million per quarter from Amgen will go to the payment of interest and principal on the notes. If the royalties earned from Amgen are insufficient to cover the interest and other payments due under the notes, we would have to forfeit our rights to future royalties and other rights under the Amgen agreement, unless we make the payments due out of our available cash resources. If we make the payments, our cash resources would be significantly reduced and we may not have sufficient cash resources to fund our programs and operations.

Conversion of the Convertible Notes will dilute the ownership interest of our existing stockholders, including holders who had previously converted their notes.

The conversion of some or all of our outstanding Convertible Notes will dilute the ownership interests of existing stockholders. Any sales in the public market of the common stock issuable upon such conversion could adversely affect prevailing market prices of our common stock. In addition, the existence of the notes may encourage short selling by market participants.

Changes in interest rates can affect the fair value of our investment portfolio and the debt we have issued and its interest earnings.

Our interest rate risk exposure results from our investment portfolio and our non-recourse notes. Our primary objectives in managing our investment portfolio are to preserve principal, maintain proper liquidity to meet operating needs and maximize yields. The securities we hold in our investment portfolio are subject to interest rate risk. At any time, sharp changes in interest rates can affect the fair value of the investment portfolio and its interest earnings. Currently, we do not hedge these interest rate exposures. We have established policies and procedures to manage exposure to fluctuations in interest rates. We place our investments with high quality issuers, limit the amount of credit exposure to any one issuer, and do not use derivative financial instruments in our investment portfolio.

The fair value of the Convertible Notes is affected by changes in the interest rates and by changes in the price of our common stock. The fair values of our Sensipar Notes are affected by changes in the interest rates and by historical and future rates of royalty revenues from cinacalcet HCl sales. The fair value of our DRI debt is affected by changes in the interest rates and by historical and future rates of royalty revenues from REGPARA sales.

If securities or industry analysts do not continue to publish research or reports or if they publish unfavorable research about our business, the price of our common stock and trading volume could decline.

The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us or our business. If securities or industry analysts do not continue coverage of us the trading price for our common stock would be negatively affected. If one or more of the analysts who covers us downgrades our common stock, the price of our common stock would likely decline. If one or more of these analysts ceases to cover us or fails to publish regular reports on us, interest in the purchase of our common stock could decrease, which could cause the price of our common stock or trading volume to decline.

If certain transactions occur with respect to our capital stock, limitations may be imposed on our ability to utilize net operating loss and tax credit carryforwards to reduce our income taxes.

We have accumulated net operating loss and tax credit carryforwards available to offset taxable income in future tax periods. If certain transactions occur with respect to our capital stock that result in a cumulative change of more than 50% of the ownership of capital stock over a three-year period (as determined under rules prescribed by Section 382 of the U.S. Internal Revenue Code and applicable Treasury regulations), an annual limitation would be imposed with respect to the ability to utilize our net operating loss and tax credit carryforwards that existed at the time of the ownership change.

We experienced an ownership change in 2010. As a result of this ownership change, we are subject to an annual limitation imposed on our use of net operating loss and tax credit carryforwards existing at the time of the ownership change to offset current and future taxable income.

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ITEM 1B. Unresolved Staff Comments.

None.

ITEM 2. Properties.

We lease approximately 75,000 square feet of administrative space in Bedminster, New Jersey. The Bedminster lease will expire in August 2016. In addition to the Bedminster location, we also lease space in other European countries to support our operations as a global organization.

ITEM 3. Legal Proceedings.

None.

Executive Officers of the Registrant

Listed below is information on our executive officers as of February 11, 2014. Executive officers are elected by the Board of Directors for an initial term, which continues until the first Board meeting following the next annual meeting of stockholders and thereafter are re-elected each year for a one-year term or until their successors have been elected. All executive officers serve at the pleasure of the Board of Directors.

Francois Nader, MD, MBA
President and Chief Executive Officer
Age: 57

Dr. Nader has been President and Chief Executive Officer of NPS since March 2008. Dr. Nader joined NPS in June 2006 and served as Executive Vice President and Chief Operating Officer until March 2008. Before joining NPS, Dr. Nader was a venture partner at Care Capital, LLC, where he served as Chief Medical Officer of its Clinical Development Capital unit from July 2005 to June 2006. From 2000 to 2004, he served as Senior Vice President, Integrated Healthcare Markets and Senior Vice President, North America Medical and Regulatory Affairs with Aventis Pharmaceuticals. He also held similar positions at Hoechst Marion Roussel and served as Head of Global Commercial Operations at the Pasteur Vaccines division of Rhone-Poulenc. Dr. Nader is the Chairman of the Board of BioNJ, a trade association representing the biotechnology industry in New Jersey. Dr. Nader is a Board member of the Biotechnology Industry Organization (BIO) and the New Jersey Chamber of Commerce. He is also a Director of Trevena, Inc. and Chair of its Compensation Committee. Dr. Nader received a French State Doctorate in Medicine from St. Joseph University (Lebanon) and a Physician Executive MBA from the University of Tennessee.

Luke M. Beshar, CPA
Executive Vice President and Chief Financial Officer
Age: 55

Luke Beshar joined NPS in November 2007.  He is a former Chief Financial Officer of various public and private companies and has more than 25 years of general and financial management experience. Prior to joining NPS, he served as Executive Vice President and Chief Financial Officer of Cambrex Corporation from December 2002 to November 2007, a global life sciences company, and Senior Vice President and Chief Financial Officer at Dendrite International from January 2002 to December 2002, a leading provider of services to the life sciences industry.  Mr. Beshar began his career with Arthur Andersen & Co. in 1980 and is a Certified Public Accountant.  Mr. Beshar obtained his B.S. degree in Accounting and Finance from Michigan State University and is a graduate of The Executive Program at the Darden Graduate School of Business at the University of Virginia.

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Roger J. Garceau, MD, FAAP
Executive Vice President and Chief Medical Officer
Age: 60

Roger Garceau, MD, joined NPS in December 2008 and brings over 20 years of broad pharmaceutical industry experience to his position. From 2002 to December 2008, Dr. Garceau served in a number of senior leadership positions at Sanofi-Aventis and most recently was vice president of the new products group. Previously, Dr. Garceau held various positions, including vice president of clinical operations, interim head of North American medical and regulatory affairs, and head of U.S. medical research, where he lead a team of over 200 professionals and oversaw the design and execution of over 50 sponsored clinical trials in five different therapeutic areas. Prior to his tenure at Sanofi-Aventis, Dr. Garceau spent 16 years with Pharmacia Corporation in global development and medical affairs where he successfully contributed to a number of marketing applications. Dr. Garceau is a board-certified pediatrician. He received a bachelor of science in biology from Fairfield University in Fairfield, Connecticut and his doctorate of medicine from the University of Massachusetts Medical School. He is a Fellow of the American Academy of Pediatrics.

Susan E. Graf, RPh, MBA
Vice President, Corporate Development and Strategy

Age: 41

Susan Graf joined NPS in May 2013 with nearly 20 years of broad industry experience in global business development and commercial operations. Before she joined NPS, Ms. Graf spent 17 years at Roche, most recently as global head, commercial assessment and due diligence for Roche Partnering. She began her career at Roche in technical operations and then moved to the commercial side taking on roles in sales and marketing research. Ms. Graf later served as director of global business development, director of U.S. marketing and global head of strategic evaluation where she was responsible for product licensing and acquisition during the integration of Genentech into the Roche organization. Ms. Graf is a licensed pharmacist and received her Bachelor of Science degree in Pharmacy from Purdue University and her Master of Business Administration degree from the Leonard N. Stern School of Business at New York University.

Glenn Melrose
Sr. Vice President, Human Resources

Age: 58

Glenn Melrose joined NPS in September 2012 as senior vice president, human resources. Mr. Melrose has more than 25 years of experience within the biomedical industry.  He previously was vice president, human resources at Alexion Pharmaceuticals, Inc. from July 2007 to April 2011. Mr. Melrose began his career as a research scientist at the University of Maryland Cancer Center and Becton Dickinson Immunodiagnostics before joining Amersham Diagnostics in 1988. Over the course of 16 years at Amersham Mr. Melrose held several positions of increasing responsibility in sales and marketing before moving into human resources, rising to the position of vice president, human resources, North America, and ultimately leading the worldwide human resources function for Amersham Biosciences. Mr. Melrose received a B.S. in Biology from Washington and Lee University and an M.S. in Experimental Biology from the University of Maryland. On January 30, 2014, Mr. Melrose notified the Company that he intends to retire on the earlier of March 28, 2014 or the date that the Company has named an acceptable replacement to assume Mr. Melrose's responsibilities.

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Eric Pauwels
Sr. Vice President and Chief Commercial Officer

Age: 52

Eric Pauwels joined NPS in September 2011 as senior vice president and chief commercial officer. Mr. Pauwels has more than 25 years of healthcare experience in biopharmaceuticals and medical devices. Most recently, from January 2011 to September 2011 Mr. Pauwels was senior vice president and chief marketing officer at Accuray Incorporated, a premier radiation oncology company. From 2005 to 2010, Mr. Pauwels served as chief commercial officer of Shire Human Genetic Therapies (Shire HGT), where he led all commercial functions and launched four orphan drugs. From 2000 to 2005, Mr. Pauwels held the position of vice president of global strategic marketing at Bayer Healthcare Pharmaceuticals. Previously, Mr. Pauwels held positions of increasing responsibility in the United States, China, France, and Belgium for Fournier Pharma and Johnson & Johnson. Mr. Pauwels also brings more than 15 years of alliance-management experience to NPS, having managed collaborations with companies such as Abbott, Centocor, Dianippon-Sumitomo, Genzyme, GlaxoSmithKline, Organon, and Takeda. Mr. Pauwels earned his Bachelor of Science degree from California State Polytechnic University in Pomona, California.

Joseph J. Rogus, PE
Vice President, Technical Operations and Supply Chain Management

Age: 67

Joseph Rogus joined NPS in April 2007.  With over 35 years of pharmaceutical industry experience, Mr. Rogus has a wealth of knowledge of pharmaceutical and technology development through commercialization and marketed product support in the global environment.  From 2006 to 2007, Mr. Rogus served as vice president of pharmaceutical development at Chugai Pharma USA.  From 2004 to 2005, Mr. Rogus served as senior vice president of technical operations at Advancis Pharmaceutical Corporation.  Before his tenure at Advancis, Mr. Rogus spent over 30 years with Schering-Plough Research Institute where he served in a number of key leadership roles, most recently as vice president of pharmaceutical product optimization and clinical supplies management.  Mr. Rogus obtained his Bachelor of Science in Chemical Engineering from Newark College of Engineering and his Master of Science in Chemical Engineering from the New Jersey Institute of Technology and is a licensed professional engineer.

Edward H. Stratemeier, JD, MBA
Sr. Vice President and General Counsel

Age: 64

Edward Stratemeier joined NPS in October 2009.  From 1982 to 2004, Mr. Stratemeier served in a number of senior leadership positions at Sanofi-Aventis and most recently served as general counsel and global senior vice president for Aventis Pharmaceuticals North America and was a member of the North American leadership team.  From 2005 to 2009 Mr. Stratemeier was in private practice, counseling pharmaceutical and biotech companies on product life cycle management; patent, regulatory and litigation strategies; and product licensing.  Mr. Stratemeier received a J.D. from the University of Missouri at Kansas City and an MBA from Rockhurst College. On December 16, 2013, Mr. Stratemeier notified the Company that he intends to retire on the earlier of March 31, 2014 or the date that the Company has named an acceptable replacement to assume Mr. Stratemeier's responsibilities.

ITEM 4. Mine Safety Disclosures Not applicable.

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PART II

ITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters and Company Purchases of Equity Securities

Market Information

Our common stock is quoted on the NASDAQ Global Market under the symbol "NPSP." The following table sets forth, for the periods indicated, the high and low closing sales prices for our common stock, as reported on the NASDAQ Global Market.

	High		Low
2012
First Quarter	$	8.21	$	6.32
Second Quarter		8.61		6.37
Third Quarter		9.25		7.18
Fourth Quarter		10.86		8.89
2013
First Quarter	$	10.21	$	7.54
Second Quarter		16.18		9.94
Third Quarter		32.97		15.78
Fourth Quarter		34.98		22.64

Holders

As of February 11, 2014, there were approximately 134 holders of record of our common stock.

Dividends

We have never declared or paid cash dividends on capital stock. We intend to retain any future earnings to finance growth and development and therefore do not anticipate paying cash dividends in the foreseeable future.

Certain of the information required by this item will be contained in our definitive Proxy Statement with respect to our 2014 Annual Meeting of Stockholders under the caption "Equity Compensation Plan Information," and is incorporated into this section by reference.

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ITEM 6. Selected Financial Data.

The selected consolidated financial data presented below are for each fiscal year in the five-year period ended December 31, 2013. This data is derived from, and qualified by reference to, our audited consolidated financial statements and notes thereto appearing elsewhere in this Form 10-K.

Consolidated Statements of Operations Data:

		Years Ended December 31,
		2013		2012		2011		2010		2009
(in thousands, except per share amounts)
Revenues:
Product sales, net	$	31,752	$	-	$	99	$	551	$	66
Royalties		123,804		105,587		96,502		86,181		79,339
Sale of royalty rights (1)		-		25,000		-		-		-
Milestones and license fees		36		57		5,044		2,682		4,742
Total revenues		155,592		130,644		101,645		89,414		84,147
Cost of sales (2)		3,587		-		-		6		-
Cost of royalties		-		-		500		-		500
Cost of license fees		9		-		2,543		69		481
Operating expenses:
Research and development		85,421		94,839		73,831		60,814		35,339
Selling, general and administrative		68,070		36,929		24,226		18,951		20,101
Restructuring charges (credits)		-		-		-		-		26
Total operating expenses		153,491		131,768		98,057		79,765		55,466
Operating (loss) income		(1,495)		(1,124)		545		9,574		27,700
Other income (expense):
Interest income		340		292		321		418		1,708
Interest expense		(11,938)		(18,198)		(37,736)		(45,128)		(52,627)
Loss on impairment of marketable
investment securities		-		-		-		-		(2,206)
Gain on sale of marketable
investment securities		4		4		-		3,751		1,326
Gain on sale of subsidiary		-		-		-		-		4,875
Other		(233)		291		621		1,035		(382)
Total other expense, net		(11,827)		(17,611)		(36,794)		(39,924)		(47,306)
Loss before income tax expense (benefit)		(13,322)		(18,735)		(36,249)		(30,350)		(19,606)
Income tax expense (benefit)		182		-		18		1,091		(1,744)
Net loss	$	(13,504)	$	(18,735)	$	(36,267)	$	(31,441)	$	(17,862)
Basic and diluted net loss per share (3)	$	(0.14)	$	(0.22)	$	(0.45)	$	(0.54)	$	(0.37)
Basic and diluted weighted
average shares outstanding (3)		97,750		86,999		81,279		58,607		48,271

_______________

(1)	In June 2012, we amended our agreement with Amgen and received a one-time non-refundable $25.0 million payment in July 2012 in exchange for our rights to receive royalties under the license agreement that are earned after December 31, 2018.
(2)	As a result of the marketing approvals for Gattex and Revestive, we will no longer expense manufacturing costs relating to these products as research and development expenses. Instead, we will capitalize these costs as inventory as they are incurred. There will be no cost of sales associated with the sale of Gattex inventory that was on hand at the time of the FDA's approval of the NDA for Gattex. We expect that this will result in higher gross margins during the period that we sell off this supply than we will achieve once we begin selling Gattex that is manufactured after the date of the FDA's approval of our NDA for Gattex. Based on our current plans and assumptions, we believe that by the end of 2015, we will have sold off this supply of product on hand at the time of the FDA's approval of the NDA for Gattex. We expect that the higher gross margins for Gattex will be partially off-set by the full cost of sales sold for Revestive, which did not have any inventory expensed prior to approval.
(3)	See note 1 to the consolidated financial statements for information concerning the computation of net loss per share.

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Consolidated Balance Sheets Data:

		Years Ended December 31,
		2013		2012		2011		2010		2009
(in thousands)
Cash, cash equivalents, and current
marketable investment securities	$	180,474	$	100,715	$	162,233	$	133,771	$	74,928
Working capital		200,338		107,484		156,025		133,750		71,280
Total assets		292,222		151,109		213,980		228,905		159,592
Long-term portion of lease financing,
convertible notes payable, non-recourse
debt and other long-term liabilities		128,918		176,183		216,493		302,035		308,419
Accumulated deficit		(1,022,689)		(1,009,185)		(990,450)		(954,183)		(922,742)
Stockholders' equity (deficit)		104,890		(54,641)		(46,116)		(155,275)		(222,799)

ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.

SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS

The following discussion should be read in conjunction with our consolidated financial statements and related notes appearing elsewhere in this Annual Report.

This Annual Report on Form 10-K contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements represent our management's judgment regarding future events. In many cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "plan," "expect," "anticipate," "estimate," "predict," "intend," "potential" or "continue" or the negative of these terms or other words of similar import, although some forward-looking statements are expressed differently. All statements other than statements of historical fact included in this Annual Report on Form 10-K regarding our financial position, business strategy and plans or objectives for future operations are forward-looking statements. Without limiting the broader description of forward-looking statements above, we specifically note that statements regarding potential drug candidates, their potential therapeutic effect, the possibility of obtaining regulatory approval, our ability or the ability of our collaborators to manufacture and sell any products, market acceptance, or our ability to earn a profit from sales or licenses of any drug candidate are all forward-looking in nature. We cannot guarantee the accuracy of the forward-looking statements, and you should be aware that results and events could differ materially from those described in the forward-looking statements due to a number of factors, including those described in Item 1A of this Annual Report under the heading "Risk Factors" which addresses factors that could cause results or events to differ materially from those set forth in the forward-looking statements. In addition, new risks emerge from time to time and it is not possible for management to predict all such risks or to assess the impact of such risks on our business. Given these risks and uncertainties, you should not place undue reliance on these forward-looking statements. We undertake no obligation to update or revise these forward-looking statements to reflect subsequent events or circumstances.

Overview

We are a biopharmaceutical company focused on pioneering and delivering therapies that transform the lives of patients with rare diseases worldwide. Our strategy is focused on the global development and commercialization of `first-in' or `best-in' rare disease therapeutics. We incorporated in Utah in 1986 and reincorporated in Delaware in 1992. Our marketed product, Gattex® 0.05 mg/kg/d (teduglutide [rDNA origin]) for injection, for subcutaneous use was approved by the U.S. Food and Drug Administration (FDA) in December 2012 for the treatment of adult patients with Short Bowel Syndrome (SBS) who are dependent on parenteral support. SBS is an ultra-rare potentially fatal disorder in which the body is unable to absorb enough nutrients and fluids through the gastrointestinal tract. In the EU, teduglutide (trade name: Revestive®) is approved for the treatment of adult patients with SBS; patients should be stable following a period of intestinal adaptation after surgery. We expect commercial sales of Revestive to begin in certain ex-US territories in 2014. We plan to begin pricing and reimbursement discussions in certain EU countries during the first half of 2014. In addition, named-patient programs have been initiated in a number of countries and we are implementing our regulatory strategy for Japan, which includes filing for orphan drug status. We are also seeking to expand our SBS franchise by evaluating the safety and efficacy of Gattex/Revestive in a global registration study of pediatric patients with SBS patients.

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Our second product, Natpara® (rhPTH[1-84]) for injection, has been developed for hypoparathyroidism, a rare multidimensional disorder characterized by deficient or absent parathyroid hormone (PTH). The review of our Biologic License Application for Natpara is ongoing and the Prescription Drug User Fee Act (PDUFA) goal date for a decision by FDA is October 24, 2014. Within our Filing Review Notification, also referred to as the Day-74 letter, the FDA told us they plan to discuss our Natpara application at an advisory committee meeting. We expect to file our Marketing Authorization Application (MAA) for Natpara in hypoparathyroidism to the European Medicines Agency (EMA) in 2014.

We are actively pursuing in-licensing to build a global pipeline of `first-in' or `best-in' therapies for rare disorders of high unmet medical need. Our lead clinical-stage product candidate is NPSP795, a calcilytic compound with potential application in rare disorders involving increased calcium receptor activity, such as autosomal dominant hypocalcemia (ADH).

We have collaborations or royalty agreements with a number of pharmaceutical companies. In 2013, we recorded $123.8 million of royalty revenue that was driven by (i) Amgen's sales of Sensipar^® and Mimpara^® (cinacalcet HCl), (ii) Kyowa Hakko Kirin's sales of REGPARA^® (cinacalcet HCl) in Japan, and (iii) Janssen's sales of Nucynta® (tapentadol) in the U.S. As described further herein, we have partially monetized our royalty rights related to Sensipar and Mimpara under our agreement with Amgen through the issuance of non-recourse debt and we have sold certain of our rights to receive royalty payments arising from sales of REGPARA under our agreement with Kyowa Hakko Kirin.

We consider our operations to be a single reportable segment. Financial results of this reportable segment are presented in our audited consolidated financial statements.

Significant Developments

• In February 2013, we launched and initiated commercial sales of Gattex in the US and we reported net sales of $31.8 million for the year ended December 31, 2013. At December 31, 2013, 530 Gattex/Revestive prescriptions had been received and 303 patients were on therapy in the U.S. We expect commercial sales of Revestive to begin in certain ex-US territories during the first half of 2014 with meaningful sales to begin in the later part of the year.

• In March 2013, we entered into an agreement, with Takeda GmbH and Takeda Pharma A/S (together, Takeda), which, among other things, terminated our existing license agreements with Takeda with respect to teduglutide and rhPTH 1-84. As a result of the transaction, we now have the exclusive worldwide rights, excluding Israel, to develop and commercialize teduglutide and rhPTH 1-84. Takeda received 6.1 million shares of NPS common stock that were valued at $54.9 million as of the date of the transaction. Takeda will also earn a $30.0 million milestone, payable in cash or stock at our option, in the first calendar year that combined worldwide net sales of both products exceed $750 million.

• In May 2013, we completed a public sale of 6,900,000 shares of our common stock at a per share price of $14.53. We received net proceeds from the sale of approximately $93.5 million, after deducting expenses and the commission in connection with the offering.

• In January 2014, the FDA accepted and filed for review our BLA for Natpara. Under PDUFA, the goal date for a decision by the FDA is October 24, 2014. Within our Filing Review Notification, also referred to as the Day-74 letter, the FDA also noted that they plan to hold an advisory committee meeting to discuss our Natpara application.

We have incurred cumulative losses from inception through December 31, 2013 of approximately $1.0 billion. We expect our operating expenses to continue to increase over the next several years as we launch Revestive in certain ex-U.S. countries and incur pre- launch and launch costs for Natpara, if approved, invest in the development of our pipeline and pursue in-licensing opportunities.

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During the years ended December 31, 2013, 2012 and 2011, we incurred expenses of $8.9 million, $48.3 million and $32.8 million, respectively, in the research and development of teduglutide, including costs associated with the manufacture of clinical and pre-launch commercial supplies of teduglutide. We have incurred expenses of approximately $267.4 million since we assumed development obligations of this product candidate upon our acquisition of Allelix Biopharmaceuticals Inc. in December 1999. During the years ended December 31, 2013, 2012 and 2011, we incurred expenses of $46.2 million, $32.0 million and $27.4 million, respectively, in the research and development of PTH 1-84, including costs associated with the manufacture of clinical and commercial supplies of PTH 1-84. We have incurred expenses of approximately $494.4 million since we assumed development obligations for PTH 1-84, upon our acquisition of Allelix Biopharmaceuticals Inc. in December 1999. During the years ended December 31, 2013, 2012 and 2011, we incurred expenses of $2.8 million, $323,000 and $0, respectively, in the research and development of NPSP795, including costs associated with the manufacture of clinical supplies of NPSP795. We have incurred expenses of approximately $3.1 million since we assumed development obligations for NPSP795, under the agreement with GSK in August 2011. Our development administration overhead costs are included in total research and development expense for each period, but are not allocated among our various projects. See "Item 1 - Business - Proprietary Product Candidates." Our ability to complete our research and development efforts and commercialize our product candidates is subject to various risks and uncertainties. See "Item 1A - Risk Factors."

As a result of the marketing approvals for Gattex and Revestive, we will no longer expense manufacturing costs relating to these products as research and development expenses. Instead, we will capitalize these costs as inventory as they are incurred. There will be no cost of sales sold associated with the sale of Gattex inventory that was on hand at the time of the FDA's approval of the NDA for Gattex. We expect that this will result in higher gross margins during the period that we sell off this supply than we will achieve once we begin selling Gattex that is manufactured after the date of the FDA's approval of our NDA for Gattex. Based on our current plans and assumptions, we believe that by the end of 2015, we will have sold off this supply of product on hand at the time of the FDA's approval of the NDA for Gattex. We expect that the higher gross margins for Gattex will be partially off-set by the full cost of sales for Revestive, which did not have any inventory expensed prior to approval. We also expect to record increased sales and incur additional marketing costs related to the commercialization of Gattex and Revestive, pre-launch costs for Natpara and higher operating costs to support our expansion into the international market.

Results of Operations

The following table summarizes selected operating statement data for the years ended December 31, 2013, 2012 and 2011 (dollars in thousands):

		2013			2012			2011
Revenues:
Product sales, net	$	31,752		$	-		$	99
Royalties		123,804			105,587			96,502
Sale of royalty rights		-			25,000			-
Milestones and license fees		36			57			5,044
Total Revenues	$	155,592		$	130,644		$	101,645
Cost of royalties	$	-		$	-		$	500
Cost of sales	$	3,587		$	-		$	-
Cost of license fees	$	9		$	-		$	2,543
Operating expenses:
Research and development	$	85,421		$	94,839		$	73,831
% of revenues		55	%		73	%		73	%
Selling, general and administrative	$	68,070		$	36,929		$	24,226
% of revenues		44	%		28	%		24	%

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Years ended December 31, 2013 and 2012

Revenues.  All our revenues relate to product sales of Gattex, which was launched in the U.S. in February 2013 and royalties and milestones from our licensees. Our revenues often fluctuate significantly from year to year. Our revenues were $155.6 million in 2013 compared to $130.6 million in 2012. We recognized revenue under our research and license agreements and product sales as follows (amounts in thousands):

		2013		2012
Product sales, net	$	31,752	$	-
Royalties:
Sensipar and Mimpara (cinacalcet HC1)		112,876		89,271
Regpara (cinacalcet HCl)		8,033		8,693
Nucynta (tapentadol)		2,895		2,837
Preotact (parathyroid hormone (PTH 1-84))		-		4,786
Total royalties		123,804		105,587
Sale of royalty rights - Sensipar		-		25,000
Other		36		57
Total revenues	$	155,592	$	130,644

Product Sales, net. For the year ended December 31, 2013, we recognized net product sales revenue of $31.8 million for the sales of Gattex. As of December 31, 2013, 530 Gattex/Revestive prescriptions have been received and 303 patients are currently on therapy in the U.S. Going forward we will no longer report prescriptions received and patients currently on therapy. We received approval from the FDA in December 2012 and subsequently launched Gattex in February 2013. Also, pursuant to the Termination and Transition Agreement with Takeda, we received back the rights to market Revestive in certain territories outside of the U.S. Revestive was approved in the EU in 2012 and we plan to launch in certain countries in the EU in the first half of 2014. Product sales for the year ended December 31, 2013 are not necessarily indicative of the results that may be expected for any future period. We expect that product sales of Gattex and Revestive will vary from period to period given the limited size of the patient population.

We record product sales net of allowances and accruals for prompt pay discounts, rebates and chargebacks under U.S. federal and state governmental programs (including Medicaid), product returns, and distribution-related fees. These allowances and accruals will continue to grow in relation to an increase in the sales of Gattex. The following table summarizes the provisions, and credits/payments, for government rebates and chargebacks, distribution-related fees, and returns and other sales-related deductions (in thousands):

					Returns and
	Rebates and		Distribution-		Other Sales-
		Chargebacks		Related Fees		Related Deductions		Total
Balance as of December 31, 2012	$	-	$	-	$	-	$	-
Provision related to current period sales		1,375		332		1,098		2,805
Credits/payments		(262)		(185)		(857)		(1,304)
Balance as of December 31, 2013	$	1,113	$	147	$	241	$	1,501

Royalties. For the years ended December 31, 2013 and 2012, our revenues related to our agreement with Amgen for Sensipar and Mimpara were comprised of $112.9 million and $89.3 million in royalty revenue, respectively. The increase in royalty revenue earned from Amgen is due to the sales growth of Sensipar and Mimpara (cinacalcet HC1) and a non-recurring favorable adjustment. We amended our agreement with Amgen, effective September 30, 2011, and Amgen began withholding the royalties on sales of Sensipar and Mimpara and credited them, net of the discount, to the Sensipar Notes issued pursuant to the amended agreement. In June 2012, we amended our agreement with Amgen and received a one-time non-refundable $25.0 million payment in July 2012 in exchange for our rights to receive royalties under the license agreement that are earned after December 31, 2018. The amendment also limits the royalty offset of the royalty advance that we received from Amgen up to $8.0 million per quarter with royalties in excess of $8.0 million paid to us for the respective quarter, thereby extending the royalty advance repayment period. After the repayment of

49

the royalty advance and a 9% per annum discount factor on the outstanding balance, Amgen will resume paying us all royalties earned through December 31, 2018.

For the years ended December 31, 2013 and 2012, we recognized $8.0 million and $8.7 million, respectively, in royalty revenue under our agreement with Kyowa Hakko Kirin for sales of REGPARA, which was launched in the first quarter of 2008. The decrease is primarily due to unfavorable fluctuations in foreign exchange rates which were partially offset by increased demand of REGPARA. In February 2010, we sold our rights to receive certain future royalty payments from Kyowa Hakko Kirin's sale of REGPARA to an affiliate of DRI. The agreement provides DRI with the right to receive payments related to sales of REGPARA occurring on or after July 1, 2009.

For the years ended December 31, 2013 and 2012, we recognized royalty revenue of $2.9 million and $2.8 million respectively, from Janssen for sales of Nucynta, which was launched in the second quarter of 2009. The increase in royalty revenue earned from Nucynta was primarily due to increased demand for Nucynta.

For the years ended December 31, 2013 and 2012, our revenues related to our agreement with Takeda for Preotact (parathyroid hormone (PTH 1-84)) were $0 and $4.8 million in royalty revenue, respectively. The decrease in royalty revenue was primarily due to the Termination and Transition agreement with Takeda. On March 18, 2013, Takeda terminated this license agreement and returned the rights to NPS. In July 2007, we sold our rights to receive certain future royalty payments from Takeda's sale of PTH 1-84 in Europe, CIS and Turkey to DRI Capital (DRI) and we therefore we were not entitled to receive any such royalty payments until the PTH 1-84-secured debt was repaid. Because we previously monetized our PTH 1-84 royalty rights as non-recourse debt, declines in PTH 1-84 sales would impact our royalty revenues but would have no material impact on our short-term liquidity.

See "Liquidity and Capital Resources" below for further discussion of payments that we may earn in the future under these agreements.

Cost of Sales.  For the year ended December 31, 2013, we began recognizing revenue and cost of sales from product sales of Gattex. Upon marketing approval from the FDA in December 2012, we began capitalizing inventory costs associated with commercial supplies of Gattex subsequent to receipt of marketing approval from the FDA. Costs for manufacturing supplies of Gattex prior to receipt of FDA approval were recognized as research and development expenses in the period that the costs were incurred. Therefore, these costs are not being included in cost of sales when revenue is recognized from the sale of those supplies of Gattex. Cost of sales for the year ended December 31, 2013 was $3.6 million and consisted primarily of royalty costs related to sales of Gattex. Accordingly, we expect our current product gross margins to decrease from approximately 90% to the 80% to 85% range as we begin sales of product that has been capitalized to inventory. Based on our current plans and assumptions, we believe that by the end of 2015, we will have sold off this supply of product on hand at the time of the FDA's approval of the NDA for Gattex.

Research and Development. Our research and development expenses are primarily comprised of personnel and third-party costs to conduct preclinical and clinical trials and to manufacture drugs needed for clinical studies and commercial production prior to FDA approval.

We group our research and development expenses into two major categories: clinical development costs and product development costs.

Clinical development costs were $16.9 million and $26.9 million for the years ended December 31, 2013 and 2012, respectively. Clinical development costs are primarily comprised of costs paid to outside parties to conduct and manage clinical trials related to Gattex and Natpara as well as costs associated with regulatory functions. Product development costs were $41.1 million and $43.7 million for the years ended December 31, 2013 and 2012, respectively. Product development costs are costs related to the drug needed for our clinical studies and pre- approval inventory.

Unallocated research and development costs were $27.5 million and $24.2 million for the years ended December 31, 2013 and 2012, respectively. Unallocated research and development costs consist primarily of personnel, personnel related costs and overhead costs that relate to clinical and product development activities which have not been allocated directly to each program.

50

For the year ended December 31, 2013, our research and development expenses decreased to $85.4 million from $94.8 million for the year ended December 31, 2012. The decrease in research and development expenses is primarily related to a $10.0 million reduction in costs associated with clinical development activities and adjustments related to the completion of certain clinical trials for both Gattex and Natpara. Additionally, we no longer expense, as research and development, inventory production for Gattex given its approval in the fourth quarter of 2012, the impact of which was $25.2 million.  These decreases were partially offset by a $21.2 million increase for the cost of preapproval PTH 1-84, which includes certain lots of inventory that were purchased from Takeda and designated for use in research and development during the year and a $3.3 million increase in unallocated research and development which mainly consists of regulatory costs as well as personnel and personnel-related costs.

Selling, General and Administrative. Our selling, general and administrative expenses consist primarily of compensation for employees in executive, finance, legal, medical science liaisons and sales and marketing functions as well as facility costs and professional fees for accounting and legal services. Our selling, general and administrative expenses increased to $68.1 million for the year ended December 31, 2013 from $36.9 million for the year ended December 31, 2012. The increase in our selling, general and administrative expenses were primarily due to a $16.4 million increase in personnel and personnel related costs and a $7.0 million increase in external costs and a $3.3 million increase in marketing costs related to launch and pre-launch activities for Gattex and Natpara, respectively. As we continue our international expansion and begin our pre-launch Natpara plan, we expect that these costs would continue to increase.

Interest Income. Interest income increased to $340,000 for the year ended December 31, 2013 from $292,000 from the comparative period in 2012.

Interest Expense.  Our interest expense decreased to $11.9 million for the year ended December 31, 2013 from $18.2 million for the comparable period in 2012. Our long-term royalty forecasts for PTH 1-84 and REGPARA are used to calculate the implicit interest rate and the related interest expense for our non-recourse debt. Interest expense decreased due primarily to (i) the lower principal balance on our Sensipar Notes ($2.7 million), (ii) a lower effective interest rate due to a decrease in the forecast of REGPARA royalties related to the non-recourse debt associated with the sale of certain of our REGPARA royalty rights ($2.5 million) and (iii) a lower effective interest rate due to a decrease in the forecast of PTH 1-84 royalties related to the non-recourse debt associated with the sale of certain of our PTH 1-84 royalty rights ($1.1 million).

Income Taxes.  We reported an income tax expense of $182,000 and $0 in 2013 and 2012, respectively. The increase in income tax expense was primarily related to a non-cash charge for state income taxes.

Our deferred tax assets are comprised primarily of net operating loss and tax credit carryforwards. We maintain a full valuation allowance on our deferred tax assets because we have a history of cumulative losses in these jurisdictions. We will continue to evaluate the need for a valuation allowance in the future. If we determine that the reversal of all or a portion of the valuation allowance is appropriate, a one-time non- cash benefit will be recognized in the period of the reversal. At such time, we will also commence recognizing an income tax provision at our blended effective tax rate. However, these net operating loss and tax credit carryforwards may be used to offset taxable income in future periods, reducing the amount of taxes we might otherwise be required to pay.

For further information, refer to Note 13, Income Taxes, in "Notes to Consolidated Financial Statements."

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Years ended December 31, 2012 and 2011

Revenues.  Substantially all our revenues relate to royalty payments, license fees, milestone payments and product sales from our licensees and collaborators. These revenues fluctuate from year to year. Our revenues were $130.6 million in 2012 compared to $101.6 million in 2011. We recognized revenue under our research and license agreements as follows (amounts in thousands):

		2012		2011
Product sales, net	$	-	$	99
Royalties:
Sensipar and Mimpara (cinacalcet HC1)		89,271		77,554
Regpara (cinacalcet HCl)		8,693		7,645
Preotact (parathyroid hormone (PTH 1-84))		4,786		9,116
Nucynta (tapentadol)		2,837		2,185
Other		-		2
Total royalties		105,587		96,502
Sale of royalty rights - Sensipar		25,000		-
Milestones and license fees:
Teduglutide		-		5,000
Other		57		44
Total milestones and license fees		57		5,044
Total revenues	$	130,644	$	101,645

For the years ended December 31, 2012 and 2011, our revenues related to our agreement with Amgen for Sensipar and Mimpara were comprised of $89.3 million and $77.6 million in royalty revenue, respectively. The increase in royalty revenue earned from Amgen is due to the sales growth of Sensipar and Mimpara (cinacalcet HC1). We amended our agreement with Amgen, effective September 30, 2011, and Amgen began withholding the royalties on sales of Sensipar and Mimpara and credited them, net of the discount, to the Sensipar Notes issued pursuant to the amended agreement. In June 2012, we amended our agreement with Amgen and received a one-time non-refundable $25.0 million payment in July 2012 in exchange for our rights to receive royalties under the license agreement that are earned after December 31, 2018. The amendment also limits the royalty offset of the royalty advance that we received from Amgen up to $8.0 million per quarter with royalties in excess of $8.0 million paid to us for the respective quarter, thereby extending the royalty advance repayment period. After the repayment of the royalty advance and a 9% per annum discount factor on the outstanding balance, Amgen will resume paying us all royalties earned through December 31, 2018.

For the years ended December 31, 2012 and 2011, we recognized $8.7 million and $7.6 million, respectively, in royalty revenue under our agreement with Kyowa Hakko Kirin for sales of REGPARA, which was launched in the first quarter of 2008. The increase is primarily due to increased demand of REGPARA. In February 2010, we sold our rights to receive certain future royalty payments from Kyowa Hakko Kirin's sale of REGPARA to an affiliate of DRI. The agreement provides DRI with the right to receive payments related to sales of REGPARA occurring on or after July 1, 2009.

For the years ended December 31, 2012 and 2011, our revenues related to our agreement with Takeda for Preotact (PTH 1-84) were comprised of $4.8 million and $9.1 million in royalty revenue, respectively. The decrease in royalty revenue was primarily due to a technical production issue whereby, Takeda was unable to have batches of finished product manufactured that were consistently within specification and that as a result Takeda stopped selling Preotact in their territories. On March 18, 2013, Takeda terminated this license agreement and returned the rights to NPS. In July 2007, we sold our rights to receive certain future royalty payments from Takeda's sale of PTH 1-84 in Europe, CIS and Turkey to DRI Capital (DRI) and we therefore were not entitled to receive any such royalty payments until the PTH 1-84- secured debt was repaid. Because we previously monetized our PTH 1-84 royalty rights as non-recourse debt, declines in PTH 1-84 sales would impact our royalty revenues but would have no material impact on our short-term liquidity.

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For the years ended December 31, 2012 and 2011, our revenues related to our agreement with Takeda for teduglutide were $0 million and $5.0 million, respectively. In September 2007, we entered into an agreement with Takeda for the rights to develop and commercialize teduglutide in territories outside of North America for gastrointestinal disorders. In 2011, in connection with this agreement, we earned a $5.0 million milestone payment for Takeda's submission of a Marketing Authorization Application (MAA) to the European Medicines Agency (EMA) for clearance to market teduglutide (Revestive®) as a once-daily subcutaneous treatment for short bowel syndrome (SBS). On March 18, 2013, Takeda terminated this license agreement and returned the rights to NPS.

For the years ended December 31, 2012 and 2011, we recognized royalty revenue of $2.8 million and $2.2 million respectively, from Janssen for sales of Nucynta, which was launched in the second quarter of 2009. The increase in royalty revenue earned from Nucynta was primarily due to increased demand for Nucynta.

See "Liquidity and Capital Resources" below for further discussion of payments that we may earn in the future under these agreements.

Cost of Royalties. We recorded cost of royalties of $0 and $500,000, respectively, during the years ended December 31, 2012 and 2011. Our cost of royalties consists of royalties owed under our agreement with a third party based on achieving a threshold for cumulative sales of Preotact during 2011.

Cost of License Fees. Our cost of license fees primarily relate to fees owed to a third party upon the licensing of teduglutide to Takeda in September 2007. We recorded cost of license fees of $0 and $2.5 million during the years ended December 31, 2012 and 2011, respectively.

Research and Development. Our research and development expenses are primarily comprised of personnel and third- party costs to conduct preclinical and clinical trials and to manufacture drugs needed for clinical studies and commercial production prior to FDA approval.

We group our research and development expenses into two major categories: clinical development costs and product development costs.

Clinical development costs were $26.9 million and $32.3 million for the years ended December 31, 2012 and 2011, respectively. Clinical development costs are primarily comprised of costs paid to outside parties to conduct and manage clinical trials related to Gattex and Natpara as well as costs associated with regulatory functions. Product development costs were $43.7 million and $24.2 million for the years ended December 31, 2012 and 2011, respectively. Product development costs are costs related to the drug needed for our clinical studies and commercial production of pre-launch inventory.

Unallocated research and development costs were $24.2 million and $17.3 million for the years ended December 31, 2012 and 2011, respectively. Unallocated research and development costs consist primarily of personnel, personnel related costs and overhead costs that relate to medical affairs and product development activities which have not been allocated directly to each program.

For the year ended December 31, 2012, our research and development expenses increased to $94.8 million from $73.8 million for the year ended December 31, 2011. The increase in research and development expenses primarily related to an increase of $19.5 million of costs for the commercial production of pre-launch Gattex and Natpara inventory and an increase of $6.9 million which mainly consists of regulatory costs as well as personnel and personnel related costs. These increases were partially offset by a $5.4 million reduction in costs associated with clinical development activities.

General and Administrative. Our general and administrative expenses consist primarily of compensation for employees in executive, finance, legal and sales and marketing functions as well as facility costs and professional fees for accounting and legal services. Our general and administrative expenses increased to $36.9 million for the year ended December 31, 2012 from $24.2 million in 2011. The increase in general and administrative expenses primarily relate to an increase in personnel and external costs related to commercial- readiness activities for Gattex.

Interest Income. Interest income decreased to $292,000 for the year ended December 31, 2012 from $321,000 from the comparative period in 2011.

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Interest Expense.  Our interest expense decreased to $18.2 million for the year ended December 31, 2012 from $37.7 million for the comparable period in 2011. Our long-term royalty forecasts for PTH 1-84 and REGPARA are used to calculate the implicit interest rate and the related interest expense for our non-recourse debt. Interest expense decreased due primarily to (i) the final principal payments of $46.2 million and $150.3 million on the Class A and B Notes, respectively, during 2011 ($18.8 million), (ii) a lower effective interest rate due to a decrease in the forecast of PTH 1-84 royalties related to the non-recourse debt associated with the sale of certain of our PTH 1-84 royalty rights ($5.7 million) and (iii) a reduction in the principal outstanding due to the conversion of $33.5 million of our 5.75% convertible notes during 2011 ($528,000). These decreases were partially offset by increased interest expense on the non-recourse debt associated with the Amgen advance of our Sensipar royalty rights in September 2011 ($5.6 million).

Income Taxes.  We reported an income tax expense of $0 and $18,000 in 2012 and 2011, respectively.

Liquidity and Capital Resources

The following table summarizes selected financial data (amounts in the thousands):

		December 31, 2013		December 31, 2012
Cash, cash equivalents,
and marketable investment securities	$	180,474	$	100,715
Total assets		292,222		151,109
Current debt		8,752		6,278
Non-current debt		123,635		169,569
Stockholders' deficit	$	104,890	$	(54,641)

Historically, we have not been a self-sustaining business and certain economic, operational and strategic factors may require us to secure additional funds. If we are unable to generate sufficient cash flows from operations or obtain sufficient funding at any time in the future, we may not be able to develop or commercialize our products, take advantage of business opportunities or respond to competitive pressures. Our current and anticipated operations require substantial capital. Our actual needs will depend on numerous factors, including the progress and scope of our internally funded commercialization and development activities related to the launch of Gattex and the launch of Revestive and the pre-launch of Natpara; our ability to comply with the terms of our research funding agreements; our ability to maintain existing collaborations; our decision to seek additional collaborators; the success of our collaborators in developing and marketing products under their respective collaborations with us; our success in producing commercial and clinical supplies of our products and product candidates on a timely basis sufficient to meet the needs of our commercial activities and clinical trials; our ability to successfully execute our strategic plans, including international expansion; the costs we incur in obtaining and enforcing patent and other proprietary rights or gaining the freedom to operate under the patents of others; and our success in acquiring and integrating complementary products, technologies or businesses. Our commercial activities may not be successful for many reasons, including our inability to convince physicians to prescribe our products for their patients; our inability to convince third party payers to provide reimbursement for our products at the prices we set, if at all; the risk that safety concerns may develop with respect to our products; the risk that our manufacturers may not be able to supply sufficient quantities of our products to support our commercialization activities; and the risk that our products may face competition from new products or technologies that may be developed. Our clinical trials may be modified or terminated for several reasons including the risk that our product candidates will demonstrate safety concerns; the risk that regulatory authorities may not approve our product candidates for further development or may require additional or expanded clinical trials to be performed; and the risk that our manufacturers may not be able to supply sufficient quantities of our drug candidates to support our clinical trials, our regulatory filing or commercial launch, which could lead to a disruption or cessation of the clinical trials, delay of commercial activities or clinical filings. We may also be required to conduct unanticipated preclinical or clinical trials to obtain regulatory approval of our product candidates, Natpara and NPSP795. If any of the events that pose these risks comes to fruition, our actual capital needs may substantially exceed our anticipated capital needs and we may have to substantially modify or terminate current and planned clinical trials or postpone conducting future clinical trials. As a result, our business may be materially harmed, our stock price may be adversely affected, and our ability to raise additional capital may be impaired.

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We may need to raise additional funds to support our long-term research, product development, in-licensing opportunities, and commercialization programs. We regularly consider various fund raising alternatives, including, for example, debt or equity financing, partnering of existing programs, monetizing of potential revenue streams, and merger and acquisition alternatives. We may also seek additional funding through strategic alliances, collaborations, or license agreements and other financing mechanisms. There can be no assurance that additional financing will be available on acceptable terms, if at all. If adequate funds are not available, we may be required to delay, reduce the scope of our efforts to commercialize Gattex/Revestive or Natpara, if it receives regulatory approval, delay, reduce the scope of, or eliminate one or more of our research and development programs, or to obtain funds through arrangements with licensees or others that may require us to relinquish rights to certain of our technologies or product candidates that we may otherwise seek to develop or commercialize on our own.

We require cash to fund our operating expenses, to make capital expenditures, acquisitions and investments. We have financed operations since inception primarily through payments received under collaborative research and license agreements; the private and public issuance and sale of equity securities; the issuance and sale of non-recourse debt, convertible debt and lease financing; and sales of Gattex. Through December 31, 2013, we have recognized $911.0 million of cumulative revenues from payments for research support, license fees, product sales, milestone and royalty payments; $885.1 million from the sale of equity securities for cash; $738.6 million from the sale of non-recourse debt and convertible debt for cash; and $31.8 million from sales of Gattex.

Our principal sources of liquidity are cash, cash equivalents, and marketable investment securities, which totaled $180.5 million at December 31, 2013. The primary objectives for our marketable investment security portfolio are liquidity and safety of principal. Investments are intended to achieve the highest rate of return to us, consistent with these two objectives. Our investment policy limits investments to certain types of instruments issued by institutions with investment grade credit ratings and places restrictions on maturities and concentration by type and issuer.

In August 2011, we amended our agreement with Amgen that became effective after the retirement of our Class B Notes. Under the Amgen agreement, Amgen advanced $145.0 million of Sensipar and Mimpara royalties to us. In June 2012, we amended our agreement with Amgen and received a one-time non-refundable $25.0 million payment in July 2012 in exchange for our rights to receive royalties under the license agreement that are earned after December 31, 2018. The amendment also limits the royalty offset of the royalty advance that we received from Amgen up to $8.0 million per quarter with royalties in excess of $8.0 million paid to us for the respective quarter, thereby extending the royalty advance repayment period. After the payment of the royalty advance and a 9% per annum discount on the balance of the advance, Amgen will resume paying royalties to us.

The following table summarizes our cash flow activity for the years ended December 31, 2013, 2012 and 2011 (amounts in thousands):

		2013		2012		2011
Net cash used in operating activities	$	(24,316)	$	(60,992)	$	(56,658)
Net cash used in investing activities		(50,113)		(6,489)		(28,119)
Net cash provided by financing activities	$	108,118	$	2,561	$	90,003

Net cash used in operating activities was $24.3 million, $61.0 million and $56.7 million in 2013, 2012 and 2010, respectively. The decrease in net cash used in 2013 was primarily due to the decrease in interest expense and non-cash royalty receivable related to the issuance of non-recourse Sensipar Notes to Amgen in the second quarter of 2012. The REGPARA royalty revenue is pledged to service the principal and interest on our non-recourse notes and is not available to fund operations. The decrease in net cash used in 2013, was also related to the increased cash received from revenues earned from the sales of Gattex during the year ended December 31, 2013 and also due to the reduction in research and development costs associated with clinical development activities. The above decreases in net cash used in 2013 were partially offset by increased spending related to the launch of Gattex in the year ended December 31, 2013. The net cash used in the years ended December 31, 2012 and 2011 was primarily related to the increased spending in research and development due to the advancement of our registration programs for Gattex and Natpara and due to the non-cash components of accounts receivable and interest expense related to the issuance of non-recourse Sensipar Notes to Amgen. The PTH 1-84 royalty revenues earned during the years ended December 31, 2012 and 2011 were pledged to service the principal and interest on our non-recourse notes and were not available to fund operations.

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Net cash used in investing activities was $50.1 million, $6.5 million, and $28.1 million in 2013, 2012 and 2011, respectively. Net cash used in investing activities during 2013, 2012 and 2011 was primarily the result of investing excess cash not currently required to fund operations. Additionally, capital expenditures for 2013, 2012 and 2011 were $1.1 million, $1.2 million and $3.4 million, respectively.

Net cash provided by financing activities was $108.1 million, $2.6 million and $90.0 million during 2013, 2012 and 2011, respectively. Cash provided by financing activities during 2013 primarily consisted of the $93.5 million received from the public sale of 6.9 million common shares in May 2013 and approximately $14.5 million received from the exercise of employee stock options and the sale of shares for the employee stock purchase plan. Cash provided by financing activities during 2012 consisted of $2.6 million received from the exercise of employee stock options and the sale of shares for the employee stock purchase plan. Cash provided by financing activities during 2011 primarily consisted of the $145.0 million received from Amgen for the issuance of the non-recourse Sensipar Notes, $106.8 million received from the public sale of common shares in April 2011 and approximately $1.3 million received from the exercise of employee stock options and the sale of shares for the employee stock purchase plan. The decrease in our restricted cash balance of $50.8 million was due to making principal and cash sweep premium payments on our Class A Notes and our Class B Notes net of increases from cash received for royalty payments. These were offset by making principal and cash sweep premium payments on our Class A Notes and Class B Notes totaling $213.8 million. Employee stock option exercises and proceeds from the sale of stock by us pursuant to the employee stock purchase plan provided approximately $14.5 million, $2.6 million, and $1.1 million of cash during 2013, 2012 and 2011, respectively. Proceeds from the exercise of employee stock options vary from period to period based upon, among other factors, fluctuations in the market price of our common stock relative to the exercise price of such options and the availability of stock under the employee stock purchase plan.

We could receive future milestone payments from all our agreements of up to $16.8 million in the aggregate if each of our current licensees accomplishes the specified research and/or development milestones provided in the respective agreements. In addition, all of the agreements require the licensees to make royalty payments to us if they sell products covered by the terms of our license agreements. However, we do not control the subject matter, timing or resources applied by our licensees to their development programs. Thus, potential receipt of milestone and royalty payments from these licensees is largely beyond our control. Further, each of these agreements may be terminated before its scheduled expiration date by the respective licensee either for any reason or under certain conditions.

We have entered into long-term agreements with certain manufacturers and suppliers that require us to make contractual payment to these organizations. We expect to enter into additional collaborative research, contract research, manufacturing, and supplier agreements in the future, which may require up-front payments and long-term commitments of cash.

The following represents our contractual obligations as of December 31, 2013 (in millions):

				Less than						More than
Contractual Obligations		Total		1 year		2-3 years		4-5 years		5 years
Operating leases	$	5.2	$	2.0	$	3.2	$	-	$	-
Purchase commitments (1)		71.4		64.4		6.8		0.2		-
Convertible notes payable		16.5		16.5		-		-		-
Interest on convertible notes payable		0.6		0.6		-		-		-
Non-recourse debt (2)		132.4		32.0		36.1		23.7		40.7
Interest on non-recourse debt (2)		60.7		8.3		17.6		30.5		4.3
Royalty payment obligation		5.6		1.0		2.0		2.0		0.6

_______________

(1)

Purchase obligations primarily represent commitments for manufacturing agreements ($26.1 million), services ($29.5 million) and commercial readiness, market access and market research agreements ($15.9 million). Commitments for services primarily represent agreements with external service providers, under which we will continue to incur expenses relating to clinical trials of Gattex/Revestive in pediatrics and other clinical candidates. These agreements are cancellable on notice of up to six months.

(2)

Amounts shown as contractual commitments under our non-recourse debt represent our estimate of expected principal repayment based on anticipated cinacalcet HCl, PTH 1-84 and REGPARA royalty income. Amounts shown in interest on non-recourse debt include our estimated interest payments based on estimated cinacalcet HCl, PTH 1-84 and REGPARA royalty income levels.

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Critical Accounting Policies and Estimates

Our discussion and analysis of our consolidated financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to revenue and research and development costs. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

We believe the following critical accounting policies affect the significant judgments and estimates used in the preparation of our consolidated financial statements:

• revenue recognition;

• inventory valuation;

• accrual of research and development expenses;

• share based payments;

• valuation of marketable investment securities;

• effective interest computation and;

• valuation of long-lived and intangible assets and goodwill.

Revenue Recognition. We earn our revenue from product sales, license fees, milestone payments, research and development support payments and royalty payments. As described below, significant management judgment and estimates must be made and used in connection with the revenue recognized in any accounting period. Material differences may result in the amount and timing of our revenue for any period if our management made different judgments or utilized different estimates.

Product Sales. We recognize revenue from product sales when persuasive evidence of an arrangement exists, title to product and associated risk of loss has passed to the customer, the price is fixed or determinable, collection from the customer is reasonably assured, we have no further performance obligations, and returns can be reasonably estimated. Currently, product sales represent U.S. sales of Gattex, which was approved by the FDA in December 2012.

All prescriptions for Gattex, received directly by us from the patient's physician, are handled through NPS Advantage, our data management and patient support program, which investigates and determines the patient's insurance coverage for Gattex. Once coverage is confirmed, we forward the prescription to the specialty pharmacy (SP) who then re-confirms the coverage and dispenses Gattex to the patient. We sell Gattex directly to a limited number of SPs and a specialty distributor (SD) who dispense product to patients, hospitals or U.S. government entities. We invoice and record revenue upon the SPs' or SD's receipt of Gattex from our third-party logistics warehouse. Our SPs order product to fill prescriptions that have been approved for reimbursement by payers.

Specific considerations for Gattex sold in the U.S. are as follows:

• Rebates: Allowances for rebates include mandated discounts under the Medicaid Drug Rebate Program. Rebates are amounts owed after the final dispensing of the product to a benefit plan participant and are based upon contractual agreements or legal requirements with public sector (e.g. Medicaid) benefit providers. The allowance for rebates is based on statutory discount rates and expected utilization. Our estimate for expected utilization for rebates is based in part on actual and pending prescriptions for which we have validated the insurance benefits.
• Chargebacks: Chargebacks are discounts that occur when contracted customers purchase from our SPs or SD. Contracted customers, which currently consist primarily of Public Health Service institutions and Federal government entities purchasing via the Federal Supply Schedule, generally purchase the product at

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a discounted price. Our SPs or SD, in turn, charge back the difference between the price initially paid by the SP or SD and the discounted price paid to the SP or SD by the customer. The allowance for chargebacks is based on actual and expected sales to the SPs and SD.

• SP and SD Fees and Deductions: Our SPs and our SD are offered prompt payment discounts and are paid fees for their services and data.

• Product returns: We will accept product that is damaged or defective when shipped directly to the SP or SD from our third-party logistics provider or for product that is returned with more than two (2) months remaining until the expiration date from our SP or SD only. We will not provide any credit for product that has been labeled for or sent to a patient. Product returned is generally not resalable as the product must be temperature-controlled throughout the supply chain and such control is difficult to confirm. We make a reasonable estimate of future potential product returns based on the number of prescriptions that have been approved for reimbursement and sent to an SP with each corresponding shipment of Gattex that has been sent to each respective SP. We also have the visibility to see current inventory levels and the current shelf life at the SPs and SD and have the ability to control the amount of product that is sold to the SPs and SD. At the end of each reporting period, we determine a product returns reserve by evaluating the units held in our distribution channel, the underlying demand for such units and the risk of potential product returns.  At December 31, 2013 we have a product returns reserve of approximately $119,000.

Product sales are recorded net of accruals for estimated rebates, chargebacks, discounts, and other deductions (collectively, sales deductions) and returns. With the exception of allowances for prompt payment, allowances for sales deductions and returns are included in accounts payable and accrued expenses in the accompanying consolidated balance sheets.

Milestone Revenue. We recognize revenue from milestone payments as agreed upon events representing the achievement of substantive steps in the development process are achieved and where the amount of the milestone payment approximates the fair value of achieving the milestone. We defer and recognize revenue from up-front nonrefundable license fees on a straight-line basis, unless another pattern is apparent, over the period we have continuing involvement in the research and development project.

Royalty Revenue. Royalties from licensees are based on third-party sales of licensed products and are recorded in accordance with the contract terms when third-party results are reliably measurable and collectability is reasonably assured.

We analyze our arrangements entered into to determine whether the elements can be separated and accounted for individually or as a single unit of accounting. Allocation of revenue to individual elements that qualify for separate accounting is based on the estimated fair value of the respective elements.

Inventory valuation. Inventories are stated at the lower of cost or estimated realizable value. We determine the cost of inventory using the first-in, first-out, or FIFO, method. We capitalize inventory costs associated with our products after regulatory approval when, based on management's judgment, future commercialization is considered probable and the future economic benefit is expected to be realized; otherwise, such costs are expensed as research and development. We periodically analyze our inventory levels to identify inventory that may expire prior to expected sale or has a cost basis in excess of its estimated realizable value, and writes-down such inventories as appropriate. In addition, our products are subject to strict quality control and monitoring which we perform throughout the manufacturing process. If certain batches or units of product no longer meet quality specifications or become obsolete due to expiration, we record a charge to cost of sales to write down such unmarketable inventory to its estimated realizable value.

Accrual of Research and Development Expenses. Research and development costs are expensed as incurred and include salaries and benefits; costs paid to third-party contractors to perform research, conduct clinical trials, develop and manufacture pre-approval drug materials and delivery devices; and associated overhead expenses and facilities costs. Clinical trial costs are a significant component of research and development expenses and include costs associated with third-party contractors. Invoicing from third-party contractors for services performed can lag several months. We accrue the costs of services rendered in connection with third-party contractor activities based on our estimate of management fees, site management and monitoring costs and data management costs. Differences between actual clinical trial costs from estimated clinical trial costs have not been material and are adjusted for in the period in which they become known.

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Share-Based Payments. We grant options to purchase our common stock to our employees and directors under our stock option plans. For options awards with market conditions we use the Monte Carlo simulation to value the awards. For other option awards which vest based on passage of time, we estimate the fair value on the date of grant using a Black-Scholes pricing model (Black-Scholes model). The determination of the fair value of share-based payment awards on the date of grant using the Black-Scholes model is affected by our stock price as well as assumptions regarding a number of complex and subjective variables. These variables include, but are not limited to, our expected stock price volatility over the expected term of the awards, actual and projected employee stock option exercise behaviors, risk-free interest rate and expected dividends. If factors change and we employ different assumptions in future periods, the compensation expense that we record may differ significantly from what we have recorded in the current period.

Estimates of share-based compensation expenses are significant to our financial statements, but these expenses are based on option valuation models and will never result in the payment of cash by us.

There are significant differences among valuation models, and there is a possibility that we will adopt different valuation models in the future. This may result in a lack of consistency in future periods and materially affect the fair value estimate of share-based payments. It may also result in a lack of comparability with other companies that use different models, methods and assumptions.

For purposes of estimating the fair value of stock options granted using the Black-Scholes model, we have made an estimate regarding our stock price volatility. We consider the historical volatility and the implied volatility of market-traded options in our stock for the expected volatility assumption input to the Black-Scholes model. The risk-free interest rate is based on the yield curve of U.S. Treasury strip securities for a period consistent with the expected term of the option in effect at the time of grant. The dividend yield assumption is based on our history and expectation of dividend payouts. The expected term is estimated considering historical option information.

Valuation of Marketable Investment Securities. We classify our marketable investment securities as available for sale. Available for sale securities are recorded at fair value. Unrealized holding gains and losses, net of the related tax effect, are excluded from earnings and are reported as a separate component of stockholders' deficit until realized. A decline in the market value below cost that is deemed other than temporary is charged to results of operations, resulting in the establishment of a new cost basis for the security. Our marketable securities consist primarily of U.S. dollar denominated corporate or government debt securities. Debt securities generally are long-term securities with coupons that may or may not reset periodically against a benchmark interest rate.

We conduct periodic reviews to identify and evaluate each investment that has an unrealized loss. An unrealized loss exists when the current fair value of an individual security is less than its amortized cost basis. Unrealized losses on available-for-sale securities that are determined to be temporary, and not related to credit loss, are recorded, net of tax, in accumulated other comprehensive income.

For available-for-sale debt securities with unrealized losses, management performs an analysis to assess whether we intend to sell or whether it would more likely than not be required to sell the security before the expected recovery of the amortized cost basis. Where we intend to sell a security, or where it may be more likely than not be required to sell the security before the expected recovery of the amortized cost basis, the security's decline in fair value is deemed to be other-than-temporary and the full amount of the unrealized loss is recorded in results of operations as an impairment loss.

Regardless of our intent to sell a security, we perform additional analysis on all securities with unrealized losses to evaluate losses associated with the creditworthiness of the security. Credit losses are identified where we do not expect to receive cash flows sufficient to recover the amortized cost basis of a security.

Effective Interest Computation. In July 2007, we entered into an agreement with DRI Capital, or DRI, in which we sold to DRI our right to receive future royalty payments arising from sales of Preotact (PTH1-84) under our licensing agreement with Takeda. We received an up-front purchase price of $50.0 million in 2007. If and when DRI receives two and a half times the payment we received, the agreement will terminate and the remainder of the royalties, if any, will revert back to us.

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In December 2013, we entered into an amendment and restatement (the "Amendment and Restatement") to our agreement with DRI for PTH 1-84. Pursuant to the previously disclosed Termination and Transition Agreement between NPS and Takeda (See note 10 to the consolidated financial statements), our license agreement with Takeda was terminated and NPS re-acquired exclusive rights worldwide to develop and commercialize PTH. Preotact is the brand name that Takeda had used to market PTH for the treatment of osteoporosis in certain of its licensed territories. NPS is developing PTH in the U.S. under the trade name Natpara for the treatment of hypoparathyroidism. In January 2014, the FDA accepted and filed for review our BLA for Natpara. Under the Prescription Drug User Fee Act (PDUFA), the goal date for a decision by the FDA is October 24, 2014. Pursuant to the Amendment and Restatement, (i) DRI has consented to the commercialization of PTH by the Company, (ii) the terms of the 2007 Agreement are tolled, and (iii) the parties' rights and obligations regarding PTH and related technology are governed by the Amendment and Restatement. We will be required to repay the outstanding non-recourse debt based upon a mid-single digit percentage of worldwide Natpara sales, excluding Israel.

Our obligation to pay royalties to DRI under the Amendment and Restatement shall expire on a country-by-country basis upon the later of (i) the last to expire patent controlled by us with claims covering PTH in such country or (ii) the expiration of any period of regulatory exclusivity applicable to PTH in such country. Our obligation to pay royalties to DRI under the Amendment and Restatement shall terminate in its entirety once cumulative royalty payments made to DRI by Takeda and us total $125 million. As of December 31, 2013, $45.5 million in royalties had been paid to DRI. We determined the initial up-front purchase price is debt and is being amortized into earnings using the effective interest method over the estimated life.

We estimate future net sales of PTH and then calculate the effective interest rate on the DRI debt. Changes to the future PTH net sales forecast may have a material impact on interest expense. Management evaluates its future PTH net sales estimates on a quarterly basis and adjusts the effective interest rate when information indicates that the estimate is materially above or below the prior estimate.

In February 2010, we entered into an agreement with DRI in which we sold to DRI our right to receive future royalty payments arising from sales of REGPARA under our licensing agreement with Kyowa Hakko Kirin. We received an up-front purchase price of $38.4 million in 2010. If and when DRI receives two and a half times the payment we received, the agreement will terminate and the remainder of the royalties, if any, will revert back to us. We have determined that we should classify the up-front purchase price as debt and amortize this using the effective interest rate method over the estimated period to recover two and a half times the principal advanced. We estimate future net sales of REGPARA by Kyowa Hakko Kirin and then calculate the effective interest rate on the DRI debt. Changes to the future REGPARA net sales forecast may have a material impact on interest expense. Management evaluates its future REGPARA net sales estimates on a quarterly basis and adjusts the effective interest rate when information indicates that the estimate is materially above or below the prior estimate.

Valuation of Long-lived Assets, Intangibles and Goodwill. We assess the impairment of long-lived assets, intangibles and goodwill whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors we consider important which could trigger an impairment review include the following:

• significant underperformance relative to expected historical or projected future operating results;

• significant changes in the manner of our use of the acquired assets or the strategy for our overall business;

• significant negative industry or economic trends;

• significant decline in our stock price for a sustained period; and

• our market capitalization relative to net book value.

When we determine that the carrying value of long-lived assets may not be recoverable based upon the existence of one or more of the above indicators of impairment, we measure any impairment based on a probability weighted projected discounted cash flow method using a discount rate determined to be commensurate with the risk inherent in our current business model.

Intangibles represent the fair value of product rights purchased. Intangible assets with definite useful lives are amortized to their estimated residual values over their estimated useful lives and reviewed for impairment if certain events occur.

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Goodwill represents the excess of costs over fair value of net assets of businesses acquired. Goodwill acquired in a purchase business combination is not amortized, but instead tested for impairment at least annually, or sooner if circumstances indicate that an impairment might have occurred.

Recent Accounting Pronouncements

See note 15 to the consolidated financial statements for a full description of recent accounting pronouncements including the respective expected dates of adoption and expected effects on results of operations and financial condition.

ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk.

Interest Rate Risk.  Our interest rate risk exposure results from our investment portfolio, our convertible notes, and our non-recourse notes. Our primary objectives in managing our investment portfolio are to preserve principal, maintain proper liquidity to meet operating needs and maximize yields. The securities we hold in our investment portfolio are subject to interest rate risk. At any time, sharp changes in interest rates can affect the fair value of the investment portfolio and its interest earnings. After a review of our marketable investment securities, we believe that in the event of a hypothetical ten percent increase in interest rates, the resulting decrease in fair value of our marketable investment securities would be insignificant to the consolidated financial statements. Currently, we do not hedge these interest rate exposures. We have established policies and procedures to manage exposure to fluctuations in interest rates. We place our investments with high quality issuers and limit the amount of credit exposure to any one issuer and do not use derivative financial instruments in our investment portfolio. We invest in highly liquid, investment-grade securities and money market funds of various issues, types and maturities. These securities are classified as available for sale and, consequently, are recorded on the balance sheet at fair value with unrealized gains or losses reported as accumulated other comprehensive income as a separate component in stockholders' deficit unless a loss is deemed other than temporary, in which case the loss is recognized in earnings. Our 5.75% Convertible Notes due 2014 and our 9% Sensipar Notes, each have a fixed interest rate. As of December 31, 2013, our Convertible Notes and Sensipar Notes had $16.5 million and $54.4 million, respectively, in aggregate principal amount outstanding. The fair value of the Convertible Notes is affected by changes in the interest rates and by changes in the price of our common stock. The fair value of the Sensipar Notes is affected by changes in interest rates and by historical and projected rates of royalty revenues from cinacalcet HCl sales.

Foreign Currency Risk.  We have significant clinical and commercial manufacturing agreements which are denominated in euros and Canadian Dollars. As a result, our financial results could be affected by factors such as a change in the foreign currency exchange rate between the U.S. dollar and the Canadian dollar or euro, or by weak economic conditions in Canada or Europe. When the U.S. dollar strengthens against the Canadian dollar or euros, the cost of expenses in Canada or Europe decreases. When the U.S. dollar weakens against the Canadian dollar or euro, the cost of expenses in Canada or Europe increases. The monetary assets and liabilities in our foreign subsidiaries which are impacted by the foreign currency fluctuations are cash, inventory, accounts payable, and certain accrued liabilities. A hypothetical ten percent increase or decrease in the exchange rate between the U.S. dollar and the Canadian dollar or euro from the December 31, 2013 rate would cause the fair value of such monetary assets and liabilities in our foreign subsidiaries to change by an insignificant amount. We are not currently engaged in any foreign currency hedging activities.

61

ITEM 8. Financial Statements and Supplementary Data.

NPS PHARMACEUTICALS, INC. AND SUBSIDIARIES
Table of Contents

	Page
Reports of Independent Registered Public Accounting Firm	63
Consolidated Balance Sheets	65
Consolidated Statements of Operations	66
Consolidated Statements of Comprehensive Loss	67
Consolidated Statements of Stockholders' Equity (Deficit)	68
Consolidated Statements of Cash Flows	69
Notes to Consolidated Financial Statements	70

All other schedules are omitted, as the required information is presented in the consolidated financial statements or related notes.

62

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
NPS Pharmaceuticals, Inc.:

We have audited the accompanying consolidated balance sheets of NPS Pharmaceuticals, Inc. and subsidiaries as of December 31, 2013 and 2012, and the related consolidated statements of operations, comprehensive loss, stockholders' equity, and cash flows for each of the years in the three-year period ended December 31, 2013. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of NPS Pharmaceuticals, Inc. and subsidiaries as of December 31, 2013 and 2012, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2013, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), NPS Pharmaceuticals, Inc.'s internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated February 18, 2014 expressed an unqualified opinion on the effectiveness of the Company's internal control over financial reporting.

/s/ KPMG LLP

Short Hills, New Jersey
February 18, 2014

63

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
NPS Pharmaceuticals, Inc.:

We have audited NPS Pharmaceuticals, Inc.'s internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). NPS Pharmaceuticals, Inc.'s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting appearing under Item 9A(b). Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, NPS Pharmaceuticals, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of NPS Pharmaceuticals, Inc. and subsidiaries as of December 31, 2013 and 2012, and the related consolidated statements of operations, comprehensive loss, stockholders' equity, and cash flows for each of the years in the three-year period ended December 31, 2013, and our report dated February 18, 2014 expressed an unqualified opinion on those consolidated financial statements.

/s/ KPMG LLP

Short Hills, New Jersey
February 18, 2014

64

NPS PHARMACEUTICALS, INC. AND SUBSIDIARIES

Consolidated Balance Sheets
December 31, 2013 and 2012
(In thousands, except share data)

		2013		2012
Assets
Current assets:
Cash and cash equivalents	$	51,204	$	17,471
Marketable investment securities		129,270		83,244
Accounts receivable		41,242		30,276
Inventory		30,035		-
Prepaid expenses		5,621		4,317
Other current assets		1,380		1,743
Total current assets		258,752		137,051
Property and equipment, net		4,402		4,193
Goodwill		9,429		9,429
Intangibles, net		19,301		-
Debt issuance costs, net of accumulated amortization
of $716 and $618, respectively		338		436
Total assets	$	292,222	$	151,109
Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
Accounts payable	$	10,919	$	4,373
Accrued expenses and other current liabilities		17,037		9,297
Accrued research and development expenses		3,541		5,636
Accrued interest expense		1,620		3,983
Convertible notes payable		16,545		-
Current portion of non-recourse debt		8,752		6,278
Total current liabilities		58,414		29,567
Non-recourse debt, less current portion		123,635		153,024
Convertible notes payable, less current portion		-		16,545
Other liabilities		5,283		6,614
Total liabilities		187,332		205,750
Commitments and contingencies (notes 8, 9 and 16)
Stockholders' equity (deficit):
Preferred stock, $0.001 par value. Authorized 5,000,000 shares;
issued and outstanding no shares		-		-
Common stock, $0.001 par value. Authorized 175,000,000 shares;
issued and outstanding 102,613,780 shares and 86,779,049 shares, respectively		103		87
Additional paid-in capital		1,127,420		954,452
Accumulated other comprehensive income		56		5
Accumulated deficit		(1,022,689)		(1,009,185)
Total stockholders' equity (deficit)		104,890		(54,641)
Total liabilities and stockholders' equity (deficit)	$	292,222	$	151,109

See accompanying notes to consolidated financial statements.

65

NPS PHARMACEUTICALS, INC. AND SUBSIDIARIES

Consolidated Statements of Operations
Years ended December 31, 2013, 2012, and 2011
(In thousands, except per share data)

		2013		2012		2011
Revenues:
Product sales, net	$	31,752	$	-	$	99
Royalties		123,804		105,587		96,502
Sale of royalty rights		-		25,000		-
Milestones and license fees		36		57		5,044
Total revenues		155,592		130,644		101,645
Cost of sales		3,587		-		-
Cost of royalties		-		-		500
Cost of license fees		9		-		2,543
Operating expenses:
Research and development		85,421		94,839		73,831
Selling, general and administrative		68,070		36,929		24,226
Total operating expenses		153,491		131,768		98,057
Operating (loss) income		(1,495)		(1,124)		545
Other income (expense):
Interest income, net		340		292		321
Interest expense		(11,938)		(18,198)		(37,736)
Gain on sale of marketable investment securities, net		4		4		-
Foreign currency transaction (loss) gain		(233)		54		318
Other		-		237		303
Total other expense, net		(11,827)		(17,611)		(36,794)
Loss before income tax expense		(13,322)		(18,735)		(36,249)
Income tax expense		182		-		18
Net loss	$	(13,504)	$	(18,735)	$	(36,267)
Basic and diluted net loss per common and potential
common share	$	(0.14)	$	(0.22)	$	(0.45)
Weighted average common and potential common
shares outstanding — basic and diluted		97,750		86,999		81,279

See accompanying notes to consolidated financial statements.

66

NPS PHARMACEUTICALS, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Loss
Years ended December 31, 2013, 2012 and 2011
(In thousands)

		2013		2012		2011
Net loss	$	(13,504)	$	(18,735)	$	(36,267)
Other comprehensive income:
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising during period		3		107		(102)
Reclassification for recognized gain on marketable
securities during the period		4		4		-
Net unrealized gain (loss) on marketable investment securities		7		111		(102)
Foreign currency translation gain (loss)		44		(10)		5
Other comprehensive income (loss)		51		101		(97)
Comprehensive loss	$	(13,453)	$	(18,634)	$	(36,364)

See accompanying notes to consolidated financial statements.

67

NPS PHARMACEUTICALS, INC. AND SUBSIDIARIES

Consolidated Statements of Stockholders' Equity (Deficit)
Years ended December 31, 2013, 2012 and 2011
(In thousands, except share data)

										Accumulated
							Additional			Other				Total
	Preferred Stock			Common Stock			Paid-in			Comprehensive		Accumulated		Stockholders'
	Shares	Amount		Shares		Amount	Capital			Income (Loss)		Deficit		Equity (Deficit)
Balances, December 31, 2010	-	$	-	66,986,940	$	67	$	798,840	$	1	$	(954,183)	$	(155,275)
Stock options exercised	-		-	257,435		-		1,130		-		-		1,130
Compensation expense on
share-based awards	-		-	-		-		4,100		-		-		4,100
Net proceeds from sale of shares	-		-	12,687,065		13		107,020		-		-		107,033
Conversion of 5.75% convertible notes				6,149,727		6		33,254						33,260
Other comprehensive loss	-		-	-		-		-		(97)		-		(97)
Net loss	-		-	-		-		-		-		(36,267)		(36,267)
Balances, December 31, 2011	-		-	86,081,167		86		944,344		(96)		(990,450)		(46,116)
Stock options exercised	-		-	481,058		1		2,407		-		-		2,408
Restricted stock vesting	-		-	171,271		-		149		-		-		149
Compensation expense on
share-based awards	-		-	-		-		7,298		-		-		7,298
Net proceeds from sale of shares	-		-	45,553		-		254		-		-		254
Other comprehensive income	-		-	-		-		-		101		-		101
Net loss	-		-	-		-		-		-		(18,735)		(18,735)
Balances, December 31, 2012	-		-	86,779,049		87		954,452		5		(1,009,185)		(54,641)
Stock options exercised	-		-	2,521,764		3		14,528		-		-		14,531
Restricted stock vesting	-		-	211,389		-		339		-		-		339
Compensation expense on
share-based awards	-		-	-		-		8,480		-		-		8,480
Excess tax benefit from stock options	-		-	-		-		178		-		-		178
Stock issued in connection with the
Takeda Termination and Transition
agreement	-		-	6,128,641		6		55,397		-		-		55,403
Net proceeds from sale of shares	-		-	6,972,937		7		94,046		-		-		94,053
Other comprehensive income			-			-		-		51		-		51
Net loss	-		-	-		-		-		-		(13,504)		(13,504)
Balances, December 31, 2013	-	$	-	102,613,780	$	103	$	1,127,420	$	56	$	(1,022,689)	$	104,890

See accompanying notes to consolidated financial statements.

68

NPS PHARMACEUTICALS, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows
Years ended December 31, 2013, 2012 and 2011
(In thousands)

		2013		2012		2011
Cash flows from operating activities:
Net loss	$	(13,504)	$	(18,735)	$	(36,267)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization		2,630		1,083		462
Accretion of premium on marketable investment securities		2,956		2,005		1,379
Shares issued for payment of services		549		-		-
Non-cash interest expense		10,982		17,239		18,115
Non-cash royalties		(39,804)		(55,993)		(57,467)
Realized gain on marketable investment securities		(4)		(4)		-
Loss on disposal of equipment		41		-		-
Loss on extinguishment of debt		-		-		646
Compensation expense on share-based awards		9,437		7,548		4,100
Decrease (increase) in operating assets:
Accounts receivable		(11,324)		(16,010)		18,663
Inventory		3,663		-		-
Prepaid expenses, other current assets and other assets		(466)		1,803		(2,948)
Increase (decrease) in operating liabilities:
Accounts payable and accrued expenses		11,859		1,321		(3,425)
Other liabilities		(1,331)		(1,249)		84
Net cash used in operating activities		(24,316)		(60,992)		(56,658)
Cash flows from investing activities:
Sales of marketable investment securities		11,850		7,628		240
Maturities of marketable investment securities		96,021		111,879		86,428
Purchases of marketable investment securities		(156,842)		(124,809)		(111,380)
Acquisitions of property and equipment		(1,142)		(1,187)		(3,407)
Net cash used in investing activities		(50,113)		(6,489)		(28,119)
Cash flows from financing activities:
Proceeds from issuance of non-recourse debt		-		-		145,000
Principal payments on debt		-		-		(213,848)
Payment of debt issuance costs		-		-		(96)
Excess tax benefit from stock options		178		-		-
Net proceeds from the sale of common stock and exercise
of stock options		107,940		2,561		108,163
Decrease in restricted cash and cash equivalents		-		-		50,784
Net cash provided by financing activities		108,118		2,561		90,003
Effect of exchange rate changes on cash		44		(10)		5
Net increase (decrease) in cash and cash equivalents		33,733		(64,930)		5,231
Cash and cash equivalents at beginning of year		17,471		82,401		77,170
Cash and cash equivalents at end of year	$	51,204	$	17,471	$	82,401
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest	$	952	$	954	$	27,109
Cash paid for income taxes		4		-		-
Supplemental Disclosures of Non-Cash Investing and Financing Activities:
6.1 million shares of NPS common stock issued in connection with
the Takeda Termination and Transition agreement, see note 10	$	55,403	$	-	$	-
Unrealized gains (losses) on marketable investment securities		7		111		(102)
Accrued acquisition of equipment		428		96		353
Noncash principal payments		26,915		52,050		19,899
Conversion of 5.75% convertible notes		-		-		33,260

See accompanying notes to consolidated financial statements.

69

NPS PHARMACEUTICALS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2013, 2012, and 2011

(1) Organization and Summary of Significant Accounting Policies

The consolidated financial statements are comprised of the financial statements of NPS Pharmaceuticals, Inc. and its subsidiaries (NPS), collectively referred to as the Company or NPS. NPS is a biopharmaceutical company pioneering and delivering therapies that transform the lives of patients with rare diseases worldwide. The Company's marketed product, Gattex® (U.S.)/Revestive® (EU) (teduglutide [rDNA origin]) for injection is approved for adult Short Bowel Syndrome (SBS) patients who are dependent on parenteral support. In February 2013, the Company launched and initiated commercial sales of Gattex in the U.S. The Company has also developed Natpara® (rhPTH[1-84]) for the treatment of hypoparathyroidism and submitted its Biologic License Application (BLA) to the FDA in October 2013. In January 2014, the U.S. Food and Drug Administration (FDA) accepted and filed for review the Company's BLA for Natpara. Under the Prescription Drug User Fee Act (PDUFA), the goal date for a decision by the FDA is October 24, 2014. During 2013, the Company reacquired the rights to Revestive and Natpara outside of the U.S. and has defined its international strategy for Gattex/Revestive.

In addition to the Company's proprietary clinical portfolio, it has a number of royalty-based clinical and commercial stage programs.

Since inception, the Company's principal activities have been performing research and development, raising capital, establishing research and license agreements and effecting the commercial launch of Gattex in the U.S. All monetary amounts are reported in U.S. dollars unless specified otherwise.

Subsequent Events

The Company has evaluated all events and transactions since December 31, 2013. The Company did not have any material recognized or non-recognized subsequent events.

Significant Accounting Policies

The following significant accounting policies are followed by the Company in preparing its consolidated financial statements:

(a) Cash Equivalents

The Company considers all highly liquid investments with maturities at the date of purchase of three months or less to be cash equivalents. Cash equivalents at December 31, 2013 and 2012 are carried at cost and consist of commercial paper, money market funds, debt securities and other highly liquid instruments of approximately $40.6 million and $16.2 million, respectively. At December 31, 2013 and 2012, the book value of cash equivalents approximates fair value.

(b) Marketable Investment Securities

The Company classifies its marketable investment securities as available-for-sale and are recorded at fair value. Unrealized holding gains and losses on available-for-sale securities, net of the related tax effect, are excluded from earnings and are reported as a separate component of stockholders' deficit until realized. A decline in the fair value below cost of available-for-sale securities that is deemed other than temporary is charged to results of operations, resulting in the establishment of a new cost basis for the security. Premiums and discounts are amortized or accreted into the cost basis over the life of the related security as adjustments to the yield using the effective-interest method. Interest income is recognized when earned. Realized gains and losses from the sale of marketable investment securities are based on the specific identification method and are included in results of operations and are determined on the specific-identification basis.

The Company conducts periodic reviews to identify and evaluate each investment that has an unrealized loss. An unrealized loss exists when the current fair value of an individual security is less than its amortized cost basis. Unrealized losses on available-for-sale securities that are determined to be temporary, and not related to credit loss, are recorded, net of tax, in accumulated other comprehensive income.

70

For available-for-sale debt securities with unrealized losses, management performs an analysis to assess whether the Company intends to sell or whether it would more likely than not be required to sell the security before the expected recovery of the amortized cost basis. Where the Company intends to sell a security, or where it may be more likely than not be required to sell the security before the expected recovery of the amortized cost basis, the security's decline in fair value is deemed to be other-than-temporary and the full amount of the unrealized loss is recorded within earnings as an impairment loss.

Regardless of the Company's intent to sell a security, the Company performs additional analysis on all securities with unrealized losses to evaluate losses associated with the creditworthiness of the security. Credit losses are identified where the Company does not expect to receive cash flows sufficient to recover the amortized cost basis of a security.

(c) Trade Accounts Receivable

Trade accounts receivable are recorded for research and development support performed, for license fees, milestone payments and royalty income earned, and for product sales, and do not bear interest. The Company determines an allowance for doubtful accounts based on assessed customers' ability to pay, historical write-off experience, and economic trends. Such allowance for doubtful accounts is the Company's best estimate of the amount of probable credit losses in the Company's existing accounts receivable. The Company reviews its allowance for doubtful accounts monthly. The Company did not record any bad debt expense for the years ended December 31, 2013 2012 and 2011. At December 31, 2013 and 2012 the allowance for bad debts was zero.

(d) Inventory

Inventories are stated at the lower of cost or estimated realizable value. The Company determines the cost of inventory using the first-in, first-out, or FIFO, method. The Company capitalizes inventory costs associated with the Company's products after regulatory approval when, based on management's judgment, future commercialization is considered probable and the future economic benefit is expected to be realized; otherwise, such costs are expensed as research and development. The Company periodically analyzes its inventory levels to identify inventory that may expire prior to expected sale or has a cost basis in excess of its estimated realizable value, and writes-down such inventories as appropriate. In addition, the Company's products are subject to strict quality control and monitoring which the Company performs throughout the manufacturing process. If certain batches or units of product no longer meet quality specifications or become obsolete due to expiration, the Company records a charge to cost of sales sold to write down such unmarketable inventory to its estimated realizable value.

(e) Property and Equipment

Property and equipment is stated at cost. Depreciation and amortization of property and equipment is calculated on the straight-line method over estimated useful lives of 3 to 5 years. Leasehold improvements are amortized using the straight-line method over the shorter of the life of the asset or remainder of the lease term.

(f) Goodwill and Intangibles

Goodwill represents the excess of costs over fair value of assets of businesses acquired. Intangibles represents acquired assets and are measured at fair value as of the date of acquisition. Goodwill and intangible assets acquired in a purchase or business combination and determined to have an indefinite useful life are not amortized, but instead tested for impairment at least annually or sooner if circumstances indicate that impairment might have occurred. Intangible assets with definite useful lives are amortized to their estimated residual values over their estimated useful lives and reviewed for impairment if certain events occur. As a result of the annual impairment test performed by management at year-end, it was noted that fair value significantly exceeded the carrying value of the reporting unit. The company considers itself a single reportable segment and reporting unit.

(g) Income Taxes

The Company utilizes the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement carrying amounts and tax bases of assets and liabilities using enacted tax rates in effect for years in which the temporary differences are expected to reverse. The Company establishes a valuation allowance when it believes it is more likely than not that deferred tax assets will not be realized.

71

The Company determines the need for a valuation allowance by assessing the probability of realizing deferred tax assets, taking into consideration all available positive and negative evidence, including historical operating results, expectations of future taxable income, carryforward periods available to the Company for tax reporting purposes, various income tax strategies and other relevant factors. Significant judgment is required in making this assessment and to the extent future expectations change, the Company would have to assess the recoverability of its deferred tax assets at that time. At December 31, 2013 and 2012, the Company maintained a full valuation allowance on its deferred tax assets.

At any one time the Company's tax returns for numerous tax years are subject to examination by U.S. federal, state and foreign taxing jurisdictions. The impact of an uncertain tax position taken or expected to be taken on an income tax return must be recognized in the financial statements at the largest amount that is more likely than not to be sustained. An uncertain income tax position will not be recognized in the financial statements unless it is more likely than not to be sustained. The Company adjusts these tax liabilities, as well as the related interest and penalties, based on the latest facts and circumstances, including recently enacted tax law changes, published rulings, court cases, and outcomes of tax audits. While the Company does not expect material changes, it is possible that its actual tax liability will differ from its established tax liabilities for unrecognized tax benefits, and the Company's effective tax rate may be materially impacted. The Company accounts for interest and penalties related to uncertain tax positions as a component of Income tax expense.

For further information, refer to Note 13, Income Taxes.

(h) Revenue Recognition

The Company analyzes its revenue arrangements to determine whether the elements should be separated and accounted for individually or as a single unit of accounting. Allocation of revenue to individual elements which qualify for separate accounting is based on the estimated fair value of the respective elements. The Company earns revenue from license fees, milestone payments, royalty payments and product sales.

License fees. The Company defers and recognizes revenue from up-front nonrefundable license fees on a straight-line basis, unless another pattern is apparent, over the period wherein the Company has continuing involvement in the research and development project. The Company recognizes revenue from up-front nonrefundable license fees upon receipt when there is no continuing involvement in the research and development project.

Milestone payments. The Company recognizes revenue from its milestone payments as agreed-upon events representing the achievement of substantive steps in the development process are achieved and where the amount of the milestone payment approximates the fair value of achieving the milestone.

Royalties. Royalties from licensees are based on third-party sales of licensed products and are recorded in accordance with contract terms when sales results are reliably measurable and collectability is reasonably assured.

Product sales. The Company recognizes revenue from product sales when persuasive evidence of an arrangement exists, title to product and associated risk of loss has passed to the customer, the price is fixed or determinable, collection from the customer is reasonably assured, the Company has no further performance obligations, and returns can be reasonably estimated. Currently, product sales represent U.S. sales of Gattex, which was approved by the FDA in December 2012.

All prescriptions for Gattex, received directly by NPS from the patient's physician, are handled through NPS Advantage, the Company's data management and patient support program, which investigates and determines the patient's insurance coverage for Gattex. Once coverage is confirmed, NPS forwards the prescription to the specialty pharmacy (SP) who then re-confirms the coverage and dispenses Gattex to the patient. The Company sells Gattex directly to a limited number of SPs and a specialty distributor (SD) who dispense product to patients, hospitals or U.S. government entities. The Company invoices and records revenue when the SPs or SD receives Gattex from the Company's third-party logistics warehouse. The Company's SPs order product to fill prescriptions that have been approved for reimbursement by payers.

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Specific considerations for Gattex sold in the U.S. are as follows:

• Rebates: Allowances for rebates include mandated discounts under the Medicaid Drug Rebate Program. Rebates are amounts owed after the final dispensing of the product to a benefit plan participant and are based upon contractual agreements or legal requirements with public sector (e.g. Medicaid) benefit providers. The allowance for rebates is based on statutory discount rates and expected utilization. The Company's estimate for expected utilization for rebates is based in part on actual and pending prescriptions for which it has validated the insurance benefits.
• Chargebacks: Chargebacks are discounts that occur when contracted customers purchase from the Company's SPs or SD. Contracted customers, which currently consist primarily of Public Health Service institutions and Federal government entities purchasing via the Federal Supply Schedule, generally purchase the product at a discounted price. The Company's SPs or SD, in turn, charge back the difference between the price initially paid by the SP or SD and the discounted price paid to the SP or SD by the customer. The allowance for chargebacks is based on actual and expected sales to the SPs and SD.

• SP and SD Fees and Deductions: The Company's SPs and its SD are offered prompt payment discounts and are paid fees for their services and data.

• Product returns: The Company will accept product that is damaged or defective when shipped directly to the SP or SD from the Company's third-party logistics provider or for product that is returned with more than two (2) months remaining until the expiration date from its SP or SD only. The Company will not provide any credit for product that has been labeled for or sent to a patient. Product returned is generally not resalable as the product must be temperature-controlled throughout the supply chain and such control is difficult to confirm. The Company makes a reasonable estimate of future potential product returns based on the number of prescriptions that have been approved for reimbursement and sent to an SP with each corresponding shipment of Gattex that has been sent to each respective SP. The Company also has the visibility to see current inventory levels and the current shelf life at the SPs and SD and has the ability to control the amount of product that is sold to the SPs and SD. At the end of each reporting period, the Company determines a product returns reserve by evaluating the units held in its distribution channel, the underlying demand for such units and the risk of potential product returns. 

The following table summarizes the provisions, and credits/payments, for government rebates and chargebacks, distribution-related fees, and returns and other sales-related deductions (in thousands):

					Returns and
	Rebates and		Distribution-		Other Sales-
		Chargebacks		Related Fees		Related Deductions		Total
Balance as of December 31, 2012	$	-	$	-	$	-	$	-
Provision related to current period sales		1,375		332		1,098		2,805
Credits/payments		(262)		(185)		(857)		(1,304)
Balance as of December 31, 2013	$	1,113	$	147	$	241	$	1,501

Product sales are recorded net of accruals for estimated rebates, chargebacks, discounts, and other deductions (collectively, sales deductions) and returns. With the exception of allowances for prompt payment, allowances for sales deductions and returns are included in accounts payable and accrued expenses in the accompanying consolidated balance sheets.

(i) Research and Development Expenses

Research and development expenses, are expensed as incurred and are primarily comprised of the following types of costs incurred in performing research and development activities: clinical trial and related clinical manufacturing costs, contract services, outside costs, salaries and benefits, overhead and occupancy costs.

The Company analyzes how to characterize payments under collaborative agreements based on the relevant facts and circumstances related to each agreement.

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(j) Income (Loss) per Common Share

Basic income (loss) per common share is the amount of income (loss) for the period divided by the sum of the weighted average shares of common stock outstanding during the reporting period. Diluted income (loss) per common share is the amount of income (loss) for the period plus interest expense on convertible debt divided by the sum of weighted average shares of common stock outstanding during the reporting period and weighted average share that would have been outstanding assuming the issuance of common shares for all dilutive potential common shares.

(k) Share-Based Compensation

The Company accounts for share-based compensation in accordance with Financial Accounting Standards Board's Accounting Standards Codification ("ASC") 718, "Compensation - Stock Compensation" (ASC 718). Compensation cost is recorded based on the grant date fair value estimated using the Black-Scholes option-pricing for awards which vest based on a service or performance condition or the Monte Carlo simulation model for awards with market conditions. The Company recognizes compensation cost for awards on a straight-line basis over the requisite service period for the entire award, except for performance condition options where vesting is subject to the Company achieving certain performance criteria. Compensation costs for performance condition options will be recognized when the achievement of the performance criteria is probable.

(l) Use of Estimates

Management of the Company has made estimates and assumptions relating to reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these consolidated financial statements in conformity with U.S. generally accepted accounting principles (U.S. GAAP). Actual results could differ from those estimates.

(m) Principles of Consolidation

The consolidated financial statements include the accounts of the Company, all subsidiaries in which it owns a majority voting interest including a variable interest entity in which the Company is the primary beneficiary. The Company eliminates all intercompany accounts and transactions in consolidation.

(n) Accounting for Impairment of Long-Lived Assets

As described in (f), goodwill is tested for impairment at least annually. The Company reviews all other long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets held and used is measured by a comparison of the carrying amount of an asset to future net cash flows (undiscounted) expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets held for sale are reported at the lower of the carrying amount, or fair value, less costs to sell.

(o) Foreign Currency Translation

Assets and liabilities of foreign operations with non-U.S. dollar functional currencies are translated into U.S. dollars at the period end exchange rates. Income, expenses and cash flows are translated at the average exchange rates prevailing during the period. Adjustments resulting from translation are reported as a separate component of accumulated other comprehensive loss in stockholders' deficit. Certain transactions are denominated in currencies other than the functional currency. Transaction gains and losses are included in other income (expense) for the period in which the transaction occurs.

(p) Comprehensive Income (Loss)

Comprehensive income (loss) consists of net income (loss) and other gains and losses affecting stockholders' equity (deficit) that, under U.S. GAAP, are excluded from net income (loss). For the Company, these consist of net unrealized gains or losses on marketable investment securities and foreign currency translation gains and losses. Accumulated other comprehensive income (loss) as of December 31, 2013 and 2012 consists of accumulated net unrealized losses on marketable investment securities of $15,000 and $22,000, respectively, and foreign currency translation gains of $71,000 and $27,000, respectively.

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(q) Concentration of Suppliers

The Company has entered into agreements with contract manufacturers to manufacture clinical and commercial supplies of its product candidates. In some instances, the Company is dependent upon a single supplier. The loss of one of these suppliers could have a material adverse effect upon the Company's operations.

(r) Leases

The Company leases its facility under terms of a lease agreement which provides for rent holidays and escalating payments. Rent under operating leases is recognized on a straight-line basis beginning with lease commencement through the end of the lease term. The Company records deferred lease payments in other long-term liabilities.

(s) Deferred Financing Costs

Costs incurred in issuing the 5.75% convertible notes are amortized using the straight-line method over the shorter of the term of the related instrument or the initial date on which the holders can require repurchase of the notes. The amortization of deferred financing costs is included in Interest expense in the Consolidated Statements of Operations.

Costs incurred in connection with the issuance of the Sensipar Notes and under the agreements with DRI, in which the Company sold to DRI its right to receive future royalty payments arising from sales of REGPARA under its license agreement with Kyowa Hakko Kirin and a future royalty in the mid-single digits from the sales of PTH, are amortized using the effective-interest method over the same period and in the same manner as the related debt. The amortization of deferred financing costs is included in Interest expense in the Consolidated Statements of Operations.

(t) Deferred License Fees

Cost of license fees are deferred if they are a direct cost of a revenue generating activity and that revenue is being deferred. These deferred costs are amortized over the same period and in the same manner as the related deferred revenue. The amortization of deferred license fees is included in Cost of license fees in the Consolidated Statements of Operations.

(2) Collaborative and License Agreements

The Company has granted exclusive development, commercialization, and marketing rights under certain of the below-described collaborative research, development, and license agreements, the success of each program is dependent upon the efforts of the licensees. Each of the respective agreements may be terminated early. If any of the licensees terminates an agreement, such termination may have a material adverse effect on the Company's operations.

Following is a description of significant collaborations and license agreements:

(a) Amgen Inc.

In 1996, the Company licensed worldwide rights (with the exception of China, Japan, North and South Korea, and Taiwan) to Amgen, Inc. to develop and commercialize cinacalcet HCl for the treatment of hyperparathyroidism and indications other than osteoporosis and related bone metabolism disorders. Amgen is incurring all costs of developing and commercializing these products. Amgen paid the Company a $10.0 million nonrefundable license fee and agreed to pay up to $400,000 per year through 2000 in development support, potential additional development milestone payments totaling $26.0 million, and royalties on any future product sales. Such $26.0 million of potential additional milestone payments includes the Company's potential to earn a $5.0 million milestone payment upon the FDA approval to sell a compound under the license agreement having a different structural formula from cinacalcet HC1. The future milestone is tied to future events outside the Company's control. The Company believes these are substantive in nature and there is no assurance that they will be achieved. Through December 31, 2013, Amgen has paid the Company $21.0 million in milestone payments, of which none were recognized during 2013, 2012, and 2011, respectively. The Company recognized royalties from product sales of $112.9 million, $89.3 million and $77.6 million in 2013, 2012 and 2011, respectively, under the contract.

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The Company receives a royalty from Amgen that represents a percentage in the high single digits to low double digits of Amgen's sales of cinacalcet HCl. In June 2012, we amended our agreement with Amgen and received a one-time non-refundable $25.0 million payment in July 2012 in exchange for our rights to receive royalties under the license agreement that are earned after December 31, 2018. Amgen has a right to terminate upon 90 days written notice to the Company, and either party may terminate upon material default by the other party subject to a right to cure such default.

(b) GlaxoSmithKline

In 1993, the Company entered into an agreement with GlaxoSmithKline (GSK) to collaborate on the research, development and commercialization of calcium receptor active compounds to treat osteoporosis and other bone metabolism disorders, excluding hyperparathyroidism. Under the terms of the agreement, the Company may receive milestone payments and royalties from any product sales under the license and a share of the profits from co-promoted products. To date, GSK has paid the Company $12.0 million in milestone payments, of which none were recognized during 2013, 2012 or 2011. The Company granted GSK the exclusive license to develop and market worldwide compounds described under the GSK agreement, subject to the Company's right to co-promote in the United States. Once compounds have been selected for development, GSK has agreed to conduct and fund all development of such products, including all human clinical trials and regulatory submissions. In December 2006, the Company entered into an amendment to the agreement with GSK that permits GSK to develop additional compounds. In consideration for this amendment, the Company received a $3.0 million fee during 2006. The Company recognized no revenue related to its agreement with GSK in 2013, 2012 or 2011.

The Company is entitled to receive a royalty from GSK that represents a percentage in the high single digits or low double digits, depending on sales, of such compounds should GSK commercialize any such compounds. The license agreement with GSK is effective for the longer of ten years from first marketing in the last country in the territory or the expiration of the last patent. GSK may terminate the agreement on 30-day written notice on a country-by-country basis if it reasonably determines that any compound developed under the agreement is not worth continued development. NPS may terminate the agreement on 90-day written notice if no compound is under development or commercialization for a period of twelve consecutive months, subject to GSK showing that it has a compound under development or commercialization or that it intends to enter development within six months. Either party may terminate upon material default by the other party subject to a right to cure such default. Upon termination, the rights and licenses the Company granted GSK revert to the Company.

In August 2011, the Company formed a new agreement with GSK which terminated and replaced the 1993 agreement. Under the agreement, GSK assigned to NPS the investigational new drug filings for two Phase 1 calcilytic compounds, NPSP790 and NPSP795. The Company believes calcilytics may have clinical application in treating rare disorders involving increased calcium receptor activity, such as autosomal dominant hypocalcemia with hypercalciuria (ADHH). The new agreement also expands GSK's licensed field of research for Ronacaleret to include stem cell transplants, in addition to osteoporosis and other bone disorders. Under the terms of the agreement, the Company has the potential to earn up to $11.5 million in future milestone payments upon the achievement of certain pre-specified product development and sales-based milestones plus royalties on product sales. The Company has the potential to earn the next product development milestone of $1.0 million upon the decision by GSK to continue development in the first indication following the proof of concept trial. The remaining milestones vary by additional indications, with $7.5 million relating to successful proof of concept studies and acceptance of regulatory filings, and $4.0 million relating to the first commercial sale of each indication. The future milestones are tied to future events outside the Company's control. The Company believes these are substantive in nature and there is no assurance that they will be achieved.

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(c) Kyowa Hakko Kirin

In 1995, the Company entered into an agreement with the pharmaceutical division of Kyowa Hakko Kirin Co. Ltd, formerly Kirin Brewery Company Limited, to develop and commercialize compounds for the treatment of hyperparathyroidism in Japan, China, North Korea, South Korea and Taiwan. Kyowa Hakko Kirin paid the Company a $5.0 million license fee during 2005 and agreed to pay up to $7.0 million in research support, potential additional milestone payments totaling $13.0 million and royalties on product sales. Kyowa Hakko Kirin is incurring all costs of developing and commercializing products. Any payments subsequent to June 2000 represent milestone and royalty payments. Through December 31, 2013, Kyowa Hakko Kirin has paid the Company $7.0 million in research support and $13.0 million in milestone payments none of which were recognized during 2013, 2012 or 2011. In October 2007, Kyowa Hakko Kirin received approval from the Japanese Pharmaceuticals and Medical Devices Agency to market cinacalcet HCl in Japan for the treatment of patients with secondary hyperparathyroidism during maintenance dialysis. The parties participate in a collaborative research program utilizing the Company's parathyroid calcium receptor technology. Under the Company's agreement with Kyowa Hakko Kirin, the Company recognized no milestone and license fee revenue in 2013, 2012 and 2011, respectively, and royalty revenue of $8.0 million in 2013, $8.7 million in 2012 and $7.6 million in 2011.

The Company receives a royalty from Kyowa Hakko Kirin that represents a percentage in the single digits of sales. The agreement with Kyowa Hakko Kirin is effective until expiration of the last patent. Kyowa Hakko Kirin has a right to terminate upon 90 days written notice to the Company, and either party may terminate upon material default by the other party subject to a right to cure such default. Kyowa Hakko Kirin also has the right to terminate the agreement with respect to individual countries based upon a reasonable determination by if that continued development or marketing of a compound is not justified in such country, subject to providing 60 days notice and the Company's right to delay termination for up to 90 days. Certain agreements between the Company and DRI Capital Inc., or DRI (formerly Drug Royalty L.P.3) limit the Company's right to terminate this license (see note 8).

(d) Takeda GmbH

On March 18, 2013, the Company entered into a Termination and Transition Agreement, with Takeda GmbH, whereby the following two agreements were terminated. (see note 10)

Teduglutide

In September 2007 the Company entered into a license agreement with Takeda GmbH, formerly known as Nycomed (Takeda) in which the Company granted Takeda the right to develop and commercialize teduglutide, outside the United States, Canada and Mexico for the treatment of gastrointestinal disorders. The Company had been developing teduglutide for the treatment of adults with short bowel syndrome (SBS). A positive opinion was issued in June 2012 by the Committee for Medicinal Products for Human Use, followed by the European Commission granting European market authorization on August 30, 2012 for the medicinal product teduglutide (trade name in Europe: Revestive®) as a once-daily treatment for adult patients with SBS.

The Company received $35.0 million in up-front fees under the agreement during 2007. Additionally, under a previously existing licensing agreement with a third party, the Company paid $6.6 million in 2007 to the licensor and was required to make future payments based on teduglutide royalties and milestone payments earned. Due to the Company's continuing involvement, the Company recognized revenue associated with the upfront fees over the estimated performance period and for the years ended December 31, 2013, 2012 and 2011, the Company recognized no license fee revenue.

During 2011, Takeda paid the Company $5.0 million for Takeda's submission of a Marketing Authorization Application (MAA) to the European Medicines Agency (EMA) for clearance to market teduglutide (Revestive®) as a once-daily subcutaneous treatment for SBS. Additionally, under a previously existing licensing agreement with a third party, the Company paid $2.4 million in 2011 to the licensor and will be required to make future payments based on teduglutide royalties and milestone payments earned. The Company recognized revenue from this milestone payment due to the achievement of an as agreed-upon event of a substantive step in the development process and due to the amount of the milestone payment approximated the fair value of achieving the milestone.

Cumulatively through December 31, 2013, the Company had received $40.0 million in license fees and milestone payments from Takeda under the license agreement of which none was received during the years ended December 31, 2013 and 2012 and $5.0 million was received during the year ended December 31, 2011.

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Preotact® (parathyroid hormone 1-84)

In 2004, the Company signed a distribution and license agreement with Takeda in which the Company granted Takeda the right to develop and market Preotact® (recombinant parathyroid hormone 1-84) in Europe. The agreement required Takeda to pay the Company up to 22.0 million euros in milestone payments upon regulatory approvals and achievement of certain sales targets. The Company was also entitled to royalties on product sales. In July 2007, the Company entered into a new license agreement with Takeda which superseded the 2004 agreement, pursuant to which the Company granted to Takeda the right to commercialize Preotact in all non-U.S. territories, excluding Japan and Israel; however, Takeda's licensed rights in Canada and Mexico, reverted back to the Company if the Company received regulatory approval for the compound in the U.S. The 2007 license agreement contains milestone and royalty payment obligations which were similar to those under the 2004 distribution and license agreement. Takeda was required to pay the Company royalties on sales of Preotact only in the European Union, European countries outside the European Union, the Commonwealth of Independent States and Turkey. As part of the manufacturing and supply transfer, Takeda paid the Company $11.0 million during 2007, for a significant portion of the Company's existing bulk drug inventory. Cumulatively through December 31, 2013, the Company has received 7.1 million euros in milestone payments from Takeda under the 2004 and 2007 agreements, all of which have been recognized as revenue.

The Company received a royalty from Takeda that represented a percentage, depending on the amount of sales of Preotact, in the teens to low twenties of the Takeda net sales of Preotact in the European Union, European countries outside the European Union, the Commonwealth of Independent States and Turkey. Either party may have terminated upon material breach by the other party subject to a right to cure such breach. Certain agreements with DRI Capital Inc., (DRI) limited the Company's right to terminate this license (see note 9).

Revenues from Takeda related to the Preotact agreement, were $0, $4.8 million and $9.1 million for the years ended December 31, 2013, 2012 and 2011, respectively.

(e) Janssen Pharmaceuticals, Inc.

In December 2006, the Company entered into an agreement with Janssen Pharmaceuticals, Inc. formerly known as Ortho-McNeil Pharmaceutical (Janssen) pertaining to certain NPS patents. Janssen paid the Company an $8.0 million fee and agreed to pay royalties on sales of licensed products. NPS will not incur any development or commercialization costs for these products. The Company is responsible for patent prosecution and maintenance of the related patents. The Company may terminate the agreement if Janssen fails to make a payment and does not cure that default within 30 days, or if it does not cure any other default within sixty days of notice. Janssen may terminate the agreement on 60 days written notice for material breach if NPS has not cured the breach by that time or on 60 days written notice. Termination does not affect any previously-matured payment obligations. In November 2008, the U.S. Food and Drug Administration (FDA) approved Nucynta (tapentadol) hydrochloride immediate release (IR) tablets for the relief of moderate to severe acute pain. This compound is covered under our agreement and Janssen is required to pay the Company a royalty on the product's sales. Nucynta is a novel investigational, centrally acting oral analgesic, which was launched in the second quarter of 2009. The Company recognized revenue of $2.9 million, $2.8 million and $2.2 million in 2013, 2012 and 2011, respectively.

(f) Hoffman-La Roche Inc. and F. Hoffmann-La Roche Ltd.

In December 2008, the Company entered into an agreement with Hoffman-La Roche Inc. and F. Hoffmann-La Roche Ltd. (Roche), under which the Company granted the Roche entities a non-exclusive license (with the right to grant sublicenses) to develop, make, import, use of for sale or sell products covered by patents relating to modulation of NMDA receptor activity using glycine uptake antagonists. In return Roche paid the Company an upfront licensing fee of $2.0 million, and agreed to make additional payments for the achievement of certain regulatory milestones. Through December 31, 2013, Roche has paid the Company $250,000 in milestone payments. Further, Roche agreed to pay royalties on sales of licensed products, if any. Either party may terminate the agreement on 30 days written notice due to a material breach by the other, or in the case of the other party's insolvency. Amounts due prior to termination will remain due thereafter. NPS will not incur any development or commercialization costs for these products. The Company has not recognized revenue in 2013, 2012 and 2011, respectively, as the Company had no continuing involvement in the arrangement.

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(g) In-License and Purchase Agreements

Depending on the commercial success of certain products, the Company may be required to pay license fees or royalties. Additionally, the Company is required to pay royalties on sales of cinacalcet HCl up to a cumulative maximum of $15.0 million. To date, $15.0 million has been accrued for related royalties payable on sales of cinacalcet HC1, of which, $9.4 million has been paid. Annual payments due are limited to a maximum of $1.0 million. Accruals of $4.6 million and $1.0 million at December 31, 2013 are recorded in other liabilities and accrued expenses and other current liabilities, respectively.

(3) Income (loss) Per Common Share

Basic income (loss) per common share is the amount of income (loss) for the period divided by the weighted average shares of common stock outstanding during the reporting period. Diluted income (loss) per common share is the amount of income (loss) for the period plus interest expense on convertible debt divided by the sum of weighted average shares of common stock outstanding during the reporting period and weighted average shares that would have been outstanding assuming the issuance of common shares for all dilutive potential common shares.

Potential common shares of approximately 7.2 million, 8.0 million and 8.3 million during the years ended December 31, 2013, 2012, and 2011, respectively, that could potentially dilute basic income (loss) per common share in the future were not included in the computation of diluted income (loss) per share because to do so would have been anti-dilutive for the periods presented. Potential dilutive common shares for the years ended December 31, 2013, 2012 and 2011 include approximately 3.0 million, 3.0 million and 4.7 million common shares related to convertible debentures, respectively, and 4.1 million, 5.0 million, and 3.6 million shares, respectively, related to stock options, restricted stock, and restricted stock units.

(4) Fair Value Measurement

Summary of Assets Recorded at Fair Value

The Company's financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy. The three levels are as follows:

Level 1- Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2- Inputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).

Level 3- Inputs are unobservable and reflect the Company's assumptions that market participants would use in pricing the asset or liability. The Company develops these inputs based on the best information available.

In accordance with the fair value hierarchy described above, the following table shows the fair value of the Company's financial assets (all marketable investment securities) that are required to be measured at fair value as of December 31, 2013 and December 31, 2012 (in thousands):

As of December 31, 2013:		Level 1		Level 2		Level 3		Total
Marketable investment securities	$	116,250	$	13,020	$	-	$	129,270

As of December 31, 2012:		Level 1		Level 2		Level 3		Total
Marketable investment securities	$	67,723	$	15,521	$	-	$	83,244

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As of December 31, 2013 and December 31, 2012, the fair values of the Company's Level 2 securities were $13.0 million and $15.5 million, respectively. These securities are certificates of deposit or commercial paper issued by domestic companies with an original maturity of greater than ninety days. These securities are currently rated A-1 or higher. The Company's cash equivalents are classified within Level 1 or Level 2 of the fair value hierarchy because they are valued using quoted market prices or broker or dealer quotations for similar assets. These investments are initially valued at the transaction price and subsequently valued utilizing third party pricing providers or other market observable data. Data used in the analysis include reportable trades, broker/dealer quotes, bids and offers, benchmark yields and credit spreads. The Company validates the prices provided by its third party pricing providers by reviewing their pricing methods, analyzing pricing inputs and confirming that the securities have traded in normally functioning markets. The Company did not adjust or override any fair value measurements provided by its pricing providers as of December 31, 2013 or 2012.

As of December 31, 2013 and 2012, the Company did not have any investments in Level 3 securities.

There were no transfers of assets or liabilities between Level 1 and Level 2 during the years ended December 31, 2013 and 2012.

The carrying amounts reflected in the consolidated balance sheets for certain short-term financial instruments including cash and cash equivalents, restricted cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, and other liabilities approximate fair value due to their short-term nature except that the estimated fair value and carrying value of the Brigham and Women's Hospital royalty liability using a discounted cash flow model is approximately $4.3 million and $5.6 million, respectively, at December 31, 2013 and $4.8 million and $6.6 million, respectively, at December 31, 2012.

Summary of Liabilities Recorded at Carrying Value

The fair and carrying value of our debt instruments are detailed as follows (in thousands):

		As of December 31, 2013				As of December 31, 2012
	Fair		Carrying		Fair		Carrying
		Value		Value		Value		Value
5.75% Convertible Notes	$	92,338	$	16,545	$	28,131	$	16,545
Sensipar Notes		54,097		54,395		79,129		80,234
PTH 1-84-Secured Debt		50,058		42,790		28,605		42,816
Regpara-Secured Debt		37,348		35,202		48,887		36,252
Total	$	233,841	$	148,932	$	184,752	$	175,847

The fair values of the Company's convertible notes were estimated using the (i) terms of the convertible notes; (ii) rights, preferences, privileges, and restrictions of the underlying security; (iii) time until any restriction(s) are released; (iv) fundamental financial and other characteristics of the Company; (v) trading characteristics of the underlying security (exchange, volume, price, and volatility); and (vi) precedent sale transactions. The fair values of the Company's non-recourse Sensipar notes, PTH 1-84-secured debt and REGPARA-secured debt were estimated using a discounted cash flow model. Within the hierarchy of fair value measurements, these are Level 3 fair values.

(5) Financial Instruments

Financial instruments that potentially subject the Company to concentrations of credit risk are accounts receivable and marketable investment securities. The majority of the Company's accounts receivable are payable by large pharmaceutical companies and specialty pharmacies and collateral is generally not required from these companies. Substantially all of the Company's royalty revenues and the related accounts receivable balances for the years ended December 31, 2013 and 2012 were from three and four licensees of the Company, respectively. Substantially all of the Company's product sales revenues for the year ended December 31, 2013 and substantially all of the Company's trade accounts receivable balances at December 31, 2013 were from six specialty pharmacies. The Company's portfolio of marketable investment securities is subject to concentration limits set within the Company's investment policy that help to mitigate its credit exposure.

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The following is a summary of the Company's marketable investment securities (in thousands):

				Gross		Gross
				unrealized		unrealized
		Amortized		holding		holding		Fair
As of December 31, 2013:		cost		gains		losses		value
Debt securities:
Corporate	$	103,175	$	23	$	(60)	$	103,138
Government agency		26,110		22		-		26,132
Total marketable investment securites	$	129,285	$	45	$	(60)	$	129,270

				Gross		Gross
				unrealized		unrealized
		Amortized		holding		holding		Fair
As of December 31, 2012:		cost		gains		losses		value
Debt securities:
Corporate	$	50,822	$	3	$	(31)	$	50,794
Government agency		32,444		10		(4)		32,450
Total marketable investment securites	$	83,266	$	13	$	(35)	$	83,244

Marketable investment securities available for sale in an unrealized loss position as of December 31, 2013 and 2012 are summarized as follows (in thousands):

		Held for less than 12 months				Held for more than 12 months				Total
				Unrealized				Unrealized				Unrealized
		Fair value		losses		Fair value		losses		Fair value		losses
December 31, 2013
Available for Sale:
Debt securities:
Corporate	$	74,407	$	56	$	5,732	$	4	$	80,139	$	60
Government agency		-		-		-		-		-		-
	$	74,407	$	56	$	5,732	$	4	$	80,139	$	60
December 31, 2012
Available for Sale:
Debt securities:
Corporate	$	37,974	$	31	$	-	$	-	$	37,974	$	31
Government agency		7,110		4		-		-		7,110		4
	$	45,084	$	35	$	-	$	-	$	45,084	$	35

Summary of Contractual Maturities

Maturities of marketable investment securities are as follows at December 31, 2013 and December 31, 2012 (in thousands):

		As of December 31, 2013				As of December 31, 2012
		Amortized				Amortized
		cost		Fair value		cost		Fair value
Due within one year	$	103,280	$	103,266	$	65,637	$	65,632
Due after one year through five years		26,005		26,004		17,629		17,612
Due after five years through ten years		-		-		-		-
Due after ten years		-		-		-		-
Total debt securities	$	129,285	$	129,270	$	83,266	$	83,244

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Impairments

No impairment losses were recognized through earnings related to available for sale securities during the years ended December 31, 2013 or 2012.

Proceeds from Available for Sale Securities

The proceeds from maturities and sales of available for sale securities and resulting realized gains and losses, were as follows (in thousands):

		For the Years Ended December 31,
		2013		2012		2011
Proceeds from sales and maturities	$	107,871	$	119,507	$	86,668
Realized gains		4		4		-
Realized losses		-		-		-

(6) Inventory

Inventories, stated at the lower of cost or market, consisted of raw materials of $29.3 million and finished goods of $705,000 as of December 31, 2013. The Company began to capitalize inventory after the FDA approval of Gattex in December 2012. The Company acquired approximately $16.6 million of Revestive raw materials and $17.1 million of PTH raw materials related to the March 18, 2013 Transition and Termination Agreement with Takeda (See note 10). During June 2013, certain lots of this PTH inventory were designated for research and development activities and were accordingly expensed during the period.

(7) Property and Equipment, Net

Property and equipment is recorded at cost and consists of the following (in thousands):

		December 31,
		2013		2012
Office Equipment	$	5,519	$	4,379
Laboratory Equipment		216		216
Leasehold Improvements		2,023		1,795
Total property and equipment		7,758		6,390
Less accumulated depreciation		(3,356)		(2,197)
Total equipment, net	$	4,402	$	4,193

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(8) Leases

The Company has a non-cancelable operating lease for its office space in Bedminster, New Jersey that expires in 2016. The Company also has non-cancelable operating leases for office space in Europe for the expansion of the Company's global business and certain equipment that expire between 2014 and 2015. Rent-free periods and other incentives granted under the leases and scheduled rent increases are charged to rent expense on a straight-line basis over the related terms of the lease. Rental expense for operating leases was approximately $1.7 million, $1.6 million, and $1.3 million for 2013, 2012, and 2011, respectively. The future lease payments under non-cancelable operating leases as of December 31, 2013 are as follows (in thousands):

		Operating
		leases
Year ending December 31:
2014	$	1,992
2015		1,910
2016		1,287
2017		-
2018		-
Total minimum lease payments	$	5,189

(9) Long-term Debt

The following table reflects the carrying value of our long-term debt under various financing arrangements as of December 31, 2013 and 2012 (in thousands):

		December 31,
		2013		2012
Convertible notes	$	16,545	$	16,545
Non-recourse debt		132,387		159,302
Total debt		148,932		175,847
Less current portion		25,297		6,278
Total long-term debt	$	123,635	$	169,569

(a) Convertible Notes

In August 2007, the Company completed a private placement of $50.0 million in 5.75% Convertible Notes due August 7, 2014 (5.75% Convertible Notes). The Company received net proceeds from the 5.75% Convertible Notes of approximately $49.4 million, after deducting costs associated with the offering. The 5.75% Convertible Notes accrue interest at an annual rate of 5.75% payable quarterly in arrears on the first day of the succeeding calendar quarter commencing January 1, 2008. As of December 31, 2013, the Company classified the 5.75% Convertible Notes as current debt. Accrued interest on the 5.75% Convertible Notes was $0 as of December 31, 2013 and 2012, respectively. The holders may convert all or a portion of the 5.75% Convertible Notes into common stock at any time, subject to certain limitations, on or before August 7, 2014. The 5.75% Convertible Notes are convertible into common stock at a conversion price of $5.44 per share (see below), subject to adjustments in certain events. The 5.75% Convertible Notes are unsecured debt obligations and rank equally in right of payment with all existing and future unsecured senior indebtedness. The 5.75% Convertible Notes provide for certain events of default, including payment defaults, breaches of covenants and certain events of bankruptcy, insolvency and reorganization. The 5.75% Convertible Notes also provide that if there shall occur a fundamental change, as defined, at any time prior to the maturity of the Note, then the holder shall have the right, at the Holder's option, to require the Company to redeem the notes, or any portion thereof plus accrued interest and liquidated damages, if any. If a change of control, as defined, occurs and if the holder converts notes in connection with any such transaction, the Company will pay a make whole premium by increasing the conversion rate applicable to the notes. If any event of default occurs and is continuing, the principal amount of the 5.75% Convertible Notes, plus accrued and unpaid interest, if any, may be declared immediately due and payable. The Company incurred debt issuance costs of approximately $600,000, which have been deferred and which are being amortized over a seven-year period. The effective interest rate on the 5.75% Convertible Notes, including debt issuance costs, is 5.9%.

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On January 31, 2011 and April 14, 2011, certain holders of the 5.75% Convertible Notes converted portions of the outstanding notes at a conversion price of $5.44 per share. The Company issued 529,282 and 5,620,445 shares on January 31, 2011 and April 14, 2011, respectively, pursuant to this conversion and retired $2.9 million and $30.6 million, respectively, of the outstanding 5.75% Convertible Notes. The Company has $16.5 million of the 5.75% Convertible Notes outstanding as of December 31, 2013.

Pursuant to the Registration Rights Agreement, the Company has filed a shelf registration statement with the SEC, covering resales of the common stock issuable upon conversion of the 5.75% Convertible Notes. The registration statement has been declared effective. The Company agreed to use its reasonable best efforts to keep the registration statement effective until the earlier of (i) the date as of which holders may sell all of the securities covered by the registration statement without restriction pursuant to Rule 144(k) promulgated under the Securities Act of 1933 or (ii) the date on which holders shall have sold all of the securities covered by the registration statement. If the Company fails to comply with these covenants or suspends use of the registration statement for periods of time that exceed what is permitted under the Registration Rights Agreement, the Company is required to pay liquidated damages in an amount equivalent to 1% per annum of (a) the principal amount of the notes outstanding, or (b) the conversion price of each underlying share of common stock that has been issued upon conversion of a note, in each case, until the Company is in compliance with these covenants. The Company believes the likelihood of such an event occurring is remote and, as such, the Company has not recorded a liability as of December 31, 2013.

(b) Non-recourse Debt

Sensipar and Mimpara-secured Non-recourse Debt

As of December 31, 2013 and 2012, the outstanding principal balances on Sensipar and Mimpara-secured debt were $54.4 million and $80.2 million, respectively. The Sensipar and Mimpara-secured debt is non-recourse to the Company and solely secured and serviced by its Sensipar and Mimpara (cinacalcet HCl) royalty revenues and milestone payments. The Sensipar and Mimpara-secured non-recourse debt relates to the following royalty monetization transactions: (i) the private placement of $175.0 million in non-recourse 8.0% Notes due March 30, 2017 (Class A Notes), (ii) the private placement of $100.0 million in non-recourse 15.5% Notes due March 30, 2017 (Class B Notes), and (iii) the amendment of the Company's agreement with Amgen in August 2011.

The Class A Notes were paid in full on March 30, 2011 and the Class B Notes were paid in full on September 30, 2011 when they were redeemable at their par value.

The Company amended its agreement with Amgen effective September 30, 2011 whereby Amgen advanced $145.0 million of Sensipar and Mimpara royalties to the Company. The Sensipar Notes accrue interest at an annual rate of 9%, compounded quarterly and payable forty-five days after the close of each quarter. The payment of the royalty advance and discount shall be satisfied solely by Amgen's withholding of royalties and except in the event of a breach of certain customary representations and warranties under the agreement, the Company will have no obligation to repay any unsettled amount. The Company further amended the agreement with Amgen effective June 29, 2012, limiting the royalty offset of the royalty advance up to $8.0 million per quarter with royalties in excess of $8.0 million paid to the Company for the respective quarter, thereby extending the royalty advance repayment period. After the payment of the royalty advance and a 9 percent per annum discount on the balance of the advance, Amgen will resume paying NPS all royalties earned through December 31, 2018. As of December 31, 2013, the Company classified $6.8 million of the Sensipar Notes as current based on royalty payments accrued as of December 31, 2013. The Sensipar Notes are non-recourse to the Company. The outstanding principal balance on the Sensipar Notes, was $54.4 million and $80.2 million as of December 31, 2013 and 2012, respectively. Accrued interest on the Sensipar Notes was approximately $592,000 and $874,000 as of December 31, 2013 and 2012, respectively. The Company incurred debt issuance costs of $96,000, which are being amortized using the effective interest method. The effective interest rate on the Sensipar Notes, including debt issuance costs, is approximately 9%.

Under the Company's agreement for the Sensipar Notes, the Company would potentially be liable for its breaches or defaults, if any.

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PTH 1-84-secured Non-recourse Debt

As of December 31, 2013 and 2012, the outstanding principal balances on the PTH 1-84-secured debt were $42.8 million, respectively. In July 2007, the Company entered into an agreement with DRI Capital, or DRI, formerly Drug Royalty L.P.3, in which the Company sold to DRI its right to receive future royalty payments arising from sales of recombinant human parathyroid hormone 1-84 [rDNA origin] ("PTH") under its license agreement with Takeda. Under the agreement, DRI paid the Company an up-front purchase price of $50.0 million. If and when DRI receives two and a half times the amount paid to the Company, the agreement will terminate and the remainder of the royalties, if any, will revert back to the Company. In connection with the Company's July 2007 agreement with DRI, the Company granted DRI a security interest in its license agreement with Takeda for Preotact and certain of its patents and other intellectual property underlying that agreement. In the event of a default by NPS under the agreement with DRI, DRI would be entitled to enforce its security interest against NPS and the property described above.

In December 2013, the Company entered into an amendment and restatement (the "Amendment and Restatement") to its agreement with DRI. Pursuant to the Termination and Transition Agreement between NPS and Takeda (See note 10), NPS' license agreement with Takeda was terminated and NPS re-acquired exclusive rights worldwide, excluding Israel, to develop and commercialize PTH. Preotact is the brand name that Takeda had used to market PTH for the treatment of osteoporosis in certain of its licensed territories. NPS is developing PTH in the U.S. under the trade name Natpara for the treatment of hypoparathyroidism. NPS filed a BLA for Natpara with the FDA in October 2013.

Pursuant to the Amendment and Restatement, (i) DRI has consented to the commercialization of PTH by the Company, (ii) the terms of the 2007 Agreement are tolled, and (iii) the parties' rights and obligations regarding PTH and related technology are governed by the Amendment and Restatement.

The Company will be required to pay royalties in the mid-single digits to DRI based upon sales of PTH by the Company and its licensees (if any) worldwide, excluding Israel. The Company has agreed to undertake certain efforts to commercialize PTH. If the Company does not submit a Marketing Authorization Application to the European Medicines Agency for PTH in the European Union by an agreed upon date, DRI will have the right to revoke the consent granted in the Amendment and Restatement, reinstate the 2007 Agreement, and either cause the Company to enter into a new license agreement with a third party with respect to PTH on terms that are substantially similar and no more extensive (when taken as a whole) than the terms contained in the terminated Takeda License Agreement, or negotiate such an agreement on NPS' behalf.

The Company's obligation to pay royalties to DRI under the Amendment and Restatement shall expire on a country-by-country basis upon the later of (i) the last to expire patent controlled by the Company with claims covering PTH in such country or (ii) the expiration of any period of regulatory exclusivity applicable to PTH in such country. The Company's obligation to pay royalties to DRI under the Amendment and Restatement shall terminate in its entirety once cumulative royalty payments made to DRI by Takeda and the Company total $125.0 million. As of December 31, 2013, $45.5 million in royalties had been paid to DRI.

DRI continues to maintain a security interest in NPS patents that contain claims covering PTH and certain other NPS intellectual property related to PTH. In the event of a default by NPS under the Amendment and Restatement, DRI would be entitled to enforce its security interest against NPS and such intellectual property.

The Company determined the initial up-front purchase price is debt and is being amortized into earnings using the effective interest method over the estimated life. Accrued interest under the DRI agreement was $0 as of December 31, 2013 and 2012, respectively. The repayment of the remaining $42.8 million is secured solely by future royalty payments arising from sales of PTH by the Company. The PTH- secured debt is non-recourse to the Company.

REGPARA-secured Non-recourse Debt

As of December 31, 2013 and 2012, the outstanding principal balances on REGPARA-secured debt were $35.2 million and $36.3 million, respectively. In February 2010, the Company entered into an agreement with an affiliate of DRI, in which the Company sold to DRI its right to receive future royalty payments arising from sales of REGPARA^® (cinacalcet HC1) under its license agreement with Kyowa Hakko Kirin. Under the agreement, DRI paid the Company an up-front purchase price of $38.4 million. If and when DRI receives two and a half times the amount paid to the Company, the agreement will terminate and the remainder of the royalties, if any, will revert back to the Company. In connection with the Company's February 2010 agreement with DRI, the Company granted DRI a security interest in its license agreement with Kyowa Hakko Kirin for REGPARA and certain of its patents and other intellectual property

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underlying that agreement. In the event of a default by NPS under the agreement with DRI, DRI would be entitled to enforce its security interest against NPS and the property described above. The Company determined the initial up-front purchase price is debt and is being amortized into earnings using the effective interest method over the estimated life of approximately 11 years. In accordance with the agreement, on March 1, 2010, DRI received the $2.1 million royalty owed to NPS for REGPARA sales during the six months ended December 31, 2009, which reduced the liability recorded for the DRI transaction to $36.3 million. As of December 31, 2013 and 2012, the Company classified $1.9 million and $0, respectively, of the REGPARA-secured debt as current based on royalty payments accrued as of December 31, 2013 and 2012, respectively. Accrued interest under the DRI agreement was $1.1 million and $3.1 million as of December 31, 2013 and 2012, respectively. Through December 31, 2013, $27.9 million has been paid to DRI. The repayment of the remaining $35.2 million is secured solely by future royalty payments arising from sales of REGPARA by Kyowa Hakko Kirin. The effective interest rate under the agreement, including issuance costs, is approximately 15.7%. The REGPARA-secured debt is non-recourse to the Company.

(c) Contractual maturities of long-term debt

The aggregate contractual maturities of long-term debt, including estimated maturities of the Non-recourse Debt, due subsequent to December 31, 2013 are as follows (in thousands):

Year ending December 31:
2014	$	48,909
2015		31,334
2016		5,005
2017		4,648
2018		18,948
Thereafter		40,088
Total long-term debt	$	148,932

(10) Takeda Termination and Transition Agreement

On March 18, 2013, the Company entered into a Termination and Transition Agreement (the Agreement), with Takeda GmbH (Takeda GmbH), and Takeda Pharma A/S (Takeda Pharma and, together with Takeda GmbH, Takeda).

The Agreement provides for the termination of the license agreement, dated July 2, 2007, as amended, which granted Takeda Pharma the exclusive license to sell, market and commercialize recombinant human parathyroid hormone 1-84 [rDNA origin] (rhPTH 1-84) worldwide, except for the U.S., Israel, and Japan, and a non-exclusive license to manufacture and develop rhPTH 1-84 (the rhPTH 1-84 License Agreement). Pursuant to the rhPTH 1-84 License Agreement the rights were returned to the Company without consideration. Preotact is the brand name that Takeda Pharma has used to market rhPTH 1-84 for the treatment of osteoporosis in certain of its licensed territories. The Company is developing rhPTH 1-84 in the U.S. under the trade name Natpara for the treatment of hypoparathyroidism.

The Agreement also provides for the termination of the license agreement, dated September 24, 2007, as amended, which granted Takeda GmbH the exclusive license to develop and commercialize teduglutide worldwide, except for North America and Israel (the Revestive License Agreement). Takeda GmbH developed and obtained approval in the EU in August 2012 for teduglutide under the trade name Revestive for the treatment of Short Bowel Syndrome (SBS) in adults. The Company obtained U.S. Food and Drug Administration approval in the U.S. in December 2012 for teduglutide under the trade name Gattex for adult patients with SBS who are dependent on parenteral support. As a result of the termination of the License Agreements, the Company now has the exclusive rights worldwide to develop and commercialize teduglutide and PTH, except as noted in Note 9.

Takeda assigned to NPS its assets related to the two products, including all of its active pharmaceutical ingredient inventory and information related to the products' continued development, manufacture, and commercialization, including life cycle management assets. Takeda received 6.1 million shares of NPS common stock that were valued at $54.9 million as of the date of the transaction. Takeda will also earn a $30.0 million milestone payment in the first calendar year that combined worldwide net sales of both products exceed $750 million. This milestone includes an early payment trigger upon a qualified change of control. NPS has the option of making this milestone payment in cash or NPS common stock.

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The Company engaged an independent valuation firm to assist it in determining the fair value of the assets acquired. Using these fair values, the Company assigned $16.6 million to the Revestive active pharmaceutical ingredient (API), $17.1 million to the PTH API and $20.7 million to the Revestive product rights. The Company capitalized the Revestive and PTH API as inventory and capitalized the product rights to intangibles, net on the Company's balance sheet due to the fact that Revestive and Preotact are approved in the EU for SBS and Osteoporosis, respectively. The Company is amortizing the Revestive product rights on a straight-line basis over the estimated useful life of approximately 12 years. Through December 31, 2013, $1.4 million of the Revestive products rights have been amortized and expensed. The estimated amortization expense for each of the next five years is approximately $1.8 million.

(11) Capital Stock

Equity Financing

In May 2013, the Company completed a public sale of 6,900,000 shares of its common stock at a per share price of $14.53. Net proceeds to the Company from the sale totaled approximately $93.5 million, after deducting expenses and the commission in connection with the offering paid by the Company.

In April 2011, the Company completed a public sale of 12,650,000 shares of its common stock at a per share price of $9.00. Net proceeds to the Company from the sale totaled approximately $106.8 million, after deducting expenses and the commission in connection with the offering paid by the Company.

Convertible Debt

As of December 31, 2013, the Company had outstanding $16.5 million in aggregate principal amount of its 5.75% Convertible Notes and has classified it as current debt. The holders of the 5.75% Convertible Notes may convert all or a portion of their notes into common stock at any time, subject to certain limitations, on or before August 7, 2014 at a conversion price equal to approximately $5.44 per share, subject to adjustment in certain events. The Company has reserved 3,041,451 shares of its common stock for issuance upon conversion of the 5.75% Convertible Notes.

(12) Share-Based Compensation Plans

As of December 31, 2013, the Company has four equity incentive plans: the 1994 Nonemployee Directors' Stock Option Plan (the Directors' Plan), the 1998 Stock Option Plan (the 1998 Plan), the 2005 Omnibus Incentive Plan (the 2005 Plan), and the Employee Stock Purchase Plan ("ESPP"). These plans provide that in the event of certain change in control transactions, including a merger or consolidation in which the Company is not the surviving corporation or a reorganization in which more than fifty-percent (50%) of the shares of the Company's common stock entitled to vote are exchanged, all outstanding, unvested equity awards under these plans will vest, and in the case of stock options, will become immediately exercisable.

As of December 31, 2013, there are no shares reserved for future grant under the Directors' Plan and the 1998 Plan. As of December 31, 2013, there are 4,497,990 shares reserved for future grant under the 2005 Plan. The Company's 2005 Plan provides for the grant of nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units, deferred stock units, performance shares, cash-based awards and other stock-based awards. Under the Company's 2005 Plan, the exercise price of stock options, the grant price of stock appreciation rights and the initial value of performance awards, must be equal to at least 100% of the fair market value of the Company's common stock on the date of grant. Stock options generally vest 28% after year one and 2% per month thereafter or 25% after year one and 6.25% every three months thereafter. Under the Company's 1998 Plan, the exercise price of options is not less than the fair market value of the Company's common stock on the date of grant. The number of shares, terms, and exercise period are determined by the board of directors on a grant-by-grant basis, and the exercise period does not extend beyond ten years from the date of the grant. Stock options generally vest 28% after one year and 2% or 3% per month thereafter or 25% after year one and 6.25% every three months thereafter.

During the year ended December 31, 2010, the Company's Board of Directors awarded a total of 1,130,700 performance condition options to certain of the Company's employees. Vesting of these options are subject to the Company achieving certain performance criteria established at the grant date and the individuals fulfilling a service condition (continued employment). As of December 31, 2013, the performance criteria of 825,340 of these options had been satisfied and these options will become exercisable based on the following vesting schedule: 25% on each of the first four anniversaries of the date of grant, which was February 20, 2010 (the date of grant). The Company recognized $277,000, $1.1 million and $153,000 of compensation expense during the years ended December 31, 2013, 2012 and

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2011, respectively, related to these options. The next performance criteria is the acceptance of the BLA filing for Natpara by the FDA. The BLA was accepted by the FDA in January 2014 and will trigger approximately $111,000 of compensation expense related to these options being recognized in the first quarter of 2014.

The Company utilized the Black-Scholes option pricing model to determine the grant date fair value of the awards. As of December 31, 2013, except for the 825,340 options discussed above, the Company does not believe that the achievement of the performance criteria for the other options is probable and therefore has not recognized any compensation expense related to those options during the years ended December 31, 2013, 2012 and 2011, respectively. Compensation expense will be recognized only once the performance condition is probable of being achieved and then only the cumulative amount related to the service condition that has been fulfilled.

On May 19, 2010, the shareholders approved an ESPP whereby qualified employees are allowed to purchase limited amounts of the Company's common stock at the lesser of 85% of the market price at the beginning or end of the offering period. The shareholders have authorized 500,000 shares for purchase by employees. During the years ended December 31, 2013, 2012 and 2011, employees purchased 72,937, 45,553 and 37,065 shares, respectively, under the ESPP. The Company has 329,585 shares available for future purchase as of December 31, 2013.

The Company estimates expected volatility considering implied volatility based on market-traded options on the Company's common stock and historical volatility of the Company's common stock over the expected life of the options. In estimating volatility for the years ended December 31, 2013, 2012 and 2011 the Company weighted implied volatility at zero percent and historical volatility at 100%. The Company recognizes compensation cost for awards on a straight-line basis over the requisite service period for the entire award. Additionally, the Company's policy is to issue new shares of common stock to satisfy stock option exercises, ESPP purchases or grants of restricted shares or deferred stock units.

The compensation expense related to stock options, ESPP purchases, restricted shares and deferred stock units are recorded in expense categories based on where other compensation cost is recorded for employees receiving the awards.

The following table summarizes the effect of compensation cost arising from share-based payment arrangements in the Company's Statements of Operations for the years ended December 31, 2013, 2012 and 2011 for the Company's stock option plans, the ESPP and other share-based awards (in thousands):

		Years ended December 31,
		2013		2012		2011
Research and development	$	4,107	$	3,343	$	1,544
Selling, general and administrative		5,330		4,205		2,556
Amounts charged against income, before
income tax expense	$	9,437	$	7,548	$	4,100

The fair value of each option award is estimated, on the date of grant using the Black-Scholes option-pricing valuation model, which incorporates ranges of assumptions for inputs as shown in the following table. The assumptions are as follows:

• The expected volatility is a blend of implied volatility based on market-traded options on the Company's common stock and historical volatility of the Company's stock over the expected term of the options.

• The Company uses historical data to estimate the expected term of the option; separate groups of employees that have similar historical exercise behavior are considered separately for valuation purposes. The expected term of options granted represents the period of time the options are expected to be outstanding.

• The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods within the expected term of the option.

• The expected dividend yield is based on the Company's current dividend yield as the best estimate of projected dividend yield for periods within the expected term of the option.

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	Years ended December 31,
	2013	2012	2011
Dividend yield	—	—	—
Expected volatility	59.15% - 60.69%	61.22% - 67.58%	60.5% - 67.8%
Risk-free interest rate	0.7% - 3.7%	0.6% - 1.1%	0.9% - 3.0%
Expected term (in years)	5.2 - 6.0	5.1 - 5.9	4.8 - 5.9

A summary of activity related to aggregate stock options under all plans is indicated in the following table (in thousands, except per share amounts):

	Year ended December 31, 2013
			Weighted	Weighted
	Number		average	average remaining		Aggregate
	of		exercise	contractual		intrinsic
	options		price	term		value
	(in thousands)			(in years)		(in thousands)
Options outstanding at beginning
of year	7,390	$	6.75
Options granted	2,178		10.69
Options exercised	2,522		5.76
Options forfeited/expired	390		13.29
Options outstanding at end of year	6,656		8.03	7.49	$	148,651
Vested and expected to vest	6,264		7.87	7.40	$	140,880
Options exercisable at end of year	2,690	$	6.69	6.05	$	63,690

The weighted-average grant-date fair value of options granted during the years ended December 31, 2013, 2012 and 2011 was $5.66, $4.46 and $4.57, respectively. The intrinsic value for stock options is defined as the difference between the current market value and the grant price. The total intrinsic value of stock options exercised during the years ended December 31, 2013, 2012 and 2011 was $33.4 million, $2.0 million and $1.0 million, respectively.

Restricted stock, restricted stock units and deferred stock unit grants consist of the Company's common stock. The fair value of each restricted stock grant, restricted stock unit and deferred stock unit is equal to the market price of the Company's stock at the date of grant. Restricted stock and restricted stock unit grants are time vested. During the years ended December 31, 2013, 2012 and 2011, the Company granted 35,097, 20,334 and 64,792 deferred stock units, respectively, to directors for services, which did not contain any vesting restrictions. During the years ended December 31, 2013, 2012 and 2011, the Company granted 75,940, 106,575 and 0 restricted stock units, respectively, to directors for services, which vest over one year. At December 31, 2013, there are 642,506 deferred stock units outstanding. During the years ended December 31, 2013, 2012 and 2011 the Company granted to employees 458,719, 307,720 and 10,000 shares of restricted stock, respectively, which will vest over a period of one to three years.

A summary of activity related to aggregate restricted stock, restricted stock units and deferred stock units as of December 31, 2013, is indicated in the following table (shares in thousands):

	Number of		Weighted-average
	shares		grant date fair value
Nonvested at beginning of year	505	$	6.96
Granted	570		9.18
Vested	(318)		6.37
Forfeited	(5)		8.21
Nonvested at December 31, 2013	752	$	8.89

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As of December 31, 2013, there was $17.0 million of total unrecognized compensation cost related to all unvested share-based compensation arrangements that is expected to be recognized over a weighted-average period of 2.55 years.

(13) Income Taxes

The components of loss before income taxes for the years ended December 31, 2013, 2012 and 2011 includes the following (in thousands):

		Years ended December 31,
		2013		2012		2011
United States	$	(9,748)	$	(18,735)	$	(36,249)
Foreign		(3,574)		-		-
Loss before income taxes	$	(13,322)	$	(18,735)	$	(36,249)

The Company has recorded income tax expense for the years ended December 31, 2013, 2012 and 2011 of $182,000, $0, and $18,000, respectively. The income tax expense for the years ended December 31, 2013 and 2011 was primarily related to a non-cash charge for state income taxes and to the Company's Canadian subsidiary based in the Canadian province of Quebec, respectively.

Income tax differed from the amounts computed by applying the U.S. federal income tax rate of 34% to loss before income tax expense (benefit) as a result of the following (in thousands):

		Years ended December 31,
		2013		2012		2011
Computed "expected" tax benefit	$	(4,529)	$	(6,370)	$	(12,325)
Expiration of tax attributes		-		-		360
IRC §382 adjustment		6,575		59,822		94,442
Change in the valuation allowance for deferred tax assets
attributable to operations and other adjustments		2,840		(42,124)		(70,514)
U.S. and foreign credits		(12,237)		(10,231)		(11,732)
State income taxes, net of federal tax effect		182		-		-
Equity based compensation expense		678		513		578
Intellectual property		5,440		-		-
Foreign tax rate differences		940		-		-
Other		293		(1,610)		(791)
	$	182	$	-	$	18

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The tax effects of temporary differences that give rise to the deferred tax assets at December 31, 2013 and 2012 are presented below (in thousands):

		2013		2012
Deferred tax assets:
Net operating loss carryforward	$	132,101	$	140,416
Research credit carryforward		68,277		49,960
Capital loss carryforward		4,186		4,169
Non-recourse debt		27,769		32,619
Acquired intellectual property		29,452		29,287
Capitalization of inventory		9,429		13,146
Stock compensation expense		2,935		5,631
Accrued compensation		3,117		2,105
Other		555		273
Total deferred tax assets		277,821		277,606
Less valuation allowance		(277,821)		(277,606)
Deferred tax assets		-		-
Deferred tax liabilities		-		-
Net deferred tax asset (liability)	$	-	$	-

Carryfowards

At December 31, 2013, the Company had U.S. federal net operating loss carryforwards of approximately $381.0 million which begin to expire in 2018, U.S. federal research credit carryforwards of $68.3 million, which begin to expire in 2030, and U.S. federal capital loss carryforwards of $10.7 million which begin to expire in 2015. The Company's domestic tax loss carryforwards for alternative minimum tax purposes is approximately the same as the Company's regular tax loss carryforwards. The Company also has New Jersey state net operating loss and capital loss carryforwards of approximately $369.9 million and $18.1 million, respectively, which begin to expire in 2014, and other domestic state net operating loss carryforwards and tax credit carryforwards in varying amounts depending on the different state laws.

The Company uses the "with-and-without" approach in determining the order in which tax attributes are utilized. Using the "with-and-without" approach, the Company will only recognize a tax benefit from stock-based awards in additional paid-in capital if an incremental tax benefit is realized after all other net operating loss carryforwards currently available to the Company have been utilized, but prior to the utilization of other tax attributes.

The U.S. federal net operating loss carryforwards of approximately $381.0 million include approximately $10.1 million of excess tax benefits related to share-based payments that are presented on a tax effected basis within the deferred tax assets. Since this amount was recorded through additional paid-in capital, the related valuation allowance on these net operating loss carryforwards will be reversed through additional paid-in capital when these excess tax benefits are realized. Also, included in the U.S. federal net operating loss carryforwards are excess tax benefits related to share-based payments of approximately $24.5 million that are not recognized as a deferred tax asset as the amounts would not have resulted in a reduction in current taxes payable if all other net operating loss carryforwards currently available to the Company were utilized. The benefit of these deductions will be recognized through additional paid-in capital at the time the tax deduction results in a reduction of current taxes payable.

Section 382 of the Internal Revenue Code can potentially limit a company's ability to use net operating loss, tax credits, capital loss, and other tax attributes in periods subsequent to a change in ownership. The Company periodically updates its Section 382 study to assess whether the Company has undergone certain greater than 50% changes of ownership as defined in Section 382 of the Internal Revenue Code.  This study concluded that the Company had an ownership change in 2010. As a result, the Company determined that certain net operating loss, tax credit and capital loss carryforwards will expire prior to their utilization due to the expected annual Section 382 limitation, and accordingly the net operating loss, tax credit, and capital loss carryforwards on the above deferred tax asset table have been reduced.

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Valuation Allowance

The Company determines the need for a valuation allowance by assessing the probability of realizing deferred tax assets, taking into consideration all available positive and negative evidence, including historical operating results, expectations of future taxable income, carryforward periods available to the Company for tax reporting purposes, various income tax strategies and other relevant factors. Significant judgment is required in making this assessment and to the extent future expectations change, the Company would have to assess the recoverability of its deferred tax assets at that time.

At December 31, 2013 and 2012, the Company maintained a full valuation allowance on its deferred tax assets. The Company has a history of cumulative losses. The Company's cumulative loss position was significant negative evidence in assessing the need for a valuation allowance. The valuation allowance for deferred tax assets increased by $215,000 in 2013 and decreased by $49.1 million in 2012.

Unrecognized Tax Benefits

A reconciliation of the beginning and ending amounts of gross unrecognized tax benefits (excluding interest and penalties) is as follows (in thousands):

	Unrecognized
		Tax Benefits
Balance as of January 1, 2012	$	4,614
Additions for current year tax positions		-
Reductions for prior year tax positions		-
Balance as of December 31, 2012		4,614
Additions for current year tax positions		-
Reductions for prior year tax positions		(677)
Balance as of December 31, 2013	$	3,937

The total amount of unrecognized tax benefits relating to the Company's tax positions is subject to change based on future events including, but not limited to, the settlements of ongoing audits and/or the expiration of applicable statutes of limitations. Although the outcomes and timing of such events are highly uncertain, it is reasonably possible that the balance of gross unrecognized tax benefits will not change during the next 12 months. However, changes in the occurrence, expected outcomes and timing of those events could cause the Company's current estimate to change materially in the future.

Due to the Company's net operating loss carryforwards, any adjustment related to an unrecognized tax benefit would not be expected to result in a cash tax liability. Accordingly, the Company has not accrued for interest or penalties for the U.S. (both Federal and State) as of December 31, 2013 and 2012. Assuming the continued existence of a full valuation allowance on the Company's deferred tax assets, future recognition of any of the Company's unrecognized tax benefits would not impact the effective tax rate.

The Company files income tax returns in the United States and various foreign jurisdictions. Of the major jurisdictions, the Company is subject to examination in: the United States for U.S. federal purposes for 2010 and forward and for New Jersey for 2011 and forward. In August 2012, the IRS completed its examination of the Company's U.S. federal income tax returns for the year ended December 31, 2009.  In May 2013, the State of New Jersey completed its examination of the Company's New Jersey income tax returns through the year ended December 31, 2010. There were no adjustments as a result of these examinations.

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(14) Employee Benefit Plans

The Company maintains a tax-qualified employee savings and retirement plan (401(k) Plan) covering all of the Company's employees in the United States. Pursuant to the 401(k) Plan, employees may elect to reduce their current compensation up to the maximum percent allowable, not to exceed the limits of code section 401(k), 403(b), 404 and 415, of eligible compensation or the prescribed IRS annual limit and have the amount of such reduction contributed to the 401(k) Plan. The 401(k) Plan permits, but does not require, additional matching contributions to the 401(k) Plan by the Company on behalf of all participants. During the years ended December 31, 2013, 2012 and 2011, the Company matched 100% of employee contributions up to 3% of employee pre-tax contributions and 50% of employee contribution on the next 3% of employee pre-tax contributions. The Company recorded an expense associated with these matching contributions for the years ended December 31, 2013, 2012, and 2011 of $1.1 million, $620,000 and $432,000, respectively.

(15) Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption.

In February 2013, the FASB issued ASU 2013-02 Reporting of Amounts Reclassified out of Accumulated Other Comprehensive Income (ASU 2013-02), an Accounting Standards Update to the Comprehensive Income Topic in the Accounting Standards Codifications (ASC). This update requires separate presentation of the components that are reclassified out of accumulated other comprehensive income either on the face of the financial statements or in the notes to the financial statements. This update also requires companies to disclose the income statement line items impacted by any significant reclassifications, such as the realized gain on marketable investment securities. These items are required for both interim and annual reporting for public companies and became effective for the Company beginning with its quarterly report on Form 10-Q for the period ending March 31, 2013. The Company adopted this ASU on January 1, 2013. The adoption of this ASU did not have a material impact on the Company's financial position or results of operations.

(16) Commitments and Contingencies

The Company has agreed to indemnify, under certain circumstances, certain manufacturers and service providers from and against any and all losses, claims, damages or liabilities arising from services provided by such manufacturers and service providers or from any use, including clinical trials, or sale by the Company or any Company agent of any product supplied by the manufacturers.

The Company has contractual commitments of $15.9 million with external marketing, commercial readiness and market research organizations relating to pre-launch activities for Revestive and Natpara. These agreements are cancellable on notice of up to six months. The Company also has approximately $29.5 million in contractual commitments for other service agreements with varying terms and conditions.

The Company has entered into long-term agreements with various third-party contract manufacturers for the production and packaging of drug substance and drug product. Under the terms of these various contracts, the Company will be required to purchase certain minimum quantities of drug product each year.

The Company has contractual commitments of $26.1 million for drug substance, drug product and other manufacturing processes as of December 31, 2013 for the manufacture of clinical and commercial supplies of Gattex/Revestive and Natpara. Amounts owed to third- party contract manufacturers are based on firm commitments for the purchase of drug product. Amounts purchased under contractual inventory commitments from third-party contract manufacturers for the years ended December 31, 2013, 2012 and 2011 were $15.0 million, $25.9 million and $14.5 million, respectively.

93

In December 2009, the Company sold a majority interest in its subsidiary, Allelix, to a group of investors ("Investors"). NPS received $5.6 million in connection with the transactions in 2009. NPS is entitled to receive an additional Canadian. $4.8 million, which would only be paid upon further investment in Allelix by the Investors, which would be expected to occur upon the successful completion of certain Canadian court proceedings. In connection with the transaction, the Company has indemnified the Investors for various items including product liabilities arising from the past operations of Allelix and has guaranteed that certain tax attributes exist as of the closing date. The maximum potential future payments related to these indemnifications or guarantees shall not exceed the amounts the Company has received in connection with the transaction ($5.5 million at December 31, 2013).

(17) Selected Quarterly Financial Data (Unaudited)

The following is a summary of the quarterly results of operations for the years ended December 31, 2013 and 2012 (in thousands, except for per share amounts):

	Quarters Ended
	March 31		June 30		September 30		December 31
(in thousands, except per share amounts)
2013
Revenues	$	25,434	$	36,505	$	39,202	$	54,451
Operating (loss) income		(4,531)		(9,321)		1,769		10,588
Net (loss) income		(7,796)		(12,389)		(1,087)		7,768
Basic (loss) income per common share	$	(0.09)	$	(0.13)	$	(0.01)	$	0.08
Diluted (loss) income per common
and potential common share	$	(0.09)	$	(0.13)	$	(0.01)	$	0.07
2012
Revenues	$	22,924	$	53,517	$	27,019	$	27,184
Operating (loss) income		(5,045)		11,206		733		(8,018)
Net (loss) income		(10,563)		7,355		(3,324)		(12,203)
Basic (loss) income per common share	$	(0.12)	$	0.08	$	(0.04)	$	(0.14)
Diluted (loss) income per common
and potential common share	$	(0.12)	$	0.08	$	(0.04)	$	(0.14)

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ITEM 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

Not applicable

ITEM 9A. Controls and Procedures.

a) Evaluation of Disclosure Controls and Procedures

We maintain "disclosure controls and procedures" within the meaning of Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Our disclosure controls and procedures, or Disclosure Controls, are designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act, such as this Annual Report on Form 10-K, is recorded, processed, summarized and reported within the time periods specified in the U.S. Securities and Exchange Commission's rules and forms. Our Disclosure Controls include, without limitation, controls and procedures designed to ensure that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

As of the end of the period covered by this Annual Report on Form 10-K, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures, which was done under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer. Based on the controls evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the date of their evaluation, our disclosure controls and procedures were effective as of December 31, 2013.

(b) Management's Report on Internal Control over Financial Reporting.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control system was designed to provide our management and board of directors reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external purposes in accordance with GAAP. Internal control over financial reporting has inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements will not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

Our management has assessed the effectiveness of internal control over financial reporting as of December 31, 2013. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (1992). Based on our assessment we believe that, as of December 31, 2013, our internal control over financial reporting is effective based on those criteria.

KPMG LLP, our independent registered public accounting firm that audited the financial statements included in this Annual Report on Form 10-K has issued an audit report on our internal control over financial reporting as of December 31, 2013. This report appears on page 62 of this report.

(c) Change in Internal Control over Financial Reporting. 

In the first quarter of 2013, we began generating revenues from sales of Gattex and began capitalizing inventory costs related to manufacturing Gattex and the acquisition of teduglutide and rhPTH 1-84 raw material related to the March 18, 2013 Transition and Termination Agreement with Takeda. (See note 10 to the consolidated financial statements). The accounting for our net product sales and the capitalization of inventory is material to our financial position as of December 31, 2013 and results of operations for the year ended December 31, 2013, and we believe the internal controls and procedures relating to the accounting for net product sales and the capitalization of inventory have a material effect on our internal control over financial reporting. See Note 1, "Significant Accounting Policies" to our consolidated financial statements contained in this Annual Report on Form 10-K for further details.

95

We have expanded our internal controls under Section 404 of the Sarbanes-Oxley Act of 2002 and applicable rules and regulations to include controls with respect to our net product sales and our valuation of inventory and intangibles. Except for these expanded controls, no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended) occurred during 2013.

ITEM 9B. Other Information.

PART III

ITEM 10. Directors, Executive Officers and Corporate Governance.

Certain of the information required by this item will be contained in our definitive Proxy Statement with respect to our 2014 Annual Meeting of Stockholders, under the captions "Election of Directors," and "Compliance with Section 16(a) of the Exchange Act." Such information is incorporated into this item by reference. For information regarding our executive officers see Part I of this Form 10-K under the caption "Executive Officers of the Registrant."

ITEM 11. Executive Compensation.

The information required by this item will be contained in our definitive Proxy Statement with respect to our 2014 Annual Meeting of Stockholders, under the captions "Executive Compensation," "Compensation Committee Interlocks and Insider Participation," and "Compensation Committee Report" and is incorporated into this item by reference.

ITEM 12. Security Ownership of Certain Beneficial Owners and Management, and Related Stockholder Matters.

The information required by this item will be contained in our definitive Proxy Statement with respect to our 2014 Annual Meeting of Stockholders, under the captions "Security Ownership of Certain Beneficial Owners and Management" and "Equity Compensation Plan Information" and is incorporated into this item by reference.

ITEM 13. Certain Relationships and Related Transactions, and Director Independence.

The information required by this item will be contained in our definitive Proxy Statement with respect to our 2014 Annual Meeting of Stockholders under the captions "Certain Relationships and Related Transactions" and "Independence of the Board" and is incorporated into this item by reference.

ITEM 14. Principal Accountant Fees and Services.

The information required by this item will be contained in our definitive Proxy Statement with respect to our 2014 Annual Meeting of Stockholders, under the caption "Principal Accountant Fees and Services" and is incorporated into this item by reference.

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PART IV

ITEM 15. Exhibits and Financial Statement Schedules.

(a) The following documents are filed as part of this Annual Report on Form 10-K.

1. Financial Statements.  The financial statements listed on the accompanying Index to Consolidated Financial Statements are filed as part of this report.

2. Financial statement schedules.  There are no financial statements schedules included because they are either not applicable or the required information is shown in the consolidated financial statements or the notes thereto.

3. Exhibits. The following exhibits are filed or incorporated by reference as part of this Form 10-K.

Exhibit
Number	Description of Document
2.1	Termination and Transition Agreement dated as of March 18, 2012, by and among Takeda GmbH, Takeda Pharma A/S and the Registrant, incorporated herein by reference
	to the Registrant's Current Report on Form 8-K (SEC File No. 000-23272), filed March 19, 2013.
3.1A	Amended and Restated Certificate of Incorporation of the Registrant, incorporated herein by reference to the Registrant's Registration Statement on Form S-1 (SEC File No. 333-74318), filed January 21, 1994.
3.1B	Certificate of Amendment of the Amended and Restated Certificate of Incorporation of the Registrant, dated December 16, 1999, incorporated herein by reference to the Registrant's Registration Statement on
	Form S-3 (SEC File No. 333-45274), filed September 6, 2000.
3.1C	Certificate of Designation of Series A Junior Participating Preferred Stock of the Registrant, dated December 18, 1996, incorporated herein by reference to the Registrant's Current Report on Form 8-K (SEC File No. 000-23272), filed December 19, 1996.
3.1D	Amendment to Certificate of Designation of Series A Junior Participating Preferred Stock of the Registrant, dated September 5, 2000, incorporated herein by reference to the Registrant's Registration Statement on Form S-3 (SEC File No. 333-45274),
	filed September 6, 2000.
3.1E	Certificate of Amendment of the Amended and Restated Certificate of Incorporation of the Registrant, dated September 30, 2003, incorporated herein by reference to the Registrant's Annual Report on Form 10-K for the fiscal year ended
	December 31, 2003 (SEC File No. 000-23272, (filed February 10, 2004)).
3.1F	Certificate of Amendment of the Amended and Restated Certificate of Incorporation of the Registrant, dated May 19, 2011, incorporated herein by reference to the Registrant's Current Report on Form 8-K (SEC File No. 000-23272), filed May 24, 2011.
3.2	Amended and Restated Bylaws of the Registrant, incorporated herein by reference to the Registrant's Current Report on Form 8-K dated December 21, 2012 (SEC File No. 000-23272), filed December 21, 2012.
4.1	Specimen Common Stock Certificate, incorporated herein by reference to the Registrant's Registration Statement on Form S-1 (SEC File No. 333-74318), filed January 21, 1994.
4.2	Indenture, dated as of August 8, 2013, between the Registrant and The Bank of New York Mellon, as trustee, incorporated herein by reference to the Registrant's Registration Statement on Form S-3 (SEC File No. 333-190494), filed August 8, 2013.
10.1A**	1994 Non-Employee Directors' Stock Option Plan, incorporated herein by reference to the Registrant's Registration Statement on Form S-1 (SEC File No. 333-74318), filed January 21, 1994.

97

10.1B**	1994 Non-Employee Directors' Stock Option Plan, as amended December 1996, incorporated herein by reference to the Registrant's Registration Statement on Form S-8 (SEC File No. 333-17521), filed December 9, 1996.
10.1C**	1994 Non-Employee Directors' Stock Option Plan, as amended December 2002, incorporated herein by reference to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2002 (SEC File No. 000-23272), filed March 21, 2003.
10.2A**	1998 Stock Option Plan (reflects all amendments by the Board of Directors through May 2008), incorporated herein by reference to the Registrant's Current Report on Form 8-K dated May 22, 2008 (SEC File No. 000-23272), filed May 28, 2008.
10.2B**	Form of Performance-Based Stock Option Agreement under the NPS Pharmaceutical, Inc. 1998 Stock Option Plan, incorporated herein by reference to the Registrant's Annual Report on Form 10-K for the fiscal year ended
	December 31, 2008 (SEC File No. 000-23272), filed March 16, 2009.
10.3**	Form of Indemnity Agreement entered into between the Registrant and each of its officers and directors, incorporated herein by reference to the Registrant's Registration Statement on Form S-1 (SEC File No. 333-74318), filed January 21, 1994.
10.4A**	Change in Control Severance Pay Plan, as amended, incorporated herein by reference to the Registrant's Quarterly Report on Form 8-Q for the quarterly period ended September 30, 2012 (SEC File No. 000-23272), filed November 9, 2012.
10.4B**	Form of Agreement Providing Specified Benefits Following Termination of Employment Incident to a Merger, Acquisition or Other Change of Control or to Some Other Strategic Corporate Event, between the Registrant and
	each of its executive officers, incorporated herein by reference to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2003 (SEC File No. 000-23272), filed February 10, 2004.
10.5A	Collaborative Research and License Agreement between the Registrant and SmithKline Beecham Corporation (now GlaxoSmithKline), dated November 1, 1993, incorporated herein by reference to the Registrant's Registration
	Statement on Form S-1 (SEC File No. 333-74318), filed January 21, 1994.
10.5B	Amendment Agreement to Collaborative Research and License Agreement between GlaxoSmithKline, effective June 29, 1995, incorporated herein by reference to Amendment No. 1 to the Registrant's Annual Report on Form 10-K
	for the fiscal year ended December 31, 1995 (SEC File No. 000-23272), filed March 29, 1996.
10.5C	Amendment Agreement between the Registrant and GlaxoSmithKline, dated October 28, 1996, incorporated herein by reference to the Registrant's Current Report on Form 8-K (SEC File No. 000-23272), filed December 19, 1996.
10.5D	Amendment Agreement between the Registrant and GlaxoSmithKline, dated October 27, 1997, Incorporated herein by reference to the Registrant's Current Report on Form 8-K (SEC File No. 000-23272), filed January 27, 1998.
10.5E	Amendment to Collaborative Research and License Agreement between the Registrant and GlaxoSmithKline, dated November 26, 1997, incorporated herein by reference to the Registrant's Current Report on
	Form 8-K (SEC File No. 000-23272), filed January 27, 1998.
10.5F	Letter, dated January 24, 2000, from SmithKline Beecham to NPS Re: Amendment Agreement to Amend the November 26, 1997 Amendment Agreement, incorporated herein by reference to the Registrant's
	Annual Report on Form 10-K for the fiscal year ended December 31, 2002 (SEC File No. 000-23272), filed March 21, 2003.
10.5G	Letter, dated May 15, 2000, from SmithKline Beecham to NPS Re: Amendment Agreement, incorporated herein by reference to the Registrant's Annual Report on Form 10-K for the fiscal year ended
	December 31, 2002 (SEC File No. 000-23272), filed March 21, 2003.

98

10.5H	Letter, dated August 1, 2001, from GlaxoSmithKline to NPS Re: Amendment Agreement to Amend the January 24, 2000 Amendment Agreement, incorporated herein by reference to the Registrant's Annual Report on Form 10-K
	for the fiscal year ended December 31, 2002 (SEC File No. 000-23272), filed March 21, 2003.
10.5I	Amendment Agreement between the Registrant and SmithKline Beecham Corporation, dba GlaxoSmithKline dated December 14, 2006, incorporated herein by reference to the Registrant's Annual Report on Form 10-K
	for the fiscal year ended December 31, 2006 (SEC File No. 000-23272), filed March 14, 2007.
10.5J*	Exclusive Patent License Agreement between the Registrant and GlaxoSmithKline LLC dated July 29, 2011, incorporated herein by reference to the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended
	September 30, 2011 (SEC File No. 000-23272), filed November 3, 2011.
10.6A	Patent Agreement between the Registrant and The Brigham and Women's Hospital, Inc., dated February 19, 1993, Incorporated herein by reference to the Registrant's Registration Statement on Form S-1 (SEC File No. 333-74318), filed January 21, 1994.
10.6B	Letter dated March 15, 1993 from the Registrant to The Brigham and Women's Hospital, Inc. regarding Patent Agreement between the Registrant and The Brigham and Women's Hospital, Inc., incorporated herein
	by reference to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2002 (SEC File No. 000-23272), filed March 21, 2003.
10.6C	Amendment to Patent Agreement between the Registrant and The Brigham and Women's Hospital, Inc., effective February 7, 1996, incorporated herein by reference to the Registrant's Annual Report on Form 10-K
	for the fiscal year ended December 31, 1995 (SEC File No. 000-23272).
10.6D	1999 Patent Agreement Amendment between the Registrant and The Brigham and Women's Hospital, Inc., effective February 18, 1999, incorporated herein by reference to the Registrant's Annual Report on Form 10-K
	for the fiscal year ended December 31, 2002 (SEC File No. 000-23272), filed March 21, 2003.
10.7	Collaborative Research and License Agreement between the Registrant and Kirin Brewery Company, Ltd. dated June 29, 1995, incorporated herein by reference to the Registrant's Annual Report on Form 10-K
	for the fiscal year ended December 31, 1995 (SEC File No. 000-23272).
10.8*+	Development and License Agreement between the Registrant and Amgen, Inc. (Conformed copy through Fifth Amendment, dated July 29, 2012).
10.9A*	Distribution and License Agreement between Registrant and Takeda GmbH, dated April 26, 2004, incorporated herein by reference to the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended
	June 30, 2004 (SEC File No. 000-23272), filed August 9, 2004.
10.9B*	First Amendment to Distribution and License Agreement between the Registrant and Takeda GmbH, dated July 1, 2004, incorporated herein by reference to the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended
	June 30, 2004 (SEC File No. 000-23272), filed August 9, 2004.
10.9C*	License Agreement, dated July 2, 2007, between NPS Allelix Corp. and Takeda GmbH , incorporated herein by reference to the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended
	September 30, 2007 (SEC File No. 000-23272), filed November 9, 2007.
10.10A**	2005 Omnibus Incentive Plan, as amended through May 18, 2011, incorporated herein by reference to the Registrant's Current Report on Form 8-K (SEC File No. 000-23272), filed May 24, 2011.
10.10B**	2005 Omnibus Incentive Plan, as amended through May 7, 2013, incorporated herein by reference to the Registrant's Current Report on Form 8-K (SEC File No. 000-23272), filed May 9, 2013.
10.10C**	Form of Stock Option Grant Agreement, incorporated herein by reference to the Registrant's Current Report on Form 8-K (SEC File No. 000-23272), filed February 13, 2013.
10.10D**	Form of Restricted Stock Unit Agreement for Non-Employee Directors, Incorporated herein by reference to the Registrant's Current Report on Form 8-K (SEC File No. 000-23272), filed February 13, 2013.

99

10.10E**	Form of Restricted Stock Unit Agreement for Employees, incorporated herein by reference to the Registrant's Current Report on Form 8-K (SEC File No. 000-23272), filed February 13, 2013.
10.10F**	Form of Restricted Stock Unit Agreement for Employees, incorporated herein by reference to the Registrant's Current Report on Form 8-K (SEC File No. 000-23272), filed February 13, 2013.
10.10G**	Form of Restricted Stock Unit Agreement for Employees, incorporated herein by reference to the Registrant's Current Report on Form 8-K (SEC File No. 000-23272), filed February 13, 2013.
10.10H**	Non-Employee Director Compensation Program, incorporated herein by reference to the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2012 (SEC File No. 333-17521), filed May 3, 2012.
10.11A**	Non-Employee Director Deferred Compensation Program, incorporated herein by reference to the Registrant's Current Report on Form 8-K dated July 1, 2005 (SEC File No. 000-23272), filed July 1, 2005.
10.11B**	Form of Deferred Stock Unit Award Agreement, incorporated herein by reference to the Registrant's Current Report on Form 8-K dated July 1, 2005 (SEC File No. 000-23272), filed July 1, 2005.
10.12A	Securities Purchase Agreement dated as of August 7, 2007 among the Registrant and Visium Balanced Fund, LP, Visium Balanced Offshore Fund, Ltd., Visium Long Bias Fund, LP, Visium Long Bias Offshore Fund, Ltd.
	and Atlas Master Fund, incorporated herein by reference to the Registrant's Current Report on Form 8-K dated August 31, 2007 (SEC File No. 000-23272), filed August 31, 2007.
10.12B	Form of Note issued pursuant to the Securities Purchase Agreement referred to in Exhibit 10.12A above, incorporated herein by reference to the Registrant's Current Report on Form 8-K dated August 31, 2007 (SEC File No. 000-23272), filed August 31, 2007.
10.12C	Registration Rights Agreement dated as of August 7, 2007 among the Registrant and the Investors, incorporated herein by reference to the Registrant's Current Report on Form 8-K dated August 31, 2007 (SEC File No. 000-23272), filed August 31, 2007.
10.13*	Agreement for Sale and Assignment of Rights, dated July 16, 2007, among the Registrant, NPS Allelix Corp. and DRI, incorporated herein by reference to the Registrant's Quarterly Report on Form 10-Q
	for the quarterly period ended September 30, 2007 (SEC File No. 000-23272), filed November 9, 2007.
10.14*	Distribution and License Agreement, dated September 24, 2007, among the Registrant, NPS Allelix Corp. and Takeda GmbH, incorporated herein by reference to the Registrant's Quarterly Report on Form 10-Q
	for the quarterly period ended September 30, 2007 (SEC File No. 000-23272), filed November 9, 2007.
10.15*	Amendment Agreement to the Distribution and License Agreement, dated October 29, 2007, among the Registrant, NPS Allelix Corp. and Takeda GmbH, incorporated herein by reference to the Registrant's Quarterly Report
	on Form 10-Q for the quarterly period ended September 30, 2007 (SEC File No. 000-23272), filed November 9, 2007.
10.16*	License Agreement, dated September 28, 1995, between 1149336 Ontario Inc., Daniel J. Drucker, and Allelix Biopharmaceuticals Inc., incorporated herein by reference to the Registrant's Quarterly Report on Form 10-Q
	for the quarterly period ended September 30, 2007 (SEC File No. 000-23272), filed November 9, 2007.
10.17	Asset Purchase Agreement, dated October 9, 2007, between AstraZeneca AB and the Registrant, incorporated herein by reference to the Registrant's Annual Report on Form 10-K for the fiscal year ended
	December 31, 2007 (SEC File No. 000-23272), filed March 17, 2008.

100

10.18A*	Commercial Manufacturing Agreement, dated October 18, 2002, by and between NPS Allelix Corp. and Boehringer Ingelheim Austria GmbH, incorporated herein by reference to the Registrant's Annual Report on Form 10-K
	for the fiscal year ended December 31, 2007 (SEC File No. 000-23272), filed March 17, 2008.
10.18B*	Amending Agreement, dated March 15, 2004, by and between NPS Allelix Corp. and Boehringer Ingelheim Austria GmbH, incorporated herein by reference to the Registrant's Annual Report on Form 10-K for the fiscal year ended
	December 31, 2007 (SEC File No. 000-23272), filed March 17, 2008.
10.18C*	Amendment Number One to Amending Agreement, dated December 22, 2005, by and between NPS Allelix Corp. and Boehringer Ingelheim Austria GmbH, incorporated herein by reference to the Registrant's Annual Report on
	Form 10-K for the fiscal year ended December 31, 2007 (SEC File No. 000-23272), filed March 17, 2008.
10.18D*	Amendment Number Two to Amending Agreement, dated August 28, 2007, by and between NPS Allelix Corp. and Boehringer Ingelheim Austria GmbH, incorporated herein by reference to the Registrant's Quarterly Report on Form
	10-Q for the quarterly period ended March 31, 2011 (SEC File No. 000-23272), filed May 3, 2011.
10.18E*	Letter Agreement dated January 19, 2009, by and between the Registrant and Boehringer Ingelheim Austria GmbH, incorporated herein by reference to the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended
	March 31, 2011 (SEC File No. 000-23272), filed May 3, 2011.
10.18F*	Amendment Number Three to Amending Agreement, dated February 1, 2011, by and between the Registrant and Boehringer Ingelheim Austria GmbH, incorporated herein by reference to the Registrant's Quarterly Report on
	Form 10-Q for the quarterly period ended March 31, 2011 (SEC File No. 000-23272), filed May 3, 2011.
10.19A**	Employment Agreement with Francois Nader, incorporated herein by reference to the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2008 (SEC File No. 000-23272), filed May 19, 2008.
10.19B**	First Amendment to the Employment Agreement with Francois Nader, incorporated herein by reference to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2008 (SEC File No. 000-23272), filed March 16, 2009.
10.19C**	Second Amendment to the Employment Agreement with Francois Nader, incorporated herein by reference to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2008 (SEC File No. 000-23272), filed March 16, 2009.
10.20**	First Amendment to Restrictive Covenant Agreement with Francois Nader, incorporated herein by reference to the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2008 (SEC File No. 000-23272), filed May 19, 2008.
10.21**	Employment Agreement with Roger Garceau, incorporated herein by reference to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2008 (SEC File No. 000-23272), filed March 16, 2009.
10.22	Common Stock Purchase Agreement between the Registrant and Azimuth Opportunity Ltd., dated as of August 5, 2009, incorporated herein by reference to the Registrant's Current Report on Form 8-K dated August 5, 2009
	(SEC File No. 000-23272), filed August 6, 2009.
10.23*	Agreement for Sale and Assignment of Rights, dated February 26, 2010, between the Registrant and LSRC II S.ÀR.L., incorporated herein by reference to the Registrant's Annual Report on Form 10-K
	for the fiscal year ended December 31, 2009 (SEC File No. 000-23272), filed March 11, 2010.
10.24**	NPS Pharmaceuticals, Inc. 2010 Employee Stock Purchase Plan, incorporated herein by reference to the Registrant's Current Report on Form 8-K (SEC File No. 000-23272), filed May 24, 2010.

101

10.25*	Development and Supply Agreement between the Registrant and Hospira Worldwide, Inc. dated March 25, 2009, incorporated herein by reference to the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended
	March 31, 2011 (SEC File No. 000-23272), filed May 3, 2011.
10.26**	Employment Agreement with Eric Pauwels, incorporated herein by reference to the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2011 (SEC File No. 000-23272), filed November 3, 2011.
10.27*	Manufacturing Agreement between the Registrant and SynCo Bio Partners B.V. dated August 1, 2009, incorporated herein by reference to the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended
	September 30, 2011 (SEC File No. 000-23272), filed November 3, 2011.
10.28**	Employment Agreement with Glenn Melrose, incorporated herein by reference to the Registrant's Quarterly Report on Form 8-Q for the quarterly period ended September 30, 2012 (SEC File No. 000-23272), filed November 9, 2012.
10.29*	Commercial Manufacturing Agreement between the Registrant and Vetter Pharma International GmbH dated December 21, 2009, incorporated herein by reference to the Registrant's Quarterly Report on Form 8-Q
	for the quarterly period ended September 30, 2012 (SEC File No. 000-23272), filed November 9, 2012.
10.30	Covenant Not to Sue Agreement between the Registrant and Ortho-McNeil Pharmaceutical dated December 21, 2006.
10.31**	2005 Omnibus Incentive Plan of the Registrant, as amended and restated through May 7, 2013, incorporated herein by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K (SEC File No. 000-23272), filed May 9, 2013.
10.32*+	Amended and Restated Agreement for the Sale and Assignment of Rights, dated as of December 20, 2013, by and between the Registrant and Drug Royalty L.P. 3.
10.33**+	Offer Letter of Susan Graf, dated as of April 29, 2013.
10.34*+	Contract Manufacturing and Supply Agreement, dated as of September 7, 2012, by and between Patheon UK Limited and the Registrant, as assignee of Takeda GmbH (f/k/a Nycomed Danmark ApS).
12.1+	Computation Ratio of Earnings Available to Cover Fixed Charges.
21.1+	List of Subsidiaries.
23.1+	Consent of Independent Registered Public Accounting Firm.
31.1+	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2+	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32+	Certification of Annual Financial Report by the Chief Executive Officer and Chief Financial Officer furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101INS	XBRL Instance Document
101SCH	XBRL Taxonomy Extension Schema Document
101CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101DEF	XBRL Taxonomy Extension Definition Linkbase Document
101LAB	XBRL Taxonomy Extension Label Linkbase Document
101PRE	XBRL Taxonomy Extension Presentation Linkbase Document

102

_____________

+	Filed herewith.
*	Confidential information was omitted from this exhibit pursuant to a request for confidential treatment and filed separately with the Securities and Exchange Commission.
**	Management contract, compensatory plan or arrangement.

103

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	NPS PHARMACEUTICALS, INC.
Date: February 18, 2014	By:	/s/    FRANCOIS NADER      Francois Nader President and Chief Executive Officer (Principal Executive Officer) and Director
Date: February 18, 2014	By:	/s/    LUKE M. BESHAR Luke M. Beshar Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.

Signature	Title	Date
/s/ FRANCOIS NADER Francois Nader	President and Chief Executive Officer (principal executive officer) and Director	February 18, 2014
/s/ LUKE M. BESHAR Luke M. Beshar	Executive Vice President and Chief Financial Officer (principal financial and accounting officer)	February 18, 2014
/s/ MICHAEL W. BONNEY Michael W. Bonney	Director	February 18, 2014
/s/ COLIN BROOM Colin Broom	Director	February 18, 2014
/s/ GEORGES GEMAYEL Georges Gemayel	Director	February 18, 2014
/s/ PEDRO GRANADILLO Pedro Granadillo	Director	February 18, 2014
/s/ JAMES G. GRONINGER James G. Groninger	Director	February 18, 2014
/s/ RACHEL R. SELISKER Rachel R. Selisker	Director	February 18, 2014
/s/ PETER G. TOMBROS Peter G. Tombros	Chairman of the Board of Directors	February 18, 2014

EX-10.8 2 exh10-8.htm DEVELOPMENT AND LICENSE AGREEMENT BETWEEN THE REGISTRANT AND AMGEN, INC.

Exhibit 10.8  

Confidential Treatment Requested. Confidential portions of this document have been redacted and have been
separately filed with the Commission.

DEVELOPMENT AND LICENSE AGREEMENT

DATED

MARCH 18, 1996

BETWEEN

NPS PHARMACEUTICALS, INC.

AND

AMGEN INC.

[Conformed copy through Fifth Amendment, dated July 29, 2012]

Confidential Treatment Requested. Confidential portions of this document have been redacted and have been
separately filed with the Commission.

THIS DEVELOPMENT AND LICENSE AGREEMENT (this "Agreement") effective as of the 27th day of December, 1995 is by and between NPS Pharmaceuticals, Inc., a Delaware corporation ("NPS") having a place of business located at 420 Chipeta Way, Salt Lake City, Utah 84108, and Amgen Inc., a Delaware corporation ("Amgen") having a place of business located at Amgen Center, 1840 DeHavilland Drive, Thousand Oaks, California 91320-1789.

WITNESSETH

WHEREAS, NPS owns or has rights in certain technology relating to calcium receptors on certain cells and to compounds which interact with calcium receptors on such cells;

WHEREAS, Amgen has scientific, clinical, regulatory, and business expertise in the worldwide development and commercialization of pharmaceutical products;

WHEREAS, NPS and Amgen, on December 27, 1995, entered into a Binding Letter of Intent by which NPS agreed to grant Amgen an exclusive license under NPS's rights in certain NPS technology to make, use and sell products, on the terms and conditions set forth therein;

WHEREAS, NPS and Amgen desire to have the terms of this Agreement supersede the terms of the Binding Letter of Intent, which shall be replaced by this Agreement.

NOW, THEREFORE, in consideration of the undertakings, and the covenants and conditions contained herein and intending to be bound hereby, the parties agree as follows:

ARTICLE 1
 
DEFINITIONS

1.1   Defined Terms. Unless otherwise provided herein, each capitalized term used herein shall have the meaning assigned to it in the Glossary attached hereto as Appendix A.

ARTICLE 2
 
GRANT OF LICENSES AND OTHER RIGHTS

2.1   Exclusive License to Amgen. NPS hereby grants to Amgen an exclusive license, with the right to sublicense, under Licensed Technology (A) to make, use and sell Class A Compound(s), Other Compound(s), NPS/Amgen Compound(s), [* * *] in the Field of Use in the Territory and (B) to make, use and sell NPS/Kirin Compound(s) in the NPS Field in the Territory.

2.2   Amgen Covenant. Amgen's exclusive license set forth in Section 2.1(A) shall be subject to the Amgen covenant set forth in Section 16.2(A).

2.3   Non-Exclusive License to Amgen. NPS hereby grants to Amgen a non-exclusive, worldwide license, with the right to sublicense, under Licensed Know-How to make, use and sell compounds other than Compound(s) in the Field of Use other than the Osteoporosis Field.

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Confidential Treatment Requested. Confidential portions of this document have been redacted and have been
separately filed with the Commission.

2.4   Assignment to Amgen. NPS hereby assigns to Amgen free and clear of encumbrance all right, title and interest in all Governmental Approvals, Regulatory Filings and Development Contracts owned in each case by NPS.

2.5   Non-Exclusive License to NPS. Amgen grants to NPS a non-exclusive, non-transferable, non-sublicensable license to use the Amgen Material only for the purposes set forth in Section 4.4.

2.6   Amgen Option. NPS grants to Amgen an exclusive option to initiate negotiations to obtain an exclusive license, with the right to sublicense, to make, use and sell NPS Products in the Field of Use in the Territory under terms and conditions to be negotiated by the Parties in good faith ("Amgen Option"). The Amgen Option shall become effective on the Closing Date and continue until the [* * *] anniversary of the Closing Date. NPS shall, from time to time, but no less often than on a [* * *] basis, make available to Amgen a non- confidential summary of all data and information relating to the NPS Product(s) and shall, upon Amgen's request, provide Amgen with all data and information indicative of potential clinical utility available to NPS on a confidential basis and such quantities of any NPS Product(s) as Amgen shall reasonably require to conduct its own evaluation of such NPS Product(s). On an NPS Product-by-Product basis, Amgen shall have [* * *] to evaluate an NPS Product from the date of receipt of all data and information available to NPS and test quantities reasonably requested by Amgen (the "Exclusive Evaluation Period"). Amgen's right to exercise the Amgen Option for a particular NPS Product shall expire upon the end of the respective Exclusive Evaluation Period. If Amgen exercises the Amgen Option with respect to a particular NPS Product by written notice to NPS, NPS and Amgen shall negotiate in good faith exclusively for [* * *] for an exclusive license (the "Exclusive Negotiation Period"). In the event that at the end of the Exclusive Negotiation Period the Parties have not reached agreement and no extension to such Exclusive Negotiation Period has been mutually agreed upon by the Parties, NPS may thereafter negotiate on a non-exclusive basis with Amgen and Third Parties or NPS may elect to pursue development and commercialization of such NPS Product on its own.

ARTICLE 3
 
RESTRICTIONS

3.1   Retained Rights. NPS expressly reserves for itself a non-transferable, non-sublicensable, right under Licensed Know-How and Licensed Patent Rights to make and use Compounds in the Territory, for the sole purposes of [* * *] Subject to Section 16.1(B), NPS may continue to use NPS R-568 and [* * *] only in in vitro studies and in in vivo studies in rodents for the purpose of discovering compounds which do not have PTH Lowering Activity. NPS will disclose to Amgen all data, information and results of these studies for NPS R-568 and [* * *], in accordance with Section 4.2.

3.2   No License. The licenses granted by NPS under Sections 2.1 through 2.3 do not grant Amgen a license under claims within Licensed Patent Rights claiming the use of Calcium Receptor(s) for the purpose of [* * *].

3.3   [* * *]

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Confidential Treatment Requested. Confidential portions of this document have been redacted and have been
separately filed with the Commission.

ARTICLE 4
 
TRANSFER OF RIGHTS

4.1   Assignment.

1. Promptly, but in no event longer than thirty (30) days after the Closing Date, NPS shall convey, transfer, assign and deliver to Amgen appropriate deeds, bills of sale, endorsements, assignments and other instruments of transfer and conveyance, in forms satisfactory to counsel of Amgen, to effect the assignments under Section 2.4.
2. NPS shall give all notices and obtain all governmental and other consents, transfers, approvals, orders, qualifications and waivers necessary or desirable for the prompt transfer of the Regulatory Filings and Governmental Approvals assignable to Amgen in accordance with Section 2.4.

4.2   Transfer of Licensed Technology.

1. Disclosure to Amgen. Within [* * *] days after the Closing Date, NPS will provide to Amgen in writing (or other mutually agreed tangible form) Licensed Technology that exists as of the Closing Date in a detail determined by Amgen to permit Amgen to practice all necessary or useful embodiments in. the making, using or selling of Compound(s). As part of such disclosure NPS shall transfer or shall cause to be transferred to Amgen (or a Third Party designated by Amgen) quantities of NPS Material currently available, and associated data and information [* * *] currently available, and associated data and information, for Amgen to conduct a preclinical evaluation. From time to time or upon the request of Amgen, but no less frequently than on a [* * *] basis thereafter during the term of this Agreement, NPS shall transfer to Amgen in writing (or other mutually agreed tangible form) all additional Licensed Technology developed by or received by NPS sufficient for Amgen to practice all necessary or useful embodiments of Licensed Technology in the making, using or selling of Compound(s). Such disclosure shall include NPS providing [* * *].
2. Restrictions. After a compound is listed as a Compound in Appendix B, NPS shall not transfer such Compound or Licensed Technology related to such Compound to any Third Party(ies), except [* * *].

4.3   NPS Assistance. During the term of this Agreement, NPS agrees that appropriate individuals shall be available to assist and consult with Amgen, as requested by Amgen, in connection with Amgen's activities hereunder. Such assistance and consultation by NPS shall be by means of personal visits, correspondence and telephone discussions.

4.4   Amgen Material. During the term of this Agreement, Amgen may provide NPS with quantities of Amgen Materials and NPS shall conduct assays with Calcium Receptors on parathyroid cells, as requested by Amgen ("NPS Assays") for [* * *]. The transferred Amgen Material shall be and remain the sole property of Amgen. At no time shall Amgen Material be given by NPS to any Third Party(ies), unless agreed to in writing in advance by Amgen. Except for the purpose of conducting NPS Assays as set forth herein, this Agreement does not transfer to

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Confidential Treatment Requested. Confidential portions of this document have been redacted and have been
separately filed with the Commission.

NPS any rights in Amgen Material nor constitute an offer to sell Amgen Material or items incorporating the same. Any quantities of Amgen Material remaining upon completion of the NPS Assays, or upon request of Amgen prior to completion of NPS Assays, shall be promptly returned to Amgen. All information, inventions and data generated by NPS through the use of Amgen Material shall be promptly disclosed to and owned by Amgen and maintained in confidence by NPS in accordance with Article 11. If NPS is unable to conduct the requested assays on a reasonably timely basis, the Parties will confer on and elect alternate ways to conduct the requested NPS Assays, including having Amgen perform the NPS Assays at NPS and NPS and Amgen performing the NPS Assays at Amgen.

4.5   Identification of Compound(s) by NPS. Upon the request of Amgen, NPS shall conduct [* * *] tests to determine if a compound meets the definition of a Compound. [* * *] During the term of this Agreement, upon determination by NPS that any compound meets the definition of an NPS Compound or NPS/Amgen Compound, such compound shall be designated by NPS as an NPS Compound or NPS/Amgen Compound as the case may be. NPS shall notify Amgen within thirty (30) days after such determination and designation.

4.6   Identification of Compound(s) by Amgen. During the term of this Agreement, within thirty (30) days upon determination by Amgen that any compound meets the definition of an [* * *] NPS/Amgen or [* * *] such compound shall be designated by Amgen as an [* * *] NPS/Amgen Compound [* * *] as the case may be. Amgen shall notify NPS within thirty (30) days after such determination and designation.

4.7   License. NPS hereby grants to Amgen a non-exclusive, fully paid-up license, under the Screening Technology and the Licensed Technology solely to do the following in the Territory (i) screen compounds (and do such acts as may be necessary to screen compounds), excluding proteins and nucleic acids, for calcimimetic activity at the Calcium Receptor(s), and (ii) study the Calcium Receptor(s) (and do such acts as may be necessary to study the Calcium Receptor(s), including without limitation to identify the crystal structure thereof both in bound and unbound conformations. Except as otherwise provided herein, NPS shall retain all other rights in connection with the Screening Technology. The foregoing license in this Section 4.7 includes the right for Amgen to permit its collaborators and contract service providers to exercise the rights granted to Amgen, provided, however that such collaborators and/or contract service provider(s) are bound by obligations no less restrictive than those applicable to Amgen under this Agreement. Nothing set forth in the Agreement shall be deemed to require Amgen to screen compounds at the request of NPS or otherwise. This paragraph supersedes Section 3.2 of the Original Agreement.

4.8   Amgen Covenants. Amgen covenants that it will not utilize Screening Technology for the purpose of screening for calcilytic compounds. NPS shall have the right to review a summary of the data generated from such Amendment Assays (i.e. the raw results of the Amendment Assays, but excluding any chemical structure information), except to the extent that Amgen may withhold data which Amgen is prohibited from disclosing.

4.9   Identification of Compound(s) by NPS. Notwithstanding the provisions of Section 4.4 and 4.5 of the Original Agreement, after the Second Amendment Effective Date, NPS shall have no obligation to conduct the Amendment Assays to screen Amgen Compounds, provided,

4

Confidential Treatment Requested. Confidential portions of this document have been redacted and have been
separately filed with the Commission.

however, that upon the reasonable request of Amgen NPS shall remain obliged to conduct Amendment Assays to screen NPS Compounds and to conduct such other tests as Amgen reasonably requests to determine if a compound meets the definition of a Compound pursuant to Section 4.5 of the Agreement.

4.10   Identification of Compound(s) by Amgen. During the term of the Agreement, within thirty (30) days after determination by Amgen that any compound meets the definition of an Amgen Compound, NPS/Amgen Compound or Third Party Compound, such compound shall be designated by Amgen as an Amgen Compound, NPS/Amgen Compound or Third Party Compound, as the case may be. Amgen shall notify NPS within thirty (30) days after such determination and designation.

4.11   Supply of Assay Materials. NPS shall deliver to Amgen the Assay Materials in reasonable condition (including with live, active cells) as further described on Exhibit 2 attached to this Second Amendment within ten (10) days after the Second Amendment Effective Date. Thereafter, NPS shall deliver additional quantities of such Assay Materials as Amgen may request within thirty (30) days of such request, and upon Amgen's reasonable request NPS shall provide reasonable technical assistance and/or training via telephone and/or at NPS's facilities.

4.12   Restrictions. Amgen shall not use the Assay Materials in humans under any circumstances. Amgen shall not transfer the Assay Materials to any Third Party(ies) without the prior written consent of NPS, except that Amgen shall have the right to transfer the Assay Materials to its corporate partners and contract services providers that are bound by obligations no less restrictive than those applicable to Amgen under this Agreement without the consent of NPS. Upon termination of this Agreement if NPS so requests in writing, Amgen shall destroy or return to NPS the remaining Assay Materials (if any). The Assay Materials and the progeny of the cell lines within the Assay Materials shall remain the property of NPS.

4.13   Warranty Disclaimer. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, ANY ASSAY MATERIALS ARE SUPPLIED "AS IS" WITH NO WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OR MERCHANTABILITY, TITLE, OR FITNESS FOR A PARTICULAR PURPOSE.

ARTICLE 5
 
LICENSE FEES

5.1   License Fees. Amgen shall pay to NPS a one-time non-refundable license fee of Ten Million Dollars ($10,000,000.00), due and payable upon the Closing Date.

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Confidential Treatment Requested. Confidential portions of this document have been redacted and have been
separately filed with the Commission.

ARTICLE 6
 
MILESTONES

6.1   Milestones. Within thirty (30) days after the occurrence of each the following events (by performance of Amgen or a sublicensee(s) of Amgen) ("Milestone Event(s)") for a Compound(s), Amgen will make the following payments ("Milestone Payment(s)") to NPS:

1. One-Time Milestone Event Payments.
   1. Primary HPT.
      1. [* * *]
      2. [* * *]
      3. [* * *]
      4. [* * *]
   2. Secondary HPT.
      1. [* * *]
      2. [* * *]
      3. [* * *]
      4. [* * *]
2. Additional Compound Milestones. [* * *]

6.2   [* * *] In the event the Compound with respect to which a Milestone Payment is earned is an [* * *] the selling of which would not infringe a valid issued claim within Licensed Patent Rights [* * *] each Milestone Payment under Section 6.1 will be reduced by [* * *].

6.3   Cumulative Milestone Payments. Amgen shall not be obligated to pay any Milestone Payment under Section 6.1(A) more than once, regardless of the number of Compound(s) which achieve that particular Milestone Event. Notwithstanding the above, if an [* * *] is the first to achieve a Milestone Event, NPS may earn the balance of the listed Milestone Payment for such Milestone Event upon a second Compound achieving such Milestone Event, provided, however, that in no event shall Amgen pay more in aggregate than the amount of the listed Milestone Payment for such Milestone Event (regardless of the number of Compound(s) which achieve such Milestone Event).

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Confidential Treatment Requested. Confidential portions of this document have been redacted and have been
separately filed with the Commission.

6.4   Unearned Milestone Payments. NPS may earn a particular Milestone Payment (or the balance of a particular Milestone Payment) under Section 6.1(A), which is not already earned for a Milestone Event for Primary HPT and Secondary HPT, upon achievement of the same Milestone Event for another indication in the Field of Use.

ARTICLE 7
 
ROYALTIES

7.1   Royalties. Amgen shall pay the following Royalties on a Compound-by-Compound basis:

1. Patented Compound
   1. Royalty Rates. Amgen shall pay to NPS a Royalty, based on the following Royalty rates, for annual Net Sales of a Compound by Amgen or its sublicensees in the countries in the Territory in which the selling of such Compound would infringe a valid issued claim in the Licensed Patent Rights in the country for sale ("Patented Compound"):
      1. a Royalty rate of six percent (6%) if cumulative annual Net Sales of the Patented Compound in such countries are less than or equal to One Hundred Million Dollars ($100,000,000.00);
      2. a Royalty rate of eight percent (8%) if cumulative annual Net Sales of the Patented Compound in such countries are greater than One Hundred Million Dollars ($100,000,000.00) and less than or equal to Two Hundred Million Dollars ($200,000,000.00);
      3. a Royalty rate of nine percent (9%) if cumulative annual Net Sales of the Patented Compound in such countries are greater than Two Hundred Million Dollars ($200,000,000.00) and less than or equal to Three Hundred Million Dollars ($300,000,000.00); or
      4. a Royalty rate of ten percent (10%) if cumulative annual Net Sales of the Patented Compound in such countries are greater than Three Hundred Million Dollars ($300,000,000.00)
   2. Term of Royalty Obligation. The obligation to pay Royalty(ies) under this Section 7.1(A) shall expire on a Compound-by-Compound and country-by-country basis [* * *].

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Confidential Treatment Requested. Confidential portions of this document have been redacted and have been
separately filed with the Commission.

3. Competition. In the event Amgen determines that in a country in the Territory a Third Party(ies) is selling a product [* * *], and instead of the rates set forth in Section 7.1(B)(1), Amgen shall pay to NPS a Royalty of two percent (2%) of Net Sales of such Non-Patented NPS Compound or Non-Patented NPS/Amgen Compound in that country, for the period during which such product [* * *].
2. Non-Patented NPS Compound or Non-Patented NPS/Amgen Compound
   1. Royalty Rates. Amgen shall pay to NPS a Royalty, based on the following Royalty rates, for annual Net Sales of an NPS Compound or of an NPS/Amgen Compound by Amgen or its sublicensees in the countries in the Territory in which the selling of such NPS Compound or NPS/Amgen Compound would not infringe a valid issued claim in Licensed Patent Rights in the country of sale "Non-Patented NPS" Compound or Non-Patented NPS/Amgen Compound"):
      1. a Royalty rate of three percent (3%) if cumulative annual Net Sales of the Non-Patented NPS Compound or Non-Patented NPS/Amgen Compound in such countries are less than or equal to One Hundred Million Dollars ($100,000,000.00);
      2. a Royalty rate of five percent (5%) if cumulative annual Net Sales of the Non-Patented NPS Compound or Non-Patented NPS/Amgen Compound in such countries are greater than One Hundred Million Dollars ($100,000,000.00) and less than or equal to Two Hundred Million Dollars ($200,000,000.00);
      3. a Royalty rate of six percent (6%) if cumulative annual Net Sales of the Non-Patented NPS Compound or Non-Patented NPS/Amgen Compound in such countries are greater than Two Hundred Million Dollars ($200,000,00.00) and less than or equal to Three Hundred Million Dollars ($300,000,000.00);
      4. a Royalty rate of seven percent (7%) if cumulative annual Net Sales of the Non-Patented NPS Compound or Non-Patented NPS/Amgen Compound in such countries are greater than Three Hundred Million Dollars ($300,000,000.00).
   2. Term of Royalty Obligation. The obligation to pay Royalty(ies) under this Section 7.1(B) shall expire on a Compound-by-Compound and country-by-country basis upon the earlier of (a) [* * *] years from the date of First Commercial Sale of the Non-Patented NPS Compound or [* * *] Compound in such country or (b) upon Amgen becoming obligated to pay Royalties under Section 7.1(A).

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Confidential Treatment Requested. Confidential portions of this document have been redacted and have been
separately filed with the Commission.

3. Competition. In the event Amgen determines that in a country in the Territory a Third Party(ies) is selling a product [* * *] and instead of the rates set forth in Section 7.1(B)(1), Amgen shall pay to NPS a Royalty of two percent (2%) of Net Sales of such Non-Patented NPS Compound or Non-Patented NPS/Amgen Compound in that country, for the period during which such product [* * *].
3. Non-Patented Amgen Compound
   1. Royalty Rates. Amgen shall pay to NPS a Royalty, based on the following Royalty rates, for annual Net Sales of an Amgen Compound by Amgen or its sublicensees in the countries in the Territory in which the selling of such Amgen Compound would not infringe a valid issued claim in Licensed Patent Rights in the country of sale ("Non-Patented Amgen Compound"):
      1. a Royalty rate of six percent (6%) if cumulative annual Net Sales of the Non-Patented Amgen Compound in such countries are less than or equal to One Hundred Million Dollars ($100,000,000.00).
      2. a Royalty rate of eight percent (8%) if cumulative annual Net Sales of the Non-Patented Amgen Compound in such countries are greater than One Hundred Million Dollars ($100,000,000.00) and less than or equal to Two Hundred Million Dollars ($200,000,000.00).
      3. a Royalty rate of nine percent (9%) if cumulative annual Net Sales of the Non-Patented Amgen Compound in such countries are greater than Two Hundred Million Dollars ($200,000,000.00) and less than or equal to Three Hundred Million Dollars ($300,000,000.00).
   2. Term of Royalty Obligation. The obligation to pay Royalty(ies) under this Section 7.1(C) shall expire on a Compound-by-Compound and country-by-country basis upon the earlier of (a) [* * *] Compound in such country or (b) upon Amgen becoming obligated to pay Royalties under Section 7.1(A).
   3. Competition. In the event Amgen determines that in a country in the Territory a Third Party(ies) is selling a product [* * *] and Royalty(ies) due NPS from Amgen on Net Sales of such Non-Patented Amgen Compound in that country shall be calculated using a [* * *] percent [* * *] reduction of the rates set forth in Section 7.1(C)(1), for the period during which such product [* * *].

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Confidential Treatment Requested. Confidential portions of this document have been redacted and have been
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4. Cumulative Royalties. The obligation to pay Royalties under this Article 7 on the Net Sales of a Compound shall be imposed only once (i) with respect to the same unit of a Compound, regardless of the number of issued claims or, assuming they were to issue, pending claims included within Licensed Patent Rights which would, but for this Agreement, be infringed by the making, using or selling of such Compound and (ii) only under one of Sections 7(A), 7(B) or 7(C).
5. Paid Up License. Upon expiration of Amgen's obligation hereunder to pay a Royalty on Net Sales of a Compound in a country, Amgen shall have a fully paid unrestricted license to make, use and sell such Compound in the Field of Use in that country.

7.2   Combination Product. In the event Amgen or a sublicensee of Amgen elects to sell a product in which one or more Compound(s) are sold in combination with one or more Active Component(s) ("Combination Product") in a country, the Royalties payable on Net Sales of such Combination Product in such country shall be determined as set forth below:

1. In the event one (1) or more components of a Combination Product are sold separately, the Royal on sales of the Combination Product shall be equal to [* * *] .
   1. [* * *]
   2. [* * *]
2. In the event one (1) or more components of a Combination Product are not sold separately, the Royalty on the sales of the Combination Product shall be equal to:
   1. [* * *]
   2. [* * *]

7.3   Third Party Patents. On a country-by-country basis, Amgen may credit [* * *] of payments paid by Amgen to any Third Party(ies) for a license to a patent or patent application of a Third Party for the making, using, or selling [* * *] of a product containing a Compound in a country against any Royalties due under Sections 7.1 and 7.2 for the sale of such Compound. Under no circumstances will Royalties be reduced below [* * *] of that due in such country for any period because of credits provided in this Section, provided, however, that unused credits in any period may be carried forward against Royalties in future periods.

7.4   Cross License. In the event that Amgen, in its sole business judgment, determines that it is necessary to grant a sublicense or a covenant not to sue under Licensed Patent Rights to any Third Party(ies) in any country in the Territory in order for Amgen to make, use or sell a Compound in the Field of Use in any country in the Territory, Amgen shall have the right to grant such sublicense or covenant not to sue to such Third Party(ies). For purposes of this Article 7, the determination of Net Sales for purposes of calculating the Royalty payable by Amgen to NPS under Sections 7.1(A), 7.1(B) and 7.1(C) shall not include sales of a Compound by such Third Party(ies) receiving a sublicense or a covenant not to sue.

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Confidential Treatment Requested. Confidential portions of this document have been redacted and have been
separately filed with the Commission.

7.5   Loss of Exclusivity. In the event that during the term of this Agreement the license to any claim within Licensed Patent Rights granted under Section 2.1 is rendered non-exclusive in any country of the Territory as a result of any governmental, judicial or other action, then from the date such license is rendered non-exclusive [* * *], with all other rights and obligations remaining the same.

7.6   Payment of Royalties.

1. Statement and Payment. Amgen agrees to deliver to NPS within [* * *] after the close of each calendar quarter during the term of this Agreement, a statement setting forth the Net Sales of Compounds during the previous quarter, which statement shall set forth the Royalty due hereunder, and shall be accompanied by a remittance of the corresponding Royalty payment. Notwithstanding the first sentence of this Section 7.6(A) above, until the Advance Recovery Date, Amgen shall not be obligated to pay Royalties to either NPS or Royalty Sub except as follows:
   1. Beginning with the first Payment Date following the close of the second calendar quarter of 2012 and until the Advance Recovery Date, Amgen shall withhold $8,000,000 from each quarterly Royalty payment and credit such $8,000,000 first (i) against the Discount Amount and then (ii) against the Unrecaptured Advance.
   2. On each Payment Date, Amgen shall remit to Royalty Sub any portion of Royalty payment then due in excess of $8,000,000.
   3. NPS or Royalty Sub shall have the option to repay the Unrecaptured Advance, in whole, together with all accrued and unpaid Discount, at any time upon at least seven (7) days prior written notice; provided, however, that if NPS or Royalty Sub elects to repay the Unrecaptured Advance, together with all accrued and unpaid Discount, on or before June 30, 2013, NPS or Royalty Sub shall pay an additional amount equal to two percent (2%) of the Unrecaptured Advance, and if NPS or Royalty Sub elects to repay the Unrecaptured Advance, together with all accrued and unpaid Discount, after June 30, 2013 but on or before June 30, 2014, NPS or Royalty Sub shall pay an additional amount equal to one percent (1%) of the Unrecaptured Advance.

   From and after the Advance Recovery Date, the payment of Royalties in accordance with Section 7.6 shall resume, including the payment of any Royalties that are in excess of the amount needed to satisfy clauses (1) and (2) above. Except as expressly set forth in the following sentence, the Unrecaptured Advance and Discount Amount shall be satisfied solely by the withholding of Royalties (or as otherwise repaid under clause (3) above) and neither NPS nor Royalty Sub shall have any obligation to make any payment in respect thereof. If an Event of

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Default occurs, then Amgen shall have the option to have NPS repay all or a portion of any remaining Unrecaptured Advance (such repayment to be made within [* * *] days after Amgen's delivery of its request for repayment), provided, however, [* * *].

The Discount shall accrue on the Unrecaptured Advance from the Advance Date and shall be computed for each Discount Period on a calendar quarter basis.

For purposes of this Section 7.6(A), the following terms have the meanings set forth below:

"Advance Date" means September 30, 2011.

"Advance Recovery Date" means the Payment Date on which an amount equal to the Unrecaptured Advance plus the then due Discount Amount shall have been withheld by Amgen from the Royalties or otherwise paid under clause (3) above.

"Discount" means 9% per annum on the Unrecaptured Advance compounded quarterly for each Discount Period.

"Discount Amount" means, on any Payment Date, the amount of accrued and unpaid Discount.

"Discount Period" means the period beginning on (and including) the Advance Date and ending on (but excluding) the first Payment Date thereafter and each successive period beginning on (and including) a Payment Date and ending on (but excluding) the next succeeding Payment Date.

"Event of Default" means an event whereby Amgen's and/or its sublicensees' obligations to pay Royalties to NPS or Royalty Sub under the Agreement cease with respect to Net Sales [* * *] pursuant to Section 14.2(c) (Default by NPS).

"Payment Date" means the date forty-five (45) days after the close of each calendar quarter during the term of the Agreement.

"Royalty Advance" means the payment by Amgen of $145,000,000 to Royalty Sub as an advance against future Royalties.

"Unrecaptured Advance" means the amount of the Royalty Advance that has not been recaptured by Amgen through the withholding of Royalties or otherwise repaid under clause (3) above as of any Payment Date (it being understood that in no event shall the application of Royalties payable by Amgen towards the Discount hereunder reduce or otherwise be deemed as a recapture of the Unrecaptured Advance).

2. Basis of Calculation. The following procedure will be used to calculate and report the quarterly Royalty payments [* * *].

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3. Records. Amgen's records that are necessary to determine the correctness of any payment of Royalties hereunder shall be open to inspection for [* * *] following the end of the period to which they pertain, by an independent Certified Public Accountant designated by NPS and reasonably acceptable to Amgen, at reasonable times and from time to time, during normal business hours, and upon reasonable notice, for the sole purpose of verifying the accuracy of any statement provided and the amount of Royalty(ies) due. The report of such accountant shall be limited to a certificate verifying any statement provided or payment submitted by Amgen during such period but may include, in the event the accountant shall be unable to verify the correctness of any such payment, information relating to why such payment is unverifiable. Should such inspection lead to the discovery of a discrepancy to NPS's detriment in an annual period, as confirmed by Amgen, Amgen shall pay the amount of the discrepancy. NPS shall pa the full cost of the inspection unless the discrepancy is greater than[* * *] to NPS's detriment, in which case Amgen shall pay the full cost of such inspection.
4. Currency. Royalties due hereunder shall be payable in United States Dollars. Net Sales received in currencies other than United States Dollars shall be converted into the United States Dollar equivalent, at the average rate of exchange as reported in International Financial Statistics for the Royalty period or, in the event International Financial Statistics does not report such conversion rate, then another reliable and generally accepted source agreeable to the Parties shall be used.
5. Deposit. If Amgen or a sublicensee of Amgen under this Agreement is unable to convert a foreign currency into United States Dollars for reasons beyond its control, or is restricted by law or regulation from remitting Royalty(ies) from any country of sale, Amgen shall cause such payment to be made to NPS by deposit to the credit and account of NPS or its designated nominee in any commercial bank designated by NPS in the applicable country. Amgen shall deliver to NPS proper evidence of such `deposit.
6. Taxes. All payments due hereunder shall be paid by Amgen, with a deduction of taxes or other fees which are imposed by any foreign government on Royalties payable to NPS; provided, however, if Amgen shall be reimbursed or receive credit for any taxes previously deducted from Royalties, Amgen shall pay to NPS the amount so deducted.
7. Purchase of Royalties. Notwithstanding Section 7.6(A), the parties agree that Amgen will pay to Royalty Sub $25,000,000 on July 13, 2012 by wire transfer to an account designated by Royalty Sub as payment in full for all Royalties accrued after December 31, 2018 on Net Sales of any and all Compounds hereunder in the Territory; [* * *]. Additionally, in consideration for the foregoing one-time payment, as of January 1, 2019, Amgen shall have a fully paid, royalty-free, unrestricted license to make, use and sell any Compound in the Field of Use in the Territory; [* * *].

7.7   Confidential Financial Information. NPS shall treat all financial information subject to review under this Article 7, or under any sublicense agreement, as Amgen Confidential Information, and shall cause its Certified Public Accountant to be bound to obligations of confidentiality to retain all such financial information at least as restrictive as NPS's obligations of confidentiality herein. The report of the Certified Public Accountant pursuant to Section 7.6(C) shall be treated as Amgen Confidential Information. Notwithstanding any other provision

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in this Agreement, under no circumstances may the report of the Certified Public Accountant under Section 7.6(C) be provided to any Third Party which has not executed a Confidentiality Agreement.

ARTICLE 8
 
DEVELOPMENT

8.1   Development of Compound(s). Beginning on the Closing Date, Amgen shall assume sole and full control, authority and responsibility for conducting, funding and pursuing all aspects of development, regulatory, manufacturing, and commercialization of Compound(s) in the Territory, including without limitation, modification or termination of such activities conducted by NPS prior to the Closing Date.

8.2   Regulatory Filings and Governmental Approvals. Beginning on the Closing Date, Amgen will prepare and file and will own all right, title and interest in Regulatory Filings and Governmental Approvals.

8.3   Record Retention. NPS shall retain, preserve and make available to Amgen during normal business hours any of the original books and records of NPS applying to the Licensed Technology and shall permit Amgen to make copies thereof.

8.4   NPS Option. NPS may elect to allocate up to two (2) FTEs per year, who are reasonably acceptable to Amgen and who may participate, under Amgen's direction and expense, [* * *] ("NPS Option"). If NPS exercises the NPS Option, the two (2) NPS FTEs will be reimbursed at [* * *] per FTE per year for a period extending from the Effective Date to the earlier to occur of (i) [* * *] from the Effective Date, (ii) until [* * *] (iii) [* * *], or (iv) NPS's election to no longer allocate the FTEs, whichever is earlier ("NPS FTE Period"). Amgen will reimburse NPS for such FTEs during the NPS FTE Period, within [* * *] after receipt of [* * *] invoices therefore from NPS.

8.5   Meetings. Amgen and NPS will meet [* * *] until the [* * *] anniversary of the Closing Date, will meet [* * *] until the [* * *] anniversary of the First Commercial Sale of the first Compound sold by Amgen and will meet thereafter as mutually desired, for Amgen to summarize the status of Amgen's Compound development and commercialization program and for NPS to update Amgen on NPS's Compound discovery program, as appropriate. Such meetings will be at mutually agreeable times and locations.

8.6   Confidential Development Information. All information generated under this Article 8 (other than Section 8.3) shall be deemed to be owned by and to be the Confidential Information of Amgen.

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Confidential Treatment Requested. Confidential portions of this document have been redacted and have been
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ARTICLE 9
 
INTELLECTUAL PROPERTY

9.1   Inventions. For purposes of this Agreement, inventorship of any invention, discovery, material or information within Licensed Technology ("Invention") will, if patentable, be determined in accordance with the principles of U.S. patent law. Inventorship of an Invention, if not patentable, will be determined under such principles by treating such Invention as if they were patentable.

9.2   Designation of Inventions. If an Invention [* * *] ("NPS Invention"), the NPS Invention will be licensed to Amgen in accordance with the rights and licenses granted hereunder. All NPS Inventions shall be promptly disclosed to Amgen. If an Invention [* * *] the Invention shall be jointly owned by the parties who are assigned rights in the Invention ("Joint Invention"), subject only to the rights and licenses granted hereunder.

9.3   NPS Inventions.

1. Prosecution by NPS. NPS shall be responsible for and shall retain outside counsel reasonably acceptable to Amgen to prepare, file, prosecute, maintain and defend patent applications and patents claiming NPS Inventions before all national and international patent offices within the Territory, at NPS's cost and expense. NPS shall regularly consult with Amgen and keep Amgen advised of the status of patent matters. NPS specifically agrees to provide Amgen with copies of and with sufficient time and opportunity, but in no event less than thirty (30) days, to review, comment and consult on all such patent applications and patents and all correspondence to and from such patent offices, including proposed responses, interferences and oppositions.
2. Input by Amgen. NPS shall prepare, file, prosecute, maintain and defend any patent claim or claims requested by Amgen which generically or specifically claim an NPS Invention, and shall advance any reasonable arguments suggested by Amgen in support of the patentability of NPS Inventions. Moreover, NPS shall prepare, file, prosecute and maintain patent applications and patents claiming NPS Inventions in any country requested by Amgen. In any action taken by NPS in the prosecution of, or in the defense of an action by a Third Party(ies) related to patent invalidity or non-patentability of, any patent application or patent claiming an NPS Invention, NPS shall not admit the invalidity or non-patentability of any Licensed Patent Rights or take any other action that may diminish Licensed Patent Rights without Amgen's prior written consent. Moreover, if Amgen concludes that taking any specific action(s) may likely have a materially adverse effect on Amgen's interests in such Licensed Patent Rights, and timely gives NPS notice thereof, then NPS shall not take such specific action(s) without the prior express written consent of Amgen.
3. Election Not to Proceed. Should NPS wish to abandon any, or cease the defense or maintenance of, any patent applications and patents claiming NPS Inventions, it shall first obtain written approval from Amgen. [* * *], Amgen, at its option and expense, may continue the prosecution or maintenance of such patent application or patent. A decision by Amgen not to prepare, file, prosecute or maintain any patent application or patent claiming an

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NPS Invention will not affect Amgen's rights under this Agreement, specifically including the rights and licenses granted under Section 2.1 through 2.3.

4. Other Property Rights. In the event that NPS elects to establish property rights other than patents to any NPS Invention, Amgen shall receive the same rights from such other property rights as provided for patents in this Agreement.

9.4   Joint Inventions.

1. Prosecution by Amgen. Amgen shall have the first right to retain outside counsel reasonably acceptable to NPS to prepare, file, prosecute, maintain and defend patent applications and patents claiming Joint Inventions before all national and international Patent Offices throughout the world, at Amgen's cost and expense. Amgen shall regularly consult with NPS and keep NPS advised of the status of patent matters. Amgen specifically agrees to provide NPS with copies of and with sufficient time and opportunity, but in no event less than thirty (30) days, to review, comment and consult on all such patent applications and patents and all correspondence to and from such patent offices, including proposed responses, interferences and oppositions.
2. Input by NPS. In any action taken by Amgen in the prosecution of, or defense of an action by a Third Party(ies) related to patent invalidity or non-patentability of, any patent applications and patents claiming Joint Inventions, Amgen shall not admit the invalidity or non-patentability of any Licensed Patent Rights or take any other action that may diminish Licensed Patent Rights without NPS's prior written consent. Moreover, if NPS concludes that taking any specific action(s) may likely have a materially adverse effect an NPS's interests in Licensed Patent Rights, and timely gives Amgen notice thereof, then Amgen shall not take such specific action(s) without the prior express written consent of NPS.
3. Election Not to Proceed. Amgen shall be free, at any time and at is sole option, to elect not to proceed with and/or to abandon the preparation, filing, prosecution, maintenance or defense of any patent application or patent claiming Joint Inventions in any country, provided, that it gives NPS notice of such intention at least thirty (30) days before a final due date which would result in abandonment or bar of patentability of such patent or patent application. In such case, NPS, at its option, may continue prosecution or maintenance at its own cost. A decision by Amgen not to prepare, file, prosecute or maintain any patent application or patent claiming a Joint Invention will not affect Amgen's rights under this Agreement, specifically including the rights and licenses granted under Sections 2.1 through 2.3.

9.5   Trademarks.

1. Right to Select. Amgen, at its expense, shall be responsible for the selection, registration and maintenance of all trademarks and tradenames which it employs in connection with the commercialization of Compounds.
2. Prosecution of Licensed Trademark Rights by Amgen. With respect to Licensed Trademark Rights, Amgen shall have the first right to retain outside counsel reasonably acceptable to NPS to prepare, file, prosecute, maintain and defend Licensed Trademark Rights

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before all national and international trademark offices in the Territory, at Amgen's cost and expense. Amgen shall regularly consult with NPS and keep NPS advised of the status of Licensed Trademark Rights. Amgen specifically agrees to provide NPS with copies of and with sufficient time and opportunity, but in no event less than thirty (30) days, to review, comment and consult on all trademark applications and trademarks within Licensed Trademark Rights and all correspondence to and from such Trademark Offices, including proposed responses and oppositions.

3. Election Not to Proceed with Licensed Trademark Rights. Amgen shall be free, at any time and at its sole option, to elect not to proceed with and/or to abandon the preparation, filing, prosecution, maintenance or defense of any trademark application or trademark within Licensed Trademark Rights in any country, provided that it gives NPS notice of such intention at least thirty (30) days before a final due date which would result in abandonment or bar of the trademark or trademark application within Licensed Trademark Rights. In such case, NPS, at its option, may continue prosecution or maintenance at its own cost. A decision by Amgen not to prepare, file, prosecute or maintain any trademark application or trademark within Licensed Trademark Rights will not affect Amgen's rights under this Agreement, specifically including the licenses granted under Sections 2.1 to 2.3.

9.6   Cooperation. Notwithstanding which Party has exclusive control over the prosecution of Licensed Patent Rights and Licensed Trademark Rights, NPS and Amgen shall cooperate with each other and render all reasonable assistance in prosecuting and maintaining such Licensed Patent Rights and Licensed Trademark Rights. Both Parties shall meet on a regular, but not less than on a quarterly, basis to discuss the prosecution of and to discuss other proceedings such as interferences and oppositions concerning Licensed Patent Rights and Licensed Trademark Rights. Amgen and NPS agree to cooperate with each other (and to use best efforts to ensure the cooperation of any of their respective personnel and licensee(s) as might reasonably be requested) in any such matters, and shall sign any necessary legal papers and provide the Party responsible for such prosecution with data or other information in support thereof.

ARTICLE 10
 
PATENT ENFORCEMENT AND INFRINGEMENT

10.1   Enforcement of Licensed Patent Rights. In the event either party becomes aware of any suspected infringement by a Third Party(ies) of any claim within Licensed Patent Rights, that Party shall promptly notify the other Party in writing. The enforcement of such Licensed Patent Rights will be as set forth below:

1. Enforcement by Amgen.
   1. [* * *]
      1. [* * *]
      2. [* * *]

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2. [* * *]
3. [* * *]
2. Enforcement by [* * *].
   1. [* * *]
   2. [* * *]

10.2   Enforcement of Licensed Trademark Rights. In the event either Party becomes aware of any suspected infringement by a Third Party(ies) of any Licensed Trademark Rights in the Field of Use in the Territory, that Party shall promptly notify the other Party in writing. Amgen shall have the right but not the obligation, in its own name, to initiate trademark infringement proceedings against such Third Party in such country. Amgen shall have exclusive control over the conduct of any such proceedings, including the right to settle or compromise such proceedings consistent with Amgen's licenses under Licensed Patent Rights. The expense of any such proceedings, including lawyers' fees and costs, shall be borne by Amgen. NPS shall execute all necessary and proper documents and take all other appropriate action required to initiate and prosecute such proceedings. If Amgen elects to commence an action for infringement and NPS is a legally indispensable party to such action, NPS shall have the right to assign to Amgen its right, title and interest in the subject trademark(s) or application(s) in lieu of joining as an indispensable party, should that be sufficient for purposes of commencing and maintaining the action. Regardless of such assignment or not, however, NPS shall cooperate fully with Amgen in such action upon request by Amgen. During the term of this Agreement, NPS agrees to use its best efforts to ensure that any NPS personnel and NPS licensee(s) (as might reasonably be requested for assistance by Amgen) will be available to cooperate with Amgen, at Amgen's request and expense, in connection with such action.

10.3   Infringement Defense.

1. Right of Amgen. [* * *]
2. Reservation of Royalty(ies). [* * *]

10.4   Enforcement of Screening Patents. NPS alone shall have the right but not the obligation, in its own name and at its sole cost and expense, to initiate patent infringement proceedings against any Third Party(ies) suspected of infringing a claim within Screening Patents, except to the extent that such proceedings could reasonably be expected to result in a challenge to the validity or enforceability of the Licensed Patents other than Screening Patents, in which case NPS shall have no right to initiate or otherwise pursue such proceedings without the prior written consent of Amgen. NPS shall have exclusive control over the conduct of any such patent infringement proceedings, including the right to settle or compromise such proceedings, provided, however that no such settlement or compromise shall be made by NPS, which has an adverse effect on the rights of Amgen without Amgen's prior written consent. If NPS elects to commence an action for infringement, Amgen shall cooperate at NPS' sole cost and expense with reasonable requests of NPS for such cooperation. During the term of this

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Agreement, Amgen agrees to use commercially reasonable efforts to ensure that any Amgen personnel (as might reasonably be requested for assistance by NPS) will be available to cooperate with NPS consistent with the terms set forth in this Section 10.4. Any award paid to NPS by Third Party(ies) as a result of such patent infringement proceedings shall belong to NPS. Notwithstanding the foregoing, nothing in this Section 10.4 shall alter in any way either Party's rights or obligations under Section 10.1, 10.2 or 10.3 of the Original Agreement.

ARTICLE 11
 
CONFIDENTIALITY

11.1   Confidentiality . Except to the extent expressly authorized by this Agreement or otherwise agreed to in writing by the Parties, the Parties agree that, for the term of this Agreement and for [* * *] years thereafter, the receiving Party shall keep confidential and shall not publish or otherwise disclose, and shall not use for any purpose other than as provided for in this Agreement, any Confidential Information furnished to it by the other Party pursuant to this Agreement, except to the extent that it can be established by the receiving Party by competent proof that such Confidential Information:

1. was already known to the receiving Party at the time of disclosure by the other Party;
2. was generally available to the public or otherwise part of the public domain at the time of its disclosure to the receiving Party;
3. became generally available to the public or otherwise part of the public domain after its disclosure and other than through any act or omission of the receiving Party in breach of this Agreement;
4. was disclosed to the receiving Party by a Third Party(ies) who had no obligation to the disclosing Party not to disclose such information to others; or
5. was independently developed by the Receiving Party without the use of the disclosed information, as evidenced by the Receiving Party's written records.

11.2   NPS Confidential Information.

1. Disclosure by Amgen. Notwithstanding the foregoing, Amgen may disclose NPS Confidential Information to the extent such disclosure(i) is related to Compound(s), metabolites of Compound(s), intermediates in the manufacture of Compound(s) and methods of making, formulating, delivering and using Compound(s) and metabolites of Compounds in the HPT Field or (ii) is reasonably necessary in the following:
   1. pursuing development and commercialization of Compound(s) in the Territory;

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2. filing or prosecuting patent applications and patents within Licensed Patent Rights;
3. prosecuting or defending litigation; and
4. complying with applicable law, regulation or order of a government authority or court of competent jurisdiction (including any applicable securities laws).
2. Non-disclosure by NPS. NPS shall not disclose NPS Confidential Information pertaining to Compound(s) to any Third Party(ies), without the prior approval of Amgen, provided, however, that NPS may disclose NPS Confidential Information (i) [* * *] (ii) to patent offices to exercise its rights under Section 9.3(A), and (iii) to courts and governmental agencies or other bodies to comply with applicable law, regulation or order of a government authority or court of competent jurisdiction (including any applicable securities laws).

11.3   Reports to [* * *]. [* * *]

11.4   This Agreement. The Parties agree that the material terms of this Agreement shall be considered Confidential Information of both Parties. The Parties will consult with one another on the provisions of this Agreement to be redacted in any filings made by the Parties with the Securities and Exchange Commission or as otherwise required by law or regulation. Notwithstanding the foregoing, each Party shall have the right to disclose in confidence under terms and conditions at least as restrictive as set forth herein the material terms of this Agreement to parties providing accounting, financing (i.e., individual investors and financial. institutions such as venture capitalist firms or investment banks and their Affiliates which are not in the business of developing, manufacturing or marketing pharmaceutical or diagnostic products), legal or similar services for such Party and who have a need to know such terms in order to provide such services.

11.5   Amgen Confidential Information.

1. Disclosure by NPS. Notwithstanding Section 11.1 above, NPS or Royalty Sub may disclose only to a Lender, a prospective Lender or a Permitted Holder in connection with a Financing Transaction the Amgen Confidential Information identified below but only to the extent required in order for NPS or Royalty Sub to comply with its obligations under any agreement with the Lenders, provided, however, that any such Lender or prospective Lender must have executed a Confidentiality Agreement pursuant to Section 11.5(B) hereto prior to NPS or Royalty Sub furnishing such Lender or prospective Lender with any Amgen Confidential Information pursuant to this provision.

   *Statements, reports and information provided by Amgen, or a certified public accountant designated in accordance with Section 7.6(C), pursuant to Section 7.6 of the Agreement.

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2. Confidentiality Agreements. Royalty Sub shall enter into a Confidentiality Agreement with Amgen. Any Lender, prospective Lender, or Third Party which intends to become a Permitted Holder shall execute and enter into a Confidentiality Agreement.
3. No Security Interest in Amgen Confidential Information. Notwithstanding any other provision in this Agreement, NPS and Royalty Sub shall not grant any security interest in Amgen Confidential Information.
4. Limitation on Duties to Disclose. Notwithstanding any other provision in this Agreement, Amgen, NPS and Royalty Sub shall have no obligation to disclose any Confidential Information to any Third Party which has not entered into a Confidentiality Agreement.
5. Royalty Sub's Right to Amgen Confidential Information. Provided Royalty Sub executes and performs under a Confidentiality Agreement pursuant to Section 11.5(B) and agrees that any information provided to Royalty Sub by Amgen pursuant to this provision shall remain Amgen Confidential Information, Amgen shall grant Royalty Sub access to Amgen Confidential Information as follows:
   1. Amgen shall provide Royalty Sub with a copy of all notices and/or statements from Amgen to NPS related to NPS's rights to receive Milestone Payments under Article 6 and receive Royalties under Article 7 and Section 14.3, including the statements under Section 7.6(A) setting forth, among other things, the Royalties due;
   2. Amgen shall arrange for Royalty Sub to receive a copy of any report from an independent Certified Public Accountant appointed under Section 7.6(C); and
   3. To the extent access to Amgen Confidential Information is required in order for Royalty Sub to comply with its obligations under any agreement with the Lenders, Amgen shall provide Royalty Sub with access to any Amgen Confidential Information other than as set forth in subparts (i) and (ii) above to which NPS would have had the right to access under this Agreement specifically relating to those rights sold and/or contributed to Royalty Sub as set forth in Section 17.3(B).

ARTICLE 12
 
PUBLICATIONS AND PRESENTATIONS

12.1   Publications and Presentations. Amgen and. NPS will treat matters of authorship of scientific abstracts, manuscripts or other publications (or presentations) in a proper collaborative spirit, giving credit where it is due. With respect to NPS's publications and presentations, NPS shall not submit or present any written or oral publication, any manuscript, abstract or the like which includes data or other information related to Licensed Technology

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(including Compounds) or Amgen Confidential Information without first obtaining the prior written consent of Amgen.

ARTICLE 13
 
INDEMNIFICATION AND INSURANCE

13.1   Indemnification by Amgen. Amgen agrees to indemnify, defend and hold harmless NPS and its directors, officers, agents and employees from any and all liability, damage, loss or expense (including reasonable attorneys' fees and expenses of litigation) in connection with any claims, suits, action or judgments [* * *].

13.2   Indemnification by NPS. NPS agrees to indemnify and hold harmless Amgen and its directors, officers, agents and employees from any and all liability, damage, loss or expense (including reasonable attorneys' fees and expenses of litigation) in connection with any claims, suits, action or judgments [* * *].

13.3   Insurance. Amgen and NPS each shall maintain insurance, [* * *].

ARTICLE 14
 
TERMINATION

14.1   Termination of Licenses or Agreement. At any time during the term of this Agreement, Amgen may, upon [* * *] written notice to NPS (i) terminate, in whole or in part, any of the licenses to Licensed Technology granted hereunder and/or (ii) terminate this Agreement. Termination of this Agreement shall terminate all licenses to Licensed Technology granted herein, with all licenses to Licensed Technology granted by NPS to Amgen reverting to NPS and Amgen's obligations to pay Royalties and Milestone Payments terminating.

14.2   Default.

1. Notice of Default. In the event any representation or warranty under Article 15 shall have been untrue when made (a "Representation Default"), or upon the failure of either Party to comply with any material obligation set forth in this Agreement (a "Performance Default"), including any obligation of NPS under any Collaborative Agreement the failure to comply with which would terminate or diminish NPS's rights thereunder and Amgen's rights under this Agreement (a "Default"), the Party not in Default ("non-Defaulting Party") shall give to the Party in Default ("Defaulting Party") written notice ("Notice of Default") specifying the nature of the Default and requesting that the Defaulting Party cure such Default within [* * *]. If the Defaulting Party shall dispute the existence, extent or nature of any Default set forth in a Notice of Default, the Parties shall use efforts to resolve the dispute.
2. Default by Amgen. In the event (1) a Representation Default by Amgen or (2) a Performance Default by Amgen in a country in the Territory shall not be cured within [* * *] of Amgen's receipt of a Notice of Default or, if such Default cannot be cured within such

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[* * *] period, Amgen has failed to commence substantial remedial actions within such [* * *] period and to diligently pursue the same, and

1. such Default arises from activities related to the development and commercialization of a specific Compound (a "Compound Default") then NPS at its option, [* * *]
2. such Default relates to other than a Compound Default (an "Agreement Default") the NPS, at its option, may [* * *]
3. Default by NPS. In the event (1) a Representation Default by NPS or (2) a Performance Default by NPS shall not be cured within [* * *] of NPS's receipt of a Notice of Default or, if such Performance Default cannot be cured within such [* * *] , NPS has failed to commence substantial remedial actions within such [* * *] period and to diligently pursue with same, Amgen's and its sublicensees' obligations [* * *].

14.3   Insolvency or Bankruptcy.

1. Insolvent Party. In addition to any other remedies available to it by law or in equity, a Party may terminate this Agreement upon providing written notice to the other Party (the "Insolvent Party"), in the event the Insolvent Party shall have become insolvent or bankrupt or shall have made an assignment for the benefit of its creditors, or there shall have been appointed a trustee or receiver of the Insolvent Party, or for all or a substantial part of its property, or any case or proceeding shall have been commenced or other action taken by or against the Insolvent Party in bankruptcy or seeking reorganization, liquidation, dissolution, winding-up arrangement, composition or readjustment of its debts or any other relief under any bankruptcy, insolvency, reorganization or other similar act or law of any jurisdiction now or hereafter in effect, or there shall have been issued a warrant of attachment, execution, distraint or similar process against any substantial part of the property of the Insolvent Party, and any such event shall have continued for [* * *] undismissed, unbonded and undischarged.
2. Rights in Bankruptcy. All rights and licenses granted under or pursuant to this Agreement by Amgen or NPS are, and shall otherwise be deemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy Code, licenses of rights to "intellectual property" as defined under Section 101 of the U.S. Bankruptcy Code. The Parties agree that each Party which is a licensee of such rights under this Agreement shall retain and may fully exercise all of its rights and elections under the U.S. Bankruptcy Code. The Parties further agree that, in the event of the commencement of a bankruptcy proceeding by or against either Party under the U.S. Bankruptcy Code, the Party hereto which is not a party to such proceeding shall be entitled to a complete duplicate of (or complete access to, as appropriate) any such intellectual property and all embodiments of such intellectual property, and same, if not already in their possession, shall be promptly delivered to them (i) upon any such commencement of a bankruptcy proceeding upon their written request therefor, unless the Party subject to such proceeding (or a trustee on behalf of the subject Party) elects to continue to perform all of their obligations under this Agreement or (ii) if not delivered under (i) above, upon the rejection of this Agreement by or on behalf of the Party subject to such proceeding upon written request therefor by the non-subject Party.

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3. Rights Upon Bankruptcy. In the event NPS shall be the Insolvent Party and Amgen elects to terminate this Agreement pursuant to this Section 14.3, all rights and obligations hereunder shall terminate, provided, however, Amgen shall retain all licenses to Licensed Technology granted herein, subject to the payment to NPS of Milestone Payments pursuant to Article 6 and Royalties pursuant to Article 7 for Compound(s) encompassing Licensed Technology.

14.4   Acquisition of NPS. In the event that during the term of the NPS Option, a Third Party (the "Acquiring Party") shall acquire, directly or indirectly, thirty-five percent (35%) or more of the shares of NPS stock entitled to vote for the election of directors of NPS, Amgen shall have the right, within one hundred and twenty (120) days of such acquisition, to terminate NPS's rights and Amgen's obligations under Sections 8.4 and 8.5, provided however, that all other rights and obligations shall remain in full force and effect.

14.5   Accrued Rights, Surviving Obligations. Termination, relinquishment or expiration of any licenses under this Agreement or of this Agreement for any reason shall be without prejudice to any rights which shall have accrued to the benefit of either Party prior to such termination, relinquishment or expiration. Such termination, relinquishment or expiration shall not relieve either Party from obligations under Articles 12 and 13. Upon termination of this Agreement in its entirety or with respect to any country or Compound, Amgen shall notify NPS of the amount of Compound(s) Amgen and its sublicensees and distributors then have on hand, the sale of which would, but for the termination, be subject to a Royalty(ies), and Amgen and its sublicensees and distributors shall thereupon be permitted to sell that amount of Compound(s) provided that Amgen shall pay the Royalty(ies) thereon at the time provided for.

14.6   Damages. In no event shall either Party be responsible for any consequential damages incurred by the other Party in connection with this Agreement, including, without limitation, lost profits or opportunities or injury to Person or property resulting from the termination (in whole or part) of the licenses to Licensed Technology or this Agreement.

ARTICLE 15
 
REPRESENTATIONS AND WARRANTIES

15.1   Representations and Warranties by NPS. NPS represents and warrants that as of the Closing Date:

1. Corporate Power. NPS is duly organized and validly existing under the laws of the state of Delaware and has full corporate power and authority to enter into this Agreement and carry out the provisions hereof.
2. Due Authorization. NPS is duly authorized to execute and deliver this Agreement and to perform its obligations hereunder. The Person executing this Agreement on NPS's behalf has been duly authorized to do so by all requisite legal action.

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3. Binding Agreement. This Agreement is a legal and valid obligation binding upon NPS and enforceable in. accordance with its terms. The execution, delivery and performance of this Agreement by NPS does not conflict with any encumbrances, agreement, instrument or understanding (oral, written or implied) to which it is a party or by which it may be bound, nor does it violate any material law or regulation of any court, governmental body or administrative or other agency having jurisdiction over it.
4. Control of Licensed Technology. NPS is the owner or licensee of Licensed Technology existing as of the Closing Date.
5. Validity of Licensed Patent Rights. NPS has no reason to believe based upon a reasonable search of public information and has no knowledge of any facts from which it can be inferred that Licensed Patent Rights are invalid, provided, however, that nothing herein shall be construed as a warranty and representation by NPS of the validity of Licensed Patent Rights.
6. Right to Practice. NPS has no reason to believe based upon a reasonable search of the public information and has no knowledge of any facts of any claim asserting that any or all Licensed Technology falls within the scope of any intellectual property rights of any Third Party(ies), provided, however, that nothing herein shall be construed as a warranty and representation by NPS that anything made, used, sold or otherwise disposed of under the license granted in this Agreement is or will be free from infringement of patents, copyrights, trademarks, registered design or other intellectual property rights.
7. No Infringement of Licensed Patent Rights. NPS has no reason to believe and has no knowledge of any facts of any Third Party infringement of any of Licensed Patent Rights.
8. Brigham and Women's Agreements. The Brigham and Women's Agreements are legal and valid obligations binding upon the parties thereto and enforceable in accordance with their terms. The Brigham and Women's Agreements grant NPS the right to grant a sublicense to Amgen consistent with the rights and licenses herein. NPS has not received any notice of default, and is not in default, of its obligations under the Brigham and Women's Agreements. Brigham and Women's has notified NPS that Brigham and Women's will provide NPS with a letter of assurance that Amgen's obligation of performance under this Agreement will be consistent with the terms of the Brigham and Women's Agreements.
9. Kirin Collaborative Agreement. The Kirin Collaborative Agreement is legal and a valid obligation binding upon the parties thereto and enforceable in accordance with its terms. [* * *] NPS has not received any notice of default, and is not in default of its obligations under the Kirin Collaborative Agreement.
10. SKB Collaborative Agreement. The SKB Collaborative Agreement is legal and a valid obligation binding upon the parties thereto and enforceable in accordance with its terms. [* * *] NPS has not received any notice of default, and is not in default, of its obligations under the SKB Collaborative Agreement.

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11. Due Diligence. NPS acknowledges that in entering into this Agreement Amgen has relied upon information supplied by NPS and information which NPS has caused to be supplied to Amgen by NPS's agents and/or representatives concerning NPS Compound(s). To the best of NPS's knowledge as of the Closing Date, NPS has disclosed all data and information regarding Compounds in its possession or generated under the Development Contracts and has not furnished to Amgen any information which is untrue or omitted to furnish Amgen any information available to NPS concerning Licensed Technology (including Compounds) required to make the disclosed information complete and not misleading, or the transactions contemplated by this Agreement which would be material to Amgen's decision to enter into this Agreement and to undertake the commitments and obligations set forth herein. Specifically, NPS has no reason to believe and has no knowledge of any facts regarding the existence of any material preclinical or clinical data or information concerning a Compound(s), which NPS has not disclosed to Amgen.
12. [* * *]. [* * *]
13. Title. NPS has good and marketable title to NPS Materials, free and clear of all liens, mortgages, deeds of trust, easements, restrictions, pledges, encumbrances, sales, agreements, security interests, claims by any Third Party(ies) of right to use, possess or adversely possess except as set forth herein.
14. No Action. NPS is aware of no action, suit or inquiry or investigation contemplated or instituted by any U.S. federal or state governmental agency which questions or threatens the validity of this Agreement or the NPS Collaborative Agreements.
15. Appendices. NPS has exercised best efforts in ensuring that the Appendices are complete in all material respects as of the Closing Date and, in the event that any other items have not been included in the Appendices as of the Closing Date, then NPS shall promptly provide those items and complete the respective Appendices and all Appendices shall be completed and updated within [* * *] of the Closing Date. NPS shall be responsible for any and all costs and expenses in connection with acquiring rights consistent with Amgen's rights under this Agreement, specifically including the rights and licenses granted under Sections 2.1 through 2.3.

15.2   Representations and Warranties by Amgen. Amgen represents and warrants that as of the Closing Date:

1. Corporate Power. Amgen is duly organized and validly existing under the laws of Delaware and has full corporate power and authority to enter into this Agreement and carry out the provisions hereof.
2. Due Authorization. Amgen is duly authorized to execute and deliver this Agreement and to perform its obligations hereunder. The Person executing this Agreement on Amgen's behalf has been duly authorized to do so by all requisite corporate action.

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3. Binding Agreement. This Agreement is a legal and valid obligation binding upon Amgen, and enforceable in accordance with its terms. The execution, delivery and performance of this Agreement by Amgen do not conflict with any agreement, instrument or understanding, oral or written, to which it is a party or by which it may be bound, nor does it violate any material law or regulation of any court, governmental body or administrative or other agency having jurisdiction over it.
4. No Action. Amgen is aware of no action, suit or inquiry or investigation contemplated or instituted by any U.S. federal or state governmental agency which questions or threatens the validity of this Agreement.
5. Competition. [* * *]
6. Testing. Amgen covenants that it will undertake studies with the intent and for the purpose of generating data to determine if each Compound [* * *] including but not limited to [* * *] and [* * *] meets all criteria for selection by Amgen as a candidate for accumulation of preclinical data deemed necessary or desirable by Amgen to file an IND or similar application outside of the United States.

ARTICLE 16
 
COVENANTS

16.1   Covenants by NPS.

1. NPS Covenant. Subject to Section 3.1, NPS shall not itself, nor shall any of its licensee(s) (other than Amgen pursuant to this Agreement) undertake to make, use or sell (including to develop and seek registration for) any Compound [* * *] for any use (including for use in the treatment of any indication within the HPT Field) in the Territory.
2. Exclusivity. NPS covenants that it will not during the term of this Agreement grant any right, license, consent or privilege to any Third Party(ies) in the Territory which would conflict with the rights granted to Amgen hereunder. NPS covenants that during the term of this Agreement, NPS will work exclusively with Amgen (i) with respect to Compound(s) [* * *] in the Field of Use in the Territory, (ii) with respect to the development and commercialization in the Territory of compounds which have PTH Lowering Activity [* * *] and (iii) with respect to research related to the discovery or characterization of Compounds having PTH Lowering Activity (subject to Section 3.1), unless otherwise agreed in writing in advance by Amgen on a case-by-case basis.
3. Commercially Reasonable Efforts. NPS covenants to use Commercially Reasonable Efforts to perform its obligations hereunder to accomplish the goals and objectives set forth herein, including but not limited to conducting its assigned responsibilities during the NPS FTE Period, and conducting research itself or with any Third Party(ies) (including under the NPS Collaborative Agreements) to discover, identify and characterize compound(s) which have PTH Lowering Activity. NPS and Amgen agree and acknowledge that access to backup compounds is material to Amgen entering into this agreement under the terms and conditions set forth herein.

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4. NPS Collaborative Agreements. NPS covenants to take any action, or not to take any action, to retain in full force and effect for the term of this Agreement the licenses under the NPS Collaborative Agreements relating to Amgen's rights hereunder. [* * *] NPS shall be solely responsible for paying all fees, milestones and royalties and any other performance obligations under the NPS Collaborative Agreements. In the event that NPS receives notice that NPS has committed a breach of its obligations under one of the NPS Collaborative Agreements, or if NPS anticipates such breach, such as may give rise to a right by the other party to terminate or diminish NPS's rights thereunder and Amgen's rights under this Agreement, NPS shall notify Amgen promptly of such situation and shall use best efforts promptly to cure such breach. However, in addition to Amgen's other remedies, if NPS is unable to cure such breach, NPS shall, to the extent possible, permit Amgen to cure such breach if Amgen so desires, with all fees and expenses (including attorneys' fees) incurred by Amgen being creditable by Amgen against future Royalty(ies).
5. Kirin Collaborative Agreement. [* * *]

16.2   Covenants by Amgen

1. Amgen Covenant. Amgen covenants not to pursue clinical development and registration of Class A Compound(s), Other Compound(s), NPS/Amgen Compound(s), [* * *], licensed under Licensed Patent Rights, in the Osteoporosis Field, [* * *]. Notwithstanding the above, Amgen has the unrestricted right to make, use and sell (including to develop and seek registration for) any Compound for disease indications within the HPT Field, including for those patients who have disease(s) within the HPT Field and who also have disease(s) within the Osteoporosis Field.
2. Exclusivity. Amgen covenants that during the term of this Agreement, Amgen will work exclusively with NPS in the Field of Use in the Territory with respect to Compound(s) [* * *] unless agreed otherwise in writing in advance by NPS on a case-by-case basis.
3. Commercially Reasonable Efforts.
   1. Amgen shall use Commercially Reasonable Efforts in pursuing development and commercialization of [* * *] in the Territory.
   2. It shall be in Amgen's sole discretion as to which and how many [* * *] shall be developed under this Agreement and Licensed Technology used to develop such [* * *].
   3. By way of example and not by way of limitation, if Amgen pursues [* * *], it will be deemed to have used Commercially Reasonable Efforts hereunder.

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ARTICLE 17
 
MISCELLANEOUS

17.1   Notices. Any Notice required to be given pursuant to this Agreement shall be effective upon date of receipt by personal delivery, by courier service (one or two day delivery, postage prepaid) or, if by mail, by registered or certified mail (return receipt requested) by one Party to the other Party at the addresses noted below:

In the case of Amgen, notice should be sent to:

Amgen Inc.
Amgen Center
1840 DeHavilland Drive
Thousand Oaks, CA 91320-1789

Attention: [* * *]

In the case of NPS, notice should be sent to:

NPS Pharmaceuticals, Inc.
420 Chipeta Way
Salt Lake City, Utah 84108

Attention: [* * *]

[NPS and Amgen agree that the Agreement currently creates a general intangible for NPS as defined in Article 9 of the Delaware Uniform Commercial Code. Although NPS seeks permission to sell or contribute its rights to receive Milestone Payments under Article 6, to receive Royalties under Article 7 and Section 14.3 and to receive payments under Section 10.1 to Royalty Sub which will in turn grant a security interest in such rights, the principal obligation of Amgen under the Agreement will continue to be its numerous duties relating to the development, manufacture and commercialization of Compounds. Amgen and NPS agree that Amgen's principal obligation under the Agreement is not and will not be a monetary obligation. Any consent of Amgen to this Amendment is expressly conditioned on Amgen being entitled to the continued protection against subsequent transfers afforded account debtors of general intangibles contained in Title 6, Article 9, Section 9-408(d) of the Delaware Uniform Commercial Code, or any corresponding provision of any applicable Uniform Commercial Code as enacted in any other state. Accordingly, Royalty Sub shall be at the time of transfer and shall remain a corporation chartered under the laws of the state of Delaware. As a condition to obtaining this amendment, NPS agrees that Royalty Sub will not change its corporate domicile nor merge into any entity in a State other than Delaware without the written consent of Amgen. To effectuate this provision, Article 17 of the Agreement is hereby amended by inserting the following section:]

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17.2   Laws to Govern. This Agreement shall be interpreted and governed in accordance with the laws of the State of California, except that questions affecting the construction and effect of any patent application or patent within Licensed Patent Rights or trademark application or trademark within Licensed Trademark Rights shall be determined by the law of the country in which the patent or trademark application is pending or the patent or trademark was granted. The Parties hereby submit to the jurisdiction of the California courts, both state and federal, in all matters concerning this Agreement.

17.3   Assignment. Neither this Agreement nor any interest hereunder shall be assignable by any Party to any Third Party without the prior written consent of the other Party; provided, however, that either Party may assign this Agreement to any successor by merger thereof or purchase or sale of substantially all of its business unit to which this Agreement relates in a manner such that the assignor (or a party succeeding the assignor) shall remain liable and responsible for the performance and observance of all its duties and obligations hereunder. This Agreement shall be binding upon the successors and permitted assigns of a Party, and the name of such Party appearing herein shall be deemed to include the names of such Party's successors and permitted assigns to the extent necessary to carry out the intent of this Agreement. Any assignment not in accordance with this Article shall be void.

17.4   Trademarks. Other than Amgen's rights under this Agreement, specifically including the rights and licenses granted under Sections 2.1 through 2.3, no right, express or implied, is granted by this Agreement for NPS to use in any manner the name "Amgen" or for Amgen to use in any manner the name "NPS" or any other trademark or trade name of the other Party in connection with the performance of this Agreement or otherwise or the name of any member of the staff of the other Party.

17.5   Public Announcements. If either Party desires to, or is required by law to, make a public announcement concerning this Agreement or the subject matter hereof, such Party shall give reasonable prior advance notice of the proposed text of such announcement to the other Party for its prior review and approval, which approval shall not be unreasonably withheld and which shall be unnecessary when, in the opinion of legal counsel to the announcing party, such announcement is required by law to be made in the form submitted to other Party. Notwithstanding that a public announcement by a Party may be required by law, the Parties will work together in good faith to agree on the format, content and other elements of the required filing.

17.6   Export Requirements. Each Party agrees to comply with all applicable laws and regulations. In particular, it is understood and acknowledged that the transfer of certain commodities and technical data is subject to United States laws and regulations controlling the export of such commodities and technical data including all Export Administration Regulations of the United States Department of Commerce. Each party hereby agrees and by entering into this Agreement gives written assurance that it will comply with all United States laws and regulations controlling the export of commodities and technical data within Licensed Technology, that it will be solely responsible for any violation of any such laws and regulations by itself or its sublicensees, and that it will indemnify, defend and hold the other Party harmless from any liability in the event of any legal action of any nature occasioned by such violation.

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17.7   Good Faith. NPS and Amgen shall deal with each other in good faith. The Parties agree that in the event of a dispute between them arising from, concerning, or in any way relating to this Agreement, the Parties shall undertake good faith efforts to amicably resolve such dispute between themselves. In the event the Parties shall be unable to resolve any such dispute, [* * *].

17.8   Force Majeure. The Parties shall not be liable in any manner for failure or delay in fulfillment of all or part of this Agreement, directly or indirectly caused by acts of God, governmental orders or restrictions, war, war-like condition, revolution, riot, looting, strike, earthquake, lockout, fire, flood or other similar or dissimilar causes or circumstances beyond the non-performing Party's control. The non-performing Party shall promptly notify the other Party of the cause or circumstance and shall recommence its performance of its obligations as soon as practicable after the cause or circumstance ceases.

17.9   Independent Contractors. The relationship between NPS and Amgen is that of independent contractors. NPS and Amgen are not joint venturers, partners, principal and agent, master and servant, employer or employee, and have no other relationship other than independent contracting parties. NPS shall have no power to bind or obligate Amgen in any manner. Likewise, Amgen shall have no power to bind NPS in any manner, other than as is expressly set forth in this Agreement.

17.10   Costs. Each Party will bear its own costs, expenses and fees incurred in connection with the transactions contemplated hereby, including, without limitation, attorneys fees and expenses, provided, however, that on the Closing Date Amgen shall reimburse NPS in the amount of [* * *] associated with NPS's continued development, preclinical and human clinical trial activities for Compound(s) between the Effective Date and the Closing Date.

17.11   Amendment. No amendment, modification or supplement of any provision of this Agreement shall be valid or effective unless made in writing and signed by a duly authorized officer of each Party.

17.12   (A) Appendices. All Appendices referenced in and attached hereto are incorporated herein by reference. In case of any discrepancies between language incorporated from the Appendices and the terms of the Articles herein, the terms of the Articles shall prevail. Unless a procedure for amending an Appendix is specifically set forth in this Agreement, the Appendices shall be amended promptly, as necessary, but in no event less than on a once per calendar quarter basis by Amgen and NPS.

(B) Notwithstanding Section 17.3(A), subject to Section 11.5(B), Amgen hereby agrees that NPS may sell, assign, pledge, contribute or otherwise transfer to Royalty Sub, NPS's right to: (i) receive Milestone Payments under Article 6, (ii) receive Royalties under Article 7 and Section 14.3, (iii) receive statements under Section 7.6(A) setting forth, among other things, the Royalties due, (iv) appoint an independent Certified Public Accountant and receive a report therefrom under Section 7.6(C) and (v) receive payments under Section 10.1, and at any time thereafter Royalty Sub may grant a security interest in the rights identified in clauses (i), (ii) and (v) above to or for the benefit of any Lender or Permitted Holder in connection with a Financing Transaction. Amgen's consent under this paragraph is subject to, and conditioned upon, as applicable, the following:

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1. No entity, other than Royalty Sub, will have the right to appoint an independent Certified Public Accountant or receive a report under Section 7.6(C);
2. Amgen's consent will not be construed to permit the assignment of any additional rights under this Agreement except as specified in this Section 17.3(B), the NPS Compounds, NPS/Amgen Compounds or Licensed Technology to any entity and NPS agrees not to sell, assign, pledge, contribute, transfer or grant any security interest in any of the foregoing so long as this Agreement remains in effect;
3. Amgen does not waive any defenses, offsets, rights of recoupment or setoff, credits or other rights it may have under any other provisions of this Agreement, including with respect to any payments or liabilities otherwise due and payable to Amgen under this Agreement;
4. NPS shall promptly notify Amgen of any notice received from Brigham and Women's relating to NPS' failure to meet its payment obligations under the Brigham and Women's Agreements in connection with sales of Compounds hereunder, and Amgen shall have the right to make such payments on behalf of NPS and offset any such payments made against any Royalties or other monies due and payable pursuant to Sections 7.6, 10.1 and 14.3 of the Agreement;
5. NPS and Royalty Sub will include the following language in the private placement memorandum for the Financing Transaction: "Amgen, the licensee under the License Agreement, is not participating in this private placement. Amgen has not reviewed and is not responsible for the accuracy or completeness of any information contained in this Private Placement Memorandum. None of the Issuer, NPS, the Placement Agent or the Trustee has been afforded any opportunity to conduct due diligence inquiries regarding Amgen in connection with the private placement. Each prospective investor must rely on its own inquiry regarding Amgen and such other information as may be available to it.";
6. NPS and Royalty Sub will include the following language (or substantively similar language) in any agreement pursuant to which an entity purchases Notes from Royalty Sub in connection with the Financing Transaction: "Purchaser acknowledges and agrees that Amgen is not a party to this transaction and has not participated in the preparation of any documents related thereto, including, without limitation, the private placement memorandum, and that Amgen makes no representations or warranties whatsoever with respect to the transactions contemplated by the private placement memorandum, including, without limitation, the issuance of notes by Royalty Sub, the value thereof or the risks associated therewith.";

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separately filed with the Commission.

7. NPS and Royalty Sub will include the following language (or substantively similar language) in the indenture agreement to be entered into between Royalty Sub and the Trustee (as defined in the private placement memorandum for the Financing Transaction) (the "Indenture Agreement"): "Trustee acknowledges and agrees that information provided by Amgen to Trustee in connection with the Development and License Agreement between Amgen and NPS dated December 27, 1995 (as amended, the "License Agreement"), including, without limitation, any royalty statements and reports provided by or on behalf of Amgen pursuant to Section 7.6 of the License Agreement, are the confidential information of Amgen and will be subject to the confidentiality provisions of this Indenture Agreement and that Amgen is a third party beneficiary of such obligations." NPS and Royalty Sub shall also ensure that the Indenture Agreement contains confidentiality provisions that are at least as restrictive as the provisions of this Agreement;
8. NPS and Royalty Sub shall ensure that, for so long as Amgen is obligated to file quarterly or annual reports pursuant to the Securities Exchange Act of 1934, as amended, the above-identified Trustee shall not disclose or provide access to any royalty statements pursuant to Section 7.6 of the Agreement provided to such Trustee to any Third Party until after such time as Amgen has filed its quarterly or annual report relating thereto;
9. Royalty Sub shall and will cause Lenders and other entities participating in the Financing Transaction to agree to, offer or sell the Notes solely to Permitted Holders;
10. Royalty Sub will not pledge or grant a security interest in the above described rights unless such pledge or security interest specifically provides that, unless the Agreement has terminated, no sale or transfer of the above described rights, in foreclosure or otherwise, shall be made other than to a Permitted Holder and such a Permitted Holder shall agree not to transfer the rights acquired except to another Permitted Holder;
11. Royalty Sub will not issue any of its equity interests or equity securities to any Person other than NPS; and
12. NPS will not pledge or grant a security interest in any equity interest or equity security of Royalty Sub unless such pledge or security interest specifically provides that, unless the Agreement has terminated, no sale of such equity interest or security, in foreclosure or otherwise, may be made other than to a Permitted Holder and such a Permitted Holder shall agree not to transfer the rights acquired except to another Permitted Holder. NPS will also cause the equity interests of Royalty Sub to be certificated and will cause the transfer restriction provided for in the previous sentence to be prominently marked on all such certificates.

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17.13   Severability. In the event that any one or more of the provisions of this Agreement should for any reason be held by any court or authority having jurisdiction over this Agreement to be invalid, illegal or unenforceable, such provision or provisions shall be reformed to approximate as nearly as possible the intent of the parties, and if unenforceable, shall be divisible and deleted in such jurisdiction and the remainder of this Agreement shall remain in full force and effect; elsewhere, this Agreement shall not be affected.

17.14   Further Actions. Each Party agrees to execute, acknowledge and deliver such further instruments and to perform all such other acts as may be necessary or appropriate to carry out the purposes and intent of this Agreement.

17.15   Waiver. No provision of this Agreement shall be waived by any act, omission or knowledge of any Party or its agents or employees except by an instrument in writing expressly waiving such provision and signed by a duly authorized officer of the waiving Party.

17.16   Counterparts. This Agreement may be executed in any number of counterparts, each of which need not contain the signature of more than one party but all such counterparts taken together shall constitute one and the same agreement.

17.17   Descriptive Headings. The descriptive headings of this Agreement are for convenience only, and shall be of no force or effect in construing or interpreting any of the provisions of this Agreement.

17.18   Entire Understanding. This Agreement represents the entire understanding between the Parties concerning the subject matter hereof.

17.19   Additional Provisions. NPS agrees that Royalty Sub will not change its corporate domicile nor merge into any entity in a State other than Delaware without the written consent of Amgen. NPS further agrees that NPS will not sell or otherwise transfer its interest in Royalty Sub, except as provided in 17.3(B), without the written consent of Amgen.

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IN WITNESS WHEREOF, the Parties hereto have caused this Fifth Amendment to be duly executed, all as of the Amendment Effective Date.

NPS PHARMACEUTICALS, INC.

By: /s/ Francois Nader
Name: Francois Nader
Title: President and CEO

AMGEN INC.

By: /s/ Robert A. Bradway
Name: Robert A. Bradway
Title: President and CEO

Acknowledged and agreed to by:

CINACALCET ROYALTY SUB LLC

By: /s/ Edward Stratemeier
Name: Edward Stratemeier
Title: General Manager

[Signature Page to Fifth Amendment]

Confidential Treatment Requested. Confidential portions of this document have been redacted and have been
separately filed with the Commission.

APPENDIX A

Glossary

1.1   "Active Component(s)" shall mean one or more proprietary substances (other than a Compound) which [* * *] but shall not include devices, excipients, fillers, buffers, and the like.

1.2   "Affiliate(s)" shall mean a Person that, directly or indirectly, through one or more intermediates, controls, is controlled by, or is under common control with a Party. For purposes of this definition, control shall mean the direct or indirect ownership of at least fifty percent (50%) or, if less than fifty percent (50%), the maximum percentage as allowed by applicable law of (i) the stock shares entitled to vote for the election of directors or (ii) ownership interest.

1.3   "Amgen" shall mean Amgen and Amgen Affiliates.

1.4   [* * *] Compound(s)" shall mean any and all compounds and all metabolic products thereof, excluding any proteins and nucleic acids, [* * *] which:

(a) have PTH Lowering Activity, and

(b) [* * *]

[* * *] Compound(s) shall specifically exclude [* * *] Compound(s).

Appendix B contains a list of all [* * *] Compound(s) known by Amgen as of the Closing Date, and will be updated in accordance with Section 17.12. In the event of a conflict between the definition of [* * *] Compound(s) and the specificity of the list in Appendix B, the definition of [* * *] Compound(s) shall control.

1.5   "Amgen Material" shall mean Amgen proprietary materials provided to NPS by Amgen hereunder, which materials include, but will not be limited to compounds and related protocols and data.

1.6   "Brigham and Women's" shall mean The Brigham and Women's Hospital Inc., a Massachusetts not-for-profit corporation having its principal offices at 75 Francis Street, Boston, Massachusetts.

1.7   "Brigham and Women's Agreements" shall mean, collectively, (i) that certain Research Agreement effective February 19, 1993, between Brigham and Women's and NPS, and that certain Patent Agreement effective February 19, 1993, between Brigham and Women's and NPS (each as amended, restated or supplemented from time to time) and (ii) upon termination of the agreements set forth in (i) above, alternative agreements approved by Amgen, if any.

Appendix H contains a full copy of each of the Brigham and Women's Agreements, with certain terms redacted, as of the Closing Date, and will be updated by NPS in accordance with Section 17.12.

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1.8   "Calcium Receptor(s)" shall mean any and all proteins located on the cell surface (plasma membrane) that detect extracellular Ca2+, and where detection enables certain cells in the body to respond to changes in the concentration of extracellular Ca2+.

1.9   "Class A Compound(s)" shall mean

1. NPS R-568, [* * *] and
2. all other existing and future compounds and all metabolic products thereof (a) which are [* * *] as of the Effective Date or during the term of this Agreement and (b) which have or which are considered [* * *] to have PTH [* * *]X Lowering Activity.

Appendix B contains a list of all Class A Compound(s) known by NPS as of the Closing Date, and will be updated by NPS in accordance with Section 17.12. In the event of a conflict between the definition of Class A Compound(s) and the specificity of the list in Appendix B, the definition of Class A Compound(s) shall control.

1.10   "Closing Date" shall mean March 18, 1996.

1.11   "Commercially Reasonable Efforts" shall mean efforts and resources commonly used in the research-based pharmaceutical industry for a product at a similar stage in its product life of similar market potential taking into account [* * *] and other relevant factors. Commercially Reasonable Efforts shall be determined on a market-by-market basis for a particular Compound, and it is anticipated that the level of effort will change over time, reflecting changes in the status of the Compound and the market involved.

1.12   "Compound(s)" shall mean any and all NPS Compound(s), NPS/Amgen Compound(s), [* * *].

1.13   "Confidential Information" shall mean information which, if written or embodied in a tangible item or product, is marked "confidential" by the disclosing party on first being provided to the receiving party or, if oral, is reduced to writing and marked "confidential" by the disclosing party and provided to the receiving party within thirty (30) days of the oral disclosure.

1. "Confidentiality Agreement" shall mean a confidential disclosure agreement executed by a (i) Lender, a prospective Lender, or any Third Party who intends to become a Permitted Holder, and (ii) Amgen or Royalty Sub so long as Amgen is identified as a beneficiary of such agreement with the right to enforce such agreement and in form substantially identical to Exhibit A to the First Amendment to this Agreement, dated November 19,2004.

1.14   "Development Contracts" shall mean all agreements, instruments or understandings (oral, written or implied) entered into between NPS and any Third Party(ies) relating to all aspects of development and commercialization of Compound(s) in the Territory (e.g., contracts including but not limited to [* * *].

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Appendix K contains a list of all Development Contracts as of the Closing Date. In the event of a conflict between the definition of Development Contracts and the specificity of the list in Appendix K, the definition of Development Contracts shall control.

1.15   "Effective Date" shall mean December 27, 1995.

1.16   "Field of Use" shall mean [* * *]

1.17   "Financing Transaction" shall mean the transaction pursuant to which Royalty Sub will issue notes ("Notes") which are secured by the Milestone Payments and Royalties as generally described in the Cinacalcet PhaRMAsM Secured Floating Rate Notes due 2017 preliminary Private Placement Memorandum dated October 27, 2004.

1.18   "First Commercial Sale" shall mean the initial transfer by Amgen or its sublicensees under this Agreement of a Compound to a Third Party(ies) in exchange for cash or some equivalent to which value can be assigned for the purpose of determining Net Sales, following marketing approval of such Compound by government authorities.

1.19   "FTE" shall mean one (1) full time equivalent staff member.

1.20   "Governmental Approvals" shall mean any approvals, licenses, registrations or authorizations, howsoever called, of any foreign or United States federal, state or local regulatory agency, department, bureau or other government entity, including the FDA, necessary for the distribution, importation, manufacture, production, use, storage, transport or sale of Compound(s).

Appendix F contains a list of all Governmental Approvals in the Territory, filed or owned by or on behalf of NPS as of the Closing Date. In the event of a conflict between the definition of Governmental Approvals and the specificity of the list in Appendix F, the definition of Governmental Approvals shall control.

1.21   "HPT Field" shall mean hyperparathyroidism, including without limitation:

1. Primary hyperparathyroidism,
2. Secondary hyperparathyroidism;
3. [* * *]
4. [* * *]
5. [* * *]

1.22   "IND" shall mean an Investigational New Drug Application filed with the United States FDA which is allowed to go into effect (e.g., for which no clinical hold is issued) and which is required for clinical testing of a human therapeutic product in the United States.

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1.23   "Kirin" shall mean Kirin Brewery Company, Limited, a Japanese corporation, having its principal offices at 10-1, Shirikawa 2-chome, Chuo-ku, Tokyo, 104 Japan.

1.24   "Kirin Collaborative Agreement" shall mean that certain Collaborative Research and License Agreement dated as of June 30, 1995, between NPS and Kirin (as the same may be amended, restated or supplemented from time to time).

Appendix I contains a full copy of the Kirin Collaborative Agreement, with certain terms redacted as of the Closing Date, which will be updated by NPS in accordance with Section 17.12.

1.25   "Lender" shall mean one or more individuals, financial institutions or institutional investors which are parties to the Financing Transaction and which are lending money to Royalty Sub which will be secured by Milestone Payments and Royalties payable hereunder.

1.26   "Licensed Know-How" shall mean all know-how including, but not limited to, trade secrets, inventions, information and data (e.g., all chemical, pharmacological, toxicological, clinical, assay, manufacturing and control information and data), results, expertise and materials, related to (i) Compound(s), including but not limited to NPS R-568, [* * *] methods of making, formulating, delivering and using Compound(s) and metabolites of Compounds, and (iv) intermediates in the manufacture of Compound(s) and metabolites of Compounds, which are necessary or useful for Amgen to develop, make, use or sell (including to develop and seek registration for) a Compound in the Field of Use in the Territory and which are owned (in whole or in part) or controlled by NPS as of the Effective Date during the terms of this Agreement.

1.27   "Licensed Patent Rights" shall mean (a) any and all patent applications heretofore or hereafter filed or having legal force in any country within the Territory owned (in whole or in part) or controlled by NPS as of the Effective Date or during the term of this Agreement, which generically or specifically claim (i) Compound(s), including but not limited to NPS R-568, [* * *] (iii) methods of making, formulating, delivering and using Compound(s) and metabolites of Compounds, and (iv) intermediates in the manufacture of Compound(s) and metabolites; (b) those claims of any and all patents that have issued or in the future issue from the foregoing patent applications, including utility, model and design patents and certificates of invention; and (c) those claims of all divisionals, continuations, continuations-in-part, reissues, renewals, extensions or additions to any such patent applications and patents.

Appendix D contains a list of all patents and patent applications within Licensed Patent Rights in the Territory as of the Closing Date, and will be updated by NPS in accordance with Section 17.12. In the event of a conflict between the definition of Licensed Patent Rights and the specificity of the list in Appendix D, the definition of Licensed Patent Rights shall control.

1.28   "Licensed Technology" shall mean, collectively, Licensed Patent Rights, Licensed Know-How and Licensed Trademark Rights.

1.29   "Licensed Trademark Rights" shall mean any trade name, logo or trademark (whether or not registered) in any country within the Territory owned (in whole or part) or

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controlled by NPS as of the Effective Date or during the term of this Agreement, which are associated with any NPS Compound (together with all goodwill associated therewith).

Appendix E contains a list of all trademark applications and trademarks within Licensed Trademark Rights in the Territory as of the Closing Date and will be updated by NPS in accordance with Section 17.12. In the event of a conflict between the definition of Licensed Trademark Rights and the specificity of the list in Appendix E, the definition of Licensed Trademark Rights shall control.

1.30   "NDA" shall mean a New Drug Application filed with the United States FDA, to obtain marketing approval of a human drug therapeutic product.

1.31   "Net Sales" shall mean all revenues, recognized in accordance with generally accepted accounting principles consistently applied, which are received from sales or other dispositions with respect to any Compound by Amgen (or a sublicensee of Amgen) [* * *].

1.32   "NPS Collaborative Agreements" shall mean collectively the Brigham and Women's Agreements, the Kirin Collaborative Agreement and the SKB Collaborative Agreements.

1.33   "NPS Compound(s)" shall mean any and all Class A Compound(s), NPS/Kirin Compound(s) and Other Compound(s). NPS Compound(s) shall specifically exclude NPS/Amgen Compound(s).

1.34   "NPS Field" shall mean all uses of Compound(s), including all human therapeutic, prophylactic and diagnostic applications except for the Osteoporosis Field.

1.35   "NPS Materials" shall mean [* * *]g of NPS R-568, [* * *].

1.36   "NPS Product(s)" shall mean any and all compounds and all metabolic products thereof, other than Compounds, identified, discovered, acquired or licensed (in whole or part) by NPS and which NPS, including its licensees or collaborators, determines prior to or during the term of the Amgen Option that such `compounds [* * *].

1.37   "NPS/Amgen Compound(s)" shall mean any and all compounds and all metabolic products thereof, excluding any proteins and nucleic acids, invented jointly by NPS and Amgen [* * *] which:

1. have PTH Lowering Activity, and
2. [* * *].

Appendix B contains a list of all NPS/Amgen Compound(s) known by NPS as of the Closing Date, which will be updated in accordance with Section 17.12. In the event of a conflict between the definition of NPS/Amgen Compound(s) and the specificity of the list in Appendix B, the definition of NPS/Amgen Compound(s) shall control.

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1.38   "NPS/Kirin Compound(s)" shall mean any and all existing and future compounds and all metabolic products thereof:

1. which are licensed by Kirin to NPS under the Kirin Collaborative Agreement as of the Effective Date or during the term of this Agreement,
2. which have PTH Lowering Activity, and
3. [* * *].

Appendix B contains a list of all NPS/Kirin Compound(s) known by NPS as of the Closing Date, and which will be updated by NPS in accordance with Section 17.12. In the event of a conflict between the definition of NPS/Kirin Compound(s) and the specificity of the list in Appendix B, the definition of NPS/Kirin Compound(s) shall control.

1.39   "Osteoporosis Field" shall mean the diagnosis and/or treatment and/or prophylaxis and/or palliation of osteoporosis and related bone metabolism disorders such as, but not limited to, rheumatoid arthritis and osteoarthritis, but specifically excluding the HPT Field.

1.40   "Other Compound(s)" shall mean all existing and future compounds and all metabolic products thereof, excluding NPS Class A Compound(s) and NPS/Kirin Compound(s):

1. which are owned (in whole or part) by NPS or licensed to NPS by any Third Party(ies) as of the Effective Date or during the term of this Agreement,
2. which have PTH Lowering Activity, and
3. [* * *].

Appendix B contains a list of all Other Compound(s) known by NPS as of the Closing Date, which will be updated by NPS in accordance with Section 17.12. In the event of a conflict between the definition of Other Compound(s) and the specificity of the list in Appendix B, the definition of Other Compound(s) shall control.

1.41   "Party" shall mean either Amgen or NPS; "Parties" shall mean both Amgen and NPS.

1. "Permitted Assignee" shall mean any Person that acquires one or more of the rights identified in clauses (i), (ii) or (v) of Section 17.3(B), or a portion of such rights, from a Lender after such Lender has foreclosed on such rights, but only if such Person is a Permitted Holder.
2. "Permitted Holder" shall mean (i) NPS, (ii) Amgen, (iii) Royalty Sub or (iv) any Third Party who (a) is not in the business of developing, manufacturing or marketing pharmaceutical or diagnostic products, (b) is not an Affiliate of any Third Party in such business and (c) has executed a Confidentiality Agreement.

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1.42   "Person" shall mean an individual, a partnership, a joint venture, a corporation, a trust, an estate, an unincorporated organization, or any other entity, or a government or any department or agency thereof.

1.43   "PLA" shall mean a Product License Application filed with and accepted by the United States FDA, to obtain marketing approval of a human therapeutic product.

1.44   "Primary EPT" shall mean a condition characterized by increased plasma levels of PTH due to neoplasia or hyperplasia.

1.45   "PTH" shall mean parathyroid hormone and any metabolic products, fragments or derivatives thereof [* * *].

1.46   "PTH[* * *] X Lowering Activity" shall mean the characteristic of a compound if it:

1. [* * *] as shown in NPS Experimental Protocol #1 (attached hereto in Appendix G);
2. [* * *] as shown in NPS Experimental Protocol #2 (attached hereto in Appendix G);
3. [* * *] as shown in NPS Experimental Protocol #3 (attached hereto in Appendix G).

1.47   "PTH Lowering Activity" shall mean the characteristic of a compound if it:

1. [* * *] as shown in NPS Experimental Protocol #1 (attached hereto in Appendix G); and
2. [* * *] as shown in NPS Experimental Protocol #4 (attached hereto in Appendix G).

1.48   "Regulatory Filings" shall mean, collectively, INDs, PLAs, establishment license applications (ELAs), drug master files (DMFs) and NDAs or any other similar filings (including any related correspondence and discussions) as may be required by the FDA or equivalent foreign regulatory agencies for the clinical testing, manufacture or sale of Compound(s).

Appendix F contains a list of all Regulatory Filings in the Territory, filed or owned by or on behalf of NPS as of the Closing Date. In the event of a conflict between the definition of Regulatory Filings and the specificity of the list in Appendix F, the definition of Regulatory Filings shall control.

1.49   "Related Compound(s)" shall mean any and all compounds and all metabolic products thereof [* * *].

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Appendix C contains a list of compounds which [* * *]. Those compounds listed in Appendix C [* * *] shall be deemed to be Related Compound(s). Appendix C will be updated by NPS in accordance with Section 17.12. In the event of a conflict between the definition of Related Compound(s) and the specificity of the list in Appendix C, the definition of Related Compound(s) shall control.

1.50   "Royalty(ies)" shall mean the royalty or royalties payable by Amgen to NPS pursuant to Article 7.

1.51   "Royalty Sub" shall mean Cinacalcet Royalty Sub LLC, a Delaware limited liability company and wholly-owned subsidiary of NPS.

1.52   "Secondary HPT" shall mean a condition characterized by increased plasma levels of PTH due to an etiology other than Primary HPT.

1.53   "SKB" shall mean SmithKline Beecham Corporation, a Pennsylvania corporation having its principal offices at One Franklin Plaza, Philadelphia, Pennsylvania 19101.

1.54   "SKB Collaborative Agreement" shall mean that certain Collaborative Research and License Agreement dated as of November 1, 1993, between NPS and SKB, as amended on June 30, 1995, (as the same may be further amended, restated or supplemented from time to time).

Appendix J contains a full copy of the SKB Collaborative Agreement, with certain terms redacted, as of the Closing Date, which will be updated by NPS in accordance with Section 17.12.

1.55   "Territory" shall mean the world, excluding Japan, Peoples' Republic of China, Hong Kong, Taiwan, South Korea and North Korea [* * *].

1.56   "Third Party(ies)" shall mean any Person or Persons other than Amgen or NPS.

1.57   [* * *]

1.58   "Third Party Royalty(ies)" shall mean royalties payable by Amgen, or sublicensees of Amgen's rights under this Agreement, to Third Party(ies) to make, use, sell or have sold Compound(s) in the Territory.

1.59   "Amendment Assay" shall mean the [* * *], which NPS has used pursuant to the terms of Sections 4.4 and 4.5 of the Original Agreement for the purpose of identifying calcimimetic compounds and determining whether such compounds meet the definition of Compounds.

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1.60   "Assay Materials" shall mean (i) the [* * *], (ii) such other materials as are used in performing the Amendment Assay, to the extent that such other materials are not generally commercially available, and (iii) the protocols for performing the Amendment Assay.

1.61   "Screening Know-How" shall mean all information, know-how and expertise which relates to screening compounds for calcimimetic activity at the Calcium Receptor(s), including, without limitation, protocols for performing the Amendment Assay.

1.62   "Screening Patents" shall mean all patent applications and issued patents owned or controlled by NPS, which cover Calcium Receptor(s) (including peptides, proteins, nucleic acids coding therefor and cells expressing such Calcium Receptor(s)) and/or use of Calcium Receptor(s), including, without limitation, those set forth on Exhibit 1 attached to this Second Amendment, but excluding all claims within Licensed Patents except those that, but for the license set forth in Section 4.7 of the Agreement, would be infringed by the use or performance of the Amendment Assays.

1.63   "Screening Technology" shall mean, collectively, Screening Know-How and Screening Patents.

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APPENDIX B

[* * *]

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APPENDIX C

[* * *]

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APPENDIX D

[* * *]

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APPENDIX E

[* * *]

Confidential Treatment Requested. Confidential portions of this document have been redacted and have been
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APPENDIX F

[* * *]

Confidential Treatment Requested. Confidential portions of this document have been redacted and have been
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APPENDIX G

[* * *]

Confidential Treatment Requested. Confidential portions of this document have been redacted and have been
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APPENDIX H

[* * *]

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APPENDIX I

[* * *]

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APPENDIX J

[* * *]

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APPENDIX K

[* * *]

EX-10.32 3 exh10-32.htm AMENDED AND RESTATED AGREEMENT FOR THE SALE AND ASSIGNMENT OF RIGHTS, DATED AS OF DECEMBER 20, 2013, BY AND BETWEEN THE REGISTRANT AND DRUG ROYALTY L.P. 3.

Exhibit 10.32

Confidential Treatment Requested. Confidential portions of this document have
been redacted and have been separately filed with the Commission.

AMENDED AND RESTATED AGREEMENT FOR THE SALE AND ASSIGNMENT OF RIGHTS

DATED AS OF DECEMBER 20, 2013

BY AND BETWEEN

NPS PHARMACEUTICALS, INC.

AND

DRUG ROYALTY L.P. 3

Confidential Treatment Requested. Confidential portions of this document have
been redacted and have been separately filed with the Commission.

TABLE OF CONTENTS

1	DEFINITIONS	2
1.1	Defined Terms	2
1.2	Interpretation	6
1.3	Currency	7
1.4	Additional Definitions	7
2	ROYALTY GRANT; CONSENT; AMENDMENT AND RESTATEMENT OF ORIGINAL PURCHASE AGREEMENT	8
2.1	Royalty Grant	8
2.2	Consent to the Revenue Interest Arrangement	8
2.3	Conditional Amendment and Restatement of the Original Purchase Agreement	8
2.4	Mutual Release	9
2.5	Tolling	9
2.6	Accrued Claims	10
3	THE CLOSING	10
3.1	The Closing	10
3.2	NPS Closing Deliveries	10
3.3	DR3 Closing Deliveries	11
4	REPRESENTATIONS, WARRANTIES OF NPS	11
4.1	Organization, Standing and Power	11
4.2	Authority, Execution and Delivery; Enforceability	11
4.3	No Conflicts	11
4.4	No Consent	12
4.5	Rights in DR3 Royalty Right	12
4.6	Agreements	12
4.7	Patents and Other Intellectual Property	12
4.8	Litigation	13
4.9	Regulatory Submissions	14
4.1	Prior Royalties	14
4.11	Reports	14
4.12	Disclosure	14

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5	REPRESENTATIONS, WARRANTIES OF DR3	14
5.1	Organization	14
5.2	Authorization	14
5.3	No Conflicts	14
5.4	No Consent	15
5.5	No Litigation	15
6	COVENANTS	15
6.1	Patent Obligations	15
6.2	Confidentiality	16
6.3	Infringement of NPS Technology	17
6.4	DR3 May Perform	17
6.5	Grant of Security Interest	18
6.6	Acknowledgment of Existing Patent Filings	18
6.7	Further Sale or Financing	18
7	COMMERCIALIZATION AND UPDATES	19
7.1	Commercialization of Product	19
7.2	Updates	19
7.3	Notifications	19
7.4	No Assumption of Obligations	20
7.5	No Contravention of NPS's Residual Rights; End of Term	20
7.6	Actions upon Revocation	20
8	PAYMENTS	20
8.1	Royalty Term	20
8.2	Royalty Payments and Royalty Statements	21
8.3	Late Payments	21
8.4	Royalty Withholding Taxes	21
8.5	Currency Conversion	21
8.6	Records, Audits	22

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9	TERM AND TERMINATION	22
9.1	Term of Agreement	22
9.2	Termination	23
9.3	Accrued Rights	23
9.4	Survival	23
10	INDEMNIFICATION	23
10.1	Indemnification by NPS	23
10.2	Indemnification by DR3	23
10.3	Procedure for Claims	23
11	MISCELLANEOUS	25
11.1	Costs and Expenses	25
11.2	Further Assurances	25
11.3	Notices	25
11.4	Successors and Assigns	26
11.5	No Partnership	26
11.6	Entire Agreement	26
11.7	Amendments, Supplements, Waivers	27
11.8	Severability	27
11.9	Governing Law	27
11.1	Waiver of Jury Trial	27
11.11	Counterparts	27

Confidential Treatment Requested. Confidential portions of this document have
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SCHEDULES

1.1(j) DR3 Account
4.6 Copies of Certain Agreements and Notifications
4.7 List of NPS Patents
4.7(a) Opinions of Counsel
4.8 Litigation
6.1(a) Jurisdictions Requiring Consent to License
6.2(d) Form 8-K

EXHIBITS

A Form of Restated Security Agreement
B Patent Filings

Confidential Treatment Requested. Confidential portions of this document have
been redacted and have been separately filed with the Commission.

AMENDED AND RESTATED AGREEMENT FOR THE SALE AND ASSIGNMENT OF RIGHTS

THIS AMENDED AND RESTATED AGREEMENT FOR THE SALE AND ASSIGNMENT OF RIGHTS (this "Agreement") is made and entered into as of December 20, 2013, by and between NPS Pharmaceuticals, Inc., a Delaware corporation ("NPS"), and Drug Royalty L.P.3, a Cayman Islands limited partnership ("DR3"). NPS and DR3 are sometimes referred to herein individually as a "Party" and together as the "Parties".

RECITALS

WHEREAS, NPS, Takeda Pharma A/S, a Danish company ("Takeda Pharma") (formerly known as Nycomed Danmark ApS) and Takeda GmbH entered into that certain Termination and Transition Agreement, dated as of March 18, 2013 (the "Termination and Transition Agreement"), pursuant to which, among other things, Takeda terminated that certain License Agreement, dated as of July 2, 2007, by and between NPS (as assignee of NPS Allelix Corp., a Canadian corporation ("NPS Allelix")) and Takeda Pharma (the "License Agreement"), pursuant to Section 16.2 of the License Agreement and NPS acquired certain additional rights and assets related to the Product;

WHEREAS, NPS (both as an original party and as assignee of NPS Allelix) and DR3 are parties to that certain Agreement for the Sale and Assignment of Rights dated as of July 16, 2007 (the "Original Purchase Agreement"), pursuant to which NPS assigned to DR3 certain of its rights under the License Agreement, including the right to receive certain payments from Takeda Pharma under the License Agreement;

WHEREAS, NPS intends to develop and market the Product on its own in the territories previously licensed to Takeda Pharma utilizing in part the rights and assets acquired from Takeda Pharma, and grant to DR3 the right to receive royalties on Net Sales of the Product (the "Revenue Interest Arrangement");

WHEREAS, NPS has agreed to grant to DR3 the DR3 Royalty Right (as defined below) in consideration of the Consent (as defined below) and subject to the conditions specified herein, and DR3 and NPS wish to enter into this Agreement to effect this transaction; and

WHEREAS, NPS and DR3 further desire to conditionally amend and restate the Original Purchase Agreement to reflect the Revenue Interest Arrangement, subject to the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants contained in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:

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1. DEFINITIONS

1.1   Defined Terms . For the purposes of this Agreement, the following terms shall have the respective meanings set out below, and grammatical variations of such terms shall have corresponding meanings:

1. "Affiliate", in respect of any Person, means any other Person which, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with the subject Person, and a Person that has an entity that is an Affiliate under the foregoing shall also be deemed to be an Affiliate of such Person.
2. "Asahi" means Asahi Kasei Pharma Corporation.
3. "Asahi Agreement" means the non-exclusive patent license agreement dated as of April 1, 2005 between NPS and Asahi.
4. "Biologics License Application" or "BLA" means a Biologics License Application (including any supplements or amendments thereto) as defined in the United States Food, Drug, and Cosmetic Act, as amended from time to time, and the regulations promulgated thereunder.
5. "Business Day" means any day that is not a Saturday, Sunday or other day on which banks are required or authorized by law to be closed in New York, New York.
6. "Closing Document" means any document, instrument, undertaking or agreement required under this Agreement to be delivered by NPS at the Closing.
7. "Control" means, when used in reference to intellectual property, other intangible property, or materials, that a Party owns or has a license or sublicense to such intellectual property, other intangible property or materials, and has the ability to grant a license or sublicense or other right to use to such intellectual property, other intangible property or materials, as applicable, as provided for herein, without (i) requiring the consent of a Third Party or (ii) violating the terms of any existing license agreement in respect of such intellectual property, other intangible property or materials with any Third Party.
8. "Damages" means any damage, loss, claim, cost, liability, demand or expense (including reasonable out-of-pocket expenses of investigation and reasonable legal fees and expenses in connection with any action, suit or proceeding), but excluding punitive and consequential damages.
9. "Dollar" means a U.S. dollar, and "$" shall be interpreted accordingly.

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10. "DR3 Account" means the bank account specified in Schedule 1.1(j).
11. "DR3 Royalty Right" means the right to receive the Royalty Payments.
12. "Encumbrance" means any lien, charge, security interest, mortgage, option, privilege, pledge, trust or deemed trust (whether contractual, statutory or otherwise arising) or any other encumbrance, right or claim of any other Person of any kind whatsoever whether choate or inchoate, or any agreement (whether written or oral) to create any of the foregoing.
13. "FDA" means the U.S. Food and Drug Administration or its successor.
14. "First Commercial Sale" means, with respect to the Product, the first sale of the Product in a given country or other regulatory jurisdiction in the Territory by or on behalf of NPS, or any of its Affiliates, licensees or sublicensees, to a Third Party, after receipt of Regulatory Approval for the Product in such country or regulatory jurisdiction.
15. "Gautvik Agreement" means the purchase and sale agreement dated April 1, 1996 between Allelix Biopharmaceuticals, Inc., Kaare M. Gautvik and Peter Alestrom.
16. "Gautvik Patents" means those patents purchased by NPS pursuant to the Gautvik Agreement.
17. "Governmental Authority" means any government, regulatory or administrative agency or commission, governmental department, ministry, bureau, commission or agency, court, tribunal, governmental arbitrator or arbitration board or other similar body, or other governmental authority or instrumentality, whether federal, provincial, state or municipal (domestic or foreign).
18. "Knowledge of NPS" means the actual knowledge of NPS after due inquiry.
19. "Know-How" means information, results and data of any type whatsoever, in any tangible or intangible form whatsoever, including without limitation, technical information, databases, practices, methods, techniques, specifications, formulations, formulae, knowledge, know-how, skill, experience, test data including pharmacological, medicinal chemistry, biological, chemical, biochemical, toxicological and clinical test data, analytical and quality control data, stability data, studies and procedures, and manufacturing process and development information, results and data relating to the Product or the device used to deliver the Product.
20. "Laws" means all applicable laws, statutes, rules, regulations, ordinances, guidelines and other pronouncements having the effect of law of any Governmental Authority.

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21. "Material Adverse Effect" means a material adverse effect on (a) the ability of NPS to perform its obligations under this Agreement, (b) the validity or enforceability of this Agreement or the rights or remedies of DR3 hereunder, (c) the timing, amount or duration of the Royalty Payments, (d) the DR3 Royalty Right, or (e) the Products.
22. "Net Sales" means, with respect to any period, the gross invoiced commercial sales or other commercial dispositions of the Product during such period by NPS, its Affiliates, licensees and sublicensees, to Third Parties, less the following deductions to the extent included in the gross invoiced sales price for the Product or otherwise directly paid, allowed, accrued, or incurred by NPS, its Affiliates, licensees or sublicensees, with respect to the Product during such period:
1. quantity or cash discounts, credits, retroactive price reductions, rebates, allowances and adjustments granted, to the extent usual and customary in the pharmaceutical industry and consistent with NPS's usual course of dealing for its products other than the Product (including government mandated and managed healthcare negotiated rebates);
2. amounts repaid, credited or written off by reason of rejections, recalls, billing errors and returns;
3. sales, excise, turnover, inventory, value-added, and similar taxes assessed on the sale of the Product (other than income taxes of NPS, its Affiliates, licensees, sublicensees), and import and customs duties; and
4. transportation, importation, shipping, insurance and other handling expenses.

Notwithstanding the foregoing, in any case where Product is sold or otherwise disposed of in a transaction that is not an arm's length sale exclusively for cash that is separate from any sale or disposition of other products or of services, Net Sales shall mean the greatest of:

1. the Net Sales amount for Product sold in such transaction determined as provided above, with any non-cash consideration attributable to such transaction valued at fair market value;
2. if there has been any arm's length sale of Product separate from any sale or disposition of other products or of services to a non-licensee or non-sublicensee Third Party, the Net Sales amount, determined as provided above, for the most contemporaneous such sale; or
3. if there has been no such arm's length sale, the fraction of the overall value of such transaction reasonably attributed to Product sold in such transaction, with any non-cash consideration attributable to such transaction valued at fair market value.

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For sake of clarity, (a) sales by NPS, its Affiliates, licensees or sublicensees to distributors and wholesalers shall be considered sales to Third Parties, and (b) amounts recovered by NPS or its Affiliates from any assertion of NPS Technology after deduction of the expenses specified in Section 6.3(b)(iii) shall be deemed Net Sales without further deductions.

23. "NPS Know-How" means (a) any non-public or confidential sections of any marketing authorization application relating to any Product, and (b) any other non-public or confidential Know-How Controlled by NPS that is necessary or useful for the performance of pre-clinical or clinical development, for the filing of marketing authorizations in the Territory, or the commercialization, marketing or manufacture of a Product.
24. "NPS Patents" means the Patents Controlled by NPS that are necessary or useful for the development, commercialization or manufacture of the Product in the Territory.
25. "NPS Technology" means the NPS Patents and the NPS Know-How.
26. "NPS Trademarks" means NATPARA™, PREOTACT™ and any other trademarks, trade dress, logos, slogans, and designs, whether or not registered in the Territory, used to identify or promote the Product in the Territory.
27. "Patent 151 License" means the development agreement dated January 7, 2004 between NPS Allelix and Ypsomed AG in respect of Patent No. EP 1519766A (filing date June 25, 2003).
54. "Patents" means patents and patent applications and (a) any foreign counterparts thereof, (b) all divisionals, continuations, continuations-in-part thereof or any other patent application claiming priority to (i) any such patents or patent applications or (ii) any patent or patent application from which such patents or patent applications claim priority, and (c) all patents issuing on any of the foregoing, and any foreign counterparts thereof, together with all registrations, reissues, re-examinations, renewals, supplemental protection certificates, or extensions of any of the foregoing, and any foreign counterparts thereof.
81. "Person" means an individual, firm, corporation, company, limited liability company or other body corporate (with or without share capital), partnership, trust, joint venture, association, executor, administrator or other legal representative, Governmental Authority or other entity or organization howsoever formed.
108. "Product" means recombinant human parathyroid hormone (rhPTH 1-84) as set forth in the BLA No. 125511 (and regardless of the trademark under which it may be sold or distributed) as well as any invention, discovery or derivative or Know-How, whether or not patentable related thereto, including other formulations or indications. For clarity, "Product" includes rhPTH 1-84 as described in BLA No. 125511 but sold, distributed or otherwise commercialized outside of the United States.

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135. "Regulatory Approvals" means all necessary approvals, licenses, registrations or authorizations of any Governmental Authority, necessary for the manufacture, distribution, use and sale of the Product in a given country or regulatory jurisdiction.
162. "Restated Security Agreement" means the Amended and Restated Security Agreement between the Parties, dated as of the date hereof, which amends and restates the Security Agreement, in substantially the form attached hereto as Exhibit A.
189. "Royalty Right" means any right to receive payments on (i) sales or other dispositions of Product in the Territory to Third Parties, (ii) the achievement of regulatory, commercialization or other milestones with respect to the Product in the Territory, or (iii) any other use of the NPS Technology in the Territory.
216. "Security Agreement" means the Security Agreement dated October 2, 2009 between NPS and DR3.
243. "Territory" means all countries and territories of the world other than Israel.
270. "Third Party" means any Person other than a Party or its Affiliates.
297. "UCC" means (i) the Uniform Commercial Code as in effect from time to time in the State of New York, (ii) with respect to enforcement, the Uniform Commercial Code as in effect from time to time in any other state whose law is applicable with respect to DR3's enforcement of its rights hereunder or under the Restated Security Agreement, as applicable, and (iii) insofar as any references to the UCC is used in the context of perfection, the Uniform Commercial Code as in effect from time to time in the state that is the "location" of NPS under the UCC, in each case including any legislation that may be substituted therefor (as any such substituted legislation may be amended from time to time).

1.2   Interpretation . The following initially capitalized terms shall the meaning set forth below. Other initially capitalized terms shall have the meaning ascribed to such terms elsewhere in this Agreement.

1. When a reference is made in this Agreement to an "Article", "Section", "Schedule" or "Exhibit", such reference shall be to an Article, Section, Schedule or Exhibit to this Agreement unless otherwise indicated.
2. The words "include," "includes" and "including" when used herein shall be deemed in each case to be followed by the words "without limitation" and shall not be construed to limit any general statement which it follows to the specific or similar items or matters immediately following it.

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3. None of the Parties hereto shall be or be deemed to be the drafter of this Agreement for the purposes of construing this Agreement against another party.
4. Unless otherwise specified in this Agreement, words importing one gender include all genders.
5. All uses of the words "hereto", "herein", "hereof', "hereby" and "hereunder" and similar expressions refer to this Agreement.
6. The headings and captions in this Agreement are for convenience and reference purposes only and shall not be considered a part of, or affect the construction or interpretation of, any provision of this Agreement.

1.3   Currency . Unless specified otherwise, all references to monetary amounts in this Agreement are to references to the lawful currency of the United States of America.

1.4   Additional Definitions . The following terms have the meanings set forth in the corresponding Sections of this Agreement:

Term	Section
Agreement	Preamble
Audit	8.6
Closing	3.1
Consent	2.2
DR3	Preamble
DR3 Released Parties	2.4(b)
indemnified party	10.3(a)
Launch	7.2
License Agreement	Recitals
NPS	Preamble
NPS Allelix	Recitals
NPS Released Parties	2.4(a)
Original Purchase Agreement	Recitals
Party or Parties	Preamble
Patent Filings	6.6
Regulatory Milestone	2.2
Revocation	2.2
Revenue Interest Arrangement	Recitals
Royalty Payments	2.1
Royalty Statements	8.2
Royalty Term	8.1
Takeda Pharma	Recitals
Term	9.1
Termination and Transition Agreement	Recitals
Third Party Claim	10.3(a)

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2. ROYALTY GRANT; CONSENT; AMENDMENT AND RESTATEMENT OF ORIGINAL PURCHASE AGREEMENT

2.1   Royalty Grant . NPS shall pay to DR3 a royalty of [* * *] of Net Sales of Product in the Territory for all or any portion of the calendar year falling within the Royalty Term ("Royalty Payments"), on the terms specified in Article 8.

2.2   Consent to the Revenue Interest Arrangement . Subject to the terms and conditions hereof, DR3 hereby grants its consent to the Revenue Interest Arrangement pursuant to Section 7.5 of the Original Purchase Agreement and the Revenue Interest Arrangement shall be deemed to be a "New Arrangement" as such term is defined in Section 7.5(a) of the Original Purchase Agreement (the "Consent"), which may only be revoked pursuant to the next sentence. In the event that NPS or any of its Affiliates fails to submit a Marketing Authorization Application (that NPS reasonably expects to be validated and accepted for review) to the European Medicines Agency for the Product in the European Union by [* * *] (the "Regulatory Milestone"), DR3 may revoke the Consent by providing written notice to NPS of such revocation on or before [* * *] (a "Revocation"). In connection with the Regulatory Milestone, NPS currently intends to pursue approval of the Product for hypo-parathyroidism and may amend, modify or withdraw any pre-existing regulatory filings or marketing approvals for the Product. In the event of a Revocation, this Agreement shall be of no further force or effect and the Original Purchase Agreement shall become active. In such event, as of the date DR3 delivers a Revocation to NPS, at DR3's election either (i) the twelve (12) month period referenced in Section 7.5(a) of the Original Purchase Agreement shall commence, or (ii) the provisions of Section 7.5(c) of the Original Purchase Agreement shall commence as though such twelve (12) month period had already expired. In the event (i) that NPS achieves the Regulatory Milestone or (ii) that NPS doesn't achieve the Regulatory Milestone and DR3 fails to exercise the Revocation by [* * *], the Consent shall be irrevocable.

2.3   Conditional Amendment and Restatement of the Original Purchase Agreement.

1. Until such time as either DR3 delivers a Revocation or the Consent becomes irrevocable pursuant to Section 2.2, the Original Purchase Agreement shall be tolled and the Parties' rights and obligations with respect to the NPS Technology and the Product, and DR3's right to receive any payments with respect to the Product, shall be governed by this Agreement.
2. In the event that DR3 delivers a Revocation in accordance with Section 2.2, this Agreement shall terminate and the Parties' rights and obligations with respect to the NPS Technology and the Product, and DR3's right to receive any payments with respect to the Product, shall be governed by the Original Purchase Agreement (for clarity, prior to its amendment and restatement by this Agreement) and this Agreement shall terminate pursuant to Section 9.2. In such event, any Royalty Payments made to DR3 prior to the effective date of such termination of this Agreement shall, for purposes of the Original Purchase Agreement, be credited against the Purchaser Royalty Interest (as such term is defined in Section 8.1 of the Original Purchase Agreement).

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3. If the Consent becomes irrevocable pursuant to Section 2.2, the Parties' rights and obligations with respect to the NPS Technology and the Product, and DR3's right to receive any payments with respect to the Product, shall be governed this Agreement without any further conditions or obligations under the Original Purchase Agreement.

2.4   Mutual Release.

1. If the Consent becomes irrevocable pursuant to Section 2.2, NPS and its Affiliates, and its and their respective officers, directors, shareholders, employees, agents, predecessors, successors and assigns (collectively, the "NPS Released Parties") shall automatically be fully, finally and irrevocably relinquished, released and discharged by DR3, on behalf of itself and its Affiliates, and its and their respective officers, directors, limited partners, employees, agents, predecessors, successors and assigns, from any and all claims, damages, liabilities, obligations, and causes of action, including indemnification claims, known or unknown, suspected or unsuspected, in law or equity, that were asserted, or that could have been asserted by DR3 and its Affiliates, and its and their respective officers, directors, shareholders, employees, agents, predecessors, successors and assigns, against the NPS Released Parties arising out of the Original Purchase Agreement and the Security Agreement, whether accrued or not; provided, however, that nothing in this Section 2.4(a) shall be deemed to affect the enforceability of DR3's rights or the obligations of the Parties under this Agreement or the Restated Security Agreement.
2. If the Consent becomes irrevocable pursuant to Section 2.2, DR3 and its Affiliates, and its and their respective officers, directors, shareholders, employees, agents, predecessors, successors and assigns (collectively, the "DR3 Released Parties") shall automatically be fully, finally and irrevocably relinquished, released and discharged by NPS, on behalf of itself and its Affiliates, and its and their respective officers, directors, limited partners, employees, agents, predecessors, successors and assigns, from any and all claims, damages, liabilities, obligations, and causes of action, including indemnification claims, known or unknown, suspected or unsuspected, in law or equity, that were asserted, or that could have been asserted by NPS and its Affiliates, and its and their respective officers, directors, shareholders, employees, agents, predecessors, successors and assigns, against the DR3 Released Parties arising out of the Original Purchase Agreement and the Security Agreement, whether accrued or not; provided, however, that nothing in this Section 2.4(b) shall be deemed to affect the enforceability of NPS's rights or the obligations of the Parties under this Agreement or the Restated Security Agreement.

2.5   Tolling.

1. Until a Revocation, DR3 and its Affiliates, and its and their respective officers, directors, shareholders, employees, agents, predecessors, successors and assigns, shall not assert any claims against the NPS Released Parties arising out of the Original Purchase Agreement and the Security Agreement whether accrued or not.

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2. Until a Revocation, NPS and its Affiliates, and its and their respective officers, directors, shareholders, employees, agents, predecessors, successors and assigns shall not assert any claims against the DR3 Released Parties arising out of the Original Purchase Agreement and the Security Agreement whether accrued or not.

2.6   Accrued Claims. Without an admission of liability by either Party, each Party acknowledges and agrees that, with respect to any claim a Party has against the other under the Original Purchase Agreement or the Security Agreement, the period of time between the date hereof and the effective date of a Revocation shall be excluded in any calculation of damages with respect to such claim.

3. THE CLOSING

   3.1   The Closing . The closing of the transactions contemplated by this Agreement, including the grant by NPS to DR3 of the DR3 Royalty Right, the grant by DR3 to NPS of the Consent, the conditional amendment and restatement of the Original Purchase Agreement described in Section 2.3, and the conditional amendment and restatement of the Security Agreement shall take place on the date hereof (the "Closing").

   3.2   NPS Closing Deliveries . DR3 acknowledges that, at the Closing, NPS has delivered or has caused to be delivered to DR3:

   1. a current Certificate of Good Standing for NPS from the Delaware Department of State;
   2. the Restated Security Agreement, duly executed and delivered by NPS;
   3. a patent security agreement in a form sufficient for the recordation thereof by the United States Patent and Trademark Office, together with an appropriately completed recordation form, each duly executed and delivered by NPS;
   4. a trademark security agreement in a form sufficient for the recordation thereof by the United States Patent and Trademark Office, together with an appropriately completed recordation form, each duly executed and delivered by NPS;
   5. standard corporate existence and authority opinions and enforceability opinions with respect to this Agreement, the Restated Security Agreement, the patent security agreement referred to in Section 3.2(c), the trademark security agreement referred to in Section 3.2(d), a perfection and registration opinion with respect to the Restated Security Agreement and a no-conflict-with-laws- opinion with respect to this Agreement; and

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6. customary UCC financing statements in form and substance satisfactory to DR3 to perfect the additional security interest granted in the Restated Security Agreement.

3.3   DR3 Closing Deliveries . NPS acknowledges that, at the Closing, DR3 has delivered or has caused to be delivered to NPS the Restated Security Agreement, duly executed and delivered by DR3.

4. REPRESENTATIONS, WARRANTIES OF NPS

   NPS hereby represents and warrants to DR3 as of the date hereof as follows and acknowledges that DR3 is relying on such representations and warranties in entering into this Agreement.

   4.1   Organization, Standing and Power.

   1. NPS is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware and has full corporate power and authority and possesses all governmental franchises, licenses, permits, authorizations and approvals necessary to enable it to own, lease or otherwise hold its properties and assets and to carry on its business as presently conducted.
   2. NPS is not insolvent and no proceedings have been taken or authorized by NPS, or to the Knowledge of NPS been taken or threatened by any other Person, with respect to the bankruptcy, insolvency, liquidation, dissolution or winding up of NPS. NPS will not become insolvent or be put in insolvent circumstances or become unable to meet its obligations as they become due, in each case within the meaning of applicable bankruptcy, insolvency and similar Laws to which NPS is subject, by or as a result of entering into this Agreement. NPS is not entering into this Agreement for the purpose of injuring, obstructing, impeding, defeating, hindering, delaying, defrauding or oppressing the rights and claims of creditors or others against NPS.

   4.2   Authority, Execution and Delivery; Enforceability . NPS has full power and authority to execute and deliver this Agreement and perform all of the obligations to be performed by NPS hereunder. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action of NPS. This Agreement has been duly executed and delivered by NPS and constitutes NPS's legal, valid and binding obligations, enforceable against NPS in accordance with its respective terms, subject to creditors' rights and general principles of equity.

   4.3   No Conflicts . The execution and delivery of this Agreement by NPS do not and will not, and the consummation of the transactions contemplated hereby and the compliance by NPS with the terms hereof will not:

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1. conflict with, result in a breach or violation of, constitute a default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to a loss of a benefit under, any provision of (i) any applicable statute, law, ordinance, rule or regulation of any Governmental Authority, or any judgment, order, writ, decree, permit or license of any court or any Governmental Authority to which NPS or its properties or assets may be subject, (ii) any agreement (whether written or oral), commitment or instrument to which NPS is a party or by which NPS or any of its assets is bound (including any agreement to which NPS is a party relating to the NPS Technology, the NPS Trademarks or the DR3 Royalty Right), or (iii) the bylaws of NPS; or
2. result in the creation or imposition of any Encumbrance on the NPS Technology, the NPS Trademarks or the DR3 Royalty Right except as contemplated in the Restated Security Agreement in favor of DR3.

4.4   No Consent . No consent, approval, license, permit, order or authorization of, or registration, declaration or filing with, any Person is required to be obtained or made by NPS in connection with the execution and delivery by NPS of this Agreement, the performance by NPS of its obligations under this Agreement or the consummation of any of the transactions contemplated hereby, including the right of DR3 to receive the Royalty Payments.

4.5   Rights in DR3 Royalty Right.

1. Other than the Milestone Payment (as such term is defined in the Termination and Transition Agreement), there are no other contracts, arrangements or understandings (whether written or oral) to which NPS or its Affiliates is a party relating to granting any Third Party any Royalty Right in the Territory.
2. Other than DR3 under this Agreement and Takeda Pharma under the Termination and Transition Agreement (in respect of the Milestone Payment, as defined therein), no Person has any entitlement to receive, in whole or in part, any Royalty Right in the Territory.

4.6   Agreements . The Asahi Agreement expired according to its express terms as of October 8, 2013, and the Gautvik Agreement expired as of September 11, 2009. On October 4, 2010, Ypsomed AG delivered written notice to NPS under the Patent 151 License that it was allowing Patent No. EP 1519766A (filing date June 25, 2003) to lapse, and the Patent 151 License has now expired. A true, correct and complete certified copy of the Asahi Agreement, the Gautvik Agreement, the Patent 151 License and lapse notifications referred to in this Section 4.6 are attached hereto in Schedule 4.6.

4.7   Patents and Other Intellectual Property.

1. Schedule 4.7 sets forth a complete list, including status, of all Patents which comprise the NPS Patents. NPS is the exclusive owner of the entire right, title and interest in and to the NPS Patents free and clear of any Encumbrances other than the encumbrances in respect of the NPS Technology that are specifically created under or by the Asahi Agreement. NPS has not received written notice that any Person has

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challenged the validity or enforceability of the NPS Patents. To the Knowledge of NPS, there is, and since July 16, 2007 there has been, no infringement of the NPS Patents by any Person. NPS has not received any demand or claim by any Person that such Person has any ownership interest in any of the NPS Patents, or that any of the NPS Patents are, or may be, invalid or unenforceable or that any Product infringes upon or may infringe upon any patent, copyright, trademark, trade secret or other intellectual property right of any Third Party. All appropriate patent fees required to be paid with respect to the applications listed on Schedule 4.7 have been paid. To the Knowledge of NPS, the sale of the Product in the Territory as previously sold by Takeda Pharma does not infringe any issued patent of any Third Party or infringes any other trademarks or trade secrets of any Third Party. Except as set forth in Schedule 4.7(a), NPS has not requested any written opinions of counsel relating to any Third Party patent or published patent application which may be considered to relate to any Product or device used to administer the Product.

2. To the Knowledge of NPS, no Third Party has a claim or has claimed any ownership rights or received any demand or claim by any Person that any of the NPS Technology or NPS Trademarks is infringing or may infringe upon any patent, copyright, trademark, trade secret or any other intellectual property rights of any Third Party.
3. Except as set forth in Schedule 4.7(c), NPS has not entered into any contract, agreement, commitment or undertaking granting to any Person the right within the Territory (i) under the NPS Patents or (ii) to use the NPS Technology, in either case, to market or sell Products or any other product.
4. NPS has not granted to any Governmental Authority a license relating to the NPS Technology and, to the Knowledge of NPS, there is no reason to believe that NPS is or will be required to grant any such license to any Governmental Authority.
5. The Gautvik Patents have expired and Pat. No. EP 1519766 has been abandoned. NPS owns sufficient rights in and to Pat. No. EP 0515228 such that NPS's manufacture, use and sale of the Product in Denmark and Norway would not infringe it.

4.8   Litigation . Except as set out on Schedule 4.8, there is no: (a) action, suit, claim or proceeding pending or, to the Knowledge of NPS, threatened against NPS, at law or in equity, (b) arbitration proceeding to which NPS is a party, or (c) any inquiry by any Governmental Authority pending or, to the Knowledge of NPS, threatened against NPS, which, if adversely determined, would question the validity or enforceability of the NPS Technology, the NPS Trademarks or the ability of NPS to grant the right for DR3 to receive Royalty Payments, or prevent the consummation of the transactions contemplated by this Agreement or otherwise adversely affect the right of DR3 to receive Royalty Payments. There is no action or suit by NPS pending or threatened in writing against others relating to the NPS Technology, the NPS Trademarks, the Products or any device used to administer the Product. None of the NPS Patents is subject to any outstanding

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decree, order, judgment, or stipulation restricting in any manner the use or licensing thereof by NPS. Schedule 4.8 sets forth a list of all patent office proceedings, including oppositions, interferences or re-examinations, relating to the NPS Patents.

4.9   Regulatory Submissions . NPS has submitted an orphan drug designation application for the Product to the European Medicines Agency, and has received orphan drug designation for the Product by the FDA. NPS has submitted BLA 125511 to the FDA for the Product and expects to receive twelve (12) years of data exclusivity in the United States.

4.10   Prior Royalties . To the Knowledge of NPS, all royalties required to be paid by Takeda Pharma pursuant to the License Agreement for any period ending on or prior to March 18, 2013 have been paid in full as and when due, and no portion of the Purchaser Royalty Interest (as defined in the Original Purchase Agreement) has accrued but not yet been paid to DR3. No royalties have been received by NPS from Takeda Pharma for the period from March 18, 2013 to the date hereof.

4.11   Reports . NPS has provided to DR3 true, correct and complete copies of all royalty reports received by NPS from Takeda Pharma as of the date hereof.

4.12   Disclosure . No representation or warranty made by NPS in this Agreement, when considered together with other representations and warranties made by NPS in this Agreement, contains any untrue statement of a material fact or omits to state any material fact necessary to make any such representation or warranty, in the light of the circumstances under which it is made, not misleading to a prospective buyer of the DR3 Royalty Right.

5. REPRESENTATIONS, WARRANTIES OF DR3

   DR3 hereby represents and warrants to NPS as of the date hereof as follows and acknowledges that NPS is relying on such representations and warranties in entering into this Agreement.

   5.1   Organization . DR3 is a limited partnership duly organized, validly existing and in good standing under the laws of the Cayman Islands and has full organizational power and authority and possesses all governmental franchises, licenses, permits, authorizations and approvals necessary to enable it to own, lease or otherwise hold its properties and assets and to carry on its business as presently conducted.

   5.2   Authorization . DR3 has full power and authority to execute and deliver this Agreement and to perform all of the obligations to be performed by DR3 hereunder. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary partnership action of DR3. This Agreement has been duly executed and delivered by DR3 and constitutes DR3's legal, valid and binding obligation, enforceable against DR3 in accordance with its terms.

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5.3   No Conflicts . The execution and delivery of this Agreement by DR3 do not, and the consummation of the transactions contemplated hereby and the compliance by DR3 with the terms hereof will not conflict with, result in a breach or violation of, constitute a default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to a loss of a material benefit under, any provision of: (a) any applicable statute, law, ordinance, rule or regulation of any Governmental Authority, or any judgment, order, writ, decree, permit or license of any court or any Governmental Authority to which DR3 or its properties or assets may be subject, (b) any material contract, commitment or instrument to which DR3 is a party or by which DR3 or any of its assets is bound, or (c) the governing documents of DR3.

5.4   No Consent . No consent, approval, license, permit, order or authorization of, or registration, declaration or filing with, any Person is required to be obtained or made by DR3 in connection with the execution and delivery by DR3 of this Agreement, the performance by DR3 of its obligations under this Agreement or the consummation of any of the transactions contemplated hereby.

5.5   No Litigation . There is no: (a) action, suit, claim or proceeding pending or, to the knowledge of DR3, threatened against DR3, at law or in equity, (b) arbitration proceeding to which DR3 is a party, or (c) any inquiry by any Governmental Authority pending or, to the knowledge of DR3, threatened against DR3, which, if adversely determined, would prevent the consummation of the transactions contemplated by this Agreement.

6. COVENANTS

   6.1   Patent Obligations.

   1. NPS may transfer or license the NPS Technology or the NPS Trademarks to its Affiliates without DR3's prior written consent. Without the prior written consent of DR3 (such consent to be at DR3's sole discretion), NPS may not sell or otherwise transfer any NPS Technology or any NPS Trademark to any Third Party. NPS may not license the NPS Technology or the NPS Trademarks to any Third Party in the jurisdictions set forth on Schedule 6.1(a) without DR3's prior written consent (not to be unreasonably withheld).
   2. NPS shall (i) to the full extent allowed by Law, prosecute and maintain in full force and effect each pending patent application included in the NPS Patents in the Territory, and (ii) maintain and keep in full force and effect any issued Patents in the Territory. In addition, prior to issuance of a patent from a pending patent application included in the NPS Patents or abandonment of a patent application included in the NPS Patents, NPS shall file, to the extent permitted by Law, a continuation or divisional application of the patent application unless: (i) NPS has prior written consent from DR3 not to file such a continuation or divisional application, or (ii) as of the date of such issuance or abandonment, the term of all issued NPS Patents has expired. Notwithstanding the foregoing, NPS shall have the right to abandon, or allow to lapse,

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any NPS Patent in the Territory, provided that (i) such abandonment or lapse would not reasonably be expected to cause, singly or in aggregate with other abandonments or lapses, a Material Adverse Effect, and (ii) in the event NPS intends to allow any NPS Patent in the Territory to lapse or become abandoned, NPS shall so notify DR3, and DR3 shall have the right (but not the obligation) to assume further responsibility for the prosecution, maintenance and defense of such NPS Patent at DR3's expense. For the avoidance of doubt, any Patent for which DR3 assumes responsibility pursuant to this Section 6.1(b) shall remain an NPS Patent.

6.2   Confidentiality.

1. All information furnished by DR3 to NPS or by NPS to DR3 in connection with this Agreement and the transactions contemplated hereby, as well as the terms, conditions and provisions of this Agreement and any other agreement delivered pursuant hereto, shall be kept confidential by NPS and DR3 and shall be used by NPS and DR3 only in connection with this Agreement and the transactions contemplated hereby, except in connection with the enforcement of rights under this Agreement and except to the extent that such information: (i) is already known (and not subject to confidentiality) by the Party to whom the information is disclosed or in the public domain at the time the information is disclosed; (ii) thereafter becomes lawfully obtainable from other sources other than as a result of a breach of an obligation of confidentiality; (iii) is required to be disclosed in any document to be filed with any Governmental Authority; or (iv) is required to be disclosed under securities Laws applicable to NPS, DR3 or their respective Affiliates, or by court or administrative order. Notwithstanding the foregoing, DR3 may disclose such information to its manager and partners and each of its and their respective Affiliates, directors, officers, investors, bankers, financing sources, ratings agencies, advisors, trustees, representatives and potential acquirers of all or part of (x) DR3, (y) an Affiliate of DR3 or (z) the DR3 Royalty Right; and NPS may disclose such information to its Affiliates, directors, officers, bankers, advisors, investors, financing sources, strategic partners and representatives, provided in each case that such Persons shall be informed of the confidential nature of such information and shall be obligated to keep such information confidential pursuant to the terms of this Section 6.2.
2. The Parties shall use reasonable efforts, acting in good faith, to cooperate with each other with respect to the scope and substance of all disclosures regarding this Agreement to or as required by any Governmental Authority, including the United States Securities and Exchange Commission. In addition, the Parties will coordinate in advance with each other in connection with the redaction of certain provisions of this Agreement with respect to any United States Securities and Exchange Commission filings of this Agreement, and each Party shall use commercially reasonable efforts to seek confidential treatment for such terms if so requested by the other Party. Notwithstanding the foregoing, each Party shall ultimately retain control over the scope of information to be disclosed to any Governmental Authority for purposes of complying with any applicable Law.

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3. The Parties shall be free to publicly disclose information contained in any materials that have previously been approved for public disclosure by the other Party, without further approvals from the other Party hereunder, to the extent there have been no material additions or changes thereto.
4. No announcement or other disclosure, public or otherwise, concerning the financial or other terms of this Agreement shall be made, either directly or indirectly, by any Party hereto without first obtaining the written approval of the other Party and agreement upon the nature and text of such announcement or disclosure, such approval and agreement not to be unreasonably withheld or delayed. Notwithstanding the foregoing, NPS may disclose the transactions contemplated by this Agreement in a form 8-K substantially in the form attached hereto as Schedule 6.2(d).

6.3   Infringement of NPS Technology.

1. In the event either Party becomes aware of any actual or threatened infringement or misappropriation of any NPS Technology, the Party first having knowledge of such infringement shall promptly notify the other, and the Parties shall thereupon consult together as to the action to be taken.
2. Enforcement.
   1. NPS shall have the first right to initiate and prosecute any legal actions to enforce its right in the NPS Technology and prosecute apparent infringers.
   2. If, after three (3) months have passed from the date notice is given pursuant to Section 6.3(a), NPS has not initiated legal action or succeeded in stopping the infringement, and is not then in substantial and active settlement or licensing discussions with the infringer, then DR3 shall have the right, in the event such infringement has or is reasonably likely, in DR3's reasonable opinion, to have a negative effect on Net Sales of the Product, upon request to NPS, to compel NPS to initiate and prosecute such a legal action against any Person infringing or misappropriating the NPS Technology directly or contributorily, using counsel selected by DR3 and at DR3's expense, and DR3 shall have the right to control such legal action. Notwithstanding the foregoing, if NPS's ongoing evaluation of patent scope, validity, enforceability, and/or possible infringement defenses requires more than three (3) months from the date of such a notice, then NPS shall so inform DR3, and shall provide DR3 with weekly updates on the status of its evaluation. If NPS receives advice from outside counsel reasonably acceptable to DR3 that the assertion of a claim against the Third Party designated in a notice provided pursuant to this Section 6.3(b)(ii) would pose an unreasonable risk to the validity or enforceability of the NPS Patent portfolio and confirms the receipt of such advice in writing to DR3, then NPS shall not be obligated to commence an action as described in this Section 6.3(b)(ii) with respect to such notice.
   3. Any and all amounts recovered by NPS or its Affiliates or DR3 with respect to any infringement or misappropriation action in respect of the NPS Technology (whether initiated or controlled by NPS or DR3) shall be applied first to reimburse the Parties for their out-of-pocket expenses (including reasonable attorneys' fees) in prosecuting such action. The remainder shall be deemed Net Sales under this Agreement and be treated accordingly.

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6.4   DR3 May Perform . If NPS fails to observe or perform any covenant, condition or agreement contained in this Agreement, and such failure shall continue unremedied for a period of thirty (30) days after notice thereof from DR3 to NPS, DR3 may (but shall not be obliged to) perform, or cause performance of, such covenant, condition or agreement, provided that DR3 shall in any event first have given NPS written notice of its intent to do the same.

6.5   Grant of Security Interest.

1. NPS shall enter into and perform its obligations under the Restated Security Agreement, including, as general and continuing security for the due payment and performance of all of NPS' obligations under this Agreement, the grant to DR3 of a legal, valid and enforceable first priority security interest in and to the NPS Technology and NPS Trademarks, on the terms of and subject to the conditions contained in the Restated Security Agreement.
2. As soon as possible following the Closing and, in any case, within sixty (60) days from the date hereof, NPS shall take such actions as are required to perfect the registers (for certainty, including, as required, ensuring that NPS' name and address are correctly referenced therein) in the patent and other offices in which the NPS Patents and NPS Trademarks are registered in the United States in order to, or in order to enable DR3 to, within such sixty (60)-day period, record on such registers the documents referred to in Section 3.2(c) and Section 3.2(d); provided that this Section 6.5(b) shall not require NPS to perfect such registers with respect to the PREOTACT trademarks unless a Revocation occurs.

6.6   Acknowledgment of Existing Patent Filings . Each Party hereto hereby acknowledges that in connection with the Original Purchase Agreement, the Parties have previously entered into certain agreements and made certain registrations and filings to perfect the security interest granted to DR3 and record the conditional assignment agreements executed in connection therewith (copies of which are attached hereto as Exhibit B; collectively, the "Patent Filings"). As of the date hereof, each Party hereby acknowledges and agrees that (i) the Patent Filings shall be and remain in full force and effect and shall constitute the legal, valid, binding and enforceable obligations of their parties thereto in accordance with their terms, (ii) such Patent Filings shall only be enforced in accordance with the circumstances specified in this Agreement and the Restated Security Agreement, and (iii) no further filing, registration or amendment is necessary to perfect the interest and rights granted under the Patent Filings. The execution, delivery and effectiveness of this Agreement shall not operate as a waiver of any right, power or remedy of the Parties under the Patent Filings.

6.7   Further Sale or Financing. Notwithstanding anything to the contrary set forth in this Agreement or the Restated Security Agreement, DR3 hereby acknowledges and agrees that NPS and its Affiliates shall have the right to sell or finance any Royalty

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Right other than the Royalty Payments, provided that such sale or financing (i) has no adverse impact on Royalty Payments, (ii) does not, and would not reasonably be expected to, result, in a Material Adverse Effect and (iii) is junior and subordinate in all respects to the Royalty Payments. In the event that NPS or its Affiliates sells or finances such right in the future in accordance with the previous sentence, (A) DR3 shall negotiate an intercreditor agreement in good faith with any such prospective purchaser or financing source, and (B) the prospective purchaser or financing source shall (as a condition to such financing or sale) enter into an intercreditor agreement on terms and conditions reasonably satisfactory to DR3 in order to ensure that the security interests of DR3 and such prospective purchaser or financing source are properly segregated and that DR3's right to receive the Royalty Payments remain senior secured obligations of NPS.

7. COMMERCIALIZATION AND UPDATES

   7.1   Commercialization of Product . NPS is and will be solely responsible for the commercialization of the Product in the Territory at NPS's expense. NPS shall have the right to commercialize the Product through Affiliates, sublicensees or distributors. NPS shall launch, market and sell the Product in the countries of the Territory in which NPS at its sole discretion finds the marketing financially feasible as soon as reasonably possible after receipt of marketing authorization, pricing and reimbursement approval for the Product in such country (but only if such foregoing approvals are obtained). Subject to the immediately preceding sentence, NPS will promote, market, sell and distribute the Product in the Territory by applying efforts and resources as reasonably required to capture the commercial potential of the Product throughout the Territory and at least equal to the efforts and resources normally used by a similarly situated pharmaceutical company for a product owned by it which has a similar market potential and is at a similar stage in its product life cycle as the Product. All efforts of NPS's Affiliates, sublicensees or distributors will be considered efforts of NPS for purposes of determining NPS's compliance with such obligations.

   7.2   Updates . In addition to the notifications provided pursuant to Section 7.3, NPS shall keep DR3 reasonably informed of material regulatory, clinical and commercial developments with respect to the Product in the Territory by providing a written summary report to DR3 on a semiannual basis until First Commercial Sale has occurred in both the United States and the European Union (the "Launch"), and thereafter on an annual basis. Additionally, until the Launch has occurred, at DR3's request the Parties shall hold quarterly update calls.

   7.3   Notifications.

   1. If NPS or any of its Affiliates receives any written or oral communications relating to a Product, the NPS Patents or the NPS Trademarks from any Governmental Authority in the Territory (including the FDA, the United States Patent and Trademark Office or their respective counterparts in other jurisdictions), or any Third Party, in respect of an issue or occurrence that (with or without the passage of time), would reasonably be expected to result, either individually or in the aggregate, in a Material Adverse Effect, NPS shall promptly inform DR3 thereof (including by providing

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a copy of any written communication or a written account of any oral communication), but in no event later than five (5) Business Days after receipt of such communication.

2. NPS shall promptly (but in no event later than five (5) Business Days after receipt) notify DR3 and provide DR3 with a copy of any correspondence or other reports or complaints submitted to or received by NPS or any of its Affiliates in respect of any actions, suits, claims, investigations or proceedings commenced or threatened in writing by a Governmental Authority or other Third Party against, relating to, involving or otherwise affecting the Product, Net Sales, the Royalty Payments or any other matters reasonably related thereto, in each case to the extent the foregoing would reasonably be expected to result, either individually or in the aggregate, in a Material Adverse Effect.

7.4   No Assumption of Obligations . DR3 expressly does not assume or agree to become responsible for any obligation or liability of NPS of any kind whatsoever with respect to the development and commercialization of the Product, whether presently in existence or arising or asserted hereafter. All such obligations and liabilities (for certainty, including any and all existing and/or potential obligations under any license agreement that NPS enters into with respect to the Product and any product liability or intellectual property infringement in respect of the commercialization of Products or devices used to administer the Product) shall be retained by and remain obligations and liabilities of NPS.

7.5   No Contravention of NPS's Residual Rights; End of Term . At the end of the Term, DR3 shall take such actions, and execute such documents, certificates and instruments, as reasonably requested by NPS to terminate the security interests granted by NPS hereunder and pursuant to the Restated Security Agreement.

7.6   Actions upon Revocation.

1. Upon a Revocation, DR3 shall take such actions, and execute such documents, certificates and instruments, as reasonably requested by NPS and at NPS' expense to terminate the additional security interests granted by NPS with respect to (i) the NPS Patents in the United States and Japan, (ii) any NPS Know-How that is applicable only to the United States or Japan, and (iii) the NPS Trademarks in the United States and Japan.
2. Upon a Revocation, NPS shall take any and all actions necessary, at NPS's expense, to effect and record the assignment of the PREOTACT trademarks, together with all applications and registrations therefor and all goodwill symbolized thereby, to NPS from Takeda Pharma in the following countries: all the countries of the European Union, European countries outside of the European Union, the Commonwealth of Independent States (formerly the USSR) and Turkey.
3. Upon a Revocation, NPS shall immediately and automatically grant to DR3 an exclusive, royalty-free, perpetual, irrevocable license to use the PREOTACT trademark in connection with the promotion, sale or other

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commercialization of Products in the Original Territory (as defined in the Original Purchase Agreement). For so long as NPS owns the PREOTACT trademark, all goodwill arising from any use of the PREOTACT trademark made pursuant to this Section 7.6(c) shall inure to the benefit of NPS.

8. PAYMENTS

   8.1   Royalty Term . NPS's obligation to make Royalty Payments to DR3 shall commence on a country-by-country basis upon the First Commercial Sale of the Product in a country in the Territory and shall expire on a country-by-country basis upon the later of: (a) the last to expire of any NPS Patent in such country or (b) the expiration of any period of regulatory exclusivity applicable to the Product in such country (the "Royalty Term").

   8.2   Royalty Payments and Royalty Statements . NPS shall calculate all amounts payable as Royalty Payments with respect to Net Sales at the end of each calendar quarter, which amounts shall be converted to Dollars at such time in accordance with Section 8.5. NPS shall pay to DR3 the royalty amount due for Net Sales during a given calendar quarter by deposit to the DR3 Account or such other account designated by DR3 from time to time in writing within forty-five (45) days after the end of such calendar quarter. Each payment of royalties due to DR3 shall be accompanied by a statement of the number of units of Product sold on a country-by-country basis, the amount of gross sales of the Product on a country-by-country basis in the Territory during the applicable calendar quarter (including such amounts expressed in local currency and as converted to Dollars), an itemized calculation of Net Sales in the Territory showing deductions provided for in the definition of "Net Sales" on a country-by-country basis during such calendar quarter and a calculation of the amount of royalty payment due on such Net Sales for such calendar quarter for the Territory and on a country-by-country basis (the "Royalty Statements"). NPS shall deliver the Royalty Statements to DR3 in accordance with Section 11.3 by e-mail addressed to DRINotices@dricapital.com. Without limiting the generality of the foregoing, NPS shall require its Affiliates, licensees and sublicensees to account for its Net Sales.

   8.3   Late Payments . If NPS fails to pay any portion of any amount due under this Agreement by the date such amount is due, NPS shall be obligated to pay DR3, in addition to the amount due, interest at an interest rate of 1.0% per month over the prime rate reported in the eastern edition of the Wall Street Journal (or an alternative source reasonably selected by DR3, if the Wall Street Journal should cease to report the prime rate or cease to exist as a periodical) on such date (or the maximum rate permitted by applicable Law, if lesser), compounded monthly, accruing from the date the payment was due through the date of actual payment.

   8.4   Royalty Withholding Taxes . Any income or other taxes which NPS is required by Law to pay or withhold on behalf of DR3 with respect to any Royalty Payments payable to DR3 shall be deducted from the amount of such payments due, and paid or withheld, as appropriate, by NPS on behalf of DR3. Any such tax required by applicable Law to be paid or withheld shall be an expense of, and borne solely by, DR3.

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NPS shall furnish DR3 with reasonable evidence of such payment or amount withheld, in electronic or written form, as soon as practicable after such payment is made or such amount is withheld. The Parties will reasonably cooperate in completing and filing documents required under the provisions of any applicable tax laws or under any other applicable Law in connection with the making of any required tax payment or withholding payment, or in connection with any claim to a refund of or credit for any such payment.

8.5   Currency Conversion . For the purpose of calculating any sums due under, or otherwise reimbursable pursuant to, this Agreement (including the calculation of Net Sales expressed in currencies other than Dollars), NPS shall convert any amount expressed in a foreign currency into Dollar equivalents, calculated using the average of the exchange rate certified by the Federal Reserve Bank of New York for customs purposes for such currency (found at http://www.federalreserve.gov/releases/h10/Hist or any other publication as agreed to by the Parties) over the entire calendar quarter in which the Net Sales were made.

8.6   Records, Audits . NPS and its Affiliates shall keep, and NPS shall require its licensees and sublicensees to keep, full, true and accurate records and books of account containing all particulars that may be necessary for the purpose of confirming the accuracy of, and calculating, as applicable, all royalties (including records of Net Sales) and NPS shall maintain complete and accurate records in sufficient detail to permit DR3 to confirm the accuracy of all amounts payable hereunder, in each case for a minimum period of six (6) years or such longer period as required by applicable Law. DR3 shall have a right to request an audit of NPS in order to confirm the accuracy of any of the foregoing (an "Audit"). Upon the written request by DR3 to Audit NPS, DR3 shall have the right to engage an independent, internationally recognized, accounting firm to perform a review as is reasonably necessary to enable such accounting firm to calculate or otherwise confirm the accuracy of any of the foregoing for the calendar year(s) requested by DR3; provided that (i) such accountants shall be given access to, and shall be permitted to examine and copy such books and records of NPS upon fifteen (15) days prior written notice to NPS, and at all reasonable times on such Business Days, (ii) prior to any such examination taking place, such accountants shall enter into a confidentiality agreement with NPS reasonably acceptable to NPS in order to keep all information and data contained in such books and records strictly confidential and shall not disclose such information or copies of such books and records to any third person including DR3, but shall only use the same for the purpose of the reviews and/or calculations which they need to perform in order to determine any amounts being reviewed, and (iii) such accountants shall use reasonable efforts to minimize any disruption to NPS's business. NPS shall make personnel available during regular business hours to answer queries on all such books and records required for the purpose of the Audit. The accountants shall deliver a copy of its findings to each of the Parties within ten (10) Business Days of the completion of the review, and, in the absence of fraud or manifest error, the findings of such accountant shall be final and binding on each of the Parties. Any underpayments by NPS shall be paid to DR3 within ten

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(10) Business Days of notification of the results of such inspection. Any overpayments made by NPS shall be refunded by DR3 within ten (10) Business Days of notification of the results of such inspection. The cost of the accountant shall be the responsibility of DR3 unless the accountants calculation shows that the actual royalties payable of Net Sales are different, by more than five percent (5%) of the amounts as previously calculated by NPS.

9. TERM AND TERMINATION

   9.1   Term of Agreement . The term of this Agreement shall commence on the date of the Closing and shall expire on the earlier of: (a) the expiration of the Royalty Term in all countries of the Territory or (b) such time as the aggregate amount of the payments received by DR3 in respect of the (i) Purchaser Royalty Interest (as defined in the Original Purchase Agreement) after July 16, 2007 and (ii) the Royalty Payments made pursuant to this Agreement is equal to $125,000,000 (the "Term").

   9.2   Termination . This Agreement shall terminate if DR3 exercises the Revocation in accordance with Section 2.1.

   9.3   Accrued Rights . Termination or expiration of this Agreement for any reason will be without prejudice to any rights that will have accrued to the benefit of a Party prior to the effective date of such termination. Such termination will not relieve a Party from obligations that are expressly indicated to survive the termination or expiration of this Agreement.

   9.4   Survival . Notwithstanding anything to the contrary contained herein, the following provisions shall survive any expiration or termination of this Agreement: Sections 2.6, 6.2, 6.5, 7.4, 7.5, 7.6, 8.2 (to the extent arising prior to expiration or termination), 8.3, 8.4, 8.5, 8.6 (but only for a period of one (1) year after the expiration or termination of this Agreement), 9.3, 9.4 and Article 10 and Article 11. Except as set forth in this Section 9.4, or otherwise expressly set forth herein, upon termination or expiration of this Agreement all other rights and obligations of the Parties shall cease.

10. INDEMNIFICATION

    10.1   Indemnification by NPS . NPS shall indemnify DR3, and its officers, directors, managers, partners, trust beneficiaries, agents and representatives, against, and hold each of them harmless from, any Damages suffered or incurred by any such Person arising from, relating to or otherwise in respect of:

    1. any breach of any representation or warranty of NPS contained in this Agreement; and
    2. any breach of any covenant of NPS contained in this Agreement.

    10.2   Indemnification by DR3 . DR3 shall indemnify NPS, its directors, officers, shareholders and representatives, against, and hold them harmless from, any Damages suffered or incurred by any such Person arising from, relating to or otherwise in respect of:

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1. any breach of any representation or warranty of DR3 contained in this Agreement; and
2. any breach of any covenant of DR3 contained in this Agreement.

10.3   Procedure for Claims.

1. Third Party Claims. In order for a Person (the "indemnified party") to be entitled to any indemnification provided for under Section 10.1 or 10.2 in respect of, arising out of or involving a claim made by any Person against the indemnified party (a "Third Party Claim"), such indemnified party must notify the indemnifying party in writing (and in reasonable detail) of the Third Party Claim within ten (10) Business Days after receipt by such indemnified party of notice of the Third Party Claim; provided, however, that failure to give such notification shall not affect the indemnification provided hereunder except to the extent the indemnifying party shall have been actually and materially prejudiced as a result of such failure. Thereafter, the indemnified party shall deliver to the indemnifying party, within five (5) Business Days after the indemnified party's receipt thereof, copies of all notices and documents (including court papers) received by the indemnified party relating to the Third Party Claim.
2. Assumption. If a Third Party Claim is made against an indemnified party, the indemnifying party shall be entitled to participate in the defense thereof and, if it so chooses, to assume the defense thereof with counsel selected by the indemnifying party; provided, however, that such counsel is not reasonably objected to by the indemnified party. Should the indemnifying party so elect to assume the defense of a Third Party Claim, the indemnifying party shall not be liable to the indemnified party for any legal expenses subsequently incurred by the indemnified party in connection with the defense thereof. If the indemnifying party assumes such defense, the indemnified party shall have the right to participate in the defense thereof and to employ counsel, at its own expense, separate from the counsel employed by the indemnifying party, it being understood that the indemnifying party shall control such defense. The indemnifying party shall be liable for the fees and expenses of counsel employed by the indemnified party for any period during which the indemnifying party has not assumed the defense thereof. If the indemnifying party chooses to defend or prosecute a Third Party Claim, all the indemnified parties shall cooperate in the defense or prosecution thereof. Such cooperation shall include the retention and (upon the indemnifying party's request) the provision to the indemnifying party of records and information that are reasonably relevant to such Third Party Claim, and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. Whether or not the indemnifying party assumes the defense of a Third Party Claim, the indemnified party shall not admit any liability with respect to, or settle, compromise or discharge, such Third Party Claim without the indemnifying party's prior written consent (which consent shall not be unreasonably withheld). If the indemnifying party assumes the defense of a Third Party Claim, the indemnified party shall agree to any settlement, compromise or discharge of a Third Party Claim that the indemnifying party may recommend and that by its terms obligates the indemnifying

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party to pay the full amount of the liability in connection with such Third Party Claim, which releases the indemnified party completely in connection with such Third Party Claim and that would not otherwise adversely affect the indemnified party.

3. Other Claims. In the event any indemnified party should have a claim against any indemnifying party under Section 10.1 or 10.2 that does not involve a Third Party Claim being asserted against or sought to be collected from such indemnified party, the indemnified party shall deliver notice of such claim with reasonable promptness to the indemnifying party. The failure by any indemnified party so to notify the indemnifying party shall not relieve the indemnifying party from any liability that it may have to such indemnified party under Section 10.1 or 10.2, except to the extent that the indemnifying party demonstrates that it has been materially prejudiced by such failure.
11. MISCELLANEOUS

    11.1   Costs and Expenses . Each Party shall be responsible for and bear all of its own costs and expenses (including attorney fees and any brokers, finders or investment banking fees or prior commitment in respect thereof) incurred in connection with this Agreement.

    11.2   Further Assurances . After the Closing, from time to time, as and when requested by any Party, each Party shall execute and deliver, or cause to be executed and delivered, all such documents, certificates and instruments, and shall take, or cause to be taken, all such further or other actions, as such other Party may deem reasonably necessary, desirable or appropriate to carry out all of the provisions of this Agreement and to consummate all of the transactions contemplated by this Agreement.

    11.3   Notices . All notices or other communications required or permitted to be given hereunder shall be in writing and shall be delivered by hand or sent electronically, by facsimile or e-mail (with proof of electronic transmission), or sent, postage prepaid, by registered, certified or express mail or overnight courier service and shall be deemed given when so delivered by hand, facsimile or e-mail, or if mailed, three Business Days after mailing (one Business Day in the case of express mail or overnight service), as follows:

    1. if to DR3:

       Drug Royalty L.P. 3.
       c/o DRI Capital Inc.
       22 St. Clair Avenue East
       Suite 200
       Toronto ON M4T 2S5
       Attention of: Behzad Khosrowshahi
       Fax No.: (416) 863-5161
       E-mail: DRINotices@dricapital.com

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Confidential Treatment Requested. Confidential portions of this document have
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with a copy to:
Attention of: Gary Margolis
Fax No.: (416) 863-5161
E-Mail: gm@dricapital.com

with a copy (which shall not constitute notice) to:
King & Spalding LLP
601 S. California Ave.

Palo Alto, CA 94304

Attention of: Emma Maconick

Fax No.: (650) 422 6800

E-mail: emaconick@kslaw.com

2. if to NPS:

   NPS Pharmaceuticals Inc.
   550 Hills Drive, 3rd Floor
   Bedminster, New Jersey 07921
   United States of America
   Attention of: General Counsel
   Fax No.: (908) 450-5344
   E-mail: estratemeier@npsp.com

   with a copy (which shall not constitute notice) to:
   Morgan Lewis and Bockius LLP
   502 Carnegie Center
   Princeton, New Jersey 08540-6241
   Attention of: Randall B. Sunberg
   Fax No.: (609) 919-6701
   E-Mail: rsunberg@morganlewis.com

or to such other address or addresses as DR3 or NPS may from time to time designate by notice as provided herein.

11.4   Successors and Assigns . This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the Parties hereto. This Agreement may not be assigned in whole or in part by either Party without the prior written consent of the other Party; provided, however, that (i) DR3 may assign this Agreement in whole or in part without the prior written consent of NPS: (a) by way of security to a financial institution or other lender, (b) to any Person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, DR3, (c) to a special purpose vehicle created to be bankruptcy remote or for financing purposes or (d) as part of a sale of a material part of DR3, an Affiliate of DR3 or of the DR3 Royalty Right, in any case whether by way of reorganization or otherwise, and DR3 shall give prompt notice of any such assignment to NPS within ten (10) Business Days after the occurrence thereof and (ii) NPS shall be permitted to assign this Agreement in whole or in part without the prior written consent

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of DR3 to any Affiliate to which the NPS Patents are also assigned in accordance with Section 6.1, provided that such assignment could not reasonably be expected to result in or give rise to a material adverse effect on the validity or enforceability of this Agreement or the rights or remedies of DR3 hereunder.

11.5   No Partnership . Nothing in this Agreement shall be deemed in any way or for any purpose to constitute either Party as a partner of the other Party in the conduct of any business. For all purposes of this Agreement, the Parties are independent contractors. Except to the limited extent expressly provided in this Agreement, neither Party shall have the authority to bind, obligate or represent the other Party.

11.6   Entire Agreement . Subject to Section 2.3, this Agreement, the Restated Security Agreement and the Closing Documents, including the Schedules and Exhibits hereto and thereto, together constitute the entire agreement and understanding between the Parties hereto with respect to the subject matter hereof and supersede all prior agreements and understandings, whether written or oral, relating to such subject matter.

11.7   Amendments, Supplements, Waivers . This Agreement may be amended or supplemented only by a written agreement signed by DR3 and NPS. Any waiver of, or consent to depart from, the requirements of any provision of this Agreement shall be effective only if it is in writing and signed by the Party giving it, and only in the specific instance and for the specific purpose for which it has been given. No failure on the part of any Party to exercise, and no delay in exercising, any right under this Agreement shall operate as a waiver of such right. No single or partial exercise of any such right shall preclude any other or further exercise of such right or the exercise of any other right.

11.8   Severability . If any provision of this Agreement is held to be invalid or unenforceable, the remaining provisions shall nevertheless be given full force and effect.

11.9   Governing Law.

1. Except as otherwise provided herein, this Agreement shall be governed by and construed, interpreted and enforced in accordance with the laws of the State of New York, without giving effect to the principles of conflicts of law thereof except as set forth in Section 5-1401 of the New York General Obligations Law.
2. Each Party hereby irrevocably and unconditionally submits to the non-exclusive jurisdiction of the courts of the State of New York located in New York County, New York and the U.S. federal district courts in the Southern District of the State of New York.

11.10   Waiver of Jury Trial . Each Party hereby waives to the fullest extent permitted by applicable Law, any right it may have to a trial by jury in respect of any claim, demand, action or cause of action directly or indirectly arising out of, under or in connection with this Agreement or any transaction contemplated hereby, and each Party hereby agrees and consents that any such claim, demand, action or cause of action shall be decided by court trial without a jury, and that either Party hereto may file an original

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counterpart or a copy of this Section 11.10 with any court as written evidence of the consent of the signatories hereto to the waiver of their right to trial by jury. Each Party: (a) certifies that no representative, agent or attorney of any other Party has represented, expressly or otherwise, that such other Party would not, in the event of litigation, seek to enforce the foregoing waiver; and (b) acknowledges that it and the other Party hereto have been induced to enter into this Agreement by, among other things, the mutual waivers and certifications in this Section 11.10.

11.11   Counterparts . This Agreement may be executed in one or more counterparts, all of which when taken together shall be considered one and the same agreement. This Agreement may be delivered by either Party by facsimile or by electronic delivery and, if so executed and delivered, shall be legally valid and binding on the Party executing in such manner.

[Signature Page Follows]

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IN WITNESS WHEREOF, the Parties, by their duly authorized officers, have executed this Agreement.

NPS PHARMACEUTICALS, INC.

By: /s/ Luke Beshar
Name: Luke Beshar
Title: EVP & CFO

DRUG ROYALTY L.P. 3, by its General Partner, DRC MANAGEMENT LLC 3

By: /s/ Behzad Khosrowshahi
Name: Behzad Khosrowshahi
Title: Manager

[Signature Page to Amended and Restated Agreement for the Sale and Assignment of Rights]

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Schedule 1.1(j)

DR3 Account

Bank Name: [* * *]
Account Name: [* * *]
Account #: [* * *]
ABA #: [* * *]
Swift Code: [* * *]

Confidential Treatment Requested. Confidential portions of this document have
been redacted and have been separately filed with the Commission.

Schedule 4.6

Copies of Certain Agreements and Notifications

[See attached.]

Confidential Treatment Requested. Confidential portions of this document have
been redacted and have been separately filed with the Commission.

NPS PHARMACEUTICALS, INC.
CERTIFICATE OF SECRETARY

I, Edward H. Stratemeier, Secretary of NPS Pharmaceuticals, Inc., a Delaware

corporation (the "Company"), do hereby certify that:

1. I am the duly elected, qualified and acting Senior Vice President, General Counsel and Secretary of the Company on the date hereof.

2. Attached hereto are true, correct and complete copies of the following documents:

Exhibit A
Non-Exclusive Patent License Agreement between NPS Pharmaceuticals, Inc. and Asahi Kasei Pharma Corporation, effective April I, 2005 (Asahi Agreement)

Exhibit B
Purchase and Sale Agreement between Allelix Biopharmaceuticals, Inc. and Kaare M. Gautvik and Peter Alestrom, effective Apri11, 1996 (Gautvik Agreement)

Exhibit C
Development Agreement between NPS Allelix Corp. and Ypsomed AG, effective January 7, 2004 (the "Patent 151 License"') (except for the last page of Appendix C)

Exhibit D
Notification of lapse of Patent No. EP 1519766A (filing date June 25, 2003) under the Patent 151 License

IN WITNESS WHEREOF, I have signed this Certificate this 20^th day of December 2013.

/s/ Edward H. Stratemeier
Edward H. Stratemeier
Senior Vice President, General Counsel
and Secretary

Confidential Treatment Requested. Confidential portions of this document have
been redacted and have been separately filed with the Commission.

EXHIBIT A

Asahi Agreement

(See attached)

Confidential Treatment Requested. Confidential portions of this document have
been redacted and have been separately filed with the Commission.

EXHIBIT B

Gautvik Agreement

(See attached)

Confidential Treatment Requested. Confidential portions of this document have
been redacted and have been separately filed with the Commission.

EXHIBIT C

Patent 151 License

(See attached)

Confidential Treatment Requested. Confidential portions of this document have
been redacted and have been separately filed with the Commission.

EXHIBIT D

Patent 151 Lapse Notification

(See attached)

Confidential Treatment Requested. Confidential portions of this document have
been redacted and have been separately filed with the Commission.

Schedule 4.7

List of NPS Patents

"ESSENTIALLY PURE HUMAN PARATHYROID HORMONE"

Country	Filing Date	Serial No.	Issue Date	Patent No.	Expiry Date
Australia	6 May `92	16049/92	20 Sept `01	639856	6 May `12
Austria	22 May `92	92304692.4	25 March `98	0 515 228	22 May `12
Belgium	22 May `92	92304692.4	25 March `98	0 515 228	22 May `12
Canada	12 May `92	2068438	12 Nov `96	2068438	12 May `12
Denmark	22 May `92	92304692.4	25 March `98	0 515 228	22 May `12
Denmark (SPC)	20 Oct `06	CA200600028	25 March `08	CR200600028	22 May `17
European Patent Convention	22 May `92	92304692.4	25 March `98	0 515 228	22 May `12
Finland	22 May `92	922,356	12 April `01	106802	22 May `12
France	22 May `92	92304692.4	25 March `98	0 515 228	22 May `12
Germany	22 May `92	92304692.4	25 March `98	0 515 228	22 May `12
Great Britain	22 May `92	92304692.4	25 March `98	0 515 228	22 May `12
Greece	22 May `92	92304692.4	25 March `98	0 515 228	22 May `12
Hong Kong	22 May `92	92304692.4	25 March `98	1004340	22 May `12
Ireland	1 July `92	921,672	28 May `04	83494	30 June `12
Italy	22 May `92	92304692.4	25 March `98	0 515 228	22 May `12
Japan	22 May `92	156100/92	19 Sep `96	2563726	22 May `12

Confidential Treatment Requested. Confidential portions of this document have
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Korea	22 May `92	1019920008730	5 Nov `97	1001289520000	22 May `12
Liechtenstein	22 May `92	92304692.4	25 March `98	0 515 228	22 May `12
Luxembourg	22 May `92	92304692.4	25 March `98	0 515 228	22 May `12
Monaco	22 May `92	92304692.4	25 March `98	0 515 228	22 May `12
Netherlands	22 May `92	92304692.4	25 March `98	0 515 228	22 May `12
New Zealand	21 May `92	19920242855	11 Aug `94	242855	21 May `12
Norway	21 May `92	92304692.4	9 November `98	304,190	21 May `12
Norway (SPC)	24 Oct `06	2006013	26 Nov `09	2006013	21 May `17
Philippines	21 May `92	44335	13 June `95	28922	13 June `12
Portugal	22 May `92	92304692.4	25 March `98	0 515 228	22 May `12
South Africa	22 May `92	92/03735	27 Jan `93	92/03735	22 May `12
Spain	22 May `92	92304692.4	25 March `98	0 515 228	22 May `12
Sweden	22 May `92	92304692.4	25 March `98	0 515 228	22 May `12
Switzerland	22 May `92	92304692.4	25 March `98	0 515 228	22 May `12
United States	23 May `91	07/707114	4 May `93	5208041	23 May `11

"PARATHYROID HORMONE FORMULATION"

Country	Filing Date	Serial No.	Issue Date	Patent No.	Expiry Date
Australia	16 Dec `94	12698/95	8 January `98	681737	16 Dec `14
Canada	16 Dec `94	2,179,207	14 November `00	2,179,207	16 Dec `14
China	16 Dec `94	94194608.8	6 August `03	94194608.8	16 Dec `14
Europe	16 Dec `94	95903732.6	3 Oct `07	0735896	16 Dec `14
Austria	16 Dec `94	95903732.6	3 Oct `07	0735896	16 Dec `14

Confidential Treatment Requested. Confidential portions of this document have
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Country	Filing Date	Serial No.	Issue Date	Patent No.	Expiry Date
Belgium	16 Dec `94	95903732.6	3 Oct `07	0735896	16 Dec `14
Denmark	16 Dec `94	95903732.6	3 Oct `07	0735896	16 Dec `14
Finland	16 Dec `94	962593	15 Sep `09	120291	16 Dec `14
France	16 Dec `94	95903732.6	3 Oct `07	0735896	16 Dec `14
Germany	16 Dec `94	95903732.6	3 Oct `07	0735896	16 Dec `14
Great Britain	16 Dec `94	95903732.6	3Oct `07	0735896	16 Dec `14
Greece	16 Dec `94	95903732.6	3 Oct `07	0735896	16 Dec `14
Hong Kong	16 Dec `94	98111127.6	23 Nov `07	1010336	16 Dec `14
Hong Kong	8 June `98	05103473.5	28 May `10	HK1070816B	8 June `18
Ireland	16 Dec `94	95903732.6	3 Oct `07	0735896	16 Dec `14
Italy	16 Dec `94	95903732.6	3 Oct `07	0735896	16 Dec `14
Japan	16 Dec `94	517064/95	12 May `00	3065662	16 Dec `14
Liechtenstein	16 Dec `94	95903732.6	3 Oct `07	0735896	16 Dec `14
Lithuania	16 Dec `94	95903732.6	3 Oct `07	0735896	16 Dec `14
Luxembourg	16 Dec `94	95903732.6	3 Oct `07	0735896	16 Dec `14
Monaco	16 Dec `94	95903732.6	3 Oct `07	0735896	16 Dec `14
Netherlands	16 Dec `94	95903732.6	3 Oct `07	0735896	16 Dec `14
New Zealand	16 Dec `94	277463	23 August `97	277463	16 Dec `14
Norway	16 Dec `94	P962634	27 Dec `07	324905	16 Dec `14
Portugal	16 Dec `94	95903732.6	3 Oct `07	0735896	16 Dec `14
South Korea	16 Dec `94	1019960703288	02 September `03	1003984610000	16 Dec `14
Spain	16 Dec `94	95903732.6	3 Oct `07	0735896	16 Dec `14
Sweden	16 Dec `94	95903732.6	3 Oct `07	0735896	16 Dec `14
Switzerland	16 Dec `94	95903732.6	3 Oct `07	0735896	16 Dec `14
U.S.	23 Dec `93	08/172,206	5 March `96	5,496,801	23 Dec `13

"PROTEIN FORMULATION (PTH) (MULTI-DOSE INJECTION)"

Country	Filing Date	Serial No.	Issue Date	Patent No.	Expiry Date
Albania	26 April `99	99917715.7	18 Aug `04	1079803	26 April `19
Austria	26 April `99	99917715.7	18 Aug `04	1079803	26 April `19
Australia	26 April `99	35916/99	29 Jan `04	766514	26 April `19
Australia DIV	16 Jan `04	2004200156	13 April `06	2004200156	26 April `19
Australia DIV	26 April `99	2006201087
Belgium	26 April `99	99917715.7	18 Aug `04	1079803	26 April `19

Confidential Treatment Requested. Confidential portions of this document have
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Country	Filing Date	Serial No.	Issue Date	Patent No.	Expiry Date
Brazil	26 April `99	BR19999909958
Canada	26 April `99	2,329,800	15 June `04	2,329,800	26 April `19
China	26 April `99	99807362.8	17 Oct `04	ZL99807362.8	26 April `19
Cyprus	26 April `99	99917715.7	18 Aug `04	1079803	26 April `19
Denmark	26 April `99	99917715.7	18 Aug `04	1079803	26 April `19
Europe	26 April `99	99917715.7	18 Aug `04	1079803	26 April `19
Finland	26 April `99	99917715.7	18 Aug `04	1079803	26 April `19
France	26 April `99	99917715.7	18 Aug `04	1079803	26 April `19
Germany	26 April `99	99917715.7	18 Aug `04	1079803	26 April `19
Great Britain	26 April `99	99917715.7	18 Aug `04	1079803	26 April `19
Greece	26 April `99	99917715.7	18 Aug `04	1079803	26 April `19
Ireland	26 April `99	99917715.7	18 Aug `04	1079803	26 April `19
Italy	26 April `99	99917715.7	18 Aug `04	1079803	26 April `19
Hong Kong	26 April `99	02102980.6	18 March `05	HK1041218	26 April `19
Japan	26 April `99	2000-545551	28 April `11	4733267	26 April `19
Japan	26 April `99	2011-011811
Liechtenstein	26 April `99	99917715.7	18 Aug `04	1079803	26 April `19
Latvia	26 April `99	99917715.7	18 Aug `04	1079803	26 April `19
Lithuania	26 April `99	99917715.7	18 Aug `04	1079803	26 April `19
Luxembourg	26 April `99	99917715.7	18 Aug `04	1079803	26 April `19
Macedonia	26 April `99	99917715.7	18 Aug `04	1079803	26 April `19
Mexico	26 April `99	010640	23 Jan `06	233893	26 April `19
Monaco	26 April `99	99917715.7	18 Aug `04	1079803	26 April `19
Netherlands	26 April `99	99917715.7	18 Aug `04	1079803	26 April `19
New Zealand	26 April `99	508269	29 Mar `04	508269	26 April `19
Portugal	26 April `99	99917715.7	18 Aug `04	1079803	26 April `19
Romania	26 April `99	99917715.7	18 Aug `04	1079803	26 April `19
Singapore	26 April `99	200006124-2	31 May `05	76839	26 April `19
Slovenia	26 April `99	99917715.7	18 Aug `04	1079803	26 April `19
South Africa	26 April `99	2000/6040	24 April `02	2000/6040	26 April `19
South Korea	26 April `99	1020007012037	8 May `06	1005798720000	26 April `19
Spain	26 April `99	99917715.7	18 Aug `04	1079803	26 April `19
Sweden	26 April `99	99917715.7	18 Aug `04	1079803	26 April `19
Switzerland	26 April `99	99917715.7	18 Aug `04	1079803	26 April `19

Confidential Treatment Requested. Confidential portions of this document have
been redacted and have been separately filed with the Commission.

"A COMBINED PHARMACEUTICAL PREPARATION COMPRISING
PARATHYROID HORMONE AND A BONE RESORPTION INHIBITOR"

Country	Filing Date	Serial No.	Issue Date	Patent No.	Expiry Date
Australia	8 June `98	79458/98	30 Jan `03	753477	8 June `18
Australia Div.	5 Sep `02	2002300896	13 July `06	2002300896	8 June `18
Austria Div.	8 June `98	04017622.4	4 Nov `09	1473040	8 June `18
Austria	8 June `98	98929965.6	8 Sept `04	1001802	8 June `18
Belgium	8 June `98	98929965.6	8 Sept `04	1001802	8 June `18
Belgium Div.	8 June `98	04017622.4	4 Nov `09	1473040	8 June `18
Canada	8 June `98	2,294,101	3 Aug `10	2,294,101	8 June `18
Canada Div.	8 June `98	2,698,626
Cyprus	8 June `98	98929965.6	8 Sept `04	1001802	8 June `18
Cyprus Div.	8 June `98	04017622.4	4 Nov `09	CY1110287	8 June `18
Denmark	8 June `98	98929965.6	8 Sept `04	1001802	8 June `18
Denmark Div.	8 June `98	04017622.4	4 Nov `09	1473040	8 June `18
Europe	8 June `98	98929965.6	8 Sept `04	1001802	8 June `18
Europe Div.	8 June `98	04017622.4	4 Nov `09	1473040	8 June `18
Finland	8 June `98	98929965.6	8 Sept `04	1001802	8 June `18
Finland Div.	8 June `98	04017622.4	4 Nov `09	1473040	8 June `18
France	8 June `98	98929965.6	8 Sept `04	1001802	8 June `18
France Div.	8 June `98	04017622.4	4 Nov `09	1473040	8 June `18
Germany	8 June `98	98929965.6	8 Sept `04	1001802	8 June `18
Germany Div.	8 June `98	69841279.6-08	4 Nov `09	1473040	8 June `18
Great Britain	8 June `98	98929965.6	8 Sept `04	1001802	8 June `18
Great Britain Div.	8 June `98	04017622.4	4 Nov `09	1473040	8 June `18
Greece Div.	8 June `98	04017622.4	4 Nov `09	1473040	8 June `18
Greece	8 June `98	98929965.6	8 Sept `04	1001802	8 June `18
Hong Kong	8 June `98	00107524.0	24 March `05	1029738	8 June `18
Ireland	8 June `98	98929965.6	8 Sept `04	1001802	8 June `18
Ireland Div.	8 June `98	04017622.4	4 Nov `09	1473040	8 June `18
Italy	8 June `98	98929965.6	8 Sept `04	1001802	8 June `18
Italy Div.	8 June `98	19750BE/2010	4 Nov `09	1473040	8 June `18
Japan	8 June `98	HEI 11-504259		(2002-504140)
Japan	8 June `98	2010-000066		(2010-100644)
Liechtenstein	8 June `98	98929965.6	8 Sept `04	1001802	8 June `18
Liechtenstein Div.	8 June `98	04017622.4	4 Nov `09	1473040	8 June `18

Country	Filing Date	Serial No.	Issue Date	Patent No.	Expiry Date
Luxembourg	8 June `98	98929965.6	8 Sept `04	1001802	8 June `18
Luxembourg Div.	8 June `98	04017622.4	4 Nov `09	1473040	8 June `18
Monaco	8 June `98	98929965.6	8 Sept `04	1001802	8 June `18
Monaco Div.	8 June `98	04017622.4	4 Nov `09	1473040	8 June `18
Netherlands	8 June `98	98929965.6	8 Sept `04	1001802	8 June `18
Netherlands Div.	8 June `98	04017622.4	4 Nov `09	1473040	8 June `18
Portugal	8 June `98	98929965.6	8 Sept `04	1001802	8 June `18
Portugal Div.	8 June `98	04017622.4	4 Nov `09	1473040	8 June `18
South Africa	8 June `98	98/4947	31 March `99	98/4947	8 June `18
Spain	8 June `98	98929965.6	8 Sept `04	1001802	8 June `18
Spain Div.	8 June `98	04017622.4	4 Nov `09	1473040	8 June `18
Sweden	8 June `98	98929965.6	8 Sept `04	1001802	8 June `18
Sweden Div.	8 June `98	04017622.4	4 Nov `09	1473040	8 June `18
Switzerland	8 June `98	98929965.6	8 Sept `04	1001802	8 June `18
Switzerland Div.	8 June `98	04017622.4	4 Nov `09	1473040	8 June `18
U.S.	14 Aug `98	09/125,247	4 Sep `01	6,284,730	8 June `18
U.S. Div Con	18 March `03	10/389,797	28 March `06	7,018,982	8 June `18
US Div Con 2	19 Dec `05	11/305,339	24 March `09	7,507,715	8 June `18
US Div	9 Jan `09	12/351,558	6 July `10	7,749,543	8 June `18
US Div	23 June `10	12/822,089	10 April `12	8,153,588	8 June `18
US DIV	24 Feb `12	13/405,093		(2012/0148684)

** Designated contracting states: Austria, Belgium, Cyprus, Denmark, Finland, France, Germany, Great Britain, Greece, Ireland, Italy, Liechtenstein, Luxembourg, Monaco, Netherlands, Portugal, Spain, Sweden, Switzerland.

Confidential Treatment Requested. Confidential portions of this document have
been redacted and have been separately filed with the Commission.

"METHOD OF ADMINISTERING THERAPEUTIC INJECTIONS"

Country	Filing Date	Serial No.	Issue Date	Patent No.	Expiry Date
Canada 35296/125.2	18 October `04	2542715
Europe*	18 October 2004	04795465.6		(EP1687048A)
US 50821/125.3	15 October `04	10/966364	4 May `10	7,708,732	11 May `27

* Designated contracting states: Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, Hungary, Ireland, Liechtenstein, Luxembourg, Monaco, Poland, Portugal, Romania, Slovenia, Slovakia, Sweden, Switzerland, Turkey, with Albania, Croatia, Lithuania, Latvia and Macedonia as extension states.

"PARATHYROID HORMONE FORMULATIONS AND USES THEREOF"

Country	Filing Date	Serial No.	Issue Date	Patent No.	Expiry Date
Albania	27 Oct `08	08842081.5	16 March `11	2219665	27 Oct `28
Austria	27 Oct `08	08842081.5	16 March `11	2219665	27 Oct `28
Belgium	27 Oct `08	08842081.5	16 March `11	2219665	27 Oct `28
Bosnia-Herzegovina	27 Oct `08	08842081.5	16 March `11	2219665	27 Oct `28
Bulgaria	27 Oct `08	08842081.5	16 March `11	2219665	27 Oct `28
Croatia	27 Oct `08	08842081.5	16 March `11	2219665	27 Oct `28
Cyprus	27 Oct `08	08842081.5	16 March `11	2219665	27 Oct `28
Czech Republic	27 Oct `08	08842081.5	16 March `11	2219665	27 Oct `28
Denmark	27 Oct `08	08842081.5	16 March `11	2219665	27 Oct `28
Estonia	27 Oct `08	08842081.5	16 March `11	2219665	27 Oct `28
Europe	27 Oct `08	08842081.5	16 March `11	2219665	26 Oct `27

Confidential Treatment Requested. Confidential portions of this document have
been redacted and have been separately filed with the Commission.

Country	Filing Date	Serial No.	Issue Date	Patent No.	Expiry Date
Finland	27 Oct `08	08842081.5	16 March `11	2219665	27 Oct `28
France	27 Oct `08	08842081.5	16 March `11	2219665	27 Oct `28
Germany	27 Oct `08	08842081.5	16 March `11	2219665	27 Oct `28
Great Britain	27 Oct `08	08842081.5	16 March `11	2219665	27 Oct `28
Greece	27 Oct `08	08842081.5	16 March `11	2219665	27 Oct `28
Hong Kong	27 Oct `08	11100351.0	16 March `11	1146465	27 Oct `28
Hungary	27 Oct `08	08842081.5	16 March `11	2219665	27 Oct `28
Iceland	27 Oct `08	08842081.5	16 March `11	2219665	27 Oct `28
Ireland	27 Oct `08	08842081.5	16 March `11	2219665	27 Oct `28
Italy	27 Oct `08	08842081.5	16 March `11	2219665	27 Oct `28
Liechtenstein	27 Oct `08	08842081.5	16 March `11	2219665	27 Oct `28
Latvia	27 Oct `08	08842081.5	16 March `11	2219665	27 Oct `28
Lithuania	27 Oct `08	08842081.5	16 March `11	2219665	27 Oct `28
Luxembourg	27 Oct `08	08842081.5	16 March `11	2219665	27 Oct `28
Macedonia	27 Oct `08	08842081.5	16 March `11	2219665	27 Oct `28
Malta	27 Oct `08	08842081.5	16 March `11	2219665	27 Oct `28
Mexico	27 Oct `08	MX/a/2010/004388	30 May `11	287021	27 Oct `28
Monaco	27 Oct `08	08842081.5	16 March `11	2219665	27 Oct `28

Confidential Treatment Requested. Confidential portions of this document have
been redacted and have been separately filed with the Commission.

Country	Filing Date	Serial No.	Issue Date	Patent No.	Expiry Date
Netherland	27 Oct `08	08842081.5	16 March `11	2219665	27 Oct `28
Norway	27 Oct `08	08842081.5	16 March `11	2219665	27 Oct `28
Poland	27 Oct `08	08842081.5	16 March `11	2219665	27 Oct `28
Portugal	27 Oct `08	08842081.5	16 March `11	2219665	27 Oct `28
Republic of Serbia	27 Oct `08	08842081.5	16 March `11	2219665	27 Oct `28
Romania	27 Oct `08	08842081.5	16 March `11	2219665	27 Oct `28
Russia	27 Oct `08	2010 121165/15	16 March `11	2467762	27 Oct `28
Slovak Republic	27 Oct `08	08842081.5	16 March `11	E9913	27 Oct `28
Slovenia	27 Oct `08	08842081.5	16 March `11	2219665	27 Oct `28
South Africa	27 Oct `08	08842081.5	16 March `11	2010/02812	27 Oct `28
Spain	27 Oct `08	08842081.5	16 March `11	2219665	27 Oct `28
Sweden	27 Oct `08	08842081.5	16 March `11	2219665	27 Oct `28
Switzerland	27 Oct `08	08842081.5	16 March `11	2219665	27 Oct `28
Turkey	27 Oct `08	08842081.5	16 March `11	2219665	27 Oct `28

Confidential Treatment Requested. Confidential portions of this document have
been redacted and have been separately filed with the Commission.

SPC SUMMARY

Based on EP 0 515 228
Country	Application Number	Filing Date	Status	Expiry
Denmark	CA 2006 00028	20 Oct. 2006	Granted 25 March 2008	22 May, 2017
Norway	SPC/NO 2006 013	24 Oct. 2006	Granted 7 Dec. 2009	21 May 2017

Based on EP 1 079 803
Country	Application Number	Filing Date	Status	Expiry Date
Austria	E273693-3	19 Oct. 2006	Grant Date 18 July 2007	April 24, 2021
Belgium	2006C/033	19 Oct. 2006	Grant Date 5 June 2007	April 24, 2021
Cyprus	CY06/006	23 Oct. 2006	Grant Date March 2007	April 23, 2021
Finland	L20060013	13 Oct. 2006	Grant Date 29 Aug 2011	April 24, 2021
Germany	12 2006 000 057.7	18 Oct. 2006	Grant Date Feb. 18 2009	April 24, 2021
Greece	20060800026	20 Oct. 2006	Grant Date May 30 2007	April 24, 2021
France	06C0032	20 Oct 2006	Grant Date 24 April 2007	April 24, 2021
Ireland	2006/032	17 Oct. 2006	Grant Date 23 May 2007	April 23, 2021
Italy	60605	23 Oct. 2006	Grant Date June 5 2007	April 22, 2021
Latvia	C/LV2006/0009	17 Oct. 2006	Grant Date 20 March 2007	April 24, 2021
Lithuania	PA 2006 007	23 Oct. 2006	Grant No. C1079803 Grant Date 04 June 2007	April 25, 2021
Luxembourg	91281	19 Oct. 2006	Grant No. 91291 Grant Date 19 Dec. 2006	April 24, 2021

Confidential Treatment Requested. Confidential portions of this document have
been redacted and have been separately filed with the Commission.

The Netherlands	300243	17 Oct. 2006	Grant Date December 7 2006	April 23, 2021
Portugal	240	20 Oct. 2006	Granted	April 24, 2021
Romania	C/022	10 April 2007	Grant Date Dec 23 2004	April 24, 2021
Slovenia	200640015	18 Oct. 2006	Grant Date 16 July 2009	April 24, 2021
Sweden	0690029-4	24 Oct. 2006	Grant Date 5 Feb 2008	23 April 2021
United Kingdom	SPC/GB06/035	13 Oct. 2006	Grant Date 1 June 2007	23 April 2021

Confidential Treatment Requested. Confidential portions of this document have
been redacted and have been separately filed with the Commission.

Schedule 4.7(a)

Opinions of Counsel

1. December 10, 1998---Vossius & Partner---PTH Search
2. October 2, 2004-Plougmann & Vingtoft-Risk Assessment Report Concerning Lyophilised Parathyroid Hormone (PTH) Formulation
3. July 30, 2007-Kraus & Weisert-Freedom to Operate Analysis in Europe for the Product "Preotact".

Confidential Treatment Requested. Confidential portions of this document have
been redacted and have been separately filed with the Commission.

Schedule 4.8

Litigation

Albanian patent 01282, the Albanian part of European patent number 1079803, serial number 99917715.7 is the subject of a suit for reinstatement against the Albanian Patent Office.

Confidential Treatment Requested. Confidential portions of this document have
been redacted and have been separately filed with the Commission.

Schedule 6.1(a)

Jurisdictions Requiring Consent to License

1. Australia
2. Belgium
3. Canada
4. Denmark
5. Finland
6. France
7. Germany
8. Iceland
9. Italy
10. Japan
11. Luxembourg
12. Netherlands
13. Norway
14. Spain
15. Sweden
16. Switzerland
17. United Kingdom
18. U.S.A.

Confidential Treatment Requested. Confidential portions of this document have
been redacted and have been separately filed with the Commission.

Schedule 6.2(d)

Form 8-K

[See attached.]

Confidential Treatment Requested. Confidential portions of this document have
been redacted and have been separately filed with the Commission.

UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549FORM 8-KCURRENT REPORTPursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

December 20, 2013

Date of Report (Date of earliest event reported)

NPS PHARMACEUTICALS, INC.

(Exact name of registrant as specified in its charter)

Delaware	0-23272	87-0439579
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification Number)

550 Hills Drive, 3^rd Floor

Bedminster, NJ 07921

(Address of principal executive offices)

	(908) 450-5300
(Registrant's telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

⃞ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

⃞ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

⃞ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

⃞ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Confidential Treatment Requested. Confidential portions of this document have
been redacted and have been separately filed with the Commission.

Item 1.01. Entry into a Material Definitive Contract.

On December 20, 2013, NPS Pharmaceuticals, Inc. (the "Company" or "NPS") entered into an amendment and restatement (the "Amendment and Restatement") to its Agreement for the Sale and Assignment of Rights (the "2007 Agreement"), dated as of July 16, 2007, between NPS Allelix Corp., Drug Royalty L.P. 3 ("DRLP3"), an investment fund managed by DRI Capital Inc. ("DRI"), and the Company.

Under the 2007 Agreement, the Company sold to DRLP3 its rights to receive future royalty payments arising from the sale of recombinant human parathyroid hormone 1-84 [rDNA origin] ("PTH") under its license agreement ("Takeda License Agreement") with Takeda Pharma A/S, formerly Nycomed Danmark ApS ("Takeda"). On March 18, 2013, pursuant to the previously disclosed Termination and Transition Agreement between NPS and Takeda, NPS' license agreement with Takeda was terminated and NPS re-acquired exclusive rights worldwide to develop and commercialize PTH. Preotact is the brand name that Takeda had used to market PTH for the treatment of osteoporosis in certain of its licensed territories. NPS is developing PTH in the U.S. under the trade name Natpara for the treatment of hypoparathyroidism. NPS filed a BLA for Natpara with the FDA in October 2013.

Pursuant to the Amendment and Restatement, (i) DRLP3 has consented to the commercialization of PTH by the Company, (ii) the terms of the 2007 Agreement are tolled, and (iii) the parties' rights and obligations regarding PTH and related technology are governed by the Amendment and Restatement.

The Company will be required to pay royalties in the mid single digits to DRLP3 based upon sales of PTH by the Company and its licensees (if any) worldwide, excluding Israel. The Company has agreed to undertake certain efforts to commercialize PTH. If the Company does not submit a Marketing Authorization Application to the European Medicines Agency for PTH in the European Union by an agreed upon date, DRLP3 will have the right to revoke the consent granted in the Amendment and Restatement, reinstate the 2007 Agreement, and either cause the Company to enter into a new license agreement with a third party with respect to PTH on terms that are substantially similar and no more extensive (when taken as a whole) than the terms contained in the terminated Takeda License Agreement, or negotiate such an agreement on NPS' behalf.

The Company's obligation to pay royalties to DRLP3 under the Amendment and Restatement shall expire on a country-by-country basis upon the later of (i) the last to expire patent controlled by the Company with claims covering PTH in such country or (ii) the expiration of any period of regulatory exclusivity applicable to PTH in such country. The Company's obligation to pay royalties to DRLP3 under the Amendment and Restatement shall terminate in its entirety once cumulative royalty payments made to DRLP3 by Takeda and the Company total $125 million. As of September 30, 2013, $45.5 million in royalties had been paid to DRLP3.

DRLP3 continues to maintain a security interest in NPS patents that contain claims covering PTH and certain other NPS intellectual property related to PTH. In the event of a default by NPS under the Amendment and Restatement, DRLP3 would be entitled to enforce its security interest against NPS and such intellectual property.

Confidential Treatment Requested. Confidential portions of this document have
been redacted and have been separately filed with the Commission.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date:	December 20, 2013	NPS PHARMACEUTICALS, INC.
		By:	/s/ Edward Stratemeier
			Edward Stratemeier
			Senior Vice President, General Counsel and Secretary

Confidential Treatment Requested. Confidential portions of this document have
been redacted and have been separately filed with the Commission.

Exhibit A

Form of Restated Security Agreement

[See attached.]

Confidential Treatment Requested. Confidential portions of this document have
been redacted and have been separately filed with the Commission.

AMENDED AND RESTATED SECURITY AGREEMENT

THIS AMENDED AND RESTATED SECURITY AGREEMENT is made as of December 20, 2013.

BETWEEN:

NPS PHARMACEUTICALS, INC.,
a corporation existing under the laws of the State of Delaware

(collectively with its successors and permitted assigns, "Debtor"),

- and -

DRUG ROYALTY L.P. 3,
a Cayman Islands limited partnership

(collectively with its successors and permitted assigns, "Secured Party").

WHEREAS Debtor and Secured Party are parties to that certain Agreement for the Sale and Assignment of Rights dated as of July 16, 2007 (as amended, restated, supplemented or otherwise modified prior to the date hereof, the "Original Purchase Agreement");

AND WHEREAS in connection with the Original Purchase Agreement, Debtor and Secured Party entered into a security agreement dated as of October 2, 2009 (the "Original Security Agreement"), pursuant to which Debtor granted to Secured Party a first priority security interest in the Collateral (as defined therein);

AND WHEREAS Debtor and Secured Party have agreed to amend and restate the Original Purchase Agreement in accordance with the terms and conditions of that certain Amended and Restated Agreement for the Sale and Assignment of Rights (as such agreement may be amended, modified, supplemented or restated from time to time, the "A&R Purchase Agreement"); and

AND WHEREAS it is a condition to the effectiveness of the A&R Purchase Agreement that the Debtor and Secured Party amend and restate the Original Security Agreement on the terms and conditions set forth herein.

NOW THEREFORE in consideration of the respective covenants, promises and agreements of the parties herein contained and other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged by each of the parties), the parties hereby amend and restate the Original Security Agreement in its entirety as set forth herein and further agree as follows:

ARTICLE 1
INTERPRETATION

1.1 Defined Terms

Terms that are defined in the A&R Purchase Agreement and not otherwise defined herein have, unless the context otherwise requires, the respective meanings specified in the A&R Purchase Agreement and, in addition, the following terms have the following meanings (and grammatical variations of such terms shall have corresponding meanings):

"A&R Purchase Agreement" has the meaning specified in the recitals of this Agreement;

"Additional Collateral" means the NPS Trademarks, the NPS Patents in the United States and Japan and NPS Know-How specific to the United States and Japan.

"Agreement" means this Amended and Restated Security Agreement, the recitals, all attached exhibits and Schedules, and any agreement, exhibit or Schedule supplementing or amending this Agreement;

"Collateral" means all of Debtor's right, title and interest in, to and under the NPS Technology and the NPS Trademarks, whether now owned or hereinafter acquired, and includes Proceeds therefrom and, where the context permits, any reference to "Collateral" shall be deemed to be a reference to "Collateral or any part thereof";

"Event of Default" means a Major Default or a Minor Default;

"Financing Statements" has the meaning specified in Section 3.1(e);

"including", when used herein, means "including without limitation" and shall not be construed to limit any general statement which it follows to the specific or similar items or matters immediately following it;

"IP Office Filings" has the meaning specified in Section 3.1(g);

"Major Default" means the occurrence of any one or more of the following events:

(a) any breach attributable to Debtor of any representation or warranty made in Section 4.1 or 4.5 of the A&R Purchase Agreement; provided, however, that a breach of Section 4.1(a) of the A&R Purchase Agreement shall not be a Major Default unless such breach results in a Material Adverse Effect;

(b) any breach by Debtor of any of its covenants under Section 6.1(a) of the A&R Purchase Agreement; or

(c) the cessation or threatened cessation by Debtor of its business generally or the admission by Debtor of its inability to, or its actual failure to, pay its debts generally, including circumstances where Debtor (i) is adjudged bankrupt or

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insolvent, (ii) makes an assignment in bankruptcy or otherwise for the benefit of creditors, (iii) files a petition or proposal under bankruptcy, insolvency or similar legislation, or (iv) has instituted against it proceedings under bankruptcy, insolvency or similar legislation including for the appointment of a receiver or trustee.

"Minor Default" means the occurrence of any one or more of the following events to the extent that it is not a Major Default:

(a) the failure of Debtor to pay any monetary Obligations within five Business Days of the date on which such Obligations are due or payable;

(b) the failure of Debtor to perform any non-monetary Obligation or covenant under this Agreement or the A&R Purchase Agreement and such failure shall continue unremedied for a period of 60 days after written notice thereof; or

(c) any breach attributable to Debtor of any representation or warranty made in the A&R Purchase Agreement;

"Obligations" means all indebtedness, liabilities and obligations (whether direct, indirect, absolute, contingent or otherwise) of Debtor to Secured Party arising pursuant to (i) the A&R Purchase Agreement, (ii) in the case of a Revocation, the Original Purchase Agreement, and/or (iii) this Agreement.

"parties" means Debtor and Secured Party, and "party" means either of them;

"Proceeds" means property in any form derived, directly or indirectly, from any dealing with the Collateral or other proceeds (together with any reissue, continuation, continuation-in-part or extension of the Patents) thereof; and includes any accounts, payment intangibles or other general intangibles arising from any sale, transfer, license, lease or other dealing in any of the Collateral and any payment or value representing indemnity or compensation for loss or damage to the Collateral or other Proceeds, including insurance proceeds and proceeds (as such term is defined in the UCC);

"Security Interest" has the meaning specified in Section 2.1;

"Transaction Documents" means this Agreement, the A&R Purchase Agreement and each other Closing Document; and

"UCC" means (i) the Uniform Commercial Code as in effect from time to time in the State of New York, (ii) with respect to enforcement, the Uniform Commercial Code as in effect from time to time in any other state whose law is applicable with respect to Secured Party's enforcement of its rights hereunder and (iii) insofar as any references to the UCC is used in the context of perfection, the Uniform Commercial Code as in effect from time to time in the state that is the "location" of Debtor under the UCC, in each case including any legislation that may be substituted therefor (as any such substituted legislation may be amended from time to time).

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1.2 Meanings under the UCC

All terms used herein and not otherwise defined pursuant to Section 1.1 (including any definitions incorporated herein by reference to the A&R Purchase Agreement) and which are defined in the UCC shall, unless the context otherwise requires, have the respective meanings assigned to such terms in the UCC.

1.3 Sections and Headings

(a) The division of this Agreement into Articles and Sections and the insertion of headings are for convenience of reference only and shall not affect the interpretation of this Agreement.

(b) All uses of the words "hereto", "herein," "hereof," "hereby" and "hereunder" and similar expressions refer to this Agreement and not to any particular Section or portion of it.

(c) References to an "Article", "Section" or "Schedule" are references to an Article or Section of or a Schedule to this Agreement unless otherwise indicated.

1.4 Applicable Law

(a) This Agreement shall be governed by, and interpreted and enforced in accordance with, the laws of the State of New York and the federal laws of the United States applicable therein, without giving effect to the principles of conflicts of law thereof except as set forth in Section 5-1401 of the New York General Obligations Law.

(b) EACH PARTY HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 1.4(b) WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. Each party (i) certifies that no representative, agent or attorney of any other party has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce the foregoing waiver and (ii) acknowledges that it and the other parties hereto have been induced to enter into this agreement by, among other things, the mutual waivers and certifications in this Section 1.4(b).

1.5 Consent to Jurisdiction

Each of Debtor and Secured Party (a) hereby irrevocably submits to the jurisdiction of the United States District Court for the Southern District of New York for the purposes of any suit, action or proceeding arising out of or relating to this Agreement and to the extent that such

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United States district court lacks jurisdiction despite the consent herein, to the jurisdiction of the courts of the State of New York sitting in New York County and the appellate courts therefrom, and (b) hereby waives, and agrees not to assert in any such suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such court, that the suit, action or proceeding is brought in an inconvenient forum or that the venue of the suit, action or proceeding is improper. Each of Debtor and Secured Party consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing in this Section 1.5 shall affect or limit any right to serve process in any other manner permitted by law.

1.6 Severability

If any provision of this Agreement is held to be illegal or invalid, the remaining provisions hereof shall nevertheless be given full force and effect, and all the provisions hereof are hereby declared to be separate, severable and distinct.

ARTICLE 2
SECURITY INTEREST

2.1 Grant of Security Interest

As general and continuing collateral security for the due payment and performance of the Obligations, Debtor hereby pledges, mortgages, charges and assigns (by way of security) to Secured Party, and grants to Secured Party, a security interest in the Collateral (collectively, the "Security Interest").

2.2 Attachment

Debtor and Secured Party acknowledge and agree that value has been given for the granting of the Security Interest and that they have not agreed to postpone the time for attachment. The security interest in the portion of the Collateral, as previously granted by Debtor pursuant to the Original Security Agreement, was attached and perfected, and this Agreement is being entered into not to reflect a new obligation with respect to such existing Collateral but to reflect the changes from the Original Security Agreement and the grant of Additional Collateral and removal of a portion of the Collateral (as such term was defined in the Original Security Agreement).

2.3 Conditional Assignment of Title of Certain Patents

(a) Debtor hereby grants, bargains, sells, assigns and transfers to Secured Party the Patents listed in Schedule 2.3 (collectively, the "Supplementary European Patents") such that title thereto and ownership therein shall, effective upon the occurrence of (i) a Major Default or (ii) subject to Section 2.3(b), a Minor Default, belong to and be vested in Secured Party.

(b) If a Minor Default occurs, the grant, bargain, sale, assignment and transfer contemplated in Section 2.3(a) shall not occur unless or until Secured Party has first sought recourse under Section 5.1(a) and any remedy obtained under such recourse has not satisfied the

5

Obligations of Debtor or any judgement obtained pursuant to such recourse remains unsatisfied by Debtor for more than 15 Business Days after the rendering of such judgement (without the necessity of appeal from such judgement) (such 15^th Business Day, the "Assignment Date").

(c) Nothing contained in this Section 2.3 shall be construed to afford Secured Party any recourse to the Supplementary European Patents prior to (i) the occurrence of a Major Default or (ii) the Assignment Date, as applicable.

ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF DEBTOR

3.1 Representations and Warranties

Debtor represents and warrants to Secured Party as follows and acknowledges that Secured Party is relying on such representations and warranties in connection with its entering into the A&R Purchase Agreement and the other transactions contemplated therein:

(a) "NPS Pharmaceuticals, Inc." is the only business name used by Debtor and has been the only business name used by Debtor for at least 12 months prior to the date hereof;

(b) the jurisdiction in which Debtor is located for purposes of Sections 9-301 and 9-307 of the UCC is the State of Delaware;

(c) except as set forth in Schedule 3.1(c), the Collateral has not been abandoned or adjudged invalid or unenforceable, in whole or in part;

(d) other than the Assignment and the "Security Interest" granted by Debtor under the Original Security Agreement, Debtor has not made a previous assignment, sale, transfer or agreement constituting a present or future assignment, sale or transfer of all or any portion of its right, title and interest in and to any Collateral for purposes of granting a security interest or as collateral that has not been terminated or released;

(e) copies of all UCC-1 financing statements filed by the Secured Party in the office of the Secretary of State of the State of Delaware to perfect the Security Interest (collectively, the "Financing Statements") are attached as Appendix 3.1(e). Debtor hereby approves, ratifies and confirms any such Financing Statement filed by Secured Party prior to the execution and delivery of this Agreement, and Debtor waives any right to claim that any such prior filing was not in compliance with the UCC or not pursuant to a prior authenticated record;

(f) copies of all notices of security interest incorporating by reference the terms of this Agreement, together with all appropriate cover sheets and other necessary documentation, required to be filed with any patent or trademark offices in the United States of America in order to record this Agreement are attached as Schedule 3.1(f).

(g) all necessary documentation required to be filed with any patent or trademark office in the United Kingdom, France, Germany, Spain, Italy, The Netherlands, Austria and Greece in order to record this Agreement has been filed (the filings referred to in Section 3.1(f) and this Section 3.1(g) collectively, the "IP Office Filings");

6

(h) upon the filing of the Financing Statements with the appropriate agencies under the UCC, the Security Interest will constitute a perfected first priority security interest in the Collateral described on such financing statements in favour of Secured Party to the extent that a security interest therein may be perfected by filing in Delaware pursuant to the relevant UCC, prior to all other Encumbrances;

(i) except as have been obtained or made and are in full force and effect, no authorization, approval or other action by, and no notice to or filing with, any Governmental Authority or any other third party is required either:

(i) for the grant by Debtor of the Security Interest; or

(ii) for the perfection or maintenance of the Security Interest hereunder, including the first priority nature of such security interest (except with respect to the Financing Statements and the IP Office Filings) or the exercise by Secured Party of its rights and remedies hereunder;

(j) Debtor is the exclusive owner of the entire right, title, and interest in and to the Collateral, free and clear of any Encumbrances except as contemplated herein and in the A&R Purchase Agreement in favour of Secured Party; and

(k) the representations and warranties of set forth in Sections 4.1, 4.2, 4.5, 4.6, 4.7(a), 4.7(b), 4.7(d), 5.1 and 5.2 of the A&R Purchase Agreement are hereby repeated in this Agreement. The representations and warranties set forth in this Section 3.1(k) shall survive for the Term and shall expire thereafter.

3.2 Survival

The representations and warranties of Debtor contained in this Agreement shall survive for so long as any of the Obligations shall remain unpaid or unperformed, as applicable, and, notwithstanding any investigation made by or on behalf of Secured Party, shall continue in full force and effect for the benefit of Secured Party during such period.

ARTICLE 4
COVENANTS OF DEBTOR

4.1 Change of Name or Jurisdiction

Debtor shall not change its name as set out in Section 3.1(a), add any new business name or change its jurisdiction as set out in Section 3.1(b), or move the location of Debtor's principal place of business or the location of the books and records related to the Collateral, in each case without providing at least thirty days' prior written notice to Secured Party of such change or addition.

7

4.2 Creating and Preserving the Security Interest

(a) As soon as possible following the execution and delivery of this Agreement and, in any case, within 60 days from the date hereof, Debtor will cause the IP Office Filings to be filed with the appropriate Governmental Authorities in the jurisdictions specified therein.

(b) Debtor shall, from time to time at the request of Secured Party acting reasonably, make and do all such acts and things and execute and deliver all such instruments, agreements, financing statements and documents as Secured Party reasonably requests by notice in writing given to Debtor in order to create, preserve, perfect, validate or otherwise protect (including with respect to priority) the Security Interest, to enable Secured Party to exercise and enforce its rights and remedies hereunder and generally to carry out the provisions and purposes of this Agreement.

4.3 Verification of Collateral

Subject to the intangible nature of the Collateral, Secured Party shall have the right one time per year to verify the existence and state of the Collateral in any reasonable manner that Secured Party may consider appropriate, and Debtor agrees to furnish all reasonable assistance and information and to perform all such reasonable acts as Secured Party may reasonably request in connection therewith and for such purpose to grant to Secured Party or its agents reasonable access to all places where Collateral may be located and to all premises occupied by Debtor; provided, however, that nothing in this Section 4.3 shall limit Secured Party's ability to access any public records relating to the Collateral maintained by any patent or trademark office or other Governmental Authority.

4.4 Preservation of Collateral

Except in connection with licenses granted in jurisdictions not included in Schedule 6.1(a) of the A&R Purchase Agreement or to the extent licenses or transfers are otherwise permitted pursuant to the A&R Purchase Agreement (including licenses or transfers to which Secured Party has consented), Debtor shall not transfer or convey any interest in the Collateral or suffer, permit or cause any Encumbrances thereon. Without limiting the foregoing, in the event Debtor makes such a transfer or conveyance, Debtor shall take any and all actions, at Debtor's expense, to ensure that Secured Party's Security Interest is and remains perfected. Subject to Section 7.6 of the A&R Purchase Agreement and 7.3(c) of this Agreement in the event of a Revocation and subject to Section 6.1(b) of the A&R Purchase Agreement, Debtor agrees to take all steps in any proceeding before the applicable patent or trademark Governmental Authority or any other Governmental Authority in each case in any jurisdiction in which Debtor intends to commercialize the Product to maintain each application and registration of the Patents and subject to the next two sentences, the NPS Trademarks, and to maintain the accuracy and effectiveness of the filings, registrations or recordings with respect to the Collateral in favour of Secured Party, in such capacity. NPS's obligation to maintain the PREOTACT trademarks shall be limited to the following countries: all the countries of the European Union, European countries outside of the European Union, the Commonwealth of Independent States (formerly the USSR) and Turkey. In the event that the Consent (as defined in the A&R Purchase Agreement) becomes irrevocable in accordance with the A&R Purchase Agreement, NPS shall

8

no longer have any obligation to maintain the PREOTACT trademarks in any of the countries set forth in the previous sentence. Secured Party may from time to time, at its option, perform the acts specified in this Section 4.4 which Debtor fails to perform after being requested by Secured Party in writing to so perform (it being understood that no such request need be given after the occurrence and during the continuance of an Event of Default). Secured Party may from time to time take any other action which it deems necessary for the maintenance, preservation or protection of any of the Collateral.

4.5 Registration of Security; Acknowledgement of Existing Filings.

(a) Debtor shall undertake all such acts, execute all such documents and do all such things as Secured Party may request in order for this Agreement and the rights granted to Secured Party by this Agreement to be recorded with the patent and trademark offices or appropriate Governmental Authority office of any relevant jurisdiction, including the European Patent Office and the United States Patent and Trademark Office.

(b) Each party hereto hereby acknowledges that in connection with the Original Purchase Agreement, the parties have previously entered into certain agreements and made certain registrations and filings to perfect the security interest granted to Secured Party and record the conditional assignment agreements executed in connection therewith (copies of which are attached hereto as Exhibit A; collectively, the "Patent Filings"). As of the date hereof, each party hereby acknowledges and agrees that (i) the Patent Filings shall be and remain in full force and effect, and shall, to the extent they expressly or implicitly so purport, except to the extent as would not either individually or in the aggregate have a Material Adverse Effect (as such term is defined in the A&R Purchase Agreement), constitute the legal, valid, binding and enforceable obligations of the parties thereto in accordance with their terms (ii) such Patent Filings shall only be enforced in accordance with the circumstances specified in this Agreement and the A&R Purchase Agreement, and (iii) no further filing, registration or amendment is necessary to perfect the interest and rights granted under the Patent Filings. The execution, delivery and effectiveness of this Agreement shall not operate as a waiver of any right, power or remedy of the Parties under the Patent Filings.

ARTICLE 5
DEFAULT AND SECURED PARTY'S REMEDIES

5.1 Remedies Upon Default

Subject to Sections 5.2, 5.3, 5.5 and 5.6, upon the occurrence of any Event of Default and at any time during the continuance thereof, without any further notice or any other action on the part of Secured Party except as provided in the UCC or expressly set forth in this Agreement, Secured Party may avail itself of all of its rights and remedies as a secured party under the UCC and, in addition to and without limiting such rights and remedies, shall be entitled to avail itself of the following remedies:

(a) commence legal action to enforce payment or performance of the Obligations;

(b) dispose of the Collateral by private or public sale, lease, licence or otherwise upon such terms and conditions as Secured Party may determine in accordance with applicable law

9

and whether or not Secured Party has taken possession of the Collateral; provided, however that Secured Party shall give Debtor at least 30 days prior written notice of such disposal event;

(c) file such proofs of claim or other documents as may be necessary or desirable to have its claim lodged in any bankruptcy, winding-up, liquidation, dissolution or other proceedings (voluntary or otherwise) relating to Debtor; and

(d) take any other action, suit, remedy or proceeding authorized or permitted by this Agreement, the A&R Purchase Agreement, the UCC or by law or equity, including pursuant to the authority granted in any power of attorney granted hereunder or otherwise pursuant to this Agreement or any other Transaction Document.

5.2 ;Delayed Realization for Minor Defaults

Notwithstanding Section 5.1, if the Event of Default is a Minor Default, Secured Party shall not be entitled to avail itself of its remedy under Section 5.1(b) or any other similar remedy under the UCC permitting Secured Party to take possession of or realize on Collateral, unless and until it has first sought recourse under Section 5.1(a) and any remedy obtained under such recourse has not satisfied the Obligations of Debtor or any judgement obtained pursuant to such recourse remains unsatisfied by Debtor for more than 15 Business Days after the rendering of such judgement (without the necessity of appeal from such judgement). Nothing in this Section 5.2 or in any judgement shall diminish or extinguish the rights of Secured Party as a secured creditor. For the avoidance of doubt, this Section 5.2 shall not apply in respect of an Event of Default that is a Major Default.

5.3 Standstill

Notwithstanding Sections 5.1 and 5.2, if an Event of Default is the result of a breach of a representation and warranty attributable to Debtor, then Secured Party shall not take any action under Section 5.1 or 5.2 for a period of 60 days commencing on the date that notice of such breach is provided to Debtor. During such 60-day period, Secured Party will enter into good-faith negotiations with Debtor in an effort to determine whether any remedy other than enforcement of the security interest granted to Secured Party hereunder can be agreed upon.

5.4 Limitations

Upon the occurrence of any Event of Default and during the continuance thereof, Section 5.1 shall be inapplicable with respect to the NPS Know-How. In lieu of such rights, solely to the extent that Secured Party or a third party obtains title to the Collateral by the exercising of Secured Party of its rights hereunder, Debtor hereby grants, effective upon the occurrence of any Event of Default, without any further action during the continuance of such Event of Default, or if such Collateral has been disposed of, indefinitely, the non-exclusive right and license under the NPS Know-How to manufacture, market, sell, offer to sell, use, import and distribute, with right to sublicense, the Product.

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5.5 Rights and Remedies are Not Mutually Exclusive

To the fullest extent permitted by law, Secured Party's rights and remedies, whether provided for in this Agreement or otherwise, are not mutually exclusive, are cumulative and not alternative, and may be exercised independently or in any combination.

5.6 No Obligation to Enforce

Secured Party shall not be under any obligation to, or liable or accountable for any failure to, enforce payment or performance of the Obligations or to seize, realize, take possession of or dispose of the Collateral and shall not be under any obligation to institute proceedings for any such purpose.

5.7 Cost of Enforcement

Debtor shall, upon demand, reimburse Secured Party for all reasonable costs and expenses incurred by Secured Party in the enforcement of any rights hereunder (including reasonable fees and expenses of counsel where Secured Party prevails) and all such costs shall form part of the Obligations. Additionally, Debtor shall promptly pay directly or reimburse Secured Party for costs, expenses and fees (including attorneys' fees) payable for analysis and diligence relating to the transfers and restructuring described in the recitals to this Agreement as well as the preparation and/or review of all required consent and assignment and assumption agreements, other than the preparation of this Agreement and the preparation and filing of the Financing Statements.

5.8 Debtor Power of Attorney

Debtor hereby irrevocably constitutes and designates Secured Party as and for Debtor's attorney in fact:

(a) to exercise, upon the occurrence of an Event of Default and during the continuance thereof, any of the transactions and rights exercisable and powers referenced in this Article 5; and

(b) to execute, upon the occurrence of an Event of Default and during the continuance thereof, all and any such instruments, documents and papers as Secured Party determines to be appropriate in connection with the exercise of such rights and remedies and to cause the sale, license, assignment, transfer or other disposition of the Collateral, including all filings, recordings or registrations with the applicable government offices required or appropriate to effect such dispositions of Collateral.

The within grant of a power of attorney, being coupled with an interest, shall be irrevocable until this Agreement is terminated.

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ARTICLE 6
ACKNOWLEDGEMENT BY DEBTOR

6.1 Acknowledgements

Debtor:

(a) acknowledges receipt of a true copy of this Agreement;

(b) acknowledges receipt of a copy of all of the Financing Statements;

(c) acknowledges and agrees that, upon notice to Debtor, this Agreement may be assigned by Secured Party to any Person as permitted by Section 7.4 and, in such event, such Person shall be entitled to all of the rights and remedies of Secured Party as set forth in this Agreement or otherwise and Secured Party shall be released and discharged from its further obligations hereunder upon the assumption of same by the assignee;

(d) acknowledges and agrees that in connection with the exercise of Secured Party's rights and remedies hereunder, any use by Secured Party of the Collateral shall be coextensive with Debtor's rights therein and with respect thereto and without any liability for royalties or other related charges from Secured Party to Debtor;

(e) authorizes and requests that each appropriate patent, trademark or other Governmental Authority requested by Secured Party record this Agreement, including any amendments hereto, or copies hereof; provided that this provision shall not preclude the filing by Debtor of the IP Office Filings; and

(f) without in any way limiting any other indemnity provisions contained herein or in the Transaction Documents, Debtor hereby indemnifies and holds Secured Party harmless from and against any claim, suit, loss, damage or expense (including reasonable legal fees) (each, a "Claim") arising out of any alleged defect in any Product, including any such Claim due to purported infringement of the Collateral or any portion thereof upon the intellectual property rights or other rights of any other Person or entity; provided that Debtor shall not be liable to Secured Party for the payment of any portion of such claim, suit, loss, damage or expense to the extent resulting solely from Secured Party's acts or omissions.

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ARTICLE 7
MISCELLANEOUS

7.1 Notice

(a) Any notice, demand, direction or other instrument required or permitted to be

given hereunder or under the UCC shall be in writing and shall be given in the manner specified in Section 11.3 of the A&R Purchase Agreement and addressed as follows:

(i) if to Debtor:

NPS Pharmaceuticals Inc.
550 Hills Drive, 3rd Floor
Bedminster, New Jersey 07921
United States of America
Attention of: General Counsel
Fax No.: (908) 450-5344
E-mail: estratemeier@npsp.com

with a copy (which shall not constitute notice) to:
Morgan Lewis and Bockius LLP
502 Carnegie Center

Princeton, New Jersey 08540-6241
Attention of: Randall B. Sunberg
Fax No.: (609) 919-6701
E-Mail: rsunberg@morganlewis.com

(ii) if to Secured Party:

Drug Royalty L.P. 3.
c/o DRI Capital Inc.
22 St. Clair Avenue East
Suite 200
Toronto ON M4T 2S5
Attention of: Behzad Khosrowshahi
Fax No.: (416) 863-5161
E-mail: DRINotices@dricapital.com

with a copy to:
Attention of: Gary Margolis
Fax No.: (416) 863-5161
E-Mail: gm@dricapital.com

13

with a copy (which shall not constitute notice) to:
King & Spalding LLP
601 S. California Ave.
Palo Alto, CA 94304
Attention of: Emma Maconick
Fax No.: (650) 422 6800
E-mail: emaconick@kslaw.com

(b) Either party may change its address for service from time to time by notice given in accordance with the foregoing.

7.2 Waiver

(a) Secured Party may waive, in whole or in part, any breach by Debtor of any of the provisions of this Agreement, any default by Debtor in the payment or performance of any of the Obligations or any of its rights and remedies, whether provided for herein or otherwise, provided that no such waiver shall be effective unless given by Secured Party to Debtor in writing.

(b) No waiver given in accordance with Section 7.2(a) shall be a waiver of any other or subsequent breach by Debtor of any of the provisions of this Agreement, of any other or subsequent default by Debtor in the payment or performance of any of the Obligations or any of the rights and remedies of Secured Party, whether provided for herein or otherwise.

(c) Secured Party may, at any time, grant extensions of time or other indulgences to, or accept compositions from or grant releases and discharges to, Debtor in respect of the Collateral or otherwise deal with Debtor or with the Collateral and other security held by Secured Party, all as Secured Party may see fit, and Debtor agrees that any such act or any failure by Secured Party to exercise any of its rights or remedies, whether provided for herein or otherwise, shall in no way affect or impair the Security Interest or the rights and remedies of Secured Party, whether provided for in this Agreement or otherwise.

7.3 Termination

(a) This Agreement may be terminated by written agreement made between Secured Party and Debtor.

(b) Upon indefeasible payment and performance of the Obligations, this Agreement shall terminate and all rights in the Collateral shall revert to Debtor.

(c) Upon a Revocation, the Secured Party's security interest with respect to (i) the NPS Patents in the United States and Japan, (ii) any NPS Know-How that is applicable only to the United States or Japan, and (iii) the NPS Trademarks in the United States and Japan shall terminate (the Collateral described in clause (i), (ii) and (iii) is collectively referred to as the "New Collateral"). It is acknowledged and agreed by all parties hereto that upon a Revocation, the liens and security interests granted to the Secured Party in all Collateral (other than the New Collateral) shall remain in full force and effect and shall continue to secure the Obligations without interruption, and that the Revocation shall not be deemed a novation of the rights and obligations contained herein.

14

(d) Upon termination of this Agreement in accordance with this Section 7.3 or upon a Revocation with respect to the Additional Collateral, Secured Party shall, at the request and expense of Debtor, make and do all such acts and things and execute and deliver all such financing statements, instruments, agreements and documents as Debtor considers reasonably necessary or desirable to discharge the Security Interest, to release and discharge the Collateral (or upon a Revocation, with respect to the Additional Collateral) therefrom and to record such release and discharge in all appropriate offices of public record.

7.4 Assignment

This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of Secured Party and Debtor. This Agreement may not be assigned in whole or in part by either party without the prior written consent of the other party; provided, however, that Secured Party may assign this Agreement in whole or in part without the prior written consent of Debtor: (i) by way of security to a financial institution or other lender, (ii) to any Person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, Secured Party, (iii) to a special purpose vehicle created to be bankruptcy remote or for financing purposes or (iv) as part of a sale of a material part of Secured Party, in any case whether by way of reorganization or otherwise, and Secured Party shall give prompt notice of any such assignment to Debtor within 10 Business Days after the occurrence thereof; provided, however, that Debtor may assign this Agreement in whole or in part without the prior written consent of Secured Party in connection with an assignment of the NPS Patents to Affiliates of NPS in accordance with Section 6.1(a) of the A&R Purchase Agreement; provided, further, that Debtor shall give prompt notice of any such assignment to Secured Party within 10 Business Days after the occurrence thereof. For clarity, the obligations provided in this Section 7.4 are in addition to any obligations of Debtor pursuant to Section 4.4.

7.5 Further Assurances

From time to time, as and when requested by any party, each party shall execute and deliver, or cause to be executed and delivered, all such documents, certificates and instruments, and shall take, or cause to be taken, all such further or other actions, as such other party may deem reasonably necessary, desirable or appropriate to carry out, or otherwise give full effect to, the provisions and intent of this Agreement.

7.6 Execution in Counterparts and Facsimile Delivery

This Agreement may be executed in one or more counterparts, all of which when taken together shall be considered one and the same agreement. This Agreement may be delivered by either party by facsimile or by electronic delivery and, if so executed and delivered, shall be legally valid and binding on the party executing in such manner.

[signature page follows]

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SCHEDULE 2.3

SUPPLEMENTARY EUROPEAN PATENTS

Note: For purposes of this Schedule 2.3, where the granted patents have been registered in Switzerland, the registration extends to Liechtenstein.

"EXCRETION OF HETEROLOGOUS PROTEINS FROM E. COLI"

Country	Filing Date	Serial No.	Issue Date	Patent No.	Expiry Date
Belgium	: 30 August'89	89308753.6	31 July'96	0 357 391	30 August '09
Sweden	: 30 August'89	89308753.6	31 July'96	0 357 391	30 August '09
Switzerland	30 August '89	89308753.6	31 July'96	0 357 391	30 August '09

"ESSENTIALLY PURE HUMAN PARATHYROID HORMONE"

Country	Filing Date	Serial No.	Issue Date	Patent No.	Expiry Date
Belgium	22 May '92	92304692.4	25 March '98	0 515 228	22 May'12
Denmark	22 May '92	92304692.4	25 March '98	0 515 228	22 May'12
Denmark (SPC)	20 Oct '06	CA200600028	25 March '08	CR200600028	22 May '17
Finland	22 May '92	922,356	12 April '01	106802	22 May'12
Ireland	1 July '92	921,672	28 May '04	83494	1 July'12
Luxembourg	22 May '92	92304692.4	25 March '98	0 515 228	22 May'12
Monaco	22 May '92	92304692.4	25 March '98	0 515 228	22 May'12
Norway	21 May '92	92304692.4	9 November '98	304,190	21 May'12
Norway (SPC)	24 Oct '06	2006013	7 Dec 2009	2006013	21 May'17
Portugal	22 May '92	92304692.4	25 March '98	0 515 228	22 May'12
Sweden	22 May '92	92304692.4	25 March '98	0 515 228	22 May'12
Switzerland	22 May '92	92304692.4	25 March '98	0 515 228	22 May'12

"PARATHYROID HORMONE FORMULATION"

Country	Filing Date	Serial No.	Issue Date	Publication No.	Expiry Date.
Belgium	16 December '94	95903732.6	03 October 2007	EP 735 896	16 December 2014
Denmark	16 December '94	95903732.6	03 October 2007	EP 735 896	16 December 2014
Ireland	16 December '94	95903732.6	03 October 2007	EP 735 896	16 December 2014
Liechtenstein	16 December '94	95903732.6	03 October 2007	EP 735 896	16 December 2014
Lithuania	16 December '94	95903732.6	03 October 2007	EP 735 896	16 December 2014
Luxembourg	16 December '94	95903732.6	03 October 2007	EP 735 896	16 December 2014
Monaco	16 December '94	95903732.6	03 October 2007	EP 735 896	16 December 2014
Portugal	16 December '94	95903732.6	03 October 2007	EP 735 896	16 December 2014
Sweden	16 December '94	95903732.6	03 October 2007	EP 735 896	16 December 2014
Switzerland	16 December '94	95903732.6	03 October 2007	EP 735 896	16 December 2014
Finland	16 December '94	962593	15 September 2009	120291	16 December 2014
Norway	16 December '94	P962634	27 December 2007	324905	16 December 2014

"PROTEIN FORMULATION (PTH) (MULTI-DOSE INJECTION)"

Country	Filing Date	Serial No.	Issue Date	Patent No.	Expiry Date
Albania	26 April '99	99917715.7	18 August '04	1079803	26 April '19
Belgium	26 April '99	99917715.7	18 August '04	1079803	26 April '19
Cyprus	26 April '99	99917715.7	18 August '04	1079803	26 April '19
Denmark	26 April '99	99917715.7	18 August '04	1079803	26 April '19
Finland	26 April '99	99917715.7	18 August '04	1079803	26 April '19
Ireland	26 April '99	99917715.7	18 August '04	1079803	26 April '19
Latvia	26 April '99	99917715.7	18 August '04	1079803	26 April '19
Lithuania	26 April '99	99917715.7	18 August '04	1079803	26 April '19
Luxembourg	26 April '99	99917715.7	18 August '04	1079803	26 April '19
Macedonia	26 April '99	99917715.7	18 August '04	1079803	26 April '19
Monaco	26 April '99	99917715.7	18 August '04	1079803	26 April '19
Portugal	26 April '99	99917715.7	18 August '04	1079803	26 April '19
Romania	26 April '99	99917715.7	18 August '04	1079803	26 April '19
Slovenia	26 April '99	99917715.7	18 August '04	1079803	26 April '19
Sweden	26 April '99	99917715.7	18 August '04	1079803	26 April '19
Switzerland	26 April '99	99917715.7	18 August '04	1079803	26 April '19

"A COMBINED PHARMACEUTICAL PREPARATION COMPRISING
PARATHYROID HORMONE AND A BONE RESORPTION INHIBITOR"

Country	Filing Date	Serial No.	Issue Date	Patent No.	Expiry Date
Belgium	8 June '98	98929965.6	8 Sept'04	1001802	8 June '18
Belgium Div.	8 June '98	04017622.4	4 Nov '09	1473040	8 June '18
Cyprus	8 June '98	98929965.6	8 Sept'04	1001802	8 June '18
Cyprus Div	8 June '98	4017622.4	8 Sept'04	CY1110287	8 June '18
Denmark	8 June '98	98929965.6	8 Sept'04	1001802	8 June '18
Denmark Div.	8 June '98	04017622.4	4 Nov '09	1001802	8 June '18
Europe Div. **	8 June '98	04017622.4	4 Nov '09	1473040	8 June '18
Finland	8 June '98	98929965.6	8 Sept'04	1001802	8 June '18
Finland Div.	8 June '98	04017622.4	4 Nov '09	1473040	8 June '18
Ireland	8 June '98	98929965.6	8 Sept'04	1001802	8 June '18
Ireland Div.	8 June '98	04017622.4	4 Nov '09	1473040	8 June '18
Liechtenstein	8 June '98	98929965.6	8 Sept'04	1001802	8 June '18
Liechtenstein Div	8 June '98	04017622.4	4 Nov. '09	1473040	8 June '18
Luxembourg	8 June '98	98929965.6	8 Sept'04	1001802	8 June '18
Luxembourg Div.	8 June '98	04017622.4	4 Nov '09	1473040	8 June '18
Monaco	8 June '98	98929965.6	8 Sept'04	1001802	8 June '18
Monaco Div.	8 June '98	04017622.4	4 Nov '09	1473040	8 June '18
Portugal	8 June '98	98929965.6	8 Sept'04	1001802	8 June '18
Portugal Div.	8 June '98	04017622.4	4 Nov '09	1473040	8 June '18
Sweden	8 June '98	98929965.6	8 Sept'04	1001802	8 June '18
Sweden Div.	8 June '98	04017622.4	4 Nov '09	1473040	8 June '18
Switzerland	8 June '98	98929965.6	8 Sept'04	1001802	8 June '18
Switzerland Div.	8 June '98	04017622.4	4 Nov. '09	1473040	8 June '18

** Designated contracting states: Belgium, Cyprus, Denmark, Finland, Ireland, Liechtenstein, Luxembourg, Monaco, Portugal, Sweden, Switzerland.

"METHOD OF ADMINISTERING THERAPEUTIC INJECTIONS"

Country	Filing Date	Serial No.	Issue Date	Publication No.	Expiry Date
Europe*	18 October 2004	04795465.6	Pending	EP1687048A

* Designated contracting states: Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, Hungary, Ireland, Liechtenstein, Luxembourg, Monaco, Poland, Portugal, Romania, Slovenia, Slovakia, Sweden, Switzerland, Turkey, with Albania, Croatia, Lithuania, Latvia and Macedonia as extension states.

SPC SUMMARY

Based on EP 0 515 228
Country	Application Number	Filing Date	Status	Expiry
Denmark	CA 2006 00028	20 Oct. 2006	Granted 25 March 2008	May 22, 2017
Norway	SPC/NO 2006 013	24 Oct. 2006	Granted 7 Dec. 2009	May 21, 2017
Based on EP 1 079 803
Country	Application Number	Filing Date	Status	Expiry Date
Belgium	2006C/033	19 Oct. 2006	Granted Grant Date 5 June 2007	April 24, 2021
Cyprus	CY06/006	23 Oct. 2006	Granted Grant Date March 2007	April 23, 2021
Denmark	CA 2006 00029	20 Oct. 2006	Abandoned
Finland	L20060013	13 Oct. 2006	Granted Grant Date 29 Aug 2011	April 24, 2021
Ireland	2006/032	17 Oct. 2006	Granted Grant Date 23 May 2007	April 23, 2021
Latvia	C/LV2006/0009	17 Oct. 2006	Granted Grant Date 20 March 07	April 24, 2021
Lithuania	PA 2006 007	23 Oct. 2006	Granted Grant No. C1079803 Grant Date 04 June 07	April 25, 2021
Luxembourg	91281	19 Oct. 2006	Granted Grant No. 91291 Grant Date 19 Dec. 06	April 24, 2021
Portugal	240	20 Oct. 2006	Granted	April 24, 2021
Romania	C/022	10 April 2007	Granted Grant Date Dec 30, 2011	24 April 2021
Slovenia	200640015	18 Oct. 2006	Granted Grant Date 16 July 2009	23 April 2021
Sweden	0690029-4	24 Oct. 2006	Granted Grant Date 5 Feb 2008	23 April 2021

SCHEDULE 3.1(C)

COLLATERAL ABANDONED BY CONSENT

European patent application no. 07019169.7, filed September 28, 2007, became abandoned with consent of the Secured Party on April 9, 2009.

APPENDIX 3.1(E)

FINANCING STATEMENTS

See attached.

EXHIBIT A TO UCC-1 FINANCING STATEMENT

DEBTOR:
 
SECURED PARTY: NPS PHARMACEUTICALS, INC.
 
DRUG ROYALTY L.P. 3

All right, title and interest in, to and under the NPS Technology and the NPS Trademarks, whether now owned or hereinafter acquired, and includes Proceeds therefrom (whether now owned by or owing to, or hereafter acquired by or arising in favor of the Debtor collectively, the "Collateral"):

The terms used herein shall have the respective meanings set out below, and grammatical variations of such terms shall have corresponding meanings:

"Know-How" means information, results and data of any type whatsoever, in any tangible or intangible form whatsoever, including without limitation, technical information, databases, practices, methods, techniques, specifications, formulations, formulae, knowledge, know-how, skill, experience, test data including pharmacological, medicinal chemistry, biological, chemical, biochemical, toxicological and clinical test data, analytical and quality control data, stability data, studies and procedures, and manufacturing process and development information, results and data relating to the Product or the device used to deliver the Product.

"NPS Know-How" means (a) any non-public or confidential sections of any marketing authorization application relating to any Product, and (b) any other non-public or confidential Know-How controlled by Debtor that is necessary or useful for the performance of pre-clinical or clinical development, for the filing of marketing authorizations in the Territory, or the commercialization, marketing or manufacture of a Product.

"NPS Patents" means the Patents controlled by Debtor that are necessary or useful for the development, commercialization or manufacture of the Product in the Territory and as listed on Schedule 2 attached hereto and made a part hereof.

"NPS Technology" means the NPS Patents and the NPS Know-How.

"NPS Trademarks" means NATPARA™, PREOTACT™ and any other trademarks, trade dress, logos, slogans, and designs, whether or not registered in the Territory, used to identify or promote the Product in the Territory including without limitations the trademarks listed on Schedule 1.

"Proceeds" means the property in any form derived, directly or indirectly, from any dealing with the Collateral or other proceeds (together with any reissue, continuation, continuation-in-part or extension of the patents) thereof; and includes any accounts, payment intangibles or other general intangibles arising from any sale, transfer, license, lease or other dealing in any of the Collateral and any payment or value representing indemnity or compensation for loss or damage to the Collateral or other proceeds, including insurance proceeds and proceeds (as such term is defined in the UCC).

"Product" means recombinant human parathyroid hormone (rhPHT 1-84) as set forth in the BLA No. 125511 (and regardless of the trademark under which it may be sold or distributed) as well as any invention, discovery or derivative or Know-How, whether or not patentable related thereto, including other formulations or indications.

"Territory" means all countries and territories of the world other than Israel.

"UCC" means (i) the Uniform Commercial Code as in effect from time to time in the State of New York, (ii) with respect to enforcement, the Uniform Commercial Code as in effect from time to time in any other state whose law is applicable with respect to Secured Party's enforcement of its rights hereunder and (iii) insofar as any references to the UCC is used in the context of perfection, the Uniform Commercial Code as in effect from time to time in the state that is the "location" of Debtor under the UCC, in each case including any legislation that may be substituted therefor (as any such substituted legislation may be amended from time to time).

All capitalized terms referenced herein and not otherwise defined herein shall have the meanings assigned to such terms in that certain Amended and Restated Agreement for the Sale and Assignment of Rights dated as of December     , 2013 by and among the Debtor in favor of the Secured Party.

Schedule 1
 
List of Trademarks

TRADEMARKS

Country	Mark	Filing Date	Serial No.	Issue Date	Trademark No.
U.S.	NATPARA	April 8,2011	85289949	September 18, 2012	4210947
U.S.	NATPARA (RHPTH [1-84]) FOR INJECTION & DESIGN	September 20, 2013	86071034
U.S.	PREOTACT	August 19, 2005	78696654	October 13, 2009	3697151
U.S.	PREOTACT PARATHYROID HORMONE (RDNA ORIGIN) FOR INJECTION	October 5, 2005	78726924	September 22, 2009	3687544
U.S.	PREOTACT	August 26, 2011	85408727

Schedule 2
 
List of NPS Patents

PATENTS

Country	Filing Date	Serial No.	Issue Date	Patent No.	Expiry Date
U.S.	23 May '91	07/707114	4 May '93	5,208,041	23 May'11
U.S.	23 Dec '93	08/172,206	5 March '96	5,496,801	23 Dec'13
U.S.	14 Aug '98	09/125,247	4 Sep '01	6,284,730	8 June '18
U.S. Div Con	18 March'03	10/389,797	28 March '06	7,018,982	8 June '18
U.S.Div Con 2	19 Dec'05	11/305,339	24 March '09	7,507,715	8 June '18
U.S.Div	9 Jan '09	12/351,558	6 July'10	7,749,543	8 June'18
U.S.Div	23 June '10	12/822,089	10 April '12	8,153,588	8 June'18
U.S.Div	24 Feb'12	13/405,093		(2012/0148684)
U.S.	15 Oct. '04	10/966,364	4 May '10	7,708,732	11 May'27

SCHEDULE 3.1(F)

UNITED STATES IP OFFICE FILINGS

See attached.

PATENT SECURITY AGREEMENT

THIS PATENT SECURITY AGREEMENT is made as of December 20, 2013,

BETWEEN:

NPS PHARMACEUTICALS, INC.,
a corporation existing under the laws of the State of Delaware

(collectively with its successors and permitted assigns, "Debtor"),

- and -

DRUG ROYALTY L.P. 3,
a Cayman Islands limited partnership

(collectively with its successors and permitted assigns, "Secured Party").

WHEREAS Secured Party and Debtor have entered into an Amended and Restated Security Agreement dated as of December 20, 2013 (as such agreement may be amended, modified, supplemented or restated from time to time, the "Security Agreement"); and

WHEREAS pursuant to the Security Agreement, Debtor has granted to Secured Party a security interest in, among other assets, certain intellectual property of Debtor, and Debtor has agreed to execute this Patent Security Agreement for recording with the United States Patent and Trademark Office;

NOW THEREFORE in consideration of the respective covenants, promises and agreements of the parties herein contained and other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged by each of the parties), the parties agree as follows:

1. Grant of Security Interest

As general and continuing collateral security for the due payment and performance of the Obligations (as such term is defined in the Security Agreement), Debtor hereby pledges, mortgages, charges and assigns (by way of security) to Secured Party, and grants to Secured Party, a security interest in, the patents described in Schedule A hereto (as such Schedule may be amended from time to time) and all reissues, divisions, continuations, continuations-in-part, extensions, renewals and re-examinations thereof (collectively, the "Patents").

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2. Recordation

Debtor authorizes and requests that the United States Patent and Trademark Office record this Patent Security Agreement.

3. Paramountry of Security Agreement

This Patent Security Agreement is being entered into in accordance with the terms of the Security Agreement. Debtor hereby acknowledges and affirms that the rights and remedies of Secured Party with respect to the security interest in the Patents made and granted hereby are more fully specified in the Security Agreement, the terms and provisions of which are incorporated by reference herein. In the event of a conflict between any provision of this Patent Security Agreement and any provision of the Security Agreement, the provision of the Security Agreement shall control.

4. Termination

This Patent Security Agreement shall terminate and all rights in the Patents shall revert to Debtor upon the termination of the Security Agreement, including termination of the Security Agreement in part, with respect to the Additional Collateral (as such term is defined in the Security Agreement), in accordance with the terms thereof.

5. Successors and Assigns

This Patent Security Agreement shall inure to the benefit of and shall be binding on and enforceable by and against the parties hereto and their respective successors and permitted assigns under the Security Agreement.

6. Applicable Law

This Patent Security Agreement shall be governed by, and interpreted and enforced in accordance with, the laws of the State of New York and the federal laws of the United States applicable therein, without giving effect to the principles of conflicts of law thereof except as set forth in Section 5-1401 of the New York General Obligations Law.

7. Execution in Counterparts and Facsimile Delivery

This Patent Security Agreement may be executed in one or more counterparts, all of which when taken together constitute one and the same agreement.

[Signature Page Follows]

SCHEDULE A

PATENTS

Country	Filing Date	Serial No.	Issue Date	Patent No.	Expiry Date
U.S.	23 May '91	07/707114	4 May '93	5,208,041	23 May'11
U.S.	23 Dec '93	08/172,206	5 March '96	5,496,801	23 Dec'13
U.S.	14 Aug '98	09/125,247	4 Sep '01	6,284,730	8 June'18
U.S. Div Con	18 March'03	10/389,797	28 March '06	7,018,982	8 June'18
U.S.Div Con 2	19 Dec'05	11/305,339	24 March '09	7,507,715	8 June'18
U.S.Div	9 Jan '09	12/351,558	6 July'10	7,749,543	8 June '18
U.S.Div	23 June'10	12/822,089	10 April '12	8,153,588	8 June'18
U.S.Div	24 Feb'12	13/405,093		(2012/0148684)
U.S.	15 Oct. '04	10/966,364	4 May '10	7,708,732	11 May'27

TRADEMARK SECURITY AGREEMENT

THIS TRADEMARK SECURITY AGREEMENT is made as of December 20,

BETWEEN:

NPS PHARMACEUTICALS, INC.,
a corporation existing under the laws of the State of Delaware

(collectively with its successors and permitted assigns, "Debtor"),

- and -

DRUG ROYALTY L.P. 3,
a Cayman Islands limited partnership

(collectively with its successors and permitted assigns, "Secured Party").

WHEREAS Secured Party and Debtor have entered into an Amended and Restated Security Agreement dated as of December 20, 2013 (as such agreement may be amended, modified, supplemented or restated from time to time, the "Security Agreement"); and

WHEREAS pursuant to the Security Agreement, Debtor has granted to Secured Party a security interest in, among other assets, certain intellectual property of Debtor, and Debtor has agreed to execute this Trademark Security Agreement for recording with the United States Patent and Trademark Office;

NOW THEREFORE in consideration of the respective covenants, promises and agreements of the parties herein contained and other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged by each of the parties), the parties agree as follows:

1. Grant of Security Interest

As general and continuing collateral security for the due payment and performance of the Obligations (as such term is defined in the Security Agreement), Debtor hereby pledges, mortgages, charges and assigns (by way of security) to Secured Party, and grants to Secured Party, a security interest in, the trademarks described in Schedule A hereto (as such Schedule may be amended from time to time) (collectively, the "Trademarks").

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2. Recordation

Debtor authorizes and requests that the United States Patent and Trademark Office record this Trademark Security Agreement.

3. Paramountcy of Security Agreement

This Trademark Security Agreement is being entered into in accordance with the terms of the Security Agreement. Debtor hereby acknowledges and affirms that the rights and remedies of Secured Party with respect to the security interest in the Trademarks made and granted hereby are more fully specified in the Security Agreement, the terms and provisions of which are incorporated by reference herein. In the event of a conflict between any provision of this Trademark Security Agreement and any provision of the Security Agreement, the provision of the Security Agreement shall control.

4. Termination

This Trademark Security Agreement shall terminate and all rights in the Trademarks shall revert to Debtor upon the termination of the Security Agreement, including termination of the Security Agreement in part, with respect to the Additional Collateral (as such term is defined in the Security Agreement), in accordance with the terms thereof.

5. Successors and Assigns

This Trademark Security Agreement shall inure to the benefit of and shall be binding on and enforceable by and against the parties hereto and their respective successors and permitted assigns under the Security Agreement.

6. Applicable Law

This Trademark Security Agreement shall be governed by, and interpreted and enforced in accordance with, the laws of the State of New York and the federal laws of the United States applicable therein, without giving effect to the principles of conflicts of law thereof except as set forth in Section 5-1401 of the New York General Obligations Law.

7. Execution in Counterparts and Facsimile Delivery

This Trademark Security Agreement may be executed in one or more counterparts, all of which when taken together constitute one and the same agreement.

[Signature Page Follows]

SCHEDULE A

TRADEMARKS

Country	Mark	Filing Date	Serial No.	Issue Date	Trademark No.
U.S.	NATPARA	April 8,2011	85289949	September 18, 2012	4210947
U.S.	NATPARA (RHPTH [1-84]) FOR INJECTION & DESIGN	September 20,2013	86071034
U.S.	PREOTACT	August 19, 2005	78696654	October 13, 2009	3697151
U.S.	PREOTACT PARATHYROID HORMONE (RDNA ORIGIN) FOR INJECTION	October 5, 2005	78726924	September 22, 2009	3687544
U.S.	PREOTACT	August 26, 2011	85408727

EXHIBIT A

PATENT FILINGS

See attached.

UNDERTAKMG

To: Drug Royalty L.P. 3 (the "Purchaser")

Reference is made to the agreement for sale and assignment of rights made as of the day of July, 2007 between the undersigned, NPS Pharmaceuticals, Inc. and the Purchaser (the "Purchase Agreement"). Capitalized terms used and not otherwise defined herein have the meaning specified in the Purchase Agreement.

The undersigned herehy undertakes to, within 15 days of Closing, execute and deliver to the Purchaser or the Purchaser's counsel: (a) a mortgage of the Patents to be registered in Spain; (b) a pledge of the Patents to be registered in Austria, in each case on terms and conditions at least as good as the terms and conditions of the draft Spanish mortgage and draft Austrian pledge annexed to this undertaking as Exhibits 1 and 2, and in each case in a form and language suitable for registration in the relevant country, and (c) any documents or instruments as the Purchaser is advised by its counsel as are necessary to be executed by it in order to effect the registration of the final forms of the Spanish mortgage and the Austrian pledge in the appropriate public registries in the relevant country.

DATED as of the 16th day of July, 2007.

NPS ALLELIX CORP.

by /s/ Val R. Antczak
Name: Val R. Antczak
Title: Vice President and Secretary

I have authority to bind the Corporation

CONDITIONAL ASSIGNMENT AGREEMENT

BETWEEN

1. NPS ALLELIX CORP., a company incorporated under the laws of Ontario, Canada, whose registered office is at c/o Blake, Cassels & Graydon LLP, 199 Bay Street, Suite 2800, Commerce Court West, Toronto ON M5L 1A9, Canada (hereinafter "NPS"); and
2. DRUG ROYALTY L.P. 3, a Cayman Island limited partnership incorporated under the laws of the Cayman Islands whose registered office is at M&C Corporate Services Limited, PO Box 309GT, Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands (hereinafter "DRLP3").

Each a "Party" and together the "Parties".

WHEREAS

1. NPS and DRLP3 have entered into an agreement for the sale and assignment of rights dated as of July 16, 2007 (as such agreement may be amended, modified, supplemented or restated from time to time, the "Purchase Agreement");
2. NPS is the registered proprietor of certain Patents (as defined in the Purchase Agreement) mcluding without limitation those patents, patent applications and supplementary protection certificates listed in the Schedule to this Agreement (the "Austrian Patents"). NPS is also the proprietor of any related Governmental Authority (as defined in the Purchase Agreement) approvals and agreements relating to any product that is the subject of any such Austrian Patents (the "Related Rights");
3. NPS and DRLP3 have also entered into an agreement, dated as of July 16, 2007, as general and continuing collateral security for the due payment and performance of certain Obligations arising pursuant to the Purchase Agreement (as such agreement may be amended, modified, supplemented or restated from time to time, the "Security Agreement");

4. Pursuant to section 3.2(g) of the Purchase Agreement, NPS has agreed to deliver certain conditional assignment agreements to DRLP3, including this Agreement;
5. This Agreement sets out the terms of the assignment of the Austrian Patents, including their Related Rights, by NPS to DRLP3.

IN CONSIDERATION OF the Parties entering into the Purchase Agreement AND IN FURTHER CONSIDERATION of the payment by DRLP3 to NPS of US$1 (the receipt and sufficiency of which is hereby acknowledged), IT IS HEREBY AGREED AS FOLLOWS:-

Defmitions

1. "Event of Default" means a Major Default or a Minor Default;
2. "Major Default" means the occurrence of any one or more of the following events:
1. any breach by NPS of any representation or warranty made by NPS in Section 4.1, 4.4, 4.5, 4.6(c), 4.6(d), 4.6(e) or 4.6(f) of the Purchase Agreement; provided, however, that a breach of Section 4.1(a) or 4.4 of the Purchase Agreement shall not be a Major Default unless such breach results in a Material Adverse Effect;
2. any breach by NPS of any of its covenants under Section 7.2(b) of the Purchase Agreement and such breach shall continue unremedied for a period of 60 days after written notice thereof; or
3. the cessation or threatened cessation by NPS of its business generally or the admission by NPS of its inability to, or its actual failure to, pay its debts generally, including circumstances where NPS (i) is adjudged bankrupt or insolvent, (ii) makes an assignment in bankruptcy or otherwise for the benefit of creditors, (iii) files a petition or proposal under bankruptcy, insolvency or similar legislation, or (iv) has instituted against it proceedings under bankruptcy, insolvency or similar legislation including for the appointment of a receiver or trustee;

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3. "Minor Default" means the occurrence of any one or more of the following events to the extent that it is not a Major Default:
1. the failure of NPS to pay any monetary Obligations within five Business Days of the date on which such Obligations are due or payable;
2. the failure of NPS to perform any non-monetary Obligation or covenant under the Security Agreement or the Purchase Agreement and such failure shall continue unremedied for a period of 60 days after written notice thereof; or
3. any breach by NPS of any representation or warranty made by NPS in the Purchase Agreement (for certainty, including without limitation a breach of Section 4.1(a) or 4.4 of the Purchase Agreement if such breach does not result in a Material Adverse Effect;
4. "Obligations" means all indebtedness, liabilities and obligations (whether direct, indirect, absolute, contingent or otherwise) of NPS to DRLP3 arising pursuant to the Purchase Agreement or the Security Agreement; and
5. All other terms used in this Agreement shall have the same meanings as provided for in the Purchase Agreement and the Security Agreement.

Operative Clauses

1. Subject to the condition provided for under clause 2 below, NPS hereby assigns all of its right, title and interest in the Austrian Patents, including without limitation then-Related Rights, to DRLP3.
2. Subject to clauses 3 and 4, the operation of this Agreement is subject to the occurrence of an Event of Default. To ensure proper operation of this Agreement at such point in time NPS herewith agrees to duly execute the assignment deed Appendix .11 (the "Assignment Deed") with notarized and apostilled signatures concurrently with the execution of this Agreement and to hand over to DRLP3 the original of such

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Assignment Deed. DRLP3 agrees to hold in strict confidence the Assignment Deed and to use the Assignment Deed solely in accordance with clause 6 below.

3. If the Event of Default is a Minor Default, the operation of this Agreement shall not take effect unless or until DRLP3 has first sought to commence legal action to enforce payment or performance of the Obligations and any remedy obtained under such action has not satisfied the Obligations of NPS or any judgement obtained pursuant to such action remains unsatisfied by NPS for more than 15 Business Days after the rendering of such judgement (without the necessity of appeal from such judgement).
4. If an Event of Default is the result of a breach of representation and warranty by NPS, then the operation of this Agreement shall not take effect for a period of 60 days commencing on the date on which notice of such breach is provided to NPS and furthermore shall not take effect if during that 60 day period the parties agree upon an alternative remedy in respect of that breach.
5. NPS covenants with DRLP3 that it shall not sell, assign, pledge or otherwise charge or transfer any of the Austrian Patentsor any Related Rights, to a third party.
6. Upon the occurrence of an Event of Default provided for under clause 2, DRLP3 shall be entitled to register the change of ownership in the Austria Patents as evidenced by the Assignment Deed with the Austrian Patent Office. NPS agrees to cooperate in good faith with DRLP3, to do all such acts and give any documents and signatures for the performance and the enforcement of all formalities required to vest title in the Austrian Patents, including their Related Rights, in DRLP3 and to record such assignment at the Austrian National Patent Register and, where required, to produce any documents confirming that an Event of Default has taken place that DRLP3 may reasonably require. Any and all costs, expenses and taxes arising as a result of the registration of the change of ownership with the Austrian Patent Office, including, but not limited to, stamp duties, shall be borne by NPS.
7. NPS hereby authorizes DRLP3 to do whatever is necessary for the maintenance of the Austrian Patents with the Austrian Patent Office in the event that NPS fails to do so, including, without limitation, the payment of taxes, renewals and annuity fees.

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8. To the extent that the parties fail to execute a pledge agreement granting DRLP3 a first ranking pledge over the Austrian Patents when this Agreement is executed, NPS agrees that it will execute such an agreement within 60 days of the execution of this Agreement. Further, NPS agrees that within the said 60 day period, it will execute any necessary powers of attorney or other documents that may be required by DRLP3 or its Austrian counsel to record the pledge granted over the Austrian Patents at the Austrian National Patent Office.
9. This Agreement is governed by and construed in accordance with the laws of the province of Ontario and the federal laws of Canada applicable therein. All disputes arising out or in connection with this Agreement including those concerning its existence, validity, interpretation and performance are subject to the exclusive jurisdiction of the competent Ontario Courts and Tribunals and all courts competent to hear appeals therefrom.

Date July 16, 2007

Having read the above, the Parties hereby sign:

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NPS ALLELIX CORP.

/s/ Val R. Antczak
Name: Val R. Antczak
Title: Vice President and Secretary

DRUG ROYALTY L.P. 3,
by its General Partner
DRC MANAGEMENT LLC 3
/s/ Behzad Khosrowshahi
Name: Behzad Khosrowshahi
Title: Manager

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SCHEDULE

The Austrian Patents

Patent No.	Subject	Status
EP1079803B	Formulation	Granted
EP1001802B	Dosage Regime	Granted
EP0515228B	Pure PTH	Granted
EP0357391B	DNA construct	Granted
EP1473040A	Dosage Regime	Pending
EP0735896A	Formulation	Pending
EP1687048A	Administration Method	Pending
SZ 32/2006 (SPC)		Filed 19 October 2006

7

Patent Pledge Agreement

between

NPS ALLELIX CORP.,
a corporation existing under the laws of the
Province of Ontario, Canada

("NPS" or the "Pledgor"),

- and -

DRUG ROYALTY L.P. 3,
a Cayman Island limited partnership

("DRLP" or the "Pledgee").

KEEP THE ORIGINAL OF THIS DOCUMENT AND ALL CERTIFIED COPIES THEREOF OUTSIDE OF THE REPUBLIC OF AUSTRIA. BRINGING THIS DOCUMENT OR ANY CERTIFIED COPY OF THIS DOCUMENT INTO THE REPUBLIC OF AUSTRIA AS WELL AS ANY WRITTEN CONFIRMATION OR WRITTEN REFERENCE TO THIS DOCUMENT MAY CAUSE THE IMPOSITION OF AUSTRIAN STAMP DUTY.

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WHEREAS, NPS as vendor and DRLP as purchaser intend to enter info an agreement for the sale and assignment of rights;

WHEREAS, NPS as debtor and DRLP as secured party intend to enter into a security agreement for the creation of a security in certain collateral as defined therein;

WHEREAS, NPS is the registered proprietor of certain Patents (as defined in the Purchase Agreement) including without limitation those patents, patent applications and supplementary protection certificates listed in the Schedule I to this Agreement (the "Austrian Patents").

NOW THEREFORE, IT IS AGREED as follows:

1. Definitions and Construction

1.1   Terms used but not otherwise defined herein shall have the meanings ascribed thereto in the Purchase Agreement, the Security Agreement and any other agreement referred to therein.

1.2   Additionally, terms used in this Agreement shall have the meaning as follows:

"Agreement" shall mean this patent pledge agreement;

"Austrian Patents" shall mean any and all patents registered with the official patent register as listed in Schedule I

"Business Day" shall mean a day (other than a Saturday or a Sunday) on which banks generally are open for business in New York and Vienna;

"Enforcement Event" shall mean the occurrence of an Event of Default , provided that if the Event of Default is:

(a)a Minor Default, the Enforcement Event shall only be deemed to have occurred if DRLP has first sought to commence legal action to enforce payment or performance of the Obligations and any remedy obtained under such action has not satisfied the Pledgor's Obligations or any judgement obtained pursuant to such action remains unsatisfied by the Pledgor for more than 15 Business Days after the rendering of such judgement (without the necessity of appeal from such judgement); or

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(b) the result of a breach of representation and warranty by the Pledgor, the Enforcement Event shall be deemed to have occurred after a period of 60 days commencing on the date on which notice of such breach is provided to the Pledgor, unless during that 60 day period the parties agree upon an alternative remedy in respect of that breach.;

and further provided that the Enforcement Event shall be deemed not to have occurred, if within 7 days of the date on which the Enforcement Event would otherwise have occurred (or have been deemed to have occurred) DRLP validly becomes the sole legal and beneficial owner of the Austrian Patents, free from all third party rights (other than Nycomed's rights under the License Agreement);

"Party" shall mean any of NPS and DRLP;

"Pledge" shall have the meaning as described in Clause 3.1;

"Pledgor" shall mean NPS ALLELIX CORP., a company incorporated under the laws of Ontario, Canada, whose registered office is at c/o Blake, Cassels & Graydon LLP, 199 Bay Street, Suite 2800, Commerce Court West, Toronto ON M5L 1A9, Canada;

"Pledgee" shall mean DRUG ROYALTY L.P. 3, a Cayman Island limited partnership incorporated under the laws of the Cayman Islands whose registered office is at M&C Corporate Services Limited, PO Box 309GT, Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands;

"Purchase Agreement" shall mean the purchase agreement intended to be entered into by the Pledgor and the Pledgee after execution of this Agreement;

"Secured Claims" shall mean all present and future obligations and liabilities (whether actual or contingent and whether jointly or severally or in any other capacity whatsoever) of the Pledgor to the Pledgee under the Purchase Agreement, the Security Agreement as well as the present Agreement as of and from the date of execution of the Purchase Agreement and the Security Agreement;

and shall mean furthermore all present and future obligations and liabilities of the Pledgor to the Pledgee in connection with any assignment of the Austrian Patents;

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and (for the avoidance of doubt) shall mean furthermore any obligations of the Pledgor to the Pledgee pursuant to Section 8 of this Agreement;

"Security Agreement" shall mean the security agreement intended to be entered into by the Pledgor and the Pledgee after execution of this Agreement;

"Secured Documents" shall mean the Purchase Agreement, the Security Agreement, the present Agreement and any and all ancillary agreements entered into by the Parties in connection therewith.

1.3 Construction

In this Agreement, unless the context otherwise requires:

(a) unless otherwise stated, a "Clause" is a reference to a Clause of this Agreement;

(b) unless otherwise stated, a "Schedule" is a reference to a Schedule of this Agreement and references to this Agreement include its Schedules;

(c) words importing the plural shall include the singular and vice versa;

(d) a reference to (or to any specified provision of) any agreement, deed or other instrument is to be construed as a reference to that agreement, deed or other instrument or that provision as from time to time amended, varied, supplemented, restated or novated but excluding for this purpose any amendment, variation, supplement or modification which is contrary to any provision of any of the Secured Documents;

(e) nothing in this Agreement shall prevent the Pledgor from carrying out a transaction not prohibited by the Secured Documents;

(f) to the extent not prohibited by mandatory provisions of Austrian law or any other applicable law nothing in this Agreement shall be construed in such a way that it would violate or contradict the provisions of the Secured Documents;

(g) References to any act or determination by a Party to be performed or made "reasonably" shall be deemed to be references to the Austrian law term "nach billigem Ermes-sen" and shall be construed according to this term, and any other reference relating to reasonability shall be construed to be a reference to the Austrian law concept of "Billigkeit".

2. Secured Claims

2.1 In case of an Enforcement Event, the Pledgor hereby unconditionally and irrevocably undertakes and agrees to pay to the Pledgee an amount of

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€1,000,000 (one million euros) as contractual penalty, irrespective of fault and not being subject to judicial review, in accordance with the relevant provisions of the Austrian Civil Code (ABGB) and the Austrian Entrepreneur Code (UGB). Any other remedy (including but not limited to damage claims) the Pledgee may have against the Pledgor under the provisions of the Purchase Agreement and/or the Security Agreement shall remain unaffected hereby and subject to the applicable laws and contractual regulations as provided for therein.

2.2 This Pledge hereunder is constituted in order to secure the prompt and complete satisfaction of all Secured Claims.

2.3 The Parties agree that in case of a change, amendment, supplement or novation (Novation) of the Secured Claims, this Pledge shall not lapse but shall continue to. secure such changed, amended, supplemented or novated Secured Claims in accordance with Section 1378 of the Austrian General Civil Code (Allgemeines Burgerliches Gesetzbuch).

3. Pledge

3.1 The Pledgor hereby grants to the Pledgee a first ranking pledge over the Austrian Patents, together with all ancillary rights and claims associated with the Austrian Patents (the "Pledge") and the Pledgee accepts such Pledge.

3.2 The Pledge granted under this Agreement shall be in addition to and shall be independent of each other security and/or guarantee which the Pledgee may at any time hold for any of the Secured Claims. No prior security held by the Pledgee over the whole or any part of the Austrian Patents shall merge in the Pledge hereby constituted. In particular, nothing contained in this Agreement is intended to, or shall operate so as to, prejudice or affect any bill, note, guarantee, mortgage, pledge, charge or other security of any kind whatsoever which the Pledgee may have for the Secured Claims or any right, remedy or privilege of the Pledgee there under.

4. Operation of the Austrian Patents

The Pledgor shall not release, sell, transfer, assign, dispose of or otherwise deal in any way with any of the Austrian Patents other than within its ordinary course of business and in accordance with the provisions of the Secured Documents. Until the occurrence of an Enforcement Event, the Pledgor (acting in good faith) shall be free (without the further consent of the Pledgee) to apply any moneys it received in respect of the Austrian Patents subject to any applicable restrictions set out in the Secured Documents.

5. Valid Creation of the Pledge in accordance with Austrian law

5.1 Immediately upon execution of this Agreement, the Pledgor undertakes to execute as legally valid and binding agreement upon the Pledgor in notarized

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and apostilled form a notice in form and substance as set out in Schedule II to the Austrian Patent Office and provide - once countersigned by the Pledgee -for submission of such notice with the Austrian Patent Office in order for the pledge over the Austrian Patents to become effective under Austrian law pursuant to section 452 of the Austrian Civil Code and section 43 of the Austrian Patent Act.

5.2 In addition and upon the request of the Pledgee, the Pledgor shall undertake any and all further action and shall deliver and issue all necessary documents and certificates with respect to the Austrian Patents which in the reasonable opinion of the Pledgee is necessary or desirable under all applicable laws to make the Pledge valid and enforceable in accordance with its terms.

5.3 Upon having actual knowledge thereof, the Pledgor shall immediately inform the Pledgee if the completion of the act of perfection as per Clause 5.1 by way of registration of the Pledge in the Patent Register turns out not to be sufficient for a valid and effective pledge of the Austrian Patents under Austrian law or any other laws applicable to the Austrian Patents and/or the Secured Documents and shall deliver and issue all necessary documents and certificates to the Pledgee as necessary to perfect the respective Pledge.

5.4 Upon the reasonable request of the Pledgee, the Pledgor shall provide to the Pledgee evidence reasonably requested showing that any perfection requirement as set out in Clauses 5.1 and 5.3 which shall be made by the Pledgor is complied with.

6. Enforcement of Pledge

6.1 Following the occurrence of an Enforcement Event, the Pledgee shall be entitled to avail itself of all rights and remedies that a pledgee has upon the default of a pledgor under Austrian law (including but not limited to enforcement pursuant to Section 461 of the Austrian Civil Code (Allgemeines Burgerliches Gesetzbuch)), In addition the Pledgee shall be entitled to realize the Pledge without writ, judgment or any other legal court action in a public auction (hereafter referred as "Public Auction") or by private sale (hereunder referred to as "Private Sale") by applying the provisions set forth in Section 466 lit a to e Austrian Civil Code and Section 368 of the Austrian Entrepreneurs Code (Unternehmensgesetzbuch), without the requirement of any further notice, calling, judicial warrant or decision, or the necessity to initiate any proceedings before the courts. The Pledgor herewith grants its express consent to such out-of-court enforcement.

6.2 Upon an Enforcement Event, the Pledgor shall be notified of any imminent realization of the Pledge by written notice prior to such realization. Such notice in order to be valid shall assert the time, place and the procedure of enforcement. Such notice, however, is not required if bankruptcy proceedings have been initiated against the Pledgor.

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6.3 Any Private Sale or Public Auction shall only be made upon prior assessment of the value of the Austrian Patents by an independent certified public accountant from Deloitte & Touche after consultation with an Austrian patent lawyer. If the Pledgor and the Pledgee do not reach agreement on the identity of the Austrian patent lawyer within 10 Business Days after the lapse of the period as set out in section 6.2, such Austrian patent lawyer shall be appointed by the President of the Austrian chamber of patent Lawyers. The assessment of the Austrian Patent shall be made by the expert on reasonable grounds and assumptions and upon specification of the appropriate method of assessment. The costs of the expert's assessment shall be borne by the Pledgor or covered by the Pledge itself.

6.4 Once the expert has rendered its valuation or the Parties have mutually agreed upon the value of the Austrian Patents, the Pledgee shall notify the Pledgor (notwithstanding any other compulsory publication obligations provided by law) on the conditions of the realization of the Pledge, which may not take place within a period less than ten Business Days from the date when the valuation of the Austrian Patents has been completed.

6.5 Both in the case of a Public Auction or a Private Sale, the Austrian Patents must not be transferred at a price which is below the value assessed by the expert or agreed upon between the Parties. The Pledgor and any affiliates of the Pledgor are not entitled to participate in a Public Auction or in a Private Sale.

6.6 In case the Pledgee should seek to enforce the Pledge, the Pledgor shall render forthwith all reasonably necessary assistance in order to facilitate the prompt realisation of the Austrian Patents or any part thereof and/or the exercise by the Pledgee of any other right it may have as pledgee.

6.7 In case of enforcement of the Pledge, no rights of the Pledgee shall pass to the Pledgor by subrogation or otherwise unless and until all of the Secured Claims have been satisfied and discharged in full. Until then, the Pledgee shall apply all enforcement proceeds to the discharge of the Secured Claims.

6.8 The proceeds from the enforcement of the Pledge shall be paid to the Pledgee. Proceeds of the enforcement which exceeds the amount of the Secured Claims, including, in particular, any accrued interests since the Secured Claims have fallen due, are to be disbursed to the Pledgor.

6.9 The Pledgee may, in its sole reasonable discretion, determine which of several granted securities, if applicable, shall be used to satisfy the Secured Claims.

6.10 The Pledgor waives its rights of revocation (Anfechtbarkeit) and set-off (Aufrechenbarkeit) to the extent legally permissible.

6.11 In case of a Public Auction or a Private Sale, the Pledgor hereby irrevocably empowers and authorizes the Pledgee to take all judicial and non judicial

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measures on behalf of the Pledgor necessary or appropriate for such realization, in particular, the Pledgor hereby irrevocably empowers and authorizes the Pledgee to sign and execute on its behalf an agreement on the sale and transfer of the Austrian Patents in the course of the Public Auction or the Private Sale, to sign all documents and make all legally binding declarations related thereto, to receive the transfer price and. to determine all other conditions of such agreement on the Pledgor's behalf. Furthermore, the Pledgor authorizes Pledgee to grant power of substitution to a person of the Pledgee's trust within the scope of this power of attorney.

7. Undertakings, Representations and Warranties

7.1 Unless otherwise permitted by any provision in any of the Secured Documents, the Pledgor hereby covenants with the Pledgee that without the prior consent of the Pledgee (not to be unreasonably withheld, delayed or conditioned where appropriate) the Pledgor shall:

7.1.1 not sell, transfer or in any other way dispose of any of the Austrian Patents or any interest therein, if such disposal is not permitted by the Secured Documents, and procure that none of its subsidiaries shall create or permit to subsist any encumbrance over all or any of the Austrian Patents,

7.1.2 effect promptly any payments to be made in respect of the Austrian Patents,

7.1.3 not, except as permitted or required under the Secured Documents, take any action or exercise any rights (or omit to take any action or exercise any rights) which could reasonably be expected materially and adversely to affect the rights of the Pledgee under and the preservation of the security interests intended to be created by this Agreement.

7.2 The Pledgor, represents and warrants to the Pledgee that

7.2.1 the Existing Austrian Patents are validly existing and legally enforceable;

7.2.2 it has good title to and is the sole owner of the Austrian Patents, free and clear of any third party rights (save for those rights granted to Nycomed Danmark APS, a corporation existing under the laws of the Kingdom of Denmark, pursuant to a licence agreement dated 2 July 2007 between the Pledgor and Nycomed Danmark APS), and it has not sold, assigned or otherwise disposed of or agreed to sell or otherwise dispose of the Austrian Patents or any of its rights or benefits in respect of the Austrian Patents;

7.2.3 the Austrian Patents are free of any encumbrances and are not subject to any prohibition to be pledged;

7.2.4 this Agreement provides for a valid first rank security over the Austrian Patents in accordance with all applicable laws.

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8. No Liability and Indemnity

8.1 The Pledgee shall not be liable for any loss or damage suffered by the Pledgor save in respect of such loss or damage which is suffered as a result of the wilful misconduct (Vorsatz) or gross negligence (grobe Fahrlassigkeit) of the Pledgee.

8.2 The Pledgor shall defend and indemnify and hold harmless Pledgee against all claims, demands, proceedings, costs and expenses (including legal fees) referred to in clause 8.2 above which may be brought or asserted against Pledgee, its shareholders, directors, employees, agents or representatives or suffered or incurred by the Pledgee, its shareholders, directors, employees, agents or representatives. The obligations in this paragraph shall survive the termination or expiry of this Agreement.

9. Duration

This Agreement shall remain in full force and effect until release of the Austrian Patents in accordance with Clause 10.

10. Release of Pledge (Pfandfreigabe)

10.1 The Pledgee shall, at the request and cost of the Pledgor, release and cancel the Pledge and release the Austrian Patents from the Pledge upon the Secured Claims being discharged in full and the Pledgor not being under any further actual or contingent obligation to make advances or provide other financial accommodation to the Pledgee under the Secured Documents;

10.2 In connection with any release or cancellation described in ClauselO.l, the Pledgee shall (at the Pledgor's costs) do all such acts which are reasonably requested by the Pledgor in order to effect the release or cancellation the Pledge.

11. Transfer of Rights

The Pledgee, but not the Pledgor, is entitled to assign and pledge its rights under this Agreement and to assign and re- pledge the Pledge (Afterverpfandung) to third parties without the consent of the Pledgor. In case of such assignment or re-pledge the Pledgee shall inform the Pledgor to an address outside of Austria and the Pledgor shall take all action as may be instructed by the Pledgee from time to time.

12. Notices

12.1 Any notice or other communication under or in connection with this Agreement shall be in writing and shall be given in the form as set out in section 11.3 of the Purchase Agreement:

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for the Pledgor:

NPS Allelix Corp.
c/o Blake, Cassels & Graydon LLP
199 Bay Street
Suite 2800, Commerce Court West
Toronto ON M5L 1A9 Canada

Attention of: Chris Hale
Fax No.: (416) 863-2653 '

with a copy (which shall not constitute notice) to:

NPS Pharmaceuticals Inc.
Morris Corporate Center 1.
4th Floor, Building B
300 Interpace Parkway
Parsippany, New Jersey 07054
United States of America

Attention of: Vice-President, Corporate Development
Fax No.: (973)316-6463

for the Pledgee:

Drug Royalty L.P. 3
c/o Drug Royalty Corporation Inc.
Suite 3120, Royal Bank Plaza
Toronto, ON
Canada M5J 2J3

Attention of: Behzad Khosrowshahi
Fax No.:(416) 863-5161
E-mail: bk@drugroyalty.com

with a copy (which shall not constitute notice) to:

Davies Ward Phillips & Vineberg LLP
P.O. Box 63
Suite 4400, 1 First Canadian Place
Toronto, ON Canada M5X 1B1

Attention of: Gillian R. Stacey
Fax No.: (416) 863-0871
E-Mail: gstacey@dwpv.com

or to such other address as the recipient may notify or may have notified to the other Party in writing in accordance with the foregoing provided that such address is outside Austria.

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12.2 Any notice or other communication under or in connection with this Agreement shall be in English or, if in any other language, accompanied by a translation into English. In the event of any conflict between the English text and the text in any other language, the English text shall prevail.

13. Austrian Stamp Duty

13.1 None of the Parties shall (i) bring an original or certified copy of this Agreement or any of the Secured Documents, or any other document that contains any written confirmation or written reference to this Agreement or any of the Secured Documents, apart from Schedule II which is intended to be filed with the Austrian Patent Office, (Ersatzbeurkundung oder rechtsbezeugende Urkunde) into the Republic of Austria or (ii) produce a document that contains any written confirmation or written reference to this Agreement or any of the Secured Documents within the Republic of Austria.

13.2 The Parties acknowledge that the bringing of this Agreement or any of the Secured Documents or any other document containing any written confirmation or any written reference to this Agreement or any of the Secured Documents, apart from Annex 2 which is intended to be filed with the Austrian Patent Office, (Ersatzbeurkundung oder rechtsbezeugende Urkunde) into the Republic of Austria or the production of any other document containing written confirmation or any written reference to this Agreement or any of the Secured Documents, apart from Annex 2 which is intended to be filed with the Austrian Patent Office, within the Republic of Austria may cause the imposition of Austrian stamp duty (Gebuhreri).

13.3 Any Party intentionally or negligently bringing or causing any other person (other than a Party) to bring this Agreement or any of the Secured Documents, either as original or certified copy, or any other written confirmation or written reference to this Agreement or any of the Secured Documents in another document, apart from Annex 2 which is intended to be filed with the Austrian Patent Office, into the Republic of Austria or producing any other document containing any written confirmation or written reference to this Agreement or any of the Secured Documents, apart from Annex 2 which is intended to be filed with the Austrian Patent Office, within the Republic of Austria shall be solely liable for any stamp duty resulting there from, provided, however, that nothing in this Clause shall prevent the Pledgee or the Security Agent from bringing or causing any other person (other than a Party) to bring this Agreement or any of the Secured Documents, either as original or certified copy, or any other written confirmation or written reference to this Agreement or any of the Secured Documents in another document, into the Republic of Austria or producing any other document containing any written confirmation or written reference to this Agreement or any of the Secured Documents in another document within the Republic of Austria if this is required and/or reasonably desirable for the enforcement or the preservation of any rights, powers and remedies under this Agreement or any of the Secured Documents, the perfection of the

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Pledge created pursuant.to this Agreement, or if any proceedings are instituted by or against the Pledgee in connection with this Agreement or any of the Secured Documents. In any case, the Pledgee and the Pledgor agree not to contest the validity of an uncertified copy of this Agreement or any of the Secured Documents in any court and enforcement proceeding in Austria.

14. Miscellaneous

14.1 Changes and amendments of this Agreement including this subsection shall be made in writing, unless notarial form is required by the law.

14.2 This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same Agreement.

14.3 If, at any time, any provision of this Agreement is or becomes illegal, invalid or unenforceable in any respect under the law of any jurisdiction, or if, at any time, any provision of this Agreement is or becomes incomplete neither the legality, validity or enforceability of the remaining provisions of this Agreement nor the legality, validity or enforceability of such provision under the law of any other jurisdiction shall in any way be affected or impaired thereby. Each insufficient (or incomplete) provision shall be replaced or completed by an effective, valid, practicable and enforceable provision in such a way that the new provision closely reflects the legal and economic effects, which the Parties have sought to achieve in the insufficient (or incomplete) provision.

14.4 No failure to exercise, nor any delay in exercising on the part of the Pledgee, any right or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right or remedy prevent any further or other exercise thereof or the exercise of any other right or remedy. The rights and remedies provided hereunder are cumulative and not exclusive of any rights or remedies provided by law.

14.5 This Agreement shall be governed by and construed in accordance with the laws of Austria.

14.6 All disputes arising out of or in connection with this Agreement, including the question of its establishment and validity, shall be finally settled under the Rules of Arbitration and Conciliation of the International Arbitral Centre of the Austrian Federal Economic Chamber in Vienna, Austria, by three arbitrators appointed in accordance with said rules. The place of arbitration shall be Vienna, Austria. The language of the arbitration proceedings shall be English. All pleadings filed in the course of the proceedings and all attachments thereto shall be in English and if any original is in any other language shall include a certified translations of the relevant original document into English. The arbitration award shall be final and binding upon the Parties taking part in the arbitration proceedings.

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Schedule I

List of Austrian Patents

Austrian Patent No.	European Patent No.	Subject	Status
E0273693	EP1079803B	Formulation	Granted
E0275419	EP1001802B	Dosage Regime	Granted
E0164394	EP0515228B	Pure PTH	Granted
E0140973	EP0357391B	DNA construct	Granted
Not yet known	EP1473040A	Dosage Regime	Pending
Not yet known	EP0735896A	Formulation	Pending
Not yet known	EP1687048A	Administration Method	Pending
SZ 32/2006 (SPC)		SPC	Filed 19 October 2006

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Schedule II

Notice to the Austrian Patent Office

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CONDITIONAL ASSIGNMENT AGREEMENT

BETWEEN

(1)   NPS ALLELIX CORP., a company incorporated under the laws of Ontario, Canada, with address c/o Blake, Cassels & Graydon LLP, 199 Bay Street, Suite 2800, Commerce Court West, Toronto ON M5L 1A9 Canada (hereinafter "NPS"); and

(2)   DRUG ROYALTY L.P. 3, a limited partnership incorporated under the laws of the Cayman Islands, whose registered office is at M&C Corporate Services Limited, PO Box 309GT, Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands (hereinafter "DRLP3").

Each a "Party" and together the "Parties".

WHEREAS

(A)   NPS and DRLP3 have entered into an agreement for the sale and assignment of rights dated as of July 16, 2007 (as such agreement may be amended, modified, supplemented or restated from time to time, the "Purchase Agreement");

(B)   NPS is the registered proprietor of certain Patents (as defined in the Purchase Agreement) including without limitation those patents and patent applications listed in the Schedule to this Agreement (the "French Patents"). NPS is also the proprietor of any related Governmental Authority (as defined in the Purchase Agreement) approvals and agreements relating to any product that is the subject of any such French Patents (the "Related Rights");

(C)   NPS and DRLP3 have also entered into an agreement, dated as of July 16, 2007, as general and continuing French Patents security for the due payment and performance of certain Obligations arising pursuant to the Purchase Agreement (as such agreement may be amended, modified, supplemented or restated from time to time, the "Security Agreement");

(D) Pursuant to section 3.2(g) of the Purchase Agreement, NPS has agreed to deliver certain conditional assignment agreements to DRLP3, including this Agreement;

(E) This Agreement sets out the terms of the assignment of the French Patents, including their Related Rights, by NPS to DRLP3. French Patents

NOW THEREFORE in consideration of the respective covenants, promises and agreements of the Parties herein contained and other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged by each of the Parties), the Parties agree as follows:

Definitions

Terms that are defined in the Purchase Agreement and in the Security Agreement and not otherwise defined herein have, unless the context otherwise requires, the respective meanings specified in priority in the Purchase Agreement and in the Security Agreement and, in addition, the following terms have the following meanings (and grammatical variations of such terms shall have corresponding meanings)

1. "Event of Defaulf' means a Major Default or a Minor Default;
2. "Major Default" means the occurrence of any one or more of the following events:

1. any breach by NPS of any representation or warranty made by NPS in Section 4.1, 4.4, 4.5, 4.6(c), 4.6(d), 4.6(e) or 4.6(f) of the Purchase Agreement; provided, however, that a breach of Section 4.1(a) or 4.4 of the Purchase Agreement shall not be a Major Default unless such breach results in a Material Adverse Effect;
2. any breach by NPS of any of its covenants under Section 7.2(b) of the Purchase Agreement and such breach shall continue unremedied for a period of 60 days after written notice thereof; or
3. the cessation or threatened cessation by NPS of its business generally or the admission by NPS of its inability to, or its actual failure to, pay its

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debts generally, including circumstances where NPS (i) is adjudged bankrupt or insolvent, (ii) makes an assignment in bankruptcy or otherwise for the benefit of creditors, (iii) files a petition or proposal under bankruptcy, insolvency or similar legislation, or (iv) has instituted against it proceedings under bankruptcy, insolvency or similar legislation including for the appointment of a receiver or trustee;

3. "Minor Default" means the occurrence of any one or more of the following events to the extent that it is not a Major Default:
   1. the failure of NPS to pay any monetary Obligations within five Business Days of the date on which such Obligations are due or payable;
   2. the failure of NPS to perform any non-monetary Obligation or covenant under the Security Agreement or the Purchase Agreement and such failure shall continue unremedied for a period of 60 days after written notice thereof; or
   3. any breach by NPS of any representation or warranty made by NPS in the Purchase Agreement (for certainty, including without limitation a breach of Section 4.1 (a) or 4.4 of the Purchase Agreement if such breach does not result in a Material Adverse Effect;
4. "Obligations" means all indebtedness, liabilities and obligations (whether direct, indirect, absolute, contingent or otherwise) of NPS to DRLP3 arising pursuant to the Purchase Agreement or the Security Agreement; and
5. "Parties" means NPS and DRLP3, and "Party" means either of them; (f) "Purchase Agreement" has the meaning specified in the recitals of this Agreement; (g)"Security Agreement" has the meaning specified in the recitals of this Agreement.

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Operative Clauses

1. Subject to the condition provided for under Clause 3 below, NPS hereby agrees that all of its right, title and interest in the French Patents, including without limitation their Related Rights, be assigned to DRLP3.
2. The operation of this Agreement does not constitute a waiver of any rights or remedies upon default provided between the parties in the Security Agreement or in other rights of DRLP3 as described in the Purchase Agreement.
3. To the fullest extent permitted by law, rights and remedies available to DRLP3, whether provided for in this Agreement, in the Security Agreement, in the Purchase Agreement or otherwise, are not mutually exclusive, are cumulative and not alternative, and may be exercised independently or in any combination.
4. Subject to the condition provided for under clause 5 below, provided that DRLP3 does not decide otherwise, NPS and DRLP3 hereby agree the French Patents, including without limitation their Related Rights, shall automatically be granted, assigned and transferred to DRLP3 such that title thereto and ownership therein shall belong to and be vested in DRLP3.
5. Subject to clauses 6 and 7, the operation of this Agreement is subject to the occurrence of an Event of Default.
6. If the Event of Default is a Minor Default, the operation of this Agreement shall not take effect unless or until DRLP3 has first sought to commence legal action to enforce payment or performance of the Obligations and any remedy obtained under such action has not satisfied the Obligations of NPS or any judgement obtained pursuant to such action remains unsatisfied by NPS for more than 15 Business Days after the rendering of such judgement (without the necessity of appeal from such judgement).
7. If an Event of Default is the result of a breach of representation and warranty by NPS, then the operation of this Agreement shall not take effect for a period of 60 days commencing on the date on which notice of such breach is provided to NPS and

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furthermore shall not take effect if during that 60 day period the parties agree upon an alternative remedy in respect of that breach.

8. Such transfer, assignment and grant shall be effective upon the occurrence of an Event of Default, subject to clauses 4 to 7 above, regardless of any dispute or proceedings whatsoever that may arise between the Parties and regardless of the Expert proceeding set out in Clause to ascertain the value of the French Patents at the time of the transfer, assignment and grant (hereunder the "Value of the French Patents").
9. Nothing contained in Clauses 4 to 7 shall be construed to afford DRLP3 any recourse to the French Patents prior to the occurrence of an Event of Default.
10. Notwithstanding the effectiveness of the transfer, assignment and grant of the French Patents to DRLP3 upon the occurrence of an Event of Default as provided in Clause 4 to 7, NPS and DRLP3 hereby agree to appoint an Expert as listed in Schedule 2 with the mission to ascertain the Value of the French Patents at the time of the transfer to DRLP3,
11. The Parties hereby agree that the decision of the Expert shall be final and binding upon the Parties and the Parties hereby waive any right to challenge the Value of the French Patents as ascertained by the Expert before any Governmental Authority Office, including any Court whatsoever.
12. Any sums owed or to be owed to DRLP3 in accordance with Clause 7 of the Purchase Agreement until the Termination Date thereof as provided in Clause 8.1 of the Purchase Agreement and any Obligations shall be automatically deducted from the Value of the French Patents. In this respect, Clause 8.1 of the Purchase Agreement provides that the Termination date of the Purchase Agreement shall be: "(i) the date that the aggregate amount of the payments received by the Purchaser in respect of the Purchaser Royalty Interest is equal to the amount that is 2.5 times the amount of the Purchase Price actually paid by the Purchaser to the Vendor under Clause 2.3 of the Purchase Agreement; (ii) the expiration or termination of the License Agreement between NPS and Nycomed pursuant to Clause 16.1 or 16.2 thereof; or (iii) the termination of the License Agreement by Nycomed and the failure by the Vendor or the Purchaser to enter into a New License

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Agreement within 12 months after such termination in accordance with Clause 7.5 of the Purchase Agreement."

13. Subject to the termination of this Agreement pursuant to Clause 11 herein, NPS covenants with DRLP3 that the French Patents is tree of hen, charge, pledge and encumbrance from any third party and that it shall not sell, assign, pledge or otherwise charge or transfer any of the French Patents to any third party.
14. This Agreement and its assignment shall be recorded at the patent registry at the French patent office (Institut National de la Propriete Industrielle or INPI) or at any Governmental Authority office in France or in relevant jurisdictions, including the European Patent Office.
15. NPS shall undertake at its own cost all such acts, execute all such documents and do all such things as DRLP3 may request in order for this Agreement and the rights granted to DRLP3 under this Agreement to be recorded with the French patent office (Institut National de la Propriete Industrielle or INPI) or appropriate Governmental Authority office in France or of any relevant jurisdiction, including the European Patent Office and, where required, to produce any additional documents that DRLP3 may require.
16. NPS shall undertake at its own cost, upon the occurrence of an Event of Default,, subject to clauses 3 and 4, to cooperate in good faith with DRLP3, to do all such acts and give any documents and signatures for the performance and the enforcement of all formalities required to vest title in the French Patents at the French patent office (Institut National de la Propriete Industrielle or INPI) or at any Governmental Authority office in France or in relevant jurisdictions, including the European Patent Office and, where required, to produce any documents confirming that an Event of Default has taken place that DRLP3 may require.
17. NPS hereby authorizes DRLP3 to take any action and make all such acts and things to create, preserve, perfect, validate or otherwise protect the French Patents and the rights acquired hereunder by DRLP 3 at the French patent office or at any Governmental Authority office in France or in relevant jurisdictions, including the European Patent Office, in the event that NPS fails to do so, at the expenses of NPS, including, without

6

limitation, the payment of taxes, renewals and annuity fees, and to enable DRLP3 to exercise and enforce its rights and remedies hereunder and generally to carry out the provisions and purposes of this Agreement;

18. NPS hereby authorizes DRLP3 to take any action, including judicial proceedings, and make all such acts and things to create, preserve, perfect, validate or otherwise protect the French Patents and the rights acquired hereunder by DRLP3 at the French patent office or at any Governmental Authority office in France or in relevant jurisdictions, including the European Patent Office, in the event that NPS fails to do so, at the expenses of NPS, including, without limitation any infringement actions from any third party and opposition proceedings that may occur at any time during the execution of this Agreement.
19. Subject to clauses 6 and 7, NPS shall, upon demand, reimburse DRLP3 for all reasonable costs and expenses incurred by DRLP3 in the enforcement of any rights hereunder (including without limitation fees and expenses of counsel at each step of the actions and proceedings where DRLP3 prevails) and all such costs shall form part of the Obligations.
20. NPS hereby irrevocably constitutes and designates DRLP3 as and for NPS's attorney in fact:
    1. to execute, upon the occurrence of an Event of Default, subject to clauses 4 to 7 above, and during the continuance thereof, all and any such instraments, documents and papers as DRLP3.determines to be appropriate in connection with the exercise of such rights and remedies and to cause the sale, license, assignment, transfer or other disposition of the French Patents, including all filings, recordings or registrations with the applicable government offices required or appropriate to effect such dispositions of the French Patents.
    2. The within grant of a power of attorney, being coupled with an interest, shall be irrevocable until this Agreement is terminated.

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21. Any notice, demand, direction or other instrument required or permitted to be given hereunder shall be in writing and shall be given in the manner and addressed as set out in Clause 11.3 of the Purchase Agreement. Either party may change its address for service from time to time by notice given in accordance with the foregoing.
22. This Agreement may be terminated by written agreement made between DRLP3 and NPS. Upon indefeasible fulfillment of the Obligations and full payment, in accordance with Clause 8.1 of the Purchase Agreement, this Agreement shall terminate and the French Patents shall belong to NPS.
23. Upon termination of this Agreement, DRLP3 shall, at the request and expense of NPS, make and do all such acts and things and execute and deliver all such financing statements, instruments, agreements and documents as NPS considers reasonably necessary or desirable to discharge the French Patents, to release and discharge the French Patents therefrom and to record such release and discharge in all appropriate offices of public record.
24. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of DRLP3 and NPS. This Agreement may not'be assigned in whole or in part by either party without the prior written consent of the other party; provided, however, that DRLP3 may assign this Agreement in whole or in part without the prior written consent of NPS: (i) by way of security to a financial institution or other lender, (ii) to any Person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, DRLP3, (iii) to a special purpose vehicle or (iv) as part of a sale of a material part of DRLP3, in any case whether by way of reorganization or otherwise, and DRLP3 shall give prompt notice of any such assignment to NPS within 10 Business Days after the occurrence thereof.
25. This Agreement is governed by and construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein. All disputes arising out or in connection with this Agreement including those concerning its existence, validity, interpretation and performance are subject to the exclusive jurisdiction of the competent Courts of the Province of Ontario and all courts competent to hear appeals therefrom.

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Date July 16, 2007

Having read the above, the Parties hereby sign:

NPS ALLELIX CORP.,

/s/ Val R. Antczak
Name: Val R. Antczak
Title: Vice President and Secretary

DRUG ROYALTY L.P. 3,
by its General Partner
DRC MANAGEMENT LLC 3
/s/ Behzad Khosrowshahi
Name: Behzad Khosrowshahi
Title: Manager

9

SCHEDULE 1

The French Patents

Patent No.	Subject	Status
EP1079803B	Formulation	Granted
SPC 06C0032	Formulation	Granted
EP1001802B	Dosage Regime	Granted
EP0515228B	Pure PTH	Granted
EP0357391B	DNA construct	Granted
EP1473040A	Dosage Regime	Pending
EP0735896A	Formulation	Pending
EP1627048A	Administration Method	Pending

10

SCHEDULE 2

NOMINATION OF THE EXPERT

Deloitte & Touche

11

CONDITIONAL ASSIGNMENT AGREEMENT

BETWEEN

(1)   NPS ALLELIX CORP., a company incorporated under the laws of Ontario, Canada, whose registered office is at c/o Blake, Cassels & Graydon LLP, 199 Bay Street, Suite 2800, Commerce Court West, Toronto ON M5L 1A9, Canada (hereinafter "NPS"); and

(2)   DRUG ROYALTY L.P. 3, a Cayman Island limited partnership incorporated under the laws of the Cayman Islands whose registered office is at M&C Corporate Services Limited, PO Box 309GT, Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands (hereinafter "DRLP3").

Each a "Party" and together the "Parties".

WHEREAS

(A)   NPS and DRLP3 have entered into an agreement for the sale and assignment of rights dated as of July 16, 2007 (as such agreement may be amended, modified, supplemented or restated from time to time, the "Purchase Agreement");

(B)   NPS is the registered proprietor of certain Patents (as defined in the Purchase Agreement) including without limitation those patents, patent applications and supplementary protection certificates listed in the Schedule to this Agreement (the "German Patents"). NPS is also the proprietor of any related Governmental Authority (as defined in the Purchase Agreement) approvals and agreements relating to any product that is the subject of any such German Patents (the "Related Rights");

(C)   NPS and DRLP3 have also entered into an agreement, dated as of July 16, 2007, as general and continuing collateral security for the due payment and performance of certain Obligations arising pursuant to the Purchase Agreement (as such agreement may be amended, modified, supplemented or restated from time to time, the "Security Agreement");

(D)   Pursuant to section 3.2(g) of the Purchase Agreement, NPS has agreed to deliver certain conditional assignment agreements to DRLP3, including this Agreement;

(E)   This Agreement sets out the terms of the assignment of the German Patents, including their Related Rights, by NPS to DRLP3.

IN CONSIDERATION OF the Parties entering into the Purchase Agreement AND IN FURTHER CONSIDERATION of the payment by DRLP3 to NPS of US$1 (the receipt and sufficiency of which is hereby acknowledged), IT IS HEREBY AGREED AS FOLLOWS:

Definitions

1. "Event of Default" means a Major Default or a Minor Default;
2. "Major Default" means the occurrence of any one or more of the following events:
   1. any breach by NPS of any representation or warranty made by NPS in Section 4.1, 4.4, 4.5, 4.6(c), 4.6(d), 4.6(e) or 4.6(f) of the Purchase Agreement; provided, however, that a breach of Section 4.1(a) or 4.4 of the Purchase Agreement shall not be a Major Default unless such breach results in a Material Adverse Effect;
   2. any breach by NPS of any of its covenants under Section 7.2(b) of the Purchase Agreement and such breach shall continue unremedied for a period of 60 days after written notice thereof; or
   3. the cessation or threatened cessation by NPS of its business generally or the admission by NPS of its inability to, or its actual failure to, pay its debts generally, including circumstances where NPS (i) is adjudged bankrupt or insolvent, (ii) makes an assignment in bankruptcy or otherwise for the benefit of creditors, (iii) files a petition or proposal under bankruptcy, insolvency or similar legislation, or (iv) has instituted against it proceedings under bankruptcy,

2

insolvency or similar legislation including for the appointment of a receiver or trustee;

3. "Minor Default" means the occurrence of any one or more of the following events to the extent that it is not a Major Default:
   1. the failure of NPS to pay any monetary Obligations within five Business Days of the date on which such Obligations are due or payable;
   2. the failure of NPS to perform any non-monetary Obligation or covenant under the Security Agreement or the Purchase Agreement and such failure shall continue unremedied for a period of 60 days after written notice thereof; or
   3. any breach by NPS of any representation or warranty made by NPS in the Purchase Agreement (for certainty, including without limitation a breach of Section 4.1(a) or 4.4 of the Purchase Agreement if such breach does not result in a Material Adverse Effect;
4. "Obligations" means all indebtedness, liabilities and obligations (whether direct, indirect, absolute, contingent or otherwise) of NTS to DRLP3 arising pursuant to the Purchase Agreement or the Security Agreement; and
5. All other terms used in this Agreement shall have the same meanings as provided for in the Purchase Agreement and the Security Agreement.

Operative Clauses

1. Subject to the condition provided for under clause 2 below, NPS hereby assigns all of its right, title and interest in the German Patents, including without limitation their Related Rights, to DRLP3.
2. Subject to clauses 3 and 4, the operation of this Agreement is subject to the occurrence of an Event of Default.

3

3. If the Event of Default is a Minor Default, the operation of this Agreement shall not take effect unless or until DRLP3 has first sought to commence legal action to enforce payment or performance of the Obligations and any remedy obtained under such action has not satisfied the Obligations of NPS or any judgement obtained pursuant to such action remains unsatisfied by NPS for more than 15 Business Days after the rendering of such judgement (without the necessity of appeal from such judgement).
4. If an Event of Default is the result of a breach of representation and warranty by NPS, then the operation of this Agreement shall not take effect for a period of 60 days commencing on the date on which notice of such breach is provided to NPS and furthermore shall not take effect if during that 60 day period the parties agree upon an alternative remedy in respect of that breach.
5. In the meantime, NPS covenants with DRLP3 that it shall not sell, assign, pledge or otherwise charge or transfer any of the German Patents, or any Related Rights, to a third party.
6. This Agreement and its assignment shall be filed with the German National Patent Office. NPS undertakes, to cooperate in good faith with DRLP3, to do all such acts and give any documents and signatures for the performance and the enforcement of all formalities required to perfect and file this Agreement and its assignment with the German National Patent Office and, where required, to produce any additional documents that DRLP3 may reasonably require.
7. NPS undertakes, upon the occurrence of an Event of Default, subject to clauses 3 and 4, to cooperate in good faith with DRLP3, to do all such acts and give any documents and signatures for the performance and the enforcement of all formalities required to vest title in the German Patents in DRLP3 and to record such assignment at the German National Patent Register and, where required, to produce any documents confirming that an Event of Default has taken place that DRLP3 may reasonably require.

4

8. NPS hereby authorizes DRLP3 to do whatever is necessary for the maintenance of the German Patents at the German Patent Office in the event that NPS fails to do so, including, without limitation, the payment of taxes, renewals and annuity fees,
9. This Agreement is governed by and construed in accordance with the laws of the province of Ontario and the federal laws of Canada applicable therein. All disputes arising out or in connection with this Agreement including those concerning its existence, validity, interpretation and performance are subject to the exclusive jurisdiction of the competent Ontario Courts and Tribunals and all courts competent to hear appeals therefrom.

Date July 16, 2007

Having read the above, the Parties hereby sign:

NPS ALLELIX CORP.,

/s/ Val R. Antczak
Name: Val R. Antczak
Title: Vice President and Secretary

DRUG ROYALTY L.P. 3,
by its General Partner
DRC MANAGEMENT LLC 3
/s/ Behzad Khosrowshahi
Name: Behzad Khosrowshahi
Title: Manager

5

SCHEDULE E

The German Patents

Patent No.	German Patent No.	Subject	Status
EP1079803B	699 19 533.0	Formulation	Granted
EP1001802B	698 26 132.1	Dosage Regime	Granted
EP0515228B	692 24 858.7	Pure PTH	Granted
EP0357391B	689 26 895.5	DNA construct	Granted
EP1473040A	P 44 80 014.2	Dosage Regime	Pending
EP0735896A	not assigned	Formulation	Pending
EP1687048A		Administration Method	Pending
12 2006 000 057.7 (SPC)			Filed on 18 October 2006

6

CONDITIONAL ASSIGNMENT AGREEMENT

BETWEEN

(1)   NPS ALLELIX CORP., a company incorporated under the laws of Ontario, Canada, whose registered office is at c/o Blake, Cassels & Graydon LLP, 199 Bay Street, Suite . 2800, Commerce Court West, Toronto ON M5L 1A9, Canada (hereinafter "NPS"); and

(2)   DRUG ROYALTY L.P. 3, a Cayman Island limited partnership incorporated under the laws of the Cayman Islands whose registered office is at M&C Corporate Services Limited, PO Box 309GT, Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands (hereinafter "DRLP3").

Each a "Party" and together the "Parties".

WHEREAS

(A)   NPS and DRLP3 have entered into an agreement for the sale and assignment of rights dated as of July 16, 2007 (as such agreement may be amended, modified, supplemented or restated from time to time, the "Purchase Agreement');

(B)   NPS is the registered proprietor of certain Patents (as defined in the Purchase Agreement) including without limitation those patents, patent applications and supplementary protection certificates listed in the Schedule to this Agreement (the "Greek Patents"). NPS is also the proprietor of any related Governmental Authority (as defined in the Purchase Agreement) approvals and agreements relating to any product that is the subject of any such Greek Patents (the "Related Rights");

(C)   NPS and DRLP3 have also entered, into an agreement, dated as of July. 16, 2007, as general and continuing collateral security for the due payment and performance of certain Obligations arising pursuant to the Purchase Agreement (as such agreement may be amended, modified, supplemented or restated from time to time, the "Security Agreement");

(D)   Pursuant to section 3.2(g) of the Purchase Agreement, HPS has agreed to deliver certain conditional assignment agreements to DRLP3, including this Agreement;

(E)   This Agreement sets out the terms of the assignment of the Greek Patents, including their Related Rights, by NPS to DRLP3.

IN CONSIDERATION OF the Parties entering into the Purchase Agreement AND IN FURTHER CONSIDERATION of the payment by DRLP3 to NPS of US$1 (the receipt and sufficiency of which is hereby acknowledged), IT IS HEREBY AGREED AS FOLLOWS:

Definitions

1. "Event of Default" means a Major Default or a Minor Default;
2. "Major Default/' means the occurrence of any one or more of the following events:
   1. any breach by NPS of any representation or warranty made by NPS in Section 4.1, 4.4, 4.5, 4.6(c), 4.6(d), 4.6(e) or 4.6(f) of the Purchase Agreement; provided, however, that a breach of Section 4.1(a) or 4.4 of the Purchase Agreement shall not be a Major Default unless such breach results in a Material Adverse Effect;
   2. any breach by NPS of any of its covenants under Section 7.2(b) of the Purchase. Agreement and such breach shall continue unremedied for a period of 60 days after written notice thereof; or
   3. the cessation or threatened cessation by NPS of its business generally or the admission by NPS of its inability to, or its actual failure to, pay its debts generally, including circumstances where NPS (i) is adjudged bankrupt or insolvent, (ii) makes an assignment in bankruptcy or Otherwise for the benefit of creditors, (iii) files a petition or proposal under bankruptcy, insolvency or similar legislation, or (iv) has instituted against it proceedings under bankruptcy,

2

insolvency or similar legislation including for the appointment of a receiver or trustee;

3. "Minor Default" means the occurrence of any one or more of the following events to the extent that it is not a Major Default:
   1. the failure of NPS to pay any monetary Obligations within five Business Days of the date on which such Obligations are due or payable;
   2. the failure of NPS to perform any non-monetary Obligation or covenant under the Security Agreement or the Purchase Agreement and such failure shall continue unremedied for a period of 60 days after written notice' thereof; or
   3. any breach by NPS of any representation or warranty made by NPS in the Purchase Agreement (for certainty, including without limitation a breach of Section 4.1(a) or 4.4 of the Purchase Agreement if such breach does not result in a Material Adverse Effect;
4. "Obligations" means all indebtedness, liabilities and obligations (whether direct, indirect, absolute, contingent or otherwise) of NPS to DRLP3 arising pursuant to the Purchase Agreement or the Security Agreement; and
5. All other terms used in this Agreement shall have the same meanings as provided for in the Purchase Agreement and the Security Agreement.

Operative Clauses

1. Subject to the condition provided for under clause 2 below, NPS hereby assigns all of its right, title and interest in the. Greek Patents, including without limitation their Related Rights, to DRLP3.
2. Subject to clauses 3 and 4, the operation of this Agreement is subject to the occurrence of an Event of Default.

3

3. If the Event of Default is a Minor Default, the operation of this Agreement shall not take eff6ct unless or until DRLP3 has first sought to commence legal action to enforce payment or performance of the Obligations and any remedy obtained under such action has not satisfied the Obligations of NPS or any judgement obtained pursuant to such action remains Unsatisfied by NPS for more than 15 Business Days after the rendering of such judgement (without the necessity of appeal from such judgement).
4. If an Event Of Default is the result of a breach of representation and warranty by NPS, then the operation of this Agreement shall not take effect for a period of 60 days commencing on the date on which notice of such breach is provided to NPS and furthermore shall not take effect if during that 60 day period the parties agree upon an alternative remedy in respect of that breach.
5. In the meantime, NPS covenants with DRLP3 that it shall not sell, assign, pledge or otherwise charge or transfer any of the Greek Patents, or any Related Rights, to a third party.
6. The consideration for the assignment under clause 1, as agreed by the Parties and provided for. in the Purchase Agreement and set out above, has already been fully provided and paid by DRLP3 to NPS, and NPS hereby acknowledges that it has received such price and agrees that DRLP3 is not required to make any further payment to NPS. The parties agree that the consideration is fair, reasonable and corresponds fully to the actual value of the assigned Greek Patents, including their Related Rights, and the conditions and prices of the relevant market.
7. This Agreement and its assignment shall be recorded on the Greek National Patent Register (O.B.I.). NPS undertakes, to cooperate in good faith with DRLP3, to do all such acts and give any documents and signatures for the performance and the enforcement of all formalities required to record this Agreement and its assignment on the Greek National Patent Register (O.B.L) and, where required, to produce any additional documents that DRLP3 may reasonably require.
8. NPS undertakes, upon the occurrence of an Event of Default, subject to clauses 3 and 4, to cooperate in good faith with DRLP3, to do all such acts and give any documents

4

and signatures for the performance and the enforcement of all formalities required to vest title in the Greek Patents, including their Related Rights, in DRLP3 and to record such assignment at the Greek National Patent Register (O.B.I.) and, where required, to produce any documents confirming that an Event of Default has taken place that DRLP3 may reasonably require. NPS undertakes also to do all such acts and give any documents and signatures that might be needed in the future for the recording with the Greek National Patent Register (O.B.I.) of this Agreement with regard to EP 1473040 and EP 073589 upon their granting and validation in Greece.

9. NPS hereby authorizes DRLP3, and grants a continuous and irrevocable power of attorney to DRLP3, to take any of the action referred to above in clauses 7 and 8 on behalf of NPS and in particular (but without limitation) to: (a) do all such acts and give any documents and signatures on behalf of NPS for the performance and the enforcement of all formalities required to record this Agreement and the assignment on the Greek National Patent Register (O.B.I.) and, where required, to produce any additional documents on behalf of NPS, (b) to do all such acts and give any documents and signatures on behalf of NPS ..for the performance and the enforcement of all formalities required to vest title in the Greek Patents, including their-Related-Rights, in itself (DRLP3) and to record such assignment at the Greek National Patent Register (O.B.I.) and, where required, to produce and sign on behalf of NPS any documents that be necessary or desirable to confirm that an Event of Default has taken place, (c) do all such acts and give any documents and signatures that might be needed in the future for the recording with the Greek National Patent Register (O.B.I.) of this Agreement with regard to any applications comprised in the Greek Patents upon their granting and validation in Greece, and (d) to carry out all or part of the present power by a substitute.
10. NPS hereby authorizes DRLP3 to do whatever is necessary for the maintenance of the Greek Patents at the Greek Patent Office (O.B.I.) and for the maintenance of the Related Rights in the event that NPS fails to do so, including, without limitation, the payment of taxes, renewals and annuity fees.

5

11. This Agreement is governed by and construed in accordance with the laws of the province of Ontario, and the federal laws of Canada applicable therein. All disputes arising out or in connection with this Agreement including those concerning its existence, validity, interpretation and performance are subject to the exclusive jurisdiction of the competent Ontario Courts and Tribunals and all courts competent to hear appeals therefrom.
12. NPS and DRLP2 both authorise Christina Panagoulea, Georgia Kotroni and Eleftheria Karabatou of "G.D. Kallimopoulos, K.Th. Loukopoulos, A.P. Chiotellis Law Firm", residents of Athens, 2 Ypsilantou Str., 106 75 Greece, jointly or each one separately, submit and record this Agreement at the Greek Patent Office (O.B.I.) and proceed to any action and perform all formalities necessary for the recording of this Agreement. NPS and DRLP3 hereby ratify and confirm everything whatsoever that said attorney(s) may lawfully do, namely any actions or omissions and authorize the above attorney(s) to carry out all or part of the present power by a substitute. NPS and DRLP3 appoint said attorney(s) to accept service of documents in Athens.

Date July 16, 2007

Having read the above, the Parties hereby sign:

6

SCHEDULE

The Greek Patents

European Patent	Greek Patent No.	Title	Status
No.
EP 1079803B	GR 3050775	"Protein Formulations"	Granted
	SPC 8000222	"PREOTACT' Active substance	Granted
EP 1001802B	GR 3050819	"A COMBINED PHARMACEUTICS L PREPARATION COMPRISING PARATHYROID HORMONE AND A BONE RESORPTION INHIBITOR"	Granted
EP0515228B	GR 3027113	"Essential pure human parathyroid hormone" .	Granted
EP1473040A		"Use of human parathyroid hormone"	Pending
EP0735896A		"PARATHYROID HORMONE FORMULATION"	Pending
EP1687048A		"Methods of Administering Therapeutic Injections"	Pending
SPC 8000222 (filed on 20 October 2006 with filing . number 20060800026)			Filed 20 October 2006

8

CONDITIONAL ASSiGNMENT AGKEEMENT

BETWEEN

(1)   NPS ALLELIX CORP., a company incorporated under the laws of Ontario, Canada, whose registered office is at with address c/o Blake, Cassels & Graydon LLP, 199 Bay Street, Suite 2800, Commerce Court West, Toronto ON M5L 1A9 Canada(hereinafter "NPS"); and

(2)   DRUG ROYALTY L.P. a Cayman Island limited partnership incorporated under the laws of the Cayman Islands whose registered office is at M&C Corporate Services Limited, PO Box 309GT, Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands (hereinafter "DRLP3").

Each a "Party" and together the "Parties".

WHEREAS

(A)   NPS and DRLP3 have entered into an agreement for the sale and assignment of rights dated as of July 16, 2007 (as such agreement may he amended", modified, supplemented or restated from time to time, the "Purchase Agreement");

(B)   NPS is the registered proprietor of certain Patents (as defined in the Purchase Agreement) including without limitation those patents, patent applications and SPCs listed in the Schedule to this Agreement (the "Italian Patents"). NPS is also the proprietor of any related Governmental Authority (as defined in the Purchase Agreement) approvals and agreements relating to any product that is the subject of any such Italian Patents (the "Related Rights");

(C)   NPS and DRLP3 have also entered into an agreement, dated as of July 16, 2007, as general and continuing collateral security for the due payment and performance of

certain Obligations arising pursuant to the Purchase Agreement (as such agreement may be amended, modified, supplemented or restated from time to time, the "Security Agreement');

(D)   Pursuant to section 3.2(g) of the Purchase Agreement, NPS has agreed to deliver certain conditional assignment agreements to DRLP3, including this Agreement;

(E)   This Agreement sets out the terms of the assignment of the Italian Patents, including their Related Rights, by NPS to DRLP3.

NOW IT IS HEREBY AGREED AS FOLLOWS:

Definitions

1. "Event of Default" means a Major Default or a Minor Default;
2. "Major Default" means the occurrence of any one or more of the following events:
   1. any breach by NPS of any representation or warranty made by NPS in Section 4.1, 4.4, 4.5, 4.6(c), 4.6(d), 4.6(e) or 4.6(f) of the Purchase Agreement; provided, however, that a breach of Section 4.1(a) or 4.4 of the Purchase Agreement shall not be a Major Default unless such breach results in a Material Adverse Effect; .
   2. any breach by NPS of any of its covenants under Section 7.2(b) of the Purchase Agreement and such breach shall continue unremedied for a period of 60 days after written notice thereof; or
   3. the cessation or threatened cessation by NPS of its business generally or the admission by NPS of its inability to, or its actual failure to, pay its debts generally, including circumstances where NPS (i) is adjudged bankrupt or insolvent, (ii) makes an assignment in bankruptcy or otherwise for the benefit of creditors, (iii) fdes a petition or proposal under bankruptcy, insolvency or similar legislation, or (iv) has instituted against it proceedings under bankruptcy, insolvency or similar legislation including for the appointment of a receiver or trustee;

2

3. "Minor Default" means the occurrence of any one or more of the following events to the extent that it is not a Major Default:
   1. the failure of NPS to pay any monetary Obligations within five Business Days of the date on which such Obligations are due or payable;
   2. the failure of NPS to perform any non-monetary Obligation or covenant under the Security Agreement or the Purchase Agreement and such failure shall continue unremedied for a period of 60 days after written notice thereof; or
   3. any breach by NPS of any representation or warranty made by NPS in the Purchase Agreement (for certainty, including without limitation a breach of Section 4.1(a) or 4.4 of the Purchase Agreement if such breach does not result in a Material Adverse Effect;
4. "Obligations" means all indebtedness, liabilities and obligations (whether direct, indirect, absolute, contingent or otherwise) of NPS to DRLP3 arising pursuant to the Purchase Agreement or the Security Agreement; and
5. All other terms used in this Agreement shall have the same meanings as provided for in the Purchase Agreement and the Security Agreement

Operative Clauses

1. Subject to the condition provided for under clause 2 below, NPS hereby assigns all of its right, title and interest in the Italian Patents, and including without limitation their Related Rights, to DRLP3.
2. Subject to clauses 3 and 4, the operation of this Agreement is subject to the occurrence of an Event of Default.
3. If the Event of Default is a Minor Default, the operation of this Agreement shall not take effect unless or until DRLP3 has first sought to commence legal action to enforce

3

payment or performance of the Obligations and any remedy obtained under such action has not satisfied the Obligations of NPS or any judgement obtained pursuant to such action remains unsatisfied by NPS for more than 15 Business Days after the rendering of such judgement (without the necessity of appeal from such judgement).

4. If an Event of Default is the result of a breach of representation and warranty by NPS, then the operation of this Agreement shall not take effect for a period of 60 days commencing on the date on which notice of such breach is provided to NPS and furthermore shall not take effect if during that 60 day period the parties agree upon an alternative remedy in respect of that breach.
5. In the meantime, NPS covenants with DRLP3 that it shall not sell, assign, pledge or otherwise charge or transfer any of the Italian Patents, or any Related Rights, to a third party.
6. The purchase price for the assignment under clause 1, as agreed by the Parties, is EUR 10,000 less the damages suffered by DRLP3 due to the Event(s) of Default; DRLP3 shall pay said amount within
   1. 30 days from the date on which the Parties agree in writing the amount of the damages due by NPS; or
   2. 30 days from the date on which an independent arbitrator, appointed according to the rules of the Italian Civil Procedure Code, settles the amount of the damages due by NPS.
7. This Agreement and its assignment shall be recorded on the Italian National Patent Register before the payment of the purchase price according to clause 6 above. NPS undertakes to cooperate in good faith with DRLP3, to do all such acts and give any documents and signatures for the performance and the enforcement of all formalities required to perfect and record this Agreement and. its assignment on the Italian Patent Office and, where required, to produce any additional documents that DRLP3 may reasonably require, including without limitation, any necessary powers of attorney that may be required by Italian counsel to record the Agreement. In particular, at the date of execution of this Agreement, NPS undertakes and agrees to execute the attached Simplified Conditional Assignment Form attached as Annex 1.

4

8. NPS undertakes, upon the occurrence of an Event of Default, subject to clauses 3 and 4, to Cooperate in good faith with DRLP3, to do all such acts and give any documents and signatures for the performance and the enforcement of all formalities required to vest title in the Italian Patents, and their Related Rights, in DRLP3 and to perfect and record such assignment at the Italian Patent Office and, where required, to produce any documents confirming that an Event of Default has taken place that DRLP3 may reasonably require, including without limitation, any necessary powers of attorney that may be required by Italian counsel to record the Agreement In particular, NPS undertakes and agrees that it will execute the attached Simplified Assignment Form attached as Annex 2.
9. NPS hereby authorizes DRLP3 to do whatever is necessary for the maintenance of the Italian Patents, and their Related Rights, at the Italian Patent Office in the event that NPS fails to do so, including, without limitation, the payment of taxes, renewals and annuity fees.
10. This Agreement is governed by and construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein. All disputes arising out or in connection with this Agreement including those concerning its existence, Validity, interpretation and performance are subject to the exclusive jurisdiction of the competent Courts and Tribunals of the Province of Ontario and all courts competent to hear appeals therefrom.

Date July 16, 2007

Having read the above, the Parties hereby sign:

5

SCHEDULE

The Italian Patents

Patent No.	Subject	Status
EP1079803B	Formulation	Granted
SPCCCPUB2006 934 .		Granted
EP100T802B	Dosage Regime	Granted
EP0515228B	PurePTH	Granted
EP0357391B	DNA construct	Granted
EP1473040A	Dosage Regime	Pending
EP0735896A	Formulation	Pending
EP1687048A	Administration Method	Pending

7

ANNEX 1

SIMPLIFIED CONDITIONAL ASSIGNMENT FORM

Between

NPS Allelix Corp., a company' existing under the laws of the Province of Ontario, "The Vendor"

Drug Royalty L.P. 3, a Cayman Island limited partnership "The Purchaser" (both "The Parties")

WHEREAS

1. The Vendor is the registered proprietor of several Patents, as defined in the following Clause b);
2. the Patents of which The Vendor grants full ownership, free and clear from any right of third parties, (hereinafter "The Collateral") are listed in Annex A
3. the Purchaser wishes to acquire conditional ownership of The Collateral;

THE PARTIES AGREE AS FOLLOWS

1. The Vendor agrees to sell, assign, transfer to The Purchaser all right, title and interest of The Vendor in and to The Collateral, such that title and ownership of The Collateral shall belong to The Purchaser;
2. The Purchaser agrees to purchase from The Vendor all right, title and interest in and to The Collateral for the price determined according to the criteria set forth in Clause 4 of Ihe Conditional Assignment Agreement signed by The Parties on July 16, 2007 (BUR 10,000 less the sum due to the damages suffered by The Purchaser due to the Event(s) of Default);
3. The Vendor shall undertake all such acts, execute all such documents and do all such things that The Purchaser may request in order to record this Form with the Italian Patent Office.

Date July 16, 2007

Having read the above, the Parties hereby sign:

NPS ALLELIX CORP.

________________________________
Name:

Title:

DRUG ROYALTY L.P. 3,
by its General Partner
DRC MANAGEMENT LLC-3

________________________________
Name: Behzad Khosrowshahi
Title: Manager

8

ANNEX 2

SIMPLIFIED CONDITIONAL ASSIGNMENT FORM

Between

NPS Allelix Corp., a company' existing under the laws of the Province of Ontario, "The Vendor"

Drug Royalty L.P. 3, a Cayman Island limited partnership "The Purchaser" (both "The Parties")

WHEREAS

1. The Vendor'is the registered proprietor of several Patents, as defined in the following Clause b);
2. the Patents of which The Vendor grants full ownership, free and clear from any right of third parties, (hereinafter "The Collateral") are listed in Annex A
3. the Purchaser wishes to acquire the full ownership of The Collateral;

THE PARTIES AGREE AS FOLLOWS

1. The Vendor agrees to sell, assign, transfer to The Purchaser all right, title and interest of The Vendor in and to The Collateral, such that title and ownership of The Collateral shall belong to The Purchaser from the date of this Simplified Assignment Form;
2. The Purchaser agrees to purchase from The Vendor all right, title and interest in and to The Collateral for the price determined according to the criteria set forth in Clause 4 of the Conditional Assignment Agreement signed by The Parties on July 16, 2007 (EUR 10,000 less the sum due to the damages suffered by The Purchaser due to the Event(s) of Default);
3. The Vendor shall undertake all such acts, execute all such documents and do all such things that The Purchaser may request in order to record this Form with the Italian Patent Office.

Date July 16,2007

Having read the above, the Parties hereby sign:

NPS ALLELIX CORP.

________________________________
Name:

Title:

DRUG ROYALTY L.P. 3,
by its General Partner
DRC MANAGEMENT LLC-3

________________________________
Name: Behzad Khosrowshahi
Title: Manager

9

Annex A

The Collateral

Patent No.	Subject	Status
EP1079803B	Formulation	Granted
SPCCCPUB2006 934		Granted
EP1001802B	Dosage Regime	Granted
EP0515228B	PurePTH	Granted
EP0357391B	DNA construct	Granted
EP1473040A	Dosage Regime	Pending
EP0735896A	Formulation	Pending
EP1687048A	Administration Method	Pending

CONDITIONAL ASSIGNMENT AGREEMENT

BETWEEN

(1)   NPS ALLELIX CORP., a company incorporated under the laws of Ontario, Canada, with address c/o Blake, Cassels & Graydon LLP, 199 Bay Street, Suite 2800, Commerce Court West, Toronto ON M5L 1A9 Canada (hereinafter "NPS"); and

(1)   DRUG ROYALTY L.P. 3, a limited partnership incorporated under the laws of the Cayman Islands, whose registered office is at M&C Corporate Services Limited, PO Box 309GT, Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands (hereinafter "DRLP3").

Each a "Party" and together the "Parties".

WHEREAS

(A)   NPS and DRLP3 have entered into an agreement for the sale and assignment of rights dated as of July 16, 2007 (as such agreement may be amended, modified, supplemented or restated from time to time, the "Purchase Agreement");

(B)   NPS is the registered proprietor of certain Patents (as defined in the Purchase Agreement) including without limitation those patents, patent applications and SPCs listed in the Schedule to this Agreement (the "Dutch Patents"). NPS is also the proprietor of any related Governmental Authority (as defined in the Purchase Agreement) approvals and agreements relating to any product that is the subject of any such Patents (the "Related Rights");

(C)   NPS and DRLP3 have also entered into an agreement, dated as of July 16; 2007, as general and continuing collateral security for the due payment and performance of certain Obligations arising pursuant to the Purchase Agreement (as such agreement may be amended, modified, supplemented or restated from time to time, the "Security Agreement");

(D)   Pursuant to section 3.2(g) of the Purchase Agreement, NPS has agreed to deliver certain conditional assignment agreements to DRLP3, including this Agreement;

(E)   As further security for compliance with its Obligations under the Purchase Agreement NPS has agreed to grant DRLP3 a right of pledge on the Dutch Patents;

(F)   This Agreement sets out the terms of the assignment of the Dutch Patents, including their Related Rights, by NPS to DRLP3.

IN CONSIDERATION OF the Parties entering into the Purchase Agreement AND IN FURTHER CONSIDERATION of the payment by DRLP3 to NPS of US$1 (the receipt and sufficiency of which is hereby acknowledged), IT IS HEREBY AGREED AS FOLLOWS:

Definitions

1. "Event of Default" means a Major Default or a Minor Default;
2. "Major Default" means the occurrence of any one or more of the following events:
   1. any breach by NPS of any representation or warranty made by NPS in Section 4.1, 4.4, 4.5, 4.6(c), 4.6(d), 4.6(e) or 4.6(f) of the Purchase Agreement; provided, however, that a breach of Section 4.1(a) or 4.4 of the Purchase Agreement shall not be a Major Default unless such breach results in a Material Adverse Effect;
   2. any breach by NPS of any of its covenants under Section 7.2(b) of the Purchase Agreement and such breach shall continue unremedied for a period of 60 days after written notice thereof; or
   3. the cessation or threatened cessation by NPS of its business generally or the admission by NPS of its inability to, or its actual failure to, pay its debts generally, including circumstances where NPS (i) is adjudged bankrupt or insolvent, (ii) makes an assignment in

2

bankruptcy or otherwise for the benefit of creditors, (iii) files a petition or proposal under bankruptcy, insolvency or similar legislation, or (iv) has instituted against it proceedings under bankruptcy, insolvency or similar legislation including for the appointment of a receiver or trustee;

3. "Minor Default" means the occurrence of any one or more of the following events to the extent that it is not a Major Default:
   1. the failure of NPS to pay any monetary Obligations within five Business Days of the date on which such Obligations are due or payable;
   2. the failure of NPS to perform any non-monetary Obligation or covenant under the Security Agreement or the Purchase Agreement and such failure shall continue unremedied for a period of 60 days after written notice thereof; or
   3. any breach by NPS of any representation or warranty made by NPS in the Purchase Agreement (for certainty, including without limitation a breach of Section 4.1(a) or 4.4 of the Purchase Agreement if such breach does not result in a Material Adverse Effect;
4. "Obligations" means all indebtedness, liabilities and obligations (whether direct, indirect, absolute, contingent or otherwise) of NPS to DRLP3 arising pursuant to the Purchase Agreement or the Security Agreement; and
5. All other terms used in this Agreement shall have the same meanings as provided for in the Purchase Agreement and the Security Agreement.

3

Operative Clauses

1. Subject to the condition provided for under clause 2 below, NPS hereby assigns all of its right, title and interest in the Dutch Patents, including without limitation their Related Rights, to DRLP3.
2. Subject to clauses 3 and 4, the operation of this assignment under Clause 1 above is subject to the occurrence of an Event of Default.
3. If the Event of Default is a Minor Default, the operation of this Agreement shall not take effect unless or until DRLP3 has first sought to commence legal action to enforce payment or performance of the Obligations and any remedy obtained under such action has not satisfied the Obligations of NPS or any judgement obtained pursuant to such action remains unsatisfied by NPS for more than 15 Business Days after the rendering of such judgement (without the necessity of appeal from such judgement).
4. If an Event of Default is the result of a breach of representation and warranty by NPS, then the operation of this Agreement shall not take effect for a period of 60 days commencing on the date on which notice of such breach is provided to NPS and furthermore shall not take effect if during that 60 day period the parties agree upon an alternative remedy in respect of that breach.
5. In the event that, upon the occurrence of an Event of Default, subject to clauses 2, 3 and 4, for whatever reason the assignment provided for in Clause 1 above is not valid and/or effective and/or cannot be enforced, NPS shall forfeit a penalty of Euro 1,000,000 to DRLP3 which will become due and payable immediately upon the occurrence of such Event of Default.
6. As security for the performance of its monetary Obligations and of the obligation under clause 1 of this deed (together the "Secured Obligations") NPS as pledgor agrees to grant to DRLP3 as pledgee, and hereby so grants to DRLP3, on the Dutch Patents a right of pledge ("een pandrecht"), which right of pledge DRLP3 hereby accepts.

4

7. In the meantime, NPS covenants with DRLP3 that it shall not sell, assign, pledge or otherwise charge or transfer any of the Dutch Patents, or any Related Rights, to a third party.
8. This Agreement and its assignment shall be recorded on the Dutch National Patent Register. NPS undertakes to cooperate in good faith with DRLP3, to do all such acts and give any documents and signatures for the performance and the enforcement of all formalities required to perfect and record this Agreement and its assignment on the Dutch National Patent Register and, where required, to produce any additional documents that DRLP3 may reasonably require.
9. In the event that NPS is in default ("verzuim"), as defined in Section 6:81 of the Dutch Civil Code, of performing one or more of the Secured Obligations, DRLP3 shall be authorised to sell the Dutch Patents or part thereof, in accordance with Section 3:248 of the Dutch Civil Code, without prejudice to DRLP3's rights under Section 3:251 (1) of the Dutch Civil Code, in order to recover the proceeds thereof. NPS shall not have the rights under Section 3:251 (1) of the Dutch Civil Code. DRLP3 does not bear the obligations referred to in Sections 3:249 and 3:252 of the Dutch Civil Code to give notice of an intended sale or to give notice following a sale,
10. NPS undertakes, upon the occurrence of an Event of Default, subject to clauses 3 and 4, to cooperate in good faith with DRLP3, to do all such acts and give any documents and signatures for the performance and the enforcement of all formalities required to vest title in the Dutch Patents, including their Related Rights, in DRLP3 and to record such assignment at the Dutch National Patent Register and, where required, to produce any documents confirming that an Event of Default has taken place that DRLP3 may reasonably require. NPS hereby authorizes DRLP3, and grants irrevocable power of attorney to DRLP3, to take any of the action referred to above on its behalf.
11. NPS hereby authorizes DRLP3 to do whatever is necessary for the maintenance of the Dutch Patents at the Dutch Patent Office and for the maintenance of the Related Rights in the event that NPS fails to do so, including, without limitation, the payment of taxes, renewals and annuity fees.

5

12. This Agreement is governed by and construed in accordance with the law of the Province of Ontario and the federal laws of Canada applicable therein, save that Clauses 5, 6 and 9 above are subject to the operation of Dutch law. All disputes arising out of or in connection with this Agreement including those concerning its existence, validity, interpretation and performance are subject to the exclusive jurisdiction of the competent courts of the Province of Ontario and all courts competent to hear appeals therefrom, save that the Dutch Courts shall have exclusive jurisdiction in relation to any such disputes arising out of the operation of Clauses 5, 6 and 9 above.

Date July 16, 2007

Having read the above, the Parties hereby sign:

NPS ALLELIX CORP.

/s/ Val R. Antczak
Name: Val R. Antczak
Title: Vice President and Secretary

DRUG ROYALTY L.P. 3,
by its General Partner
DRC MANAGEMENT LLC 3
/s/ Behzad Khosrowshahi
Name: Behzad Khosrowshahi
Title: Manager

6

SCHEDULE

The Dutch Patents

Patent No.	Subject	Status
EP1079803B	Formulation	Granted
SPC 300243	Formulation	Granted
EP1001802B	Dosage Regime	Granted
EP0515228B	Pure PTH	Granted
EP0357391B	DNA construct	Granted
EP1473040A	Dosage Regime	Pending
EP0735896A	Formulation	Pending
EP1627048A	Administration Method	Pending

7

CONDITIONAL ASSIGNMENT AGREEMENT

BETWEEN

(1)   NPS ALLELLX CORP., a company incorporated under the laws of Ontario, Canada, whose registered office is at with address c/o Blake, Cassels & Graydon LLP, 199 Bay Street, Suite 2800, Commerce Court West, Toronto ON M5L 1A9 Canada(hereinafter "NPS"); and

(2)   DRUG ROYALTY L.P. 3, a limited partnership incorporated under the laws of the Cayman Islands, whose registered office is at M&C Corporate Services Limited, PO Box 309GT, Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands (hereinafter "DRLP3").

Each a "Party" and together the "Parties".

WHEREAS

(A) NPS and DRLP3 have entered into an agreement for the sale and assignment of rights dated as of July 16, 2007 (as such agreement may be amended, modified, supplemented or restated from time to time, the "Purchase Agreement");

(B) NPS is the registered proprietor of certain Patents (as defined in the Purchase Agreement) including without limitation those patents, patent applications and SPCs listed in the Schedule to this Agreement (the "Spanish Patents"). NPS is also the proprietor of any related Governmental Authority (as defined in the Purchase Agreement) approvals and agreements relating to any product that is the subject of any such Spanish Patents (the "Related Rights");

(C) NPS and DRLP3 have also entered into an agreement, dated as of July 16, 2007, as general and continuing collateral security for the due payment and performance of certain Obligations arising pursuant to the Purchase Agreement (as such agreement may

be amended, modified, supplemented or restated from time to time, the "Security Agreement");

(D) Pursuant to section 3.2(g) of the Purchase Agreement, NPS has agreed to deliver certain conditional assignment agreements to DRLP3, including this Agreement;

(E) This Agreement sets out the terms of the assignment of the Applications, including then Related Rights, by NPS to DRLP3.

IN CONSIDERATION OF the Parties entering into the Purchase Agreement AND IN FURTHER CONSIDERATION of the payment to be made by DRLP3 to NPS pursuant to clause 6 below (the receipt and sufficiency of which is hereby acknowledged), IT IS HEREBY AGREED AS FOLLOWS:

Definitions

1. "Event of Default" means a Major Default or a Minor Default;
2. "Major Default" means the occurrence of any one or more of the following events:
   1. any breach by NPS of any representation or warranty made by NPS in Section 4.1, 4.4, 4.5, 4.6(c), 4.6(d), 4.6(e) or 4.6(f) of the Purchase Agreement; provided, however, that a breach of Section 4.1(a) or 4.4 of the Purchase Agreement shall not be a Major Default unless such breach results in a Material Adverse;
   2. any breach by NPS of any of its covenants under Section 7.2(b) of the Purchase Agreement and such breach shall continue unremedied for a period of 60 days after written notice thereof; or
   3. the cessation or threatened cessation by NPS of its business generally or the admission by NPS of its inability to, or its actual failure to, pay its debts generally, including circumstances where NPS (i) is adjudged bankrupt or insolvent, (ii) makes an assignment in bankruptcy or otherwise for the benefit of creditors, (iii) files a petition or proposal under bankruptcy, insolvency or similar legislation, or

2

(iv) has instituted against it proceedings under bankruptcy, insolvency or similar legislation mcluding for the appointment of a receiver or trustee;

3. "Minor Default" means the occurrence of any one or more of the following events to the extent that it is not a Major Default:
   1. the failure of NPS to pay any monetary Obligations within five Business Days of the date on which such Obligations are due or payable;
   2. the failure of NPS to perform any non-monetary Obligation or covenant under the Security Agreement or the Purchase Agreement and such failure shall continue unremedied for a period of 60 days after written notice thereof; or
   3. any breach by NPS of any representation or warranty made by NPS in the Purchase Agreement (for certainty, including without limitation a breach of Section 4.1(a) or 4.4 of the Purchase Agreement if such breach does not result in a Material Adverse Effect;
4. "Obligations" means all indebtedness, liabilities and obligations (whether direct, indirect, absolute, contingent or otherwise) of NPS to DRLP3 arising pursuant to the Purchase Agreement or the Security Agreement; and
5. All other terms used in this Agreement shall have the same meanings as provided for in the Purchase Agreement and the Security Agreement.

Operative Clauses

1. Subject to the condition provided for under clause 2 below, NPS hereby assigns all of its right, title and interest in the Spanish Patents, and including without limitation their Related Rights, to DRLP3.
2. Subject to clauses 3 and 4, the operation of this Agreement is subject to the occurrence of an Event of Default.

3

3. If the Event of Default is a Minor Default, the operation of this Agreement shall not take effect unless or until DRLP3 has first sought to commence legal action to enforce payment or performance of the Obligations and any remedy obtained under such action has not satisfied the Obligations of NPS or any judgement obtained pursuant to such action remains unsatisfied by NPS for more than 15 Business Days after the rendering of such judgement (without the necessity of appeal from such judgement).
4. If an Event of Default is the result of a breach of representation and warranty by NPS, then the operation of this Agreement shall not take effect for a period of 60 days commencing on the date on which notice of such breach is provided to NPS and furthermore shall not take effect if during that 60 day period the parties agree upon an alternative remedy in respect of that breach.
5. In the meantime, NPS covenants with DRLP3 that it shall not sell, assign, pledge or otherwise charge or transfer any of the Spanish Patents, or any Related Rights, to a third party.
6. The purchase price for the assignment under clause 1, as agreed by the Parties, is 3000 Euros, which DRLP3 pays in advance to NPS, and NPS hereby acknowledges that it has received such amount and agrees that DRLP3 is not required to make any further payment to NPS.
7. This Agreement shall be raised to a public deed before a Spanish Notary Public and, subject to clauses 3 and 4, its assignment shall be recorded on the Spanish National Patent Register upon the occurrence of an Event of Default. NPS undertakes, to cooperate in good faith with DRLP3, to do all such acts and give any documents and signatures for the performance and the enforcement of all formalities required to perfect and record this Agreement and its assignment on the Spanish National Patent Register and, where required, to produce any additional documents that DRLP3 may reasonably require. Without prejudice to the generality of the foregoing, NPS agrees that it will within 60 days of the execution of this Agreement execute any necessary powers of attorney that may be required by Spanish counsel to record this Agreement at the Spanish National Patent Office. Further, to the extent that the parties fail to execute a mortgage granting DRLP3 a security interest over the Spanish Patents when

4

this Agreement is executed, NPS agrees that it will execute such an agreement within the said 60 day period.

In relation to the above, NPS irrevocably empowers DRLP3 to appear before a Spanish notary public to execute any document and to comply with any formality necessary to have the assignment regulated hereby fully effective, subject to clauses 3 and 4, once an Event of Default has occurred.

8. NPS undertakes, upon the occurrence of an Event of Default, subject to clauses 3 and 4, to cooperate in good faith with DRLP3, to do all such acts and give any documents and signatures for the performance and the enforcement of all formalities required to vest title in the Spanish Patents in DRLP3 and to record such assignment at the Spanish National Patent Register and, where required, to produce any documents confirming that an Event of Default has taken place that DRLP3 may reasonably require.
9. NPS hereby authorizes DRLP3 to do whatever is necessary for the maintenance of the Spanish Patents, and their Related Rights, at the Spanish Patent Office in the event that NPS fails to do so, including, without limitation, the payment of taxes, renewals and annuity fees.
10. This Agreement is governed by and construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein.. All disputes arising out or in connection with this Agreement including those concerning its existence, validity, interpretation and performance are subject to the exclusive jurisdiction of the competent Ontario Courts and Tribunals Ontario and all courts competent to hear appeals therefrom.

Date July 16,2007

Having read the above, the Parties hereby sign:

5

NPS ALLELIX CORP.

/s/ Val R. Antczak
Name: Val R. Antczak
Title: Vice President and Secretary

DRUG ROYALTY L.P. 3,
by its General Partner
DRC MANAGEMENT LLC 3
/s/ Behzad Khosrowshahi
Name: Behzad Khosrowshahi
Title: Manager

6

SCHEDULE

The Spanish Patents

Patent No.	Subject	Status
EP1079803B	Formulation	Granted
SPC 200600034	Formulation	Granted
EP1001802B	Dosage Regime	Granted
EP0515228B	Pure PTH	Granted
EP0357391B	DNA construct	Granted
EP1473040A	Dosage Regime	Pending
EP0735896A	Formulation	Pending
EP1687048A	Administration Regime	Pending

7

PATENT MORTGAGE - OUTSTANDING

POWER OF ATTORNEY

In the city of Salt Lake City, Utah, USA, on September, 2007.

BEFORE ME

Ms. Leslie Lancaster, Notary Public living and practicing in said city and duly entitled to formalise public deeds.

APPEARS

Mr. Barton W. Giddings, of legal age, married, of USA citizenship, with professional domicile at Salt Lake City, Utah, USA, with USA passport number 056408123, in force.

ACTS

In the name and on behalf of NPS ALLELIX CORP. a company duly incorporated and in existence in accordance with the laws of the Province of Ontario, with registered offices at c/o Blake, Cassels & Graydon LLP, 199 Bay Street, Suite 2800, Commerce Court West, Toronto ON M5L 1A9 Canada and registered with the Ontario Ministry of Government Services under number 00138941 (the "Grantor"), who is duly empowered to grant this power of attorney on behalf of the Grantor.

He is duly empowered for this act by virtue of his appointment as Assistant Corporate Secretary.

He has to my own judgement the necessary legal capacity for executing the present and for this purpose,

GRANTS

A power of attorney as broad and sufficient as required by law in favour of:

• Mr. Fernando de las Cuevas Castresana, of legal age, a Spanish citizen,.. married, lawyer, with professional domicile at Paseo de la Castellana 216, Madrid, Spain and National Identity Card number 42.936.545-F, in force;
• Mr. Ralph Smith, of legal age, a British citizen, married, lawyer, with professional domicile at Paseo de la Castellana 216, Madrid, Spain and holders of British passport number 704620075;
• Mr. Francisco Gil Duran, of legal age, a Spanish citizen, married, lawyer, with professional domicile at Paseo de la Castellana 216, Madrid, Spain and National Identity Card number 5.405.248-H, in force;

• Ms. Valentina Rodriguez Hernandez, of legal age, a Venezuelan citizen, married, lawyer, with professional domicile at Paseo de la Castellana 216, Madrid, Spain and Residence Permit number X-2868095-H, in force; and
• Ms. Alejandra Huidobro Andueza, of legal age, a Spanish citizen, single, lawyer, with professional domicile at Paseo de la Castellana 216, Madrid, Spain and National Identity Card number 2.912.275-S, in force.

so that any one of them, acting individually, in the name and on behalf of the Grantor and empowered hereby to totally or partially appoint their substitutes, may:

1. Perform whatsoever acts and execute whatsoever public or private documents are necessary in order to constitute, create, modify, enforce and register in favor of DRUG ROYALTY L.P. 3, any patent mortgages, in any terms and conditions deemed appropriate, over the Spanish part of any of the following patents:

• European Patent number 99917715 (1079803).
• European Patent number 98929965.6 (1001802).
• European Patent number 92304692.4 (0515228).
• European Patent number 89308753.6 (0357391).
• European Patent number 4017622.4 (1473040).
• European Patent number 95903732.6 (0735896).
• European Patent number 04795465.6 (1687048).

2. To appear before a Spanish notary public to execute a conditional assignment agreement (substantially in the form of the draft attached to this power of attorney) for the transfer, subject to condition precedent, of the patents identified in point 1 above, and to execute any kind of document and to comply any formality necessary to formalize satisfaction of the abovementioned condition precedent and the full effect of the transfer of the patents listed in point 1 above.
3. Carry out, likewise, whatsoever related or complementary acts as may be necessary -including the execution of whatever document in order to authorize the registration of the documents referred to in points 1 and 2 above with the corresponding Movable Goods Registry, the Spanish Patents*, and Trademarks Office and/or any other relevant registry and filing of tax liquidations- for the fullest execution of the mandate received and to sign whatsoever public or private documents which may be necessary or appropriate to exercise the powers contained herein, including, if necessary, deeds of correction of possible errors.

IN WITNESS WHEREOF, the Grantor, having been informed of the content of this public deed of power of attorney, approves and signs it with me, the Notary Public, having complied with all the formalities required by applicable law where this power of attorney is granted.

2

POWER OF ATTORNEY

In the city of Toronto, Canada, on July 16, 2007.

BEFORE ME

Mr. Michael Uster, Notary Public living and practicing in said city and duly entitled to formalise public deeds.

APPEARS

Mr. Bezhad Khosrowshahi, of legal age, married, of Canadian citizenship, with professional domicile at Royal Bank Plaza, Suite 3120, South Tower, Box 122, 200 Bay St., Toronto, Ontario Canada M5J 2J3, with Canadian passport number BA002202, in force.

ACTS

In the name and on behalf of DRUG ROYALTY L.P. 3, a Cayman Island limited partnership existing under the laws of the Cayman Islands whose registered office is at M&C Corporate Services Limited, PO Box 309GT, Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands, who is duly empowered to grant this power of attorney on behalf of the Grantor.

He is duly empowered for this act by virtue of him being the Manager of the Grantor's General Partner, DRC Management LLC3.

He has to my own judgement the necessary legal capacity for executing the present and for this purpose,

GRANTS

A power of attorney as broad and sufficient as required by law in favour of:

• Mr. Fernando de las Cuevas Castresana, of legal age, a Spanish citizen, married, lawyer, with professional domicile at Paseo de la Castellana 216, Madrid, Spain and National Identity Card number 42.936.545-F, in force;
• Mr. Ralph Smith, of legal, age, a British citizen, married, lawyer, with professional domicile at Paseo de la Castellana 216, Madrid, Spain and holders of British passport number 704620075;
• Mr. Francisco Gil Duran, of legal age, a Spanish citizen, married, lawyer, with professional domicile at Paseo de la Castellana 216, Madrid, Spain and National Identity Card number 5.405.248-H, in force;

• Ms. Valentina Rodriguez Hernandez, of legal age, a Venezuelan citizen, married, lawyer, with professional domicile at Paseo de la Castellana 216, Madrid, Spain and Residence Permit number X-2868095-H, in force; and
• Ms. Alexandra Huidobro Andueza> of legal age, a Spanish citizen, single, lawyer, with professional domicile at Paseo de la Castellana 216, Madrid, Spain and National Identity Card number 2.912.275-S, in force.

so that any one of them, acting individually, in the name and on behalf of the Grantor and empowered hereby to totally or partially appoint their substitutes, may:

1. Perform whatsoever acts and execute whatsoever public or private documents are necessary in order to accept, modify, enforce and register, in favor of the Grantor, any patent mortgages, in any terms and conditions deemed appropriate, over the Spanish part of any of the following patents:

• European Patent number 99917715 (1079803).
• European Patent number 98929965.6 (1001802).
• European Patent number 92304692.4 (0515228).
• European Patent number 89308753.6 (0357391).
• European Patent number 4017622.4 (1473040).
• European Patent number 95903732.6 (0735896).
• European Patent number 04795465.6 (1687048).

2. To appear before a Spanish notary public to execute a conditional assignment agreement (substantially in the form of the draft attached to this power of attorney) for the acquisition, subject to condition precedent, of the patents identified in point 1 above, and to execute any kind of document and to comply any formality necessary to formalize satisfaction of the abovementioned condition precedent and the full effect of the transfer of the patents listed in point 1 above.
3. Carry out, likewise, whatsoever related or complementary acts as may be necessary - including the execution of whatever document in order to register the documents referred to in points 1 and 2 with the corresponding Movable Goods Registry, the Spanish Patents and Trademarks Office and/or any other relevant registry and filing of tax liquidations - for the fullest execution of the mandate received and to sign whatsoever public or private documents which may be necessary or appropriate to exercise the powers contained herein, including, if necessary, deeds of correction of possible errors.

IN WITNESS WHEREOF, the Grantor, having been informed of the content of this public deed of power of attorney, approves and signs it with me, the Notary Public, having complied with all the formalities required by applicable law where this power of attorney is granted.

ATTESTATION OF THE NOTARY

I, the Notary Public, hereby certify and attest as follows:

1. That the Grantor Is a Cayman Islands limited partnership existing under the laws of the Cayman Islands and complies with all legal conditions required by the laws of the Cayman Islands to continue its commercial activities and perform its corporate purpose; and
2. That the appearer, whose personal particulars I know from his statements and from his personal documentation in force which he shows to me, and who signed in my presence this Power of Attorney, in the capacity in which he acts, is duly authorised and has the necessary legal capacity to execute this instrument in the name and on behalf of the Grantor according to the Laws of the Cayman Islands and pursuant to its by-laws and to his appointment as of the Grantor's General Partner, Manager of DRC Management, LLC3; and
3. That in the execution of this Public Instrument, all the formalities and solemnities required by the Laws in force in the Cayman Islands, the place of the execution of the same, regarding this class of document, have been complied with.

SIGNATURE of
DRUG ROYALTY L.P. 3,
by its General Partner
DRC MANAGEMENT LLC 3
/s/ Behzad Khosrowshahi
Name: Behzad Khosrowshahi
Title: Manager

________________________________
[*]

SIGNATURE of the NOTORARY PUBLIC:

/s/ Michael Uster
Michael Uster

POWER OF ATTORNEY OF
NYCOMED DANMARK ApS - OUTSTANDING

CONDITIONAL ASSIGNMENT AGREEMENT

BETWEEN

(1)   NPS ALLELIX CORP., a company incorporated under the laws of Ontario, Canada, whose registered office is at with address c/o Blake, Cassels & Graydon LLP, 199 Bay Street, Suite 2800, Commerce Court West, Toronto ON M5L 1A9 Canada(hereinafter "NPS"); and

(2)   DRUG ROYALTY L.P. 3, a Cayman Island limited partnership incorporated under the laws of the Cayman Islands whose registered office is at M&C Corporate Services Limited, PO Box 309GT, Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands (hereinafter "DRLP3").

Each a "Party" and together the "Parties".

WHEREAS

(A)   NPS and DRLP3 have entered into an agreement for the sale and assignment of rights dated as of July 16, 2007 (as such agreement may be amended, modified, supplemented or restated from time to time, the "Purchase Agreement");

(B)   NPS is the registered proprietor of certain Patents (as defined in the Purchase Agreement) including without limitation those patents, patent applications and SPCs listed in the Schedule to this Agreement (the "United Kingdom Patents"). NPS is also the proprietor of any related Governmental Authority (as defined in the Purchase Agreement) approvals and agreements relating to any product that is the subject of any such United Kingdom Patents (the "Related Rights");

(C)   NPS and DRLP3 have also entered into an agreement, dated as of July 16, 2007, as general and continuing collateral security for the due payment and performance of certain Obligations arising pursuant to the Purchase Agreement (as such agreement may

be amended, modified, supplemented or restated from time to time, the "Security Agreement");

(D)   Pursuant to section 3.2(g) of the Purchase Agreement, NPS has agreed to deliver
certain conditional assignment agreements to DRLP3, including this Agreement;

(E)   This Agreement sets out the terms of the assignment of the United Kingdom Patents,
including their Related Rights, by NPS to DRLP3.

IN CONSIDERATION OF the Parties entering into the Purchase Agreement AND IN FURTHER CONSIDERATION of the payment by DRLP3 to NPS of US$1 (the receipt and sufficiency of which is hereby acknowledged), IT IS HEREBY AGREED AS FOLLOWS:

Definitions

1. "Event of Default" means a Major Default or a Minor Default;
2. "Major Default" means the occurrence of any one or more of the following events:
   1. any breach by NPS of any representation or warranty made by NPS in Section 4.1, 4.4, 4.5, 4.6(c), 4.6(d), 4.6(e) or 4.6(f) of the Purchase Agreement; provided, however, that a breach of Section 4.1 (a) or 4.4 of the Purchase Agreement shall not be a Major Default unless such breach results in a Material Adverse Effect;
   2. any breach by NPS of any of its covenants under Section 7.2(b) of the Purchase Agreement and such breach shall continue unremedied for a period of 60 days after written notice thereof; or
   3. the cessation or threatened cessation by NPS of its business generally or the admission by NPS of its inability to, or its actual failure to, pay its debts generally, including circumstances where NPS (i) is adjudged bankrupt or insolvent, (ii) makes an assignment in bankruptcy or otherwise for the benefit of creditors, (iii) files a petition or proposal under bankruptcy, insolvency or similar legislation, or

2

(iv) has instituted against it proceedings under bankruptcy, insolvency or similar legislation including for the appointment of a receiver or trustee;

3. "Minor Default" means the occurrence of any one or more of the following events to the extent that it is not a Major Default:
   1. the failure of NPS to pay any monetary Obligations within five Business Days of the date on which such Obligations are due or payable;
   2. the failure of NPS to perform any non-monetary Obligation or covenant under the Security Agreement or the Purchase Agreement and such failure shall continue unremedied for a period of 60 days after written notice thereof; or
   3. any breach by NPS of any representation or warranty made by NPS in the Purchase Agreement (for certainty, including without limitation a breach of Section 4.1 (a) or 4.4 of the Purchase Agreement if such breach does not result in a Material Adverse Effect;
4. "Obligations" means all indebtedness, liabilities and obligations (whether direct, indirect, absolute, contingent or otherwise) of NPS to DRLP3 arising pursuant to the Purchase Agreement or the Security Agreement; and
5. All other terms used in this Agreement shall have the same meanings as provided for in the Purchase Agreement and the Security Agreement.

Operative Clauses

1. Subject to the condition provided for under clause 2 below, NPS hereby assigns all of its right, title and interest in the United Kingdom Patents, including without limitation their Related Rights, to DRLP3.
2. Subject to clauses 3 and 4, the operation of this Agreement is subject to the occurrence of an Event of Default.

3

3. If the Event of Default is a Minor Default, the operation of this Agreement shall not take effect unless or until DRLP3 has first sought to commence legal action to enforce payment or performance of the Obligations and any remedy obtained under such action has not satisfied the Obligations of NPS or any judgement obtained pursuant to such action remains unsatisfied by NPS for more than 15 Business Days after the rendering of such judgement (without the necessity of appeal from such judgement).
4. If an Event of Default is the result of a breach of representation and warranty by NPS, then the operation of this Agreement shall not take effect for a period of 60 days commencing on the date on which notice of such breach is provided to NPS and furthermore shall not take effect if during that 60 day period the parties agree upon an alternative remedy in respect of that breach.
5. In the meantime, NPS covenants with DRLP3 that it shall not sell, assign, pledge or otherwise charge or transfer any of the United Kingdom Patents, or any Related Rights, to a third party.
6. This Agreement and its assignment shall be recorded on the United Kingdom National Patent Register. NPS undertakes, to cooperate in good faith with DRLP3, to do all such acts and give any documents and signatures for the performance and the enforcement of all formalities required to perfect and record this Agreement and its assignment on the United Kingdom National Patent Register and, where required, to produce any additional documents that DRLP3 may reasonably require.
7. NPS undertakes, upon the occurrence of an Event of Default, subject to clauses 3 and 4, to cooperate in good faith with DRLP3, to do all such acts and give any documents and signatures for the performance and the enforcement of all formalities required to vest title in the United Kingdom Patents, including their Related Rights, in DRLP3 and to record such assignment at the United Kingdom National Patent Register and, where required, to produce any documents confirming that an Event of Default has taken place that DRLP3 may reasonably require.
8. NPS hereby authorizes DRLP3 to do whatever is necessary for the maintenance of the United Kingdom Patents at the United Kingdom Patent Office and for the maintenance

4

of the Related Rights in the event that NPS fails to do so, including, without limitation, the payment of taxes, renewals and annuity fees.

9. This Agreement is governed by and construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein. All disputes arising out or in connection with this Agreement including those concerning its existence, validity, interpretation and performance are subject to the exclusive jurisdiction of the competent Courts and Tribunals of the Province of Ontario and all courts competent to hear appeals therefrom.

Date July 16, 2007

Having read the above, the Parties hereby sign:

NPS ALLELIX CORP.

/s/ Val R. Antczak
Name: Val R. Antczak
Title: Vice President and Secretary

DRUG ROYALTY L.P. 3,
by its General Partner
DRC MANAGEMENT LLC 3
/s/ Behzad Khosrowshahi
Name: Behzad Khosrowshahi
Title: Manager

5

SCHEDULE

The United Kingdom Patents

Patent No.	Subject	Status
EP1079803B	Formulation	Granted
SPC/GB06/035	Formulation	Granted
EP1001802B	Dosage Regime	Granted
EP0515228B	Pure PTH	Granted
EP0357391B	DNA construct	Granted
EP1473040A	Dosage Regime	Pending
EP0735896A	Formulation	Pending
EP1687048A	Administration Method	Pending

6

CONDITIONAL ASSIGNMENT AGREEMENT

BETWEEN

(1)   NPS ALLELIX CORP., a company incorporated under the laws of Ontario, Canada, whose registered office is at c/o Blake, Cassels & Graydon LLP, 199 Bay Street, Suite 2800, Commerce Court West, Toronto ON M5L 1A9 Canada (hereinafter "NPS"); and

(2)   DRUG ROYALTY L.P. 3, a limited partnership incorporated under the laws of the Cayman Islands, whose registered office is at M&C Corporate Services Limited, PO Box 309GT, Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands (hereinafter "DRLP3").

Each a "Party" and together the "Parties".

WHEREAS

(A)   NPS and DRLP3 have entered into an agreement for the sale and assignment of rights dated as of July 16, 2007 (as such agreement may be amended, modified, supplemented or restated from time to time, the "Purchase Agreement");

(B)   NPS is the registered proprietor of certain Patents (as defined in the Purchase Agreement) including without limitation those patent applications listed in the Schedule to this Agreement (the "Applications"). NPS is also the proprietor of any related Governmental Authority (as defined in the Purchase Agreement) approvals and agreements relating to any product that is the subject of any such Applications (the "Related Rights");

(C)   NPS and DRLP3 have also entered into an agreement, dated as of July 16, 2007, as general and continuing collateral security for the due payment and performance of certain Obligations arising pursuant to the Purchase Agreement (as such agreement may be amended, modified, supplemented or restated from time to time, the "Security Agreement");

(D)   Pursuant to section 3.2(g) of the Purchase Agreement, NPS has agreed to deliver certain conditional assignment agreements to DRLP3, including this Agreement;

(E)   This Agreement sets out the terms of the assignment of the Applications, including their Related Rights, by NPS to DRLP3.

IN CONSIDERATION OF the Parties entering into the Purchase Agreement AND IN FURTHER CONSIDERATION of the payment by DRLP3 to NPS of US$1 (the receipt and sufficiency of which is hereby acknowledged), IT IS HEREBY AGREED AS FOLLOWS:-

Definitions

1. "Event of Default" means a Major Default or a Minor Default;
2. "Major Default" means the occurrence of any one or more of the following events:

1. any breach by NPS of any representation or warranty made by NPS in Section 4.1, 4.4, 4.5, 4.6(c), 4.6(d), 4.6(e) or 4.6(f) of the Purchase Agreement; provided, however, that a breach of Section 4.1(a) or 4.4 of the Purchase Agreement shall not be a Major Default unless such breach results in a Material Adverse Effect;
2. any breach by NPS of any of its covenants under Section 7.2(b) of the Purchase Agreement and such breach shall continue unremedied for a period of 60 days after written notice thereof; or
3. the cessation or threatened cessation by NPS of its business generally or the admission by NPS of its inability to, or its actual failure to, pay its debts generally, including circumstances where NPS (i) is adjudged bankrupt or insolvent, (ii) makes an assignment in bankruptcy or otherwise for the benefit of creditors, (iii) files a petition or proposal under bankruptcy, insolvency or similar legislation, or (iv) has instituted against it proceedings under bankruptcy, insolvency or similar legislation including for the appointment of a receiver or trustee;

2

3. "Minor Default" means the occurrence of any one or more of the following events to the extent that it is not a Major Default:
   1. the failure of NPS to pay any monetary Obligations within five Business Days of the date on which such Obligations are due or payable;
   2. the failure of NPS to perform any non-monetary Obligation or covenant under the Security Agreement or the Purchase Agreement and such failure shall continue unremedied for a period of 60 days after written notice thereof; or
   3. any breach by NPS of any representation or warranty made by NPS in the Purchase Agreement (for certainty, including without limitation a breach of Section 4.1 (a) or 4.4 of the Purchase Agreement if such breach does not result in a Material Adverse Effect;
4. "Obligations" means all indebtedness, liabilities and obligations (whether direct, indirect, absolute, contingent or otherwise) of NPS to DRLP3 arising pursuant to the Purchase Agreement or the Security Agreement; and
5. All other terms used in this Agreement shall have the same meanings as provided for in the Purchase Agreement and the Security Agreement.

Operative Clauses

1. Subject to the condition provided for under clause 2 below, NPS hereby assigns all of its right, title and interest in the Applications, with respect to all confracting states designated in each of the Applications, and including without limitation their Related Rights, to DRLP3.
2. Subject to clauses 3 and 4, the operation of this Agreement is subject to the occurrence of an Event of Default.

3

3. If the Event of Default is a Minor Default, the operation of this Agreement shall not take effect unless or until DRLP3 has first sought to commence legal action to enforce payment or performance of the Obligations and any remedy obtained under such action has not satisfied the Obligations of NPS or any judgement obtained pursuant to such action remains unsatisfied by NPS for more than 15 Business Days after the rendering of such judgement (without the necessity of appeal from such judgement).
4. If an Event of Default is the result of a breach of representation and warranty by NPS, then the operation of this Agreement shall not take effect for a period of 60 days commencing on the date on which notice of such breach is provided to NPS and furthermore shall not take effect if during that 60 day period the parties agree upon an alternative remedy in respect of that breach.
5. In the meantime, NPS covenants with DRLP3 that it shall not sell, assign, pledge or otherwise charge or transfer any of the Applications, or any Related Rights, to a third party.
6. This Agreement and its assignment shall be recorded with the European Patent Office (and, if DRLP3 so requests, the national patent offices of any relevant contracting state). NPS undertakes, to cooperate in good faith with DRLP3, to do all such acts and give any documents and signatures for the performance and the enforcement of all formalities required to perfect and record this Agreement and its assignment with the European Patent Office and/or national patent offices and, where required, to produce any additional documents that DRLP3 may reasonably require.
7. NPS undertakes, upon the occurrence of an Event of Default,, subject to clauses 3 and 4, to cooperate in good faith with DRLP3, to do all such acts and give any documents and signatures for the performance and the enforcement of all formalities required to vest title in the Applications, including their Related Rights, in DRLP3 and to record such assignment with the European Patent Office (and, if DRLP3 so requests, the national patent offices of any relevant contracting state) and, where required, to produce any documents confirming that an Event of Default has taken place that DRLP3 may reasonably require.

4

3. NPS hereby authorizes DRLP3 to do whatever is necessary for the maintenance of the Applications with the European Patent Office (and, if relevant, the national patent offices of any relevant contracting state) and for the maintenance of the Related Rights in the event that NPS fails to do so, including, without limitation, the payment of taxes, renewals and annuity fees.
4. This Agreement is governed by and construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein. All disputes arising out or in connection with this Agreement including those concerning its existence, validity, interpretation and performance are subject to the exclusive jurisdiction of the competent Courts and Tribunals of the Province of Ontario and all courts competent to hear appeals therefrom.

Date July 16, 2007

Having read the above, the Parties hereby sign:

NPS ALLELIX CORP.

/s/ Val R. Antczak
Name: Val R. Antczak
Title: Vice President and Secretary

DRUG ROYALTY L.P. 3,
by its General Partner
DRC MANAGEMENT LLC 3
/s/ Behzad Khosrowshahi
Name: Behzad Khosrowshahi
Title: Manager

5

SCHEDULE

The Applications

Application No	Subject	Status
EP1473040A	Dosage Regime	Pending
EP0735896A	Formulation	Pending
EP1687048A	Adminstration Method	Pending

Exhibit B

Patent Filings

[See attached.]

PATENT SECURITY AGREEMENT

THIS PATENT SECURITY AGREEMENT is made as of December 20, 2013,

BETWEEN:

NPS PHARMACEUTICALS, INC.,
a corporation existing under the laws of the State of Delaware

(collectively with its successors and permitted assigns, "Debtor"),

- and -

DRUG ROYALTY L.P. 3,
a Cayman Islands limited partnership

(collectively with its successors and permitted assigns, "Secured Party").

WHEREAS Secured Party and Debtor have entered into an Amended and Restated Security Agreement dated as of December 20, 2013 (as such agreement may be amended, modified, supplemented or restated from time to time, the "Security Agreement"); and

WHEREAS pursuant to the Security Agreement, Debtor has granted to Secured Party a security interest in, among other assets, certain intellectual property of Debtor, and Debtor has agreed to execute this Patent Security Agreement for recording with the United States Patent and Trademark Office;

NOW THEREFORE in consideration of the respective covenants, promises and agreements of the parties herein contained and other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged by each of the parties), the parties agree as follows:

1. Grant of Security Interest

As general and continuing collateral security for the due payment and performance of the Obligations (as such term is defined in the Security Agreement), Debtor hereby pledges, mortgages, charges and assigns (by way of security) to Secured Party, and grants to Secured Party, a security interest in, the patents described in Schedule A hereto (as such Schedule may be amended from time to time) and all reissues, divisions, continuations, continuations-in-part, extensions, renewals and re-examinations thereof (collectively, the "Patents").

2. Recordation

Debtor authorizes and requests that the United States Patent and Trademark Office record this Patent Security Agreement.

3. Paramountry of Security Agreement

This Patent Security Agreement is being entered into in accordance with the terms of the Security Agreement. Debtor hereby acknowledges and affirms that the rights and remedies of Secured Party with respect to the security interest in the Patents made and granted hereby are more fully specified in the Security Agreement, the terms and provisions of which are incorporated by reference herein. In the event of a conflict between any provision of this Patent Security Agreement and any provision of the Security Agreement, the provision of the Security Agreement shall control.

4. Termination

This Patent Security Agreement shall terminate and all rights in the Patents shall revert to Debtor upon the termination of the Security Agreement, including termination of the Security Agreement in part, with respect to the Additional Collateral (as such term is defined in the Security Agreement), in accordance with the terms thereof.

5. Successors and Assigns

This Patent Security Agreement shall inure to the benefit of and shall be binding on and enforceable by and against the parties hereto and their respective successors and permitted assigns under the Security Agreement.

6. Applicable Law

This Patent Security Agreement shall be governed by, and interpreted and enforced in accordance with, the laws of the State of New York and the federal laws of the United States applicable therein, without giving effect to the principles of conflicts of law thereof except as set forth in Section 5-1401 of the New York General Obligations Law.

7. Execution in Counterparts and Facsimile Delivery

This Patent Security Agreement may be executed in one or more counterparts, all of which when taken together constitute one and the same agreement.

[Signature Page Follows]

IN WITNESS WHEREOF the parties have executed this Patent Security Agreement.

NPS Pharmaceuticals, Inc.
550 Hills Drive, 3^rd Floor
Bedminster, New Jersey 07921
United States of America Attention of: General Counsel
Fax No.: (908)450-5344
E-mail: estratemeier@npsp.com NPS PHARMACEUTICALS, INC.
 
 
 
 
 
By /s/ Luke Beshar
Name: Luke Beshar
Title: EVP and CFO

Drug Royalty L.P. 3
c/o DRI Capital Inc.
22 St. Clair Avenue East
Suite 200
Toronto ON M4T 2S5 Attention of: Behzad Khosrowshahi
Fax No.: (416) 863-5161
E-mail: DRInotices@dricapital.com DRUG ROYALTY L.P. 3
 
 
 
 
by its General Partner, DRC
Management LLC 3
By /s/ Behzad Khosrowshahi
Name: Behzad Khosrowshahi
Title: Manager

Patent Security Agreement - Signature Page

SCHEDULE A

PATENTS

Country	Filing Date	Serial No.	Issue Date	Patent No.	Expiry Date
U.S.	23 May '91	07/707114	4 May '93	5,208,041	23 May'11
U.S.	23 Dec '93	08/172,206	5 March '96	5,496,801	23 Dec'13
U.S.	14 Aug '98	09/125,247	4 Sep '01	6,284,730	8 June'18
U.S. Div Con	18 March'03	10/389,797	28 March '06	7,018,982	8 June'18
U.S.Div Con 2	19 Dec'05	11/305,339	24 March '09	7,507,715	8 June'18
U.S.Div	9 Jan '09	12/351,558	6 July'10	7,749,543	8 June '18
U.S.Div	23 June'10	12/822,089	10 April '12	8,153,588	8 June'18
U.S.Div	24 Feb'12	13/405,093		(2012/0148684)
U.S.	15 Oct. '04	10/966,364	4 May '10	7,708,732	11 May'27

EX-10.33 4 exh10-33.htm OFFER LETTER OF SUSAN GRAF, DATED AS OF APRIL 29, 2013

Exhibit 10.33

April 29, 2013

Susan Graf
99 Rhoda Avenue
Nutley, NJ, 07110

Dear Susan:

On behalf of NPS Pharmaceuticals, Inc. ("NPS"), I am delighted to offer you employment as Vice President, Strategy & Corporate Development reporting to Dr. Francois Nader, President & Chief Executive Officer. Your employment will begin at an annual salary of $300,000 currently payable in bi-weekly installments. Your starting date is TBD.

Your annual incentive target will be 35% (weighted 75% Company performance & 25% individual performance) of base salary under the terms of the NPS Short Term Incentive (STI) Plan. The actual amount of this incentive, or whether you receive an incentive at all, is not guaranteed and is based on your actual regular base earnings. Also, this target amount is subject to change at the discretion of the Board of Directors. Eligibility for this plan will begin in 2013.

You will also receive a sign-on bonus equal to $50,000 payable on your one year anniversary. Your bonus is subject to federal and state taxes at the standard rate. In the event that you voluntarily resign or are terminated for cause within one year of receipt of this bonus, you must return the full sign-on bonus to NPS.

As an NPS employee you will be eligible to receive stock option grants under the Company's stock option plans. You will be awarded an initial new hire stock option grant in the amount of 48,000 stock options. The exercise price will be the price for shares of NPS common stock as quoted on the NASDAQ Stock Market at market close on the date the options are granted, which will be on the 15^th or next available business day of the month after your month of hire. All grants are subject to approval by the Board of Directors. Your initial new hire stock option grant will vest over four years, as follows: 25% becomes vested on the first anniversary of the grant and then 6.25% every three months for the next 3 years. In addition, you will also receive 17,365 RSUs on the 15^th or next available business day of the month after your month of hire. Your RSUs will vest 1/3 each year over a 3 year period.

I can confirm that "change in control" severance protection exists for you as per the rules of the enclosed "NPS Pharmaceuticals, Inc. Change in Control Severance Pay Plan". This plan is subject to an annual review by the Board of Directors and may be changed at their discretion.

In addition, NPS provides U.S. employees with the following benefits package, which may be revised from time to time.

• Medical insurance coverage for you and your legal dependents as defined by The NPS Medical Plan.
• Dental insurance coverage for you and your legal dependents as defined by The NPS Dental Plan.
• Long Term Care insurance.
• Short-term disability coverage.
• Regular life insurance in the amount of one times your base salary with a minimum of $50,000 and a maximum of $200,000.
• Accidental death and dismemberment insurance in the amount of one times your base salary with a minimum of $50,000 and a maximum of $200,000.
• Long-term disability coverage.
• A 401k plan, subject to that plan's rules. Currently NPS will match 100% of your contributions up to 3% of your annual salary and 50% of your contributions for the next 3%. NPS Pharmaceuticals' contributions will be 0% vested until an employee has worked for NPS Pharmaceuticals for 3 years, after which a participant will be 100% vested.  
• The option to participate in the 125 Cafeteria Plan which includes Dependent Care and Health Care Flexible Spending Accounts.
• Annual Paid Time Off (PTO) accrual of 7.7 hours per full pay period worked for a total of 25 days per year.
• Ten paid holiday days each year (11 for 2013).

You will be required to observe NPS policies and procedures applicable to employees. Your first 90 days of employment will be considered an "introductory period". Within this period, we shall assess and evaluate your performance and you will also be working closely with your supervisor to closely monitor your work and advise improvement accordingly. New Jersey is an employment-at-will state and as with all employees of NPS, your employment will be at-will and there is no fixed or guaranteed duration of your employment. This offer of employment is conditional upon the submission of appropriate documentation to work in the United States within three business days of your first day of employment and the signing of the Code of Business Conduct and Ethics as well as the Employee Policy Agreement Concerning Invention Assignment, Non-Disclosure, and Non-Competition. Copies of appropriate forms are enclosed or will be provided separately. All policies are subject to change.

This offer is contingent upon successful completion of reference checks, drug screening and background verification. The outcome of these checks and verification, at the absolute discretion of NPS, must be considered by NPS to be satisfactory. It is also contingent upon you signing and returning this offer letter by Thursday, May 2, 2013.

By accepting this offer you represent that you are not a party to any agreement or employment agreement that would interfere with your employment at NPS.

During orientation you will be asked to complete your new-hire paperwork. Please bring two forms of government issued identification with you, such as a U.S. Passport, Driver's License, or a Social Security card; one form of identification needs to have your photograph.

I look forward to your response and to the significant contribution you will make to our efforts.

Please call me if you have any questions.

Sincerely,

/s/ Glenn Melrose

Glenn Melrose
Senior Vice President, Human Resources

Please indicate your acceptance of this employment offer by signing below:

/s/ Susan Graf
Susan Graf April 29, 2013
Date

EX-10.34 5 exh10-34.htm CONTRACT MANUFACTURING AND SUPPLY AGREEMENT, DATED AS OF SEPTEMBER 7, 2012, BY AND BETWEEN PATHEON UK LIMITED AND THE REGISTRANT, AS ASSIGNEE OF TAKEDA GMBH (F/K/A NYCOMED DANMARK APS).

Confidential Treatment Requested. Confidential portions of this document have been
redacted and have been separately filed with the Commission.

Exhibit 10.34  

Contract Manufacture and
Supply Agreement

(Teduglutide Unlabelled Bulk Vials)

between

Nycomed Danmark ApS
Langebjerg 1
4000 Roskilde Danmark

and

Patheon UK Limited
Kingfisher Drive
Covingham, Swindon, SN3 5BZ
England

Confidential Treatment Requested. Confidential portions of this document have been
redacted and have been separately filed with the Commission.

TABLE OF CONTENTS

	Page
Article 1 Definitions	3
Article 2 Manufacture of Products, Quality Agreement, Changes, Pharmaceutical Audits, Subcontracting	10
Article 3 Cooperation	14
Article 4 Forecasting, Ordering and Supply	16
Article 5 Shipping and Delivery	19
Article 6 Product Warranty	20
Article 7 Financial Provisions	23
Article 8 Intellectual Property	25
Article 9 Confidentiality	25
Article 10 Compliance with Law and Product Recall	27
Article 11 General Representations and Warranties	28
Article 12 Indemnification, Liability and Insurance	29
Article 13 No Exclusivity	32
Article 14 Term and Termination	32
Article 15 Rights and Duties upon Termination	34
Article 16 Governing Law, Arbitration	36
Article 17 Force Majeure	37
Article 18 Miscellaneous	37

List of Schedules

Schedule 1.1 (Product)
Schedule 1.2 (Start Up and Development Agreement)
Schedule 1.3 (Territory)
Schedule 2.2.1 (First Freezer and Additional Freezer
Schedule 2.2.1.A (Room for Additional Freezer
Schedule 2.3 (Quality Agreement)
Schedule 2.6.4. (Target Yield, Actual Yield, API Agreed Value)
Schedule 7.1 (Supply Price)
Schedule 7.2.2.1. (Supply Price Adjustment)

Confidential Treatment Requested. Confidential portions of this document have been
redacted and have been separately filed with the Commission.

This Contract Manufacture and Supply Agreement relating to the Teduglutide unlabelled bulk lyo vials is being entered into by and between Nycomed Danmark ApS, Langebjerg 1, 4000 Roskilde, Denmark, ("Nycomed"), and Patheon UK Limited, a company incorporated in England & Wales (registered number 3764421) with registered office at Kingfisher Drive, Covingham, Swindon, Wiltshire, SN3 58Z, England ("Patheon"). Each or both of Nycomed and Patheon are hereinafter referred to as "Party" or "Parties", as intended in the given context.

WITNESSETH

WHEREAS, Patheon is member of a group of companies owned by the Canadian public company Patheon Inc., a leading global provider of contract dosage form development and manufacturing services to the pharmaceuticals and biotechnologies industries;

WHEREAS, Patheon delivers and coordinates some functions within the Patheon's companies based in Europe and has a comprehensive spectrum of technology for and broad experience and capabilities in the formulation, manufacture and control of pharmaceutical products, and in particular in the field of lyophilisation;

WHEREAS, Nycomed and Patheon International A.G., an Affiliate of Patheon located in Switzerland, have entered into an agreement with regard to the performance of certain start-up activities relating to the Product by Patheon International A.G. for Nycomed (as hereinafter defined) on February 9, 2010 (hereinafter referred to as "Start Up and Development Agreement") and that such Start Up and Development Agreement has been assigned by Patheon International A.G. to Patheon with effect as of September 22nd, 2011;

WHEREAS, Nycomed and Patheon have negotiated in good faith a contract manufacture and supply agreement with regard to the continued provision by Patheon of certain manufacturing services relating to the Product for Nycomed and the commercial supply of the Product by Patheon to Nycomed;

NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, Nycomed and Patheon hereby agree as follows:

Article 1

Definitions

For the purposes of this Agreement, the following terms, whether used in the singular or plural, shall be ascribed the following meaning:

"Active Pharmaceutical Ingredient" or "API" means the [***]

"Actual Yield" shall have the meaning set forth in Section 2.6.4.

"Affiliate" of either Party means any corporation, firm, partnership, organization or entity, whether de jure or de facto, which such Party directly or indirectly controls, is controlled by or is

Confidential Treatment Requested. Confidential portions of this document have been
redacted and have been separately filed with the Commission.

under common control with. For the purpose of this definition, the term "control" means (i) direct or indirect ownership of fifty percent (50%) or more of the outstanding equity voting stock (or such lesser percentage which is the maximum allowed to be owned by a foreign corporation in a particular jurisdiction) of a Party or other entity or (ii) the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Party or other entity, whether through the ownership of voting securities, by contract, or otherwise.

"API Agreed Value" shall mean the value per mg API as set forth in Schedule 2.6.4.

"Agreement" or "Contract Manufacture and Supply Agreement" means this contract manufacture and supply agreement, including its schedules (including, without limitation, the Quality Agreement).

"Applicable Laws" means (i) with respect to Patheon, the laws of Italy, being the jurisdiction where the Manufacturing Facility is located, and the laws and regulations applying at the place of Manufacture and performance of activities by Patheon hereunder; and (ii) with respect to Nycomed and the Products, the laws of all jurisdictions where the Products Commercialized as such are agreed and understood by the Parties in this Agreement.

"Auditing Company" shall have the meaning set forth in Section 7.2.3.

"Batch" means a defined quantity of the Product as set forth in the Quality Agreement.

"Breach" shall have the meaning set forth in Section 14.2.1.

"Business Day" means any day on which banking institutions in Copenhagen - Denmark, -Swindon - United Kingdom and Monza - Italy are open for business.

"Capital Equipment" means the manufacturing and storage equipment owned by Nycomed e.g but not limited to peristaltic pumps and freezers, as better described in the Start Up and Development Agreement and in Section 2.2.1 below.

"cGMP" means with regard to the Product, the Excipients and Packaging Materials, the then current (i) international rules and regulations according to ICH guidelines, (ii) rules and regulations of the European Union and the United States, including but not limited to the EU-Guide to Good Manufacturing Practice for Medicinal Products and valid FDA regulations, and (iii) valid national regulations in the other countries of the Territory where Nycomed or its Cooperation Partners intend to or actually are actively Commercializing the Product each of (i)-(iii), as may be amended from time to time and (iv) any additional standard if agreed by the Parties in writing.

"Change" means any change or modification to the Product, including without limitation, to the Starting Materials, manufacturing and packaging procedures, Suppliers, the in-process controls, the manufacturing equipment, the facility equipment and utilities, cleaning processes, analytical procedures, specifications and quality control, as well as the storage conditions of, or related to the Product and the Starting Materials.

"Claims" shall have the meaning set forth in Section 12.1.1.

4

Confidential Treatment Requested. Confidential portions of this document have been
redacted and have been separately filed with the Commission.

"Commercialization" means any and all activities directed to importing, exporting, marketing, promoting, advertising, distributing, storing, offering for sale, using and selling the Product, including, without limitation, the distribution of promotional samples to targeted prescribers (to the extent applicable), in the Territory, and conducting Phase IV Studies of the Product. When used as a verb, "Commercialize" means to engage in Commercialization.

"Commercially Reasonable Efforts" means, with respect to a Party's obligations under this Agreement, the level of efforts which are commercially reasonable under the circumstances and as are consistent with the policies and practices that would be utilized by a reasonable and prudent businessman in conducting a business comparable in size and activities to the business conducted by the Party subject to the obligations under this Agreement. It is understood that an obligation to use Commercially Reasonable Efforts under this Agreement will not be construed as requiring the Party subject to the obligation to take actions that would result in a materially adverse change in the benefits to such Party of this Agreement.

"Confidentiality Agreement" shall mean the confidentiality agreement made and entered into as of July 13, 2009 by and between Patheon International A.G. and Nycomed.

"Contract Year" means in the first year of this Agreement the period from the Effective Date up to and including December 31 of the same calendar year, and thereafter shall mean a calendar year except for the last Contract Year which shall mean the period beginning on January 1 of such last Contract Year and ending on the date as of which this Agreement is terminated.

"Control" or "Controlled" means with respect to any: (i) material, item of information, method, data or other know-how, or (ii) intellectual property right or other intangible property, the possession (whether by ownership or license or by control over an Affiliate having possession by license or ownership, other than pursuant to this Agreement) by a Party or its Affiliates of the ability to grant to the other Party access and/or a license or sublicense as provided herein, to such material, item of information, method, data or other know-how or intellectual property right or other intangible property without violating the terms of any agreement or other arrangement with any Third Party existing before or, to the extent negotiated and executed in good faith, after the Effective Date.

"Conversion Costs" shall have the meaning set forth in Schedule 7.1.

"Cooperation Partners" means the Affiliates, Third Party licensees and Third Party distributors engaged by Nycomed in the Development and Commercialization of the Product in the Territory.

"Corporate Control" shall have the meaning set forth in Section 14.3.1.

"Costs of Nationalization" means the customs duties, costs of customs clearance and handling charges accruing in the context of the exportation and importation of Products.

"Defect" means the failure of a Product to comply with any of the warranties undertaken by Patheon pursuant to Section 6.1.1, Section 6.1.2, Section 6.1.3, Section 6.1.4 and/or Section 6.1.5.

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"Defective Product" means Product showing any Defect.

"Deficiency Notice" shall have the meaning set forth in Section 6.2.2.1.

"Delivery Date" shall mean the date of delivery of Products from the Manufacturing Facility, as confirmed in the acceptance of the Firm Order by Patheon pursuant to Article 5.1.

"Development" means the scientific, medical, technical, clinical, regulatory and other activities to obtain and maintain Regulatory Approvals to Commercialize Product in the Territory. Where used as a verb "Develop" means to engage in Development.

"Disclosing Party" shall have the meaning set forth in Section 9.1.

"Disclosing Party Information" shall have the meaning set forth in Section 9.1.

"Discretionary Changes" shall have the meaning set forth in Section 2.7.2.

"Effective Date" means the date of signature of the Party last to sign.

"EMA" shall mean the European Medicines Agency or any successor agency of comparable jurisdiction.

"EONIA" shall have the meaning set forth in Section 7.4.

"Evident Defect" means a Defect that may be readily discovered upon reasonable visual inspection of a shipment of Products without removing the transportation packaging.

"Excipients" means any substance or material that is employed in the Manufacture of the Product, excluding (i) API, and (ii) Packaging Material, as further described in the Quality Agreement.

"Extended Remedy Period" shall have the meaning set forth in Section 14.2.1(d).

"FDA" means the United States Federal Food and Drug Administration or any successor agency of comparable jurisdiction.

"Firm Order" shall have the meaning set forth in Section 4.3.1.

"Forecast" shall have such meaning set forth in Article 4.

"Force Majeure Event" shall have the meaning set forth in Section 17.1.

"Indemnified Party" shall have the meaning set forth in Section 12.1.3.

"Indemnifying Party" shall have the meaning set forth in Section 12.1.3.

"Information" shall mean all scientific, technical, financial, marketing and other information acquired by a Party from the other Party, no matter whether disclosed in tangible form, including

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in written form or in the form of prototypes, or in intangible form, including in oral, electronic or visual form.

"Initial Term" shall have the meaning set forth in Section 14.1.1.

"Inventory" means all inventories of Excipients, Packaging Materials, semi finished Products and Products not yet delivered held by Patheon in connection with the Manufacture of the Products but, for greater certainty, does not include the API.

"Latent Detect" means a Defect other than an Evident Defect.

"Launch Year" shall have the meaning set forth in Section 4.1.1.

"Losses" shall have the meaning set forth in Section 12.1.1.

"Manufacture or Manufacturing" means the process of converting Starting Materials into Products, including Packaging, Quality Control in all processing stages up to stability testing and related services as provided for in this Agreement, in each case excluding the manufacture, testing and analysis of Starting Materials.

"Manufacturing Facility" shall mean the manufacturing facility used for the Manufacture of the Product as located at Viale G.B. Stucchi 110, 20900 Monza (MB), Italy.

"Merger Notice" shall have the meaning set forth in Section 14.3.1.

"Nycomed" shall have the meaning set forth in the first paragraph of this Agreement.

"Nycomed Indemnified Persons" shall have the meaning set forth in Section 12.1.1.

"Nycomed Objection Notification" shall have the meaning set forth in Section 7.2.3.

"Nycomed Patent Rights" shall mean Patent Rights, to the extent that they (a) are directly related to the Manufacture, use, or Commercialization of the Product in the Territory, and (b) are Controlled by Nycomed.

"Packaging" or "Pack" means the filling of the composition of API and Excipients into vials and closing filled vials with stoppers and sealing thereof.

"Packaging Materials" means any material that is employed in the Packaging of Product, excluding any material that is employed for packaging the Product for transport, as further described in the Quality Agreement.

"Party" means either Patheon or Nycomed, as the case may be, and when used in the plural, means Patheon and Nycomed.

"Patent Rights" shall mean patents and patent applications and all substitutions, divisions, continuations, continuations-in-part, any patent issued with respect to any such patent applications, any reissue, re-examination, renewal or extension (including any supplemental

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protection certificate) of any such patent, and any confirmation patent or registration patent or patent of addition based on any such patent, and all counterparts thereof in any country within the Territory.

"Patheon" shall have the meaning set forth in the first paragraph of this Agreement.

"Patheon Indemnified Persons" shall have the meaning set forth in Section 12.1.2.

"Patheon Information" means all Patheon Know-How and other information Controlled by Patheon related to the Product that is required by Nycomed for the Development and Commercialization of the Product.

"Patheon Know-How" means the know-how Controlled by Patheon and required to Manufacture the Product.

"Patheon Patents" means all technical intellectual property rights, including, without limitation, patents, patent applications and all continuations, divisions, reissues, renewals, amendments and extensions (including supplementary protection certificate and patent term extension) of the aforesaid Controlled by Patheon and related to the Manufacture of Products.

"Patheon Technology" means the Patheon Know-How and the Patheon Patents, collectively.

"Person" means any individual, corporation, partnership, association, joint-stock company, limited liability company, trust, unincorporated organisation or government or subdivision thereof.

"Product" means [***], as further described in Schedule 1.1.

"Product Quality Review" means the annual quality review of the Product with the objective of verifying the consistency of the existing methods, the appropriateness of current Specifications and specifications of Starting Materials to highlight any trends and to identify Product and method improvements.

"Product Warranty" means the warranties set forth in Sections 6.1.1, 6.1.2, 6.1.3, 6.1.4 and/or 6.1.5, individually or collectively.

"Quality Agreement" means the quality agreement referenced in Section 2.3 and attached hereto as Schedule 2.3, and which can from time to time be revised in accordance with a written agreement between the Parties.

"Quality Control" means that part of the Manufacturing process which is concerned with sampling, specifications and testing, and with the organization, documentation and release procedures which ensure that the necessary and relevant tests are actually carried out and that materials are not released for use, nor Products released for sale or supply, until their quality has been judged to be satisfactory.

"Recall" shall have the meaning set forth in Section 10.3.1.

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"Recall Expenses" shall have the meaning set forth in Section 10.3.2.

"Receiving Party" shall have the meaning set forth in Section 9.2.

"Regulatory Approval" means any and all approvals (including any applicable supplements, amendments, and pre- and post-approvals), licenses, registrations, or authorizations of a Regulatory Authority necessary for the Manufacture, distribution, use, storage, import, export, transport, promotion, marketing and sale of a Product in a country within the Territory, together with any related governmental price or reimbursement approvals.

"Regulatory Authority" means, with respect to the Territory, any federal, national, multinational, state, provincial or local regulatory agency, department, bureau, commission, council or other governmental entity, including, without limitation, the FDA and the EMA.

"Relevant Price Adjustment Factors" shall have the meaning set forth in Section 7.2.2.1.

"Remedy Period" shall have the meaning set forth in Section 14.2.1(c).

"Reminder" shall have the meaning set forth in Section 14.2.1(b).

"Renewal Term" shall have the meaning set forth in Section 14.1.1.

"Required Changes" shall have the meaning set forth in Section 2.7.1.

"Rolling Forecast" shall have the meaning set forth in Section 4.2.

"Rough Cut Capacity Planning" and "Rough Cut Capacity Plan" shall have the meaning set forth in Section 4.1.

"Shelf Life" means the period beginning on the date of introducing the API into the compounding of the Product and ending according to the then current Regulatory Approval of the Product in the European Union.

"Specifications" means the specifications of the Product as described in the Quality Agreement, as amended by mutual agreement of the Parties from time to time, which include, without limitation:

• specifications for API, Excipients and Packaging Materials, as applicable;
• Manufacturing specifications, directions and processes;
• Specifications for Manufacturing equipment, Manufacturing area and Manufacturing Facility, as applicable;
• storage requirements for API, Excipients and Packaging Materials, as applicable;
• material safety data sheets of the Product;
• material data sheets for the API; and
• the finished Product specifications, packaging specifications and shipping and transport requirements for each Product.

"Starting Materials" means API, Excipients and Packaging Materials.

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"Start Up and Development Agreement" shall have the meaning set forth in the Whereas clauses above, a copy of which is attached herewith in Schedule 1.2.

"Subcontractor" means any Affiliate of Patheon or Third Party appointed by Patheon (i) to Manufacture Product or any part thereof, or (ii) to perform any other activity to be performed by Patheon under or in connection with this Agreement.

"Suit" or "Suits" means any legal action, including any proceeding or complaint.

"Suppliers" shall mean any Third Party manufacturer and/or supplier of any Excipient or Packaging Material procured by Patheon for Manufacturing the Product.

"Supply Price" shall have the meaning set forth in Section 7.1.

"Target Yield" shall have the meaning set forth in Section 2.6.4.

"Term" shall have the meaning set forth in Section 14.1.1.

"Territory" means the countries set forth in Schedule 1.3. and such additional countries as requested by Nycomed for inclusion in Schedule 1.3. and agreed upon by Patheon in good faith, which agreement shall not unreasonably be withheld or delayed.

"Third Party" shall mean any Person other than the Parties and their Affiliates.

"Unit" shall mean one vial of the Product.

"Yearly Volume" means the volume of Product expected to be ordered by Nycomed for delivery in any Contract Year of this Agreement by Patheon as further described in Article 4.1.1.

Article 2

Manufacture of Products, Quality Agreement, Changes,
Pharmaceutical Audits, Subcontracting

2.1  Manufacture of Products. Subject to the terms and conditions of this Agreement, Patheon shall Manufacture for Nycomed or appointees of Nycomed, as instructed by Nycomed, Nycomed's and its Cooperation Partners' requirements of the Product.

2.2  Equipment and Set-Up of Manufacturing Facility. Patheon shall provide and maintain sufficient Manufacturing resources at the Manufacturing Facility in order to meet Nycomed's and its Cooperation Partners' requirements of the Product scheduled for delivery in accordance with Article 4 hereof, including the provision of all equipment, machinery and labor necessary for such purpose.

2.2.1  Capital Equipment, Maintenance. Already under the Start Up and Development Agreement, the Capital Equipment as described therein has been acquired at Nycomed's cost and installed at the Manufacturing Facility. Furthermore, already prior to the Effective Date, the Subcontractor has acquired at Nycomed's cost, an additional freezer as described and specified in

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Schedule 2.2.1, solely dedicated for storage of API. Already prior to the Effective Date, the Subcontractor has installed that additional freezer at Nycomed's cost and expenses, in a room at the Manufacturing Facility, which room is situated in the area of the Manufacturing Site specified in Schedule 2.2.1.A, and which is separated from the room where the first freezer of the Capital Equipment is located. The aforesaid additional freezer shall for the purposes of this Agreement, be part of and fall under the definition of the Capital Equipment. Nycomed has the legal ownership of the Capital Equipment. It is herewith recorded that the provisions set forth in the Start Up and Development Agreement regarding the Capital Equipment including, without limitation, its use, maintenance and servicing shall continue to apply under and for the Term of this Agreement.

2.3  Quality Agreement. The responsibilities of the Parties related to quality assurance, including, without limitation, standard operating procedures applying to Change control, are set forth in the Quality Agreement, executed by and between Patheon International A.G. and Nycomed and assigned on September 22nd, 2011 from Patheon International A.G. to Patheon.

2.4  Manufacturing Standards. In the Manufacturing and performance of activities related to Products, Patheon shall adhere to (i) the Applicable Laws, (ii) cGMP, (iii) Specifications and (iv) this Agreement. Patheon shall store all Products as set forth in the Quality Agreement.

2.5  Release and Testing by Third Party Laboratory. Promptly after the Manufacture of each Batch of Products, Patheon shall (i) perform release tests as specified in the Quality Agreement, and (ii) deliver samples drawn and in quantities as specified in the Quality Agreement to a Third Party laboratory designated by Nycomed at [***] viale G.B. Stucchi n. 110, Monza, Italy, for further testing as specified in the Quality Agreement, in each case together with the documentation set forth in the Quality Agreement. Patheon shall contact the freight carrier appointed by Nycomed for arranging the shipment of Product on behalf of Nycomed based on a routing order, if so requested by and according to the instructions of Nycomed.

2.6  Supply of API, Procurement of Excipients and Packaging Materials.

2.6.1  Supply of API. Subject to the terms and conditions of this Agreement all quantities of API necessary for the Manufacture of Products shall be supplied by Nycomed to Patheon [***]. Patheon shall not use the API for any purpose whatsoever other than for the Manufacture of Products.

2.6.2  Testing of API. API shall be tested by Nycomed or its appointee and Patheon as provided for in the Quality Agreement and each delivery of API by Nycomed shall be accompanied by the documentation as set forth in the Quality Agreement. At any time so detected by Patheon, whether by testing the API or otherwise, that API supplied by Nycomed does not conform to its Specification or is otherwise defective, Patheon shall promptly and in writing notify Nycomed about such non-compliance or defect.

2.6.3  Terms of Delivery of API. At least [***] days prior to the scheduled Manufacturing date, Nycomed shall furnish the quantities of API necessary to enable Patheon to Manufacture the Product for delivery pursuant to Section 5.2 on the Delivery Date. The delivered amount of

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API shall be stored in the freezers provided by Nycomed. Nycomed or its appointee shall ship API as indicated by Patheon [***] viale G.B. Stucchi n. 110, Monza, Italy.

2.6.4  Yield loss of API. With respect to the Manufacture of Product, the Parties shall evaluate and mutually determine the quantities of API which during the normal course of Manufacture would be required and acceptable to achieve a specified result, taking into account, among other things, fixed and flexible Manufacture losses ("Target Yield"). Target Yields are Batch specific. The Target Yield as set out in Schedule 2.6.4 shall apply for the Batches of Product delivered in Contract Years [***] and [***], respectively. Thereafter, the Target Yield shall be reviewed annually and agreed on by the Parties for Product to be delivered in each Contract Year during the continuance of this Agreement through good faith negotiations, having regard to the previous Contract Year's performance, to process enhancements, to the relevant requirements of any Regulatory Authority, to cGMP requirements and to all other relevant circumstances, it being understood and agreed that the previous Contract Year's performance shall not be determinative for such review and agreement. The Parties shall, at the end of each Contract Year, mutually determine by calculation pursuant to the formula set out in Schedule 2.6.4., the cumulative actual quantity of API which during the actual course of Manufacture was required to achieve the result of the relevant Contract Year ("Actual Yield"). To the extent that the Actual Yield is equal to, or greater than, the Target Yield minus [***], all Yield losses of API shall be at Nycomed's sole cost and expense. Patheon shall reimburse Nycomed for the cost of any deficiency wherein the Actual Yield is less than the Target Yield minus [***] at the API Agreed Value only, but in no event shall the combined total of the reimbursed amount be in excess of the amount set out in Section 12.3.2 per Contract Year.

2.6.5  Storage of API. Patheon shall store API in the freezer of the Capital Equipment, as set forth in the Quality Agreement.

2.6.6  Ownership and Insurance of API. All stock of API held by Patheon is the property of Nycomed and shall be insured by Nycomed.

2.6.7  Procurement of Excipients and Packaging Materials. All Excipients and Packaging Materials necessary for Manufacturing the Product shall be procured by Patheon at its cost and expense and only from Suppliers approved as provided for in the Quality Agreement, and such Excipients and Packaging Materials shall be tested by Patheon as provided for in the Quality Agreement. Patheon shall cause its Suppliers to adhere in the manufacturing of and all other activities in relation to Excipients and Packaging Materials to (i) all laws and regulations applying at the place of manufacture of and performance of activities related to Excipients or Packaging Materials (as applicable), (ii) cGMP, (iii) Specifications and (iv) this Agreement. Patheon shall store the Excipients and Packaging Materials as set forth in the Quality Agreement.

2.7  Changes.

2.7.1  Required Changes. Patheon shall and shall cause its Subcontractors to, only after written approval by Nycomed promptly implement any Changes that are required by law or by medical or scientific concerns as to the toxicity, safety and/or efficacy of the Product (collectively, "Required Changes") in accordance with the Change control process set forth in the Quality Agreement.

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2.7.2  Discretionary Changes. For Changes that are not Required Changes (collectively, "Discretionary Changes") the Party requesting a Discretionary Change shall notify the other Party well in advance of its intention to implement a Discretionary Change in order to obtain such other Party's prior written approval, such approval not to be unreasonably withheld or delayed. Patheon shall, and shall cause its Subcontractors to implement any such Discretionary Change only upon prior coordination with a written clearance by Nycomed and in accordance with the Change control process set forth in the Quality Agreement. The Parties shall, to the extent commercially reasonable under the circumstances, cooperate in making such Discretionary Changes.

2.7.3  Costs of Changes. If Required Changes are solely related to the Product or Nycomed's Capital Equipment installed at Patheon, all cost and expenses of these Changes should be paid for by Nycomed. Costs and expenses related to all other Required Changes should be paid for by Patheon. All costs and expenses associated with Discretionary Changes shall be borne by the Party requesting such Change, unless such Changes is suggested by Patheon in order to optimize the Manufacturing process of the Product, in which case the Parties shall meet and in good faith negotiate the costs and expenses and the settlement of said cost and expenses.

2.7.4  Changes of Manufacturing Facility. Any Change of the Manufacturing Facility by Patheon shall require the prior written consent of Nycomed, such consent not to be unreasonably withheld or delayed and shall be made in accordance with the Change control process set forth in the Quality Agreement. Nycomed shall, without limitation, be entitled to withhold its consent if any such Change would cause additional costs to Nycomed, including without limitation, customs duties or increased customs duties on the Product.

2.8   Stability Tests, Product Quality Review, Pharmaceutical Audits.

2.8.1   Stability Tests. Patheon shall perform stability tests of the Product as set forth in the Quality Agreement, for the separate fees specified in Schedule 7.1. Patheon shall not make any changes to these testing protocols without prior written approval from Nycomed. In the event of a confirmed stability test failure, Patheon will notify Nycomed within one Business Day, after which Patheon and Nycomed shall jointly determine the proceedings and methods to be undertaken to investigate the causes of such failure, including which Party shall bear the cost of such investigation. Patheon will provide any and all data and results relating to the stability testing upon request by Nycomed.

2.8.2  Product Quality Review. Patheon shall perform Product Quality Reviews as set forth in the Quality Agreement for the separate fees specified in Schedule 7.1.

2.8.3  Pharmaceutical Audits. In addition to related provisions contained in the Quality Agreement. Nycomed shall have the right, during normal business hours and upon reasonable advance notice, to inspect and audit, in order to ascertain compliance with the terms of this Agreement (a) the facilities of Patheon and/or its Subcontractors where Products are being Manufactured and/or stored, and/or the facilities of its Suppliers where the Excipients and/or Packaging Materials are manufactured and/or stored, provided that, Suppliers agree to be inspected or audited and the representatives of Nycomed shall on such occasions be accompanied by a Patheon representative; (b) any of Patheon's, its Subcontractors' and/or its

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Suppliers' quality documentation relating to the Manufacturing, and storage of Products and manufacture, storage and transport of Excipients and Packaging Materials respectively and (c) any of Patheon's documentation relating to audits Patheon has performed or that have been performed at the request of Nycomed on Patheon's Subcontractors and Suppliers. But, with the exception of "for-cause" audits, Nycomed will be limited each Contract Year to one cGMP-type audit, lasting no more than two (2) days, and involving no more than two (2) auditors. Nycomed may request additional cGMP-type audits, subject to payment to Patheon of a fee to be agreed between the Parties. Patheon shall inspect and audit its Subcontractors' and/or Suppliers' respective facilities and documentation as set out in the Quality Agreement and provide Nycomed with the respective inspection and audit reports. Upon Nycomed's request, Patheon shall in addition inspect and audit its Subcontractors' and/or Suppliers' respective facilities and documentation as above described at Nycomed's costs and expenses and provide Nycomed with the respective inspection and audit reports.

2.9  Appointment of Subcontractors.

2.9.1   General. Subject to Section 2.9.3, Patheon may appoint a Subcontractor only subject to Nycomed's prior written consent, such consent not to be unreasonably withheld or delayed.

2.9.2  Obligations of Patheon with Respect to Subcontractors. It is understood that Patheon shall enter into an agreement with the Subcontractor that contains any terms necessary to ensure that Patheon meets its obligations under this Agreement. For avoidance of doubt the subcontracting of any Manufacture and/or performance of activities hereunder to the Subcontractor by Patheon shall not relieve Patheon of, and Patheon shall remain solely liable, vis-a-vis Nycomed, for its obligations under this Agreement.

2.9.3  Permitted Subcontractors as of Effective Date. Subject to Section 2.9.2, Nycomed consents, as of the Effective Date, to the appointment by Patheon of the following Subcontractors:

Patheon Italia S.p.A., Viale G.B. Stucchi 110, 20900 Monza (MB), Italy -Manufacture of Product.

2.9.4  Vicarious Liability. Patheon shall be liable for the performance or non-performance of any responsibilities delegated to any Subcontractor as if they had been performed or not performed by Patheon.

Article 3

Cooperation

3.1   Existing Patheon Information. Patheon shall provide Nycomed and/or Regulatory Authorities, as requested by Nycomed, free of charge, with all Patheon Information related to Manufacturing of the Product in existence at the time of Nycomed's request.

3.2   Additional Patheon Information. In addition to the Patheon Information to be provided pursuant to Section 3.1, Patheon shall:

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1. provide Nycomed, free of charge, with all required additional information in relation to all Batches in accordance with the QA Agreement; and
2. use Commercially Reasonable Efforts to create and provide, in each case as soon as reasonable practicable, Nycomed and/or Regulatory Authorities, with other additional Patheon Information as requested by and as coordinated with Nycomed. This other additional Patheon Information is charged by Patheon to Nycomed, based on a quotation at an hourly rate of [***]. For greater clarity, if Nycomed's request of information causes Patheon to re-elaborate the required information, such activity shall be compensated by Nycomed at the above mentioned rate or at the relevant different rates provided under this Agreement.

3.3   Notification of Nycomed by Patheon. Patheon shall promptly notify Nycomed of any of the following, including any corrective actions initiated and shall provide Nycomed with copies of all relevant material documentation relating thereto: (i) Regulatory Authority inspections of Manufacturing Facility and related facilities used for any of the Products; (ii) any material communication from Regulatory Authorities pertaining to the Manufacture of any of the Products; or (iii) any other Regulatory Authority reviews, inquiries or investigations relating to any of the Products.

3.4   Regulatory Filings.

1. Regulatory Authority. Nycomed shall have the sole responsibility for filing all documents with all Regulatory Authorities and taking any other actions that may be required for the receipt and/or maintenance of Regulatory Authority approval for the Commercialization of the Products. Patheon shall assist Nycomed, to the extent consistent with Patheon's obligations under this Agreement, to obtain Regulatory Authority approval for the Commercialization of all Products as quickly as reasonably possible.
2. Verification of CMC. At least [***] days prior to filing with any Regulatory Authority any documentation which is or is equivalent to the FDA's Chemistry and Manufacturing Controls ("CMC") related to any Marketing Authorization, Nycomed shall provide Patheon with a copy of the CMC documentation that covers activities and data generated by Patheon pursuant to this Agreement. Such disclosure shall permit Patheon to verify that the CMC accurately describes the work that Patheon has performed and the Manufacturing processes that Patheon will perform pursuant to this Agreement. Nycomed shall provide Patheon with copies of all Regulatory filings at the time of submission which contain chemistry, manufacturing and controls ("CMC") information regarding the Product and the Manufacturing Facility.
3. Deficiencies. If in Patheon's sole discretion, acting reasonably, Patheon determines that any of the information provided by Nycomed in accordance with paragraph (b) above is inaccurate or deficient in any manner whatsoever (the "Deficiencies"), Patheon shall notify Nycomed in writing of such Deficiencies as soon as reasonably possible. The Parties shall work together to have such Deficiencies resolved prior to any pre-approval inspection.

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4. Nycomed Responsibility. For clarity, the Parties agree that in reviewing the documents referred to in paragraph (b) above, Patheon's role will be limited to verifying the accuracy of the description of the work undertaken or to be undertaken by Patheon. Subject to the foregoing, Patheon shall not assume any responsibility for the accuracy of any application for receipt of an approval by a Regulatory Authority. Nycomed is solely responsibility for the preparation and filing of the application for approval by the Regulatory Authorities and any relevant costs shall be borne by Nycomed.
5. Inspection by Regulatory Authorities. If Nycomed does not provide Patheon with the documents requested pursuant to paragraph (b) above within the time stipulated in these paragraphs and if Patheon reasonably believes that Patheon's standing with a Regulatory Authority may be jeopardized, Patheon may, in its sole discretion, delay or postpone any inspection by the Regulatory Authority until such time as Patheon has reviewed the requested documents and is satisfied with their contents.

Article 4

Forecasting, Ordering and Supply

4.1   Rough Cut Capacity Planning. Within the first [***] days of the first Contract Year and in the month of January of all subsequent Contract Years, Nycomed agrees to submit to Patheon and update its best estimate rough cut capacity planning of its anticipated requirements of Products for the subsequent [***] months period on which Patheon's and its Subcontractors' Manufacturing capacity planning will be based (the "Rough Cut Capacity Planning" and each, a "Rough Cut Capacity Plan"). At the receipt of the Rough Cut Capacity Planning, Patheon will provide Nycomed with its observations regarding potential Patheon's inability to meet the forecasted volumes requirements of Nycomed. The volumes of Product forecasted in the Rough Cut Capacity Planning shall not be deemed as binding on Nycomed nor on Patheon.

4.2   Yearly Volume (or "YV"). At least [***] months before the first scheduled commercial delivery of Product, Nycomed shall provide Patheon with the Yearly Volume for the Launch Year. If the first scheduled commercial delivery is no later than [***], the Launch Year is the period commencing from the Manufacturing of the first commercial Batch of Product up to and including [***] of that same year. If the first scheduled commercial delivery is later than [***], the Launch Year is the period commencing from the Manufacturing of the first commercial Batch of Product up to and including [***] of the following Contract Year.

Thereafter no later than [***] of the Launch Year and all following Contract Years during the Term, Nycomed shall provide Patheon with the Yearly Volume for the immediately following Contract Year.

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At the receipt of the Yearly Volume, Patheon will evaluate the actual variation (if any) of the volumes of Product as set out in the Rough Cut Capacity Plan. If the total volume of the Products, as set out in the Yearly Volume, exceeds the Rough Cut Capacity Plan to such an extent that the volume becomes critical for Patheon in relation to the Manufacturing capacity at the Manufacturing Facility, then the Parties shall evaluate and discuss in good faith the impact of such variation on the Manufacturing capacity at the Manufacturing Facility and on the resources necessary to meet such variation.

The Parties hereby agree that the Yearly Volume may be reduced yearly during the Term of the Agreement within the flexibility ranges (hereinafter the "Flexibility Ranges" or "FR") set out in the Table below:

[***]

If at the end of each Contract Year the aggregate actual volume of Product ordered by Nycomed for delivery during such Contract Year ("Actual Yearly Volume" or "AYV") varies from the Yearly Volume provided by Nycomed, by more than the Flexibility Ranges as set out in the Table above for such Year, then Patheon shall be entitled to and may request that Nycomed pays to Patheon an amount to be determined as follows, for the non-absorbed fixed manufacturing costs incurred by Patheon during such Year:

[***]

When calculating the % of FR, the value shall be reduced to the nearest multiple of Batches.

If during a Contract Year, Nycomed requests a volume of Product which exceeds by more than [***] the YV for such Contract Year, then the Parties shall evaluate in good faith such excess request in order to reach an agreement on Product feasibility in the current Contract Year and Patheon shall use all Commercially Reasonable Efforts to meet such Nycomed's excess requests.

4.2   Rolling Forecast. Promptly following the Effective Date, and within the first [***] calendar days of each calendar month thereafter, Nycomed shall submit to Patheon a non-binding rolling monthly forecast of the quantity of Products which Nycomed expects Patheon to supply to Nycomed during the succeeding [***] months (the "Rolling Forecast"). Subject to Sections 4.3.1 and 4.3.2, the quantities indicated in the respective third month of each Rolling Forecast shall be binding on Nycomed and Patheon. If the quantities of Product forecasted for the 4th until the 18th month of a Rolling Forecast exceed the respective quantities of the most recent Rolling Forecast to such an extent that such excess volume becomes critical for Patheon in relation to the Manufacturing capacity at the Manufacturing Facility, then Patheon shall notify Nycomed thereabout in writing latest within [***] Business Days after receipt of that Rolling Forecasts. In such case the Parties shall evaluate and discuss in good faith the impact of such excess volume on Patheon's Manufacturing capacity, on resources necessary to meet such excess volume and/or a reasonable adjustment of the subject Rolling Forecast. Failure of Patheon to provide such written notification to Nycomed within the aforesaid time limit shall be deemed acceptance by Patheon of all quantities of Products so forecasted by Nycomed as being uncritical in relation to Patheon's Manufacturing capacity and Patheon being able to timely Manufacture all such quantities for delivery as forecasted.

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4.3   Ordering.

4.3.1   Commencement of Ordering. Promptly following the Effective Date, or such other time agreed by the Parties in writing, Nycomed shall commence ordering Products on the basis of the Rolling Forecast. The first [***] months of the initial Rolling Forecast shall constitute a firm written order in the form of a purchase order ("Firm Order") binding on the part of Nycomed to purchase, and when accepted by Patheon pursuant to Section 4.3.2., for Patheon to supply the quantity of the Product. Thereafter, before the [***] calendar day of each calendar month, Nycomed shall place firm purchase orders (each also a "Firm Order") for Products to be delivered to Nycomed on a date not less than [***] months from the date that the Firm Order is submitted. The quantities of Products ordered in such Firm Orders and then accepted by Patheon pursuant to Section 4.3.2., shall be firm and binding on Nycomed and Patheon and shall not be subject to reduction by Nycomed or Patheon. Each Firm Order may only be cancelled or modified if agreed in writing by the Parties.

In delivering Firm Orders an over-or underdelivery of up to [***] of the relevant Firm Order quantity is acceptable.

4.3.2   Acceptance of Firm Orders and Supply. Patheon shall indicate its acceptance of Firm Orders for the Product by acknowledging acceptance of each Firm Order in writing within [***] Business Days of its receipt; each such acceptance shall include the estimated Manufacturing start date and the Delivery Date of the Product ordered. For as long as the ordered quantity of Product does not exceed the quantity of the same month under the most recent Rolling Forecast by more than [***] Batch Patheon shall use its reasonable best efforts to accept and any such Firm Order shall be deemed accepted by Patheon for delivery within the same month. Patheon will use Commercially Reasonable Efforts to supply to Nycomed the quantity of Products in each Firm Order exceeding such maximum quantity.

4.3.3   Allocation of Supply. In the event that Patheon is aware or anticipates that it will be unable to meet any Firm Order, either in whole or in part, Patheon shall promptly inform Nycomed of such inability. If such inability is partial, Patheon shall fulfill Firm Orders with such quantities of Products as can be reasonably made available for supply to Nycomed hereunder. Patheon shall give no less priority to meeting Nycomed's and its Cooperation Partners' requirements of Products as it may give to a Third Party's comparable requirements.

4.3.4   Minimum Order Size. Unless the Parties agree otherwise in writing, all Firm Orders from Nycomed for Product shall be for a delivery quantity corresponding to 1 (one) Batch as set forth in Schedule 7.1 or multiples thereof.

4.3.5   Terms of Firm Orders. Any Rough Cut Capacity Plans, Yearly Volumes, Rolling Forecasts or related Firm Orders, confirmations, acceptances, advices and similar documents submitted by or on behalf of Nycomed or by or on behalf of Patheon in conducting the activities contemplated under this Agreement are for administrative purposes only and shall not add to or modify the terms of this Agreement. To the extent there are any conflicts or inconsistencies between this Agreement and any such document, the terms and conditions of this Agreement shall control as to a particular document unless otherwise agreed to in writing by the Parties. The failure by a Party to object to any provision in conflict or inconsistent with the terms and

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conditions of this Agreement, shall not be construed as a waiver by such Party of the terms and conditions of this Agreement or as acceptance by such Party of the conflicting or inconsistent terms and conditions.

4.4   Multiple of Batches. All Firm Orders and all monthly quantities of Product in Rolling Forecasts, Yearly Volumes and Rough Cut Capacity Plans shall correspond to an integer number of Batches.

4.5   Safety Stock. Nycomed understands and acknowledges that Patheon will rely on the Rolling Forecast and Firm Orders submitted pursuant to Sections 4.2 and 4.3 in ordering the Excipients and Packaging Materials required to meet such Firm Orders. In addition, Nycomed understands that to ensure an orderly supply of such Excipients and Packaging Materials to achieve economies of scale in the costs, it may be desirable for Patheon to purchase such Excipients and Packaging Materials in sufficient volumes to meet the Manufacturing requirements for Product during part or all of the forecasted periods referred to in Section 4.2 or to meet the Manufacturing requirements of any longer period agreed to by Patheon and Nycomed. Accordingly, Nycomed authorizes Patheon to purchase Excipients and Packaging Materials in order to satisfy the production requirements for Products for the [***] contemplated in the most recent forecast provided by Nycomed pursuant to Section 4.2, and agrees that Patheon may make such other purchases of Excipients and Packaging Materials to meet Manufacturing requirements during such longer periods as may be agreed upon and approved in writing from time to time by Nycomed at the request of Patheon.

4.6 If Excipients and Packaging Materials ordered by Patheon pursuant to Firm Orders or for the first [***] month period in reliance upon the rolling [***] month forecast pursuant to Section 4.2 are not included in finished Products purchased by Nycomed within [***] months after the date of purchase of such Excipients and Packaging Materials, Nycomed shall upon Patheon's request pay to Patheon its costs therefore (including all costs incurred by Patheon in connection with the purchase of such Excipients) and, in the event such Excipients and Packaging Materials are incorporated into Product subsequently purchased by Nycomed or into Third Party products manufactured by Patheon, Nycomed will receive credit for any costs of such Excipients and Packaging Materials previously paid to Patheon by Nycomed.

In relation to the period prior to the first commercial delivery of Product the Parties shall in good faith agree on what levels of safety stock that are appropriate.

Article 5

Shipping and Delivery

5.1   Delivery Date of Products. At the time Nycomed places a Firm Order, Nycomed or its appointee will provide Patheon with a delivery date consistent with the Rolling Forecast. Patheon will confirm the Delivery Date in the Firm Order acceptance.

5.2   Terms of Delivery of Products. Patheon shall deliver Products [***]), viale G.B. Stucchi n. 110, Monza, Italy. Patheon shall contact the freight carrier appointed by Nycomed for

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arranging the shipment of Product on behalf of Nycomed based on a routing order, if so requested by and according to the instructions of Nycomed.

5.3   Shipment. Subject to the terms and conditions of this Agreement, Patheon agrees to ship Products in a manner consistent with the shipping instructions that form part of the Quality Agreement.

1.1   Accompanying Documentation.

5.3.1   Shipping Documentation. Patheon shall provide Nycomed with a commercially appropriate and complete shipping documentation, including, without limitation, bills of lading together with each shipment of Products. The documents must include Nycomed's ordering number, batch numbers, and expiry dates of the Products.

5.3.2   Certificate of Analysis and Certificate of Conformance. Concurrent with the delivery of Product, Patheon shall provide Nycomed with a certificate of analysis and a certificate of conformance as further set out in the Quality Agreement.

5.4   Default in Delivery. If Patheon fails to deliver the ordered Product (a) free of Defects (subject to Sections 6.2.4 and 6.3), (b) at the agreed place of delivery, (c) at the quantity of the Product ordered pursuant to the Firm Order (subject to Section 4.3.1), (d) within the Delivery Date, provided that (i) the delay was not caused by breach by Nycomed any of its obligations hereunder, and (ii) the delay was not caused by circumstances beyond the control of Patheon as stipulated in Article 17, without prejudice to any other rights or claims Nycomed may have hereunder or under the law, including, without limitation, claims for documented damages exceeding the penalty amount, Nycomed shall, only after having granted Patheon with a grace period of [***] Business Days and within said [***] Business Days Patheon have failed to remedy the default, have the right to demand from Patheon a penalty payment, of [***] per commence day of the delay of the Firm Order value. Any such payment of penalty shall be credited against the ensuing Firm Order.

Article 6

Product Warranty

6.1   Warranties. Patheon warrants to Nycomed as follows:

6.1.1   Compliance with Specifications. At the date of delivery pursuant to Section 5.2, all Products shall fully comply with the Specifications;

6.1.2   Remaining Shelf Life. At the date of delivery of Products pursuant to Section 5.2. no more than [***] months of the Shelf Life have been elapsed, except in case that Patheon conducts investigation of a significant deviation (as set forth in the Quality Agreement) prior to delivery of Product, in which case no more than [***] months of the Shelf Life have been elapsed at the date of delivery of Products pursuant to Section 5.2;

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6.1.3   Compliance with Manufacturing Standards for Products. All Products supplied to Nycomed or its appointee shall have been Manufactured and all activities in relation to the Products shall have been performed in accordance with (i) Applicable Laws (ii) cGMP, (iii) Specifications and (iv) this Agreement.

6.1.4   Compliance with Manufacturing Standards for Excipients and Packaging Materials. All Excipients and Packaging Materials employed in the Manufacture and Packaging of Products supplied to Nycomed or its appointee shall have been manufactured and all activities in relation to the Excipients and Packaging Materials shall have been performed in accordance with (i) all laws and regulations applying at the place of manufacture of Excipients or Packaging Materials (as applicable), (ii) cGMP, (iii) this Agreement and (iv) the Specifications.

6.1.5   Compliance with Procurement Requirements. Only Excipients and Packaging Materials that have been procured from Suppliers approved as provided for in the Quality Agreement shall have been employed in the Manufacture and Packaging of Products supplied to Nycomed or its appointee.

6.2   Inspection and Acceptance. Nycomed agrees to inspect or have inspected incoming shipments of Products as follows:

6.2.1   Incoming Inspection Regarding Evident Defects. Nycomed agrees to inspect, or to have its appointee inspect, each shipment of Products supplied by Patheon for Evident Defects, as far as reasonably possible, within [***] Business Days following delivery pursuant to Section 5.2.

6.2.2   Notification of Patheon of Latent and Evident Defects.

6.2.2.1   Evident Defects. Nycomed agrees to provide, or to cause its appointee to provide, written notice ("Deficiency Notice") to Patheon of any Evident Defects within [***] calendar days following delivery pursuant to Section 5.2.

6.2.2.2   Latent Defects. Nycomed agrees to provide written Deficiency Notice to Patheon of any Latent Defects (including, without limitation, Defects discovered by the Third Party laboratory referred to in Section 2.5.) within [***] days of discovery by Nycomed but in no event after the expiration date of the Product.

6.2.2.3   Determination of Deficiency. Upon receipt of a Deficiency Notice, Patheon shall have [***] Business Days to advise Nycomed by notice in writing that it disagrees with the contents of such Deficiency Notice. If Nycomed and Patheon fail to agree within [***] Business Days after Patheon's notice to Nycomed as to whether or not any Products identified in the Deficiency Notice is a Defective Product, then the Parties shall mutually select an independent laboratory to evaluate whether or not the Products is a Defective Product. Such evaluation shall be binding on the Parties, and if such evaluation certifies that any Products is a Defective Product Nycomed may reject those Products in the manner contemplated in this Article 6 and the evaluation costs of the independent laboratory will be borne by Patheon, otherwise the Nycomed will be responsible for the evaluation costs.

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6.2.3   Acceptance of Shipment. If Nycomed should fail to perform the incoming inspection pursuant to Section 6.2.1 and to notify Patheon of an Evident Defect in accordance with Section 6.2.2.1, or if Nycomed should fail to notify Patheon of a Latent Defect in accordance with Section 6.2.2.2, then Nycomed shall no longer be entitled to assert warranty claims pursuant to Section 6.4 in respect to such Evident Defect or such Latent Defect (as applicable) of the applicable shipment of Product, provided however that the aforesaid shall not be construed as preventing or limiting the exercise by Nycomed of any other rights or remedies (including, without limitation, the right to be indemnified by Patheon pursuant to Section 12.1.1.), concurrently or separately, as provided for in this Agreement, at law or in equity.

6.2.4   Right to Reject. If a shipment of Products includes Defective Products Nycomed may, in its reasonable discretion, consider such shipment to be Defective in its entirety, and reserves the right to reject any such shipment of Product in its entirety. If Nycomed intends to reject an entire shipment as aforesaid it shall consult with Patheon, provided, however, that the final decision shall always be solely with Nycomed.

6.3   Limitations of Warranty. Patheon's warranties set forth in Section 6.1.1 shall not apply to the extent a Defect in a Product results from (i) API supplied by Nycomed which did not conform to its Specification or was otherwise defective at the time of delivery to Patheon pursuant to Section 2.6.3, provided that such non-conformity or defect of the API could not reasonably have been detected by Patheon's testing the API prior to Manufacturing Products there from as set forth in Section 2.6.2, or (ii) causes which occur following delivery of the applicable shipment of Product to Nycomed pursuant to Section 5.2, including misuse, improper storage or improper handling; (iii) is caused by inappropriate Manufacturing methods or test methods (including test methods related to Excipients and Packaging Materials) set forth in the Specifications if and to the extent Nycomed is responsible for the appropriateness of such methods, provided, however that the warranty limitation of this lit. (iii) shall not apply in case Patheon could have reasonably detected such inappropriateness of methods (if and to the extent Nycomed is responsible for the appropriateness of these methods) and did not promptly inform Nycomed thereof; or (iv) is due to any breach by Nycomed of its obligations under this Agreement that was not caused by circumstances beyond the control of Nycomed as stipulated in Article 17.

6.4   Remedies.

6.4.1   Evident and Latent Defects. Subject to Section 6.2.4 and the limitations of Patheon's warranty pursuant to Section 6.3, Patheon shall, at Nycomed's option, either (i) promptly provide to Nycomed or its appointee, at no additional charge, replacement delivery of non-Defective Products in a quantity equal to, dependent upon the receipt from Nycomed of all API required for the Manufacture of such replacement Products; or (ii) issue a credit to Nycomed for the Supply Price paid by Nycomed for the Defective Products; or (iii) offset the Supply Price paid by Nycomed for the Defective Products against other amounts due to Patheon hereunder. Patheon shall furthermore (iv) pay to Nycomed, subject to the limits set forth in Section 12.3.2., the API Agreed Value for any quantity of API lost or damaged by Patheon for the Manufacture of Defective Product; (v) refund to Nycomed the costs of transport of such API to Patheon pursuant to Section 2.6.3; (vi) reimburse Nycomed for Costs of Nationalization and for additional reasonable out-of-pocket expenses, incurred by Nycomed or its appointee in the transportation,

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inspection and disposal of Defective Products (payment by Patheon shall be made in each case (iv) - (vi) in EUR plus V.A.T. (if any) within [***] days from invoice date); (vii) be liable and obliged to provide indemnity pursuant to Section 12.1.1.; and (viii) be liable to Nycomed pursuant to Section 12.4, and (ix) reimburse Nycomed for Recall Expenses pursuant to Section 10.3.2.

Article 7

Financial Provisions

7.1   Supply Price. The supply price payable by Nycomed for each of the Products (the "Supply Price") is as set out in Schedule 7.1.. The Supply Price is based on delivery [***], viale G.B. Stucchi 110 Monza, Italy. Except as otherwise expressly provided for in this Agreement, all work and performances by Patheon under this Agreement shall be deemed fully satisfied and remunerated by Nycomed, by payment of the Supply Price.

7.2   Adjustment of Supply Price.

7.2.1   General. Effective from the second Contract Year (i.e. year 2012) and in each Contract Year thereafter during the Term, and no more frequently than once during each Contract Year, the Parties shall be entitled to an adjustment of the Supply Price in accordance with Section 7.2.2 below in respect of the Products to reflect a change in the Relevant Price Adjustment Factors subject to Section 7.2.2.1. It is however agreed between the Parties that in the event Patheon incurs extraordinary cost increases (more than [***]) related to Excipients and Packaging Materials during a Contract Year, the Parties shall meet and in good faith discuss the costs impact on the Supply Price. Patheon shall however use Commercially Reasonable Efforts to prevent such potential cost increases from occurring.

Any so adjusted Supply Price shall apply to Firm Orders placed by Nycomed following notification by Patheon to Nycomed of the relevant adjustment, always provided that this shall not apply to Supply Price decreases that Patheon should have failed to make, which shall retroactively apply for Firm Orders placed by Nycomed after the date the relevant adjustment should have been notified to Nycomed by Patheon.

7.2.2   Principles Applying to Adjustment of Supply Price.

7.2.2.1   Relevant Price Adjustment Factors. Subject to Section 7.2.3, the Parties shall be entitled to an adjustment of the Supply Price in respect of the Products to reflect:

1. [***] and
2. [***]

(individually and collectively, the "Relevant Price Adjustment Factors").

In connection with a Price adjustment pursuant to this Section 7.2.2.1 (a), the Parties have agreed, that the variation of the Supply Price for the second and third Contract Year of this

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Agreement, respectively Contract Year 2012 and Contract Year 2013, shall be based on the following percentages:

• For Contract Year 2012: [***] of the Consumer Price Index, published by ISTAT in respect of the immediately prior Contract Year; and
• For Contract Year 2013: [***] of the Consumer Price Index, published by ISTAT in respect of the immediately prior Contract Year.

In connection with a Price adjustment pursuant to this Section 7.2.2.1(a), Patheon shall deliver to Nycomed on or about the first quarter of each Year, a statement outlining the percentage increase/decrease in the Consumer Price Index upon which such price adjustment is based. The adjusted Supply Price shall be effective as of 1st January of the Contract Year in which the adjustment is required.

In connection with the Price adjustment pursuant to this Section 7.2.2.1(b), Patheon shall deliver to Nycomed the budgetary pricing information, related to the increase or decrease of Patheon's procurement cost for Excipients and Packaging Materials. Any so adjusted Supply Price shall apply to Firm Orders placed by Nycomed following the notification by Patheon to Nycomed of the adjustment, always provided that this shall not apply to Supply Price decreases, that Patheon should have failed to make, which shall retroactively apply for Firm Orders placed by Nycomed after the date the relevant adjustment should have been notified to Nycomed by Patheon.

7.2.3   Dispute on Supply Price Adjustment. If Nycomed should object to (i) an adjustment by Patheon of the Supply Price pursuant to Section 7.2. in writing within a period of [***] weeks, or (ii) Patheon's failure to adjust the Supply Price pursuant to Section 7.2. in writing (in each case, a "Nycomed Objection Notification"), a senior officer of Patheon and a senior officer of Nycomed shall discuss and attempt to resolve the matter. If the issue should not have been resolved within a period of [***] month from receipt by Patheon of the relevant Nycomed Objection Notification, then the issue of an adjustment of the Supply Price shall be determined by a reputable international accounting firm to be promptly agreed by the Parties in good faith (the "Auditing Company"; PriceWaterhouseCoopers and KPMG are acceptable to both Parties).

Such Auditing Company shall sign a standard form confidentiality agreement in a form to be agreed between the Parties and shall then be entitled to review only the Patheon's financial records strictly necessary to make such final determination of, and to communicate to the Parties, the relevant change of the Supply Price resulting from the application of the principles set forth in Section 7.2. Such determination shall be final and binding upon the Parties. However, such Auditing Company shall not be entitled to reveal to Nycomed any details of its review and calculation including, without limitation, the prices charged to Patheon by its Suppliers or Subcontractors. It is understood between the Parties that, pursuant to this Section 7.2.3., Patheon will not have any obligation to disclose to the Auditing Company financial records or any other document or information related to the prices charged to Patheon by its Subcontractor under Section 2.9.3.

The costs of the services performed by such Auditing Company shall be borne by Patheon, if the deviation is to the detriment of Nycomed, and by Nycomed if there is no deviation or if the deviation is to the detriment of Patheon,

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Such determination by such Auditing Company shall, if relevant, retroactively, apply to the calculation of the Supply Price of Product for all Firm Orders placed by Nycomed following notification by Patheon to Nycomed of the relevant adjustment, always provided that this shall not apply to Supply Price decreases that Patheon should have failed to make, which shall retroactively apply for Firm Orders placed by Nycomed after the date the relevant adjustment should have been notified to Nycomed by Patheon.

7.3   Invoices and Payment. Invoices will be sent, by Patheon to Nycomed, at the time the Product is delivered to Nycomed pursuant to Section 5.2. Payment for supplies of the Product will be due net [***] days from the date of the relevant invoice. Payments shall be made in Euro.

7.4   Late Payments. In the event that either Party should fail to make timely payment of any amount due and payable pursuant to this Agreement, interest shall accrue at a rate of interest per annum of [***] above the Euro Overnight Index Average ("EONIA"), as calculated and published by the European Central Bank effective for the respective days of the period of default; provided, that if such failure to pay continues for more than [***] days, the applicable rate of interest shall be EONIA plus [***] for the entire period of default. In the event that any payment, or portion thereof, is disputed in good faith by the Party allegedly obliged to make payment, any subsequent settlement payment related to that dispute shall not include interest thereon.

Article 8

Intellectual Property

8.1   Limited License. NYCOMED herewith grants to Patheon and to its Subcontractor under Section 2.9.3. for the Term, a non-exclusive, royalty-free, revocable license with respect to all Nycomed Patent Rights which are used by Patheon and by its Subcontractor solely to the extent necessary to allow the performance of the Manufacture of Products and other activities and services by Patheon under this Agreement.

8.2   Infringement of Third Party Patents. Patheon shall promptly notify Nycomed if a written claim is made, or if a Suit is threatened or brought, against Patheon, any of their respective Affiliates, or any of Patheon's Subcontractors, alleging that the activities being carried out under this Agreement infringe upon one or more claims of a Third Party patent or published patent application. Patheon shall set out in reasonable detail in its notice the facts of the claim or Suit as known. Patheon shall cooperate as far as reasonable with Nycomed in the defense of the Suit.

Article 9

Confidentiality

9.1   General Principle. Subject to the terms and conditions of this Agreement, each Party shall (i) maintain in strict confidence the terms and conditions of this Agreement and all Information obtained from the other Party and/or its Affiliates ("Disclosing Party") under or in

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connection with this Agreement (the "Disclosing Party Information"), (ii) not disclose or divulge the Disclosing Party Information without the prior written consent of the Disclosing Party; and (iii) use the Disclosing Party Information only as reasonably necessary to exercise its rights and fulfill its obligations under this Agreement.

9.2   Exceptions. The obligations pursuant to Section 9.1 shall not apply to Information that (i) was known (other than from the Disclosing Party) to the Party receiving ("Receiving Party") the Disclosing Party Information, prior to its date of disclosure to the Receiving Party, as evidenced by written records; or (ii) either before or after the date of the disclosure to the Receiving Party is lawfully disclosed to the Receiving Party by sources other than the Disclosing Party, rightfully in possession of the Information; or (iii) either before or after the date of the disclosure to the Receiving Party becomes published or generally known to the public other than through any act or omission of the Receiving Party in breach of this Agreement; or (iv) is independently developed by or for the Receiving Party without reference to or reliance upon the Disclosing Party Information.

9.3   Nycomed Permitted Use and Disclosure. Nycomed may disclose Information received from Patheon to the extent such disclosure is reasonably necessary for the purpose of the implementation of this Agreement, including, without limitation, the disclosure of Information to the extent it has to be disclosed to Cooperation Partners of Nycomed, Nycomed Affiliates, Regulatory Authorities and other Third Parties in connection with the manufacturing, development, registration, marketing and sale of the Product and provided that Nycomed shall, and shall cause its Cooperation Partners to, undertake reasonable and lawful actions to avoid and/or minimize the degree of such disclosure. Nycomed undertakes to submit its Cooperation Partners and aforesaid other Third Parties to similar obligations of confidentiality and use restrictions no less stringent than those undertaken by Nycomed pursuant to this Agreement.

9.4   Patheon Permitted Use and Disclosure. Patheon may disclose Information received from Nycomed to Patheon's Subcontractors and/or Suppliers, to the extent such disclosure is necessary for the purpose of the implementation of this Agreement, provided that Patheon has imposed upon the relevant Subcontractors and Suppliers written obligations of confidentiality and non-use no less stringent than those undertaken by Patheon pursuant to this Agreement.

9.5   Parties Permitted Use and Disclosure. The Receiving Party may disclose Disclosing Party Information that it is required to disclose to comply with applicable laws to defend or prosecute litigation or to comply with governmental regulation, provided that the Receiving Party provides prior notice to the Disclosing Party and takes reasonable and lawful actions to avoid and/or minimize the degree of such disclosure.

9.6   Submission of Agreement to Cooperation Partners. Patheon acknowledges that Nycomed is cooperating with certain Cooperation Partners, in the Development and Commercialization of the Product. Patheon agrees that Nycomed may submit a copy of this Agreement in redacted form as previously agreed with Patheon (such agreement not to be unreasonably withheld or delayed by Patheon) to these Cooperation Partners for purposes of information and subject to the Cooperation Partners agreeing to maintain the information in confidence, not to disclose it to any Third Party, and to use it only as required to assist with the Development and Commercialization of Product.

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9.7   Survival of Obligations of Confidentiality. All of the provisions in this Article 9 shall survive any termination or expiration of this Agreement for an unlimited period of time.

9.8   Prior Confidentiality Agreement. Already prior to the Effective Date the Parties have entered into the Confidentiality Agreement. The Parties hereby agree that all Information disclosed by a Party to the other Party under the aforesaid Confidentiality Agreement shall be deemed Disclosing Party Information disclosed under this Agreement.

Article 10

Compliance with Law and Product Recall

10.1   Compliance with Law. In performing this Agreement, Patheon undertakes to comply with all Applicable Laws.

10.2   Duties to Inform. The Parties shall cooperate to keep each Party informed, commencing within forty-eight (48) hours of notification of any action by, or notification or other information which it receives (directly or indirectly) from a Regulatory Authority in the Territory, (i) which raises any material concerns regarding the safety or efficacy of any Product, (ii) which indicates or suggests a potential material liability for either Party to Third Parties arising in connection with any Product, or (iii) which is reasonably likely to lead to a Recall or market withdrawal of any Product. Subject always to Sections 10.1, neither Party shall be obliged to disclose such information in breach of any contractual restriction which it could not reasonably have avoided.

10.3   Product Recall.

10.3.1   General Principle. Any recall of the Product in a country of the Territory, whether required by a competent relevant Regulatory Authority, for any failure of Product to meet the Specifications or for other reasons (each, a "Recall"), shall be implemented and administered by Nycomed and/or its Cooperation Partners, as the case may be, at its sole discretion with consultation and cooperation of Patheon, in a manner which is appropriate and reasonable under the circumstances and in conformity with any requests or orders of the applicable Regulatory Authority as well as accepted trade practices.

10.3.2   Recall Costs and Expenses. The out-of-pocket expenses associated with any Recall referred to in Section 10.3.1 including, without limitation, frustrated Costs of Nationalization (the "Recall Expenses") shall be paid by Nycomed, unless such Recall is attributable to Defects of Product. In such case, Patheon shall reimburse Nycomed the reasonable Recall Expenses against appropriate documentation. Recall Expenses so reimbursed shall not exceed a maximum amount of Euro [***] per calendar year. The Recall Expenses reside in the calendar year within which the Recall is initiated.

For the purposes of this Agreement, the Recall Expenses shall not include Nycomed's internal costs or charges, or any Nycomed internal administrative or overhead charge.

10.4   Survival of Obligations. The provisions of this Article 10 shall survive any expiry or termination of this Agreement.

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Article 11

General Representations and Warranties

11.1   Representations and Warranties by Patheon. Further to its representations and warranties given in Section 6.1, Patheon represents and warrants to Nycomed that:

11.1.1   as of the Effective Date Patheon has taken all necessary actions on its part to authorize the execution, delivery and performance of the obligations undertaken in this Agreement;

11.1.2   this Agreement has been duly executed and delivered by and on behalf of Patheon and constitutes legal, valid and binding obligations enforceable against Patheon in accordance with its terms;

11.1.3   Patheon is a corporation duly organized, validly existing and in good standing under the laws of England, with the power and authority to sign, deliver and perform all of its obligations under this Agreement; and

11.1.4   the execution, delivery and performance of this Agreement do not: (i) in any material respect, conflict with or violate any applicable statute, law, rule or regulation in United Kingdom; (ii) conflict with or violate any organizational, charter or internal governance document of Patheon; and (iii) conflict with or constitute a default under any contract, agreement or obligation of Patheon.

11.2   Representations and Warranties by Nycomed. Nycomed represents and warrants to Patheon that, as of the Effective Date:

11.2.1   Nycomed has taken all necessary actions on its part to authorize the execution, delivery and performance of the obligations undertaken in this Agreement;

11.2.2   this Agreement has been duly executed and delivered by and on behalf of Nycomed and constitutes legal, valid and binding obligations enforceable against Nycomed in accordance with its terms;

11.2.3   Nycomed is a corporation, duly organized, validly existing and in good standing under the laws of Denmark, with the power and authority to sign, deliver and perform all of its obligations under this Agreement;

11.2.4   the execution, delivery and performance of this Agreement: (i) do not, in any material respect, conflict with or violate any applicable statute, law, rule or regulation in Denmark; (ii) do not conflict with or violate any organizational, charter or internal governance document of Nycomed; and (iii) do not conflict with or constitute a default under any contract, agreement or obligation of Nycomed;

11.2.5   the Specifications for each of the Products are Controlled by Nycomed;

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11.2.6   any Nycomed Patent Rights licensed to Patheon and to its Subcontractor pursuant to Section 8.1. are Controlled by Nycomed and may be lawfully used by Patheon as provided for in this Agreement;

11.2.7   Nycomed is not aware of any Third Party Patent Rights that would be infringed by the Manufacture of Product by Patheon in accordance with this Agreement;

11.2.8   to Nycomed's knowledge there are no actions or other legal proceedings, the subject of which is the infringement of Third Party Rights related to any of the Specifications, or any of the API, or the sale, use or other disposition of any Product made in accordance with the' Specifications.

Article 12

Indemnification, Liability and Insurance

12.1   Indemnification.

12.1.1   Indemnification by Patheon. Patheon hereby agrees to defend Nycomed and its Affiliates and their respective directors, officers, employees, agents, successors and assigns (collectively, the "Nycomed Indemnified Persons") against any and all legal claims, Suits, demands or actions of a Third Party (collectively, the "Claims") for, and to indemnify and hold the Nycomed Indemnified Persons harmless from and against any and all losses, damages, costs, penalties, liabilities (including strict liabilities), judgments, amounts paid in settlement, fines and expenses (including court costs and reasonable fees of attorneys and other professionals) arising out of any Claims (individually and collectively, the "Losses) caused by:

12.1.1.1   Defects inherent in Product at the time of delivery pursuant to Section 5.2 to Nycomed or its permitted appointee; or

12.1.1.2   a negligence or willful misconduct or wrongdoing of Patheon or any Person for whose actions or omissions Patheon is legally liable; or

12.1.1.3   a breach by Patheon of its obligations, representations, warranties and/or covenants hereunder,

provided, however, that Patheon shall have no liability or obligations pursuant to this Section 12.1.1 to the extent that such Claims or Losses are attributable to Nycomed pursuant to Section 12.1.2.

12.1.2   Indemnification by Nycomed. Nycomed hereby agrees to defend Patheon and its Affiliates and their respective directors, officers, employees, agents, successors and assigns (collectively, the "Patheon Indemnified Persons") against any and all Claims for, and to indemnify and hold the Patheon Indemnified Persons, harmless from and against any and all Losses arising out of any Claims caused by:

12.1.2.1   The negligence or willful misconduct or wrongdoing of Nycomed or any Person for whose actions or omissions Nycomed is legally liable; or

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12.1.2.2   a breach by Nycomed of its obligations, representations warranties and/or covenants hereunder; or

12.1.2.3   Product that at the date of delivery by Nycomed to the Third Party was not fit for the purpose intended or not safe for human consumption despite of Patheon, or any Person for whose actions or omission Patheon is legally liable (i) not having been negligent or willfully misconducting or wrongdoing, and (ii) not having breached any of its obligations, representations, warranties and/or covenants hereunder; or

12.1.2.4   API that has not been manufactured in compliance with cGMP or on the date of delivery of API to Patheon pursuant to Section 2.6.3. did not conform to its Specification, provided that any such non-conformity of the API could not reasonably have been detected by Patheon's testing of the API prior to Manufacturing Products there from as set forth in Section 2.6.2.,

provided, however, that Nycomed shall have no liability or obligations pursuant to this Section 12.1.2 to the extent that such Claims or Losses are attributable to Patheon pursuant to Section 12.1.1.

12.1.3   Indemnification Procedure. Any Party seeking to be indemnified hereunder (the "Indemnified Party") shall provide prompt written notice to the other Party (the "Indemnifying Party") no later than [***] days after becoming aware of any actual Claim in respect of which indemnification may be sought; provided, however, that the failure by the Indemnified Party to provide such prompt notice to the Indemnifying Party shall only be a bar to recovering Losses to the extent that the Indemnifying Party can demonstrate that it was actually prejudiced and directly damaged by such failure. In the event of any such actual or threatened Loss or Claim therefore, each Party shall provide the other information and assistance as the other shall reasonably request for purposes of defense, and each Party shall receive from the other all necessary and reasonable cooperation in such defense, including, but not limited to, the services of employees or agents of the other Party who are familiar with the transactions or occurrences out of which any such Loss may have arisen. The primary responsibility for defending any such Loss or claim shall be with the Indemnifying Party; provided, however, that the Indemnified Party shall have the right to participate in and with respect to the defense of any Loss with counsel of its own choosing, whose fees shall be borne by the Indemnified Party. The Indemnified Party shall not be entitled to settle any claim or agree to the entry of any judgment or other relief without the prior written consent of the Indemnifying Party, which consent shall not be unreasonably withheld or delayed.

12.2   Adequate Insurance. During the Term and for the longer of (i) a period of and until expiry of the shelf life of the last Batch of Product Manufactured hereunder, or (ii) three (3) years after the Term, both Parties shall obtain and/or maintain, respectively, at their sole cost and expense, product liability insurance that meets the following requirements: (i) the insurance shall insure the respective Party and its Affiliates against all legal liability related to Product (whether a Party's or its Affiliate's legal liability arises from such Party's or Affiliate's conduct or by virtue of a Party's or its Affiliate's participation in this Agreement), including, without limitation, legal liability for bodily injury, property damage, other damages and wrongful death);

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and (ii) the insurance shall be in amounts, respectively, that are required by operation of law and reasonable and customary in the industry, and in any event no less than [***] per year.

12.3   Limitation of Liability.

12.3.1   Patheon shall be responsible for the custody, proper care and storage of the API, such responsibility to commence upon receipt by Patheon, at the Manufacturing Facility, from the carrier of Active Ingredients and ends upon delivery of Product by Patheon pursuant to Section 5.2. Patheon shall maintain storage of Active Ingredients in accordance with the provided Specifications and with the current Good Manufacturing Practices. If any API is lost or damaged due to the failure of Patheon's custody, proper care and storage in accordance with this Agreement, then Patheon shall be liable to Nycomed for any losses, claims, damages, expenses, liabilities, or costs incurred by Nycomed as a result of such failure, to the extent provided in this Section 12.3.2. For clarity, Patheon's liability for all other damages of Nycomed (that are not a result of such aforesaid failure) are subject to Section 12.4.

12.3.2   Except for cases of gross negligence or wilful misconduct or wrongdoing Patheon's maximum responsibility for loss or damage to the API under this Agreement, including, without limitation API losses described in Sections 2.6.4, 6.4.1. and 12.3.1, shall not exceed a maximum amount equal to the lesser than: (i) [***] per Contract Year or (ii) the [***] during the Contract Year to which the event giving rise to such responsibility is attributable.

12.4 EITHER PARTY SHALL BE LIABLE TO THE OTHER HEREUNDER IN TORT; NEGLIGENCE; BREACH OF STATUTORY DUTY OR OTHERWISE AS PROVIDED FOR BY APPLICALBE LAW. HOWEVER, TO THE EXTENT PERMITTED BY APPLICABLE LAW NEITHER PARTY SHALL BE LIABLE TO THE OTHER HEREUNDER IN CONTRACT, TORT, NEGLIGENCE, BREACH OF STATUTORY DUTY OR OTHERWISE FOR (I) ANY (DIRECT OR INDIRECT) LOSS OF PROFITS, OF PRODUCTION, OF ANTICIPATED SAVINGS, OF BUSINESS OR GOODWILL OR (II) FOR ANY OTHER LIABILITY, DAMAGE, COSTS OR EXPENSE OF ANY KIND INCURRED BY THE OTHER PARTY OF AN INDIRECT OR CONSEQUENTIAL NATURE, REGARDLESS OF ANY NOTICE OF THE POSSIBILITY OF SUCH DAMAGES; PROVIDED HOWEVER THAT THE AFORESAID RESTRICTION OF LIABILITY SHALL NOT APPLY (III) TO ANY SUCH AFORESAID LOSSES; LIABILITY; DAMAGE COST OR EXPENSE OF A THIRD PARTY FOR WHICH INDEMNIFICATION HAS TO BE PROVIDED FOR BY A PARTY PURSUANT TO SECTION 12.1.(Indemnification), (IV) IN CASE OF ANY BREACH OF OBLIGATIONS UNDER SECTION 9 (Confidentiality), AND (V) IN CASE OF A MATERIAL BREACH OF PATHEON'S SUPPLY OBLIGATION UNDER THIS AGREEMENT. For the purposes of the foregoing lit. (V) Patheon shall be deemed to be in material breach of its supply obligation if it fails to cure such material breach pursuant to Section 14.2.1.(b).

12.5   Reasonable Allocation of Risk. The provisions of this Agreement (including, without limitation, this Article 12) are reasonable and create a reasonable allocation of risk having regard to the relative profits the Parties respectively expect to derive from the Products, and that Patheon, in its fees for the Manufacture under this Agreements, has not accepted a greater degree of the risks arising from the manufacture, distribution and use of the Products, based on the fact that Nycomed has developed and holds the marketing approval for the Products and requires

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Patheon to Manufacture the Products strictly in accordance with this Agreement, and that Nycomed and not Patheon is in a position to inform and advise potential users of the Products as to the circumstances and manner of use of the Products.

12.6   Survival of Indemnification obligations. The provisions of this Article 12 shall survive any expiry or termination of this Agreement.

Article 13

No Exclusivity

13.1   No Patheon Exclusivity. For the avoidance of doubt, Patheon recognizes that Nycomed has the right to Manufacture the Product by itself, through its Affiliates and Third Parties, in addition to or instead of having Patheon Manufacture the Product under this Agreement.

Article 14

Term and Termination

14.   Term and Termination at Will.

14.1.1   Initial Term, Renewal Terms and Term. This Agreement shall come into effect as of the Effective Date and shall, unless terminated earlier in accordance with its terms, remain in effect for ten (10) years after the Effective Date (the "Initial Term"). If not terminated by either Party to the end of the Initial Term or any Renewal Term pursuant to Section 14.1.2 or for cause pursuant to Sections 14.2 and 14.3, it shall automatically renew upon identical terms and conditions for successive periods of two (2) years terms (each a "Renewal Term"). The Initial Term and applicable Renewal Terms, or parts thereof, to the extent applicable, are hereinafter referred to as the "Term".

14.1.2   Termination at Will. Either Party may terminate this Agreement to the end of the Initial Term or a Renewal Term by giving the other Party no less than two (2) years prior written notice.

14.2   Either Party's Right to Terminate for Material Breach.

14.2.1   Termination for Material Breach. Without prejudice to any remedy or claim it may have against the other Party for material breach or non-performance of this Agreement, either Party shall have the right to terminate this Agreement in the event that the other Party fails to materially comply with or perform any material provision of this Agreement (the "Breach") in accordance with the following provisions:

1. If the Breach by its nature is not curable, the non-breaching Party shall have the right to terminate this Agreement with immediate effect by giving the breaching Party notice of any such non-curable Breach, specifying such non-curable Breach in reasonable detail and stating that it terminates this Agreement, such termination

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   right to be exercised within a period of [***] days following the date as of which the terminating Party receives knowledge of any such Breach.

2. If the Breach by its nature is curable, the non-breaching Party shall notify the breaching Party of any such curable Breach in writing, specifying such curable Breach in reasonable detail and stating its intention to terminate this Agreement, if the Breach is not cured as set out according to Section 14.2.1(c) (the "Reminder").
3. In the event that the breaching Party either (i) fails to cure such curable Breach within a period of [***] days following receipt by the other Party of such Reminder (the "Remedy Period"); or in the event that any such curable Breach pertains to obligations other than the payment of monies, (ii) fails to establish, to the reasonable satisfaction of the other Party, that it is diligently and actively pursuing a cure at the expiration of such Remedy Period; or (iii) cannot be reasonably expected to effect a cure within such Remedy Period; the other Party shall be entitled to terminate this Agreement within a period of [***] days following the expiry of such Remedy Period with immediate effect by giving the breaching Party notice.
4. In the event that the breaching Party, under the circumstances referred to under Section 14.2.1(c) (ii) above, can establish to the reasonable satisfaction of the other Party that it is diligently and actively pursuing a cure at the expiration of the Remedy Period, then such Remedy Period shall be extended for so long as a cure is being diligently and actively pursued, such extension not to exceed an additional [***] days (the "Extended Remedy Period").
5. In the event that the breaching Party has not cured the curable Breach by the end of such Extended Remedy Period, the other Party may exercise its termination right for Breach within a period of [***] days following the expiry of such Extended Remedy Period by giving the breaching Party notice.

14.2.2   Termination for Reasons of Insolvency or Termination of Business Activities. Either Party shall be entitled to terminate this Agreement if the other Party becomes insolvent or is subject of a petition in bankruptcy whether voluntary or involuntary or of any other proceeding under bankruptcy, insolvency or similar laws, makes an assignment for the benefit of creditors, is named in, or its property is subject to a Suit for the appointment of a receiver, or is dissolved or liquidated. Such termination right may be exercised within a term of [***] days following the date as of which the Party entitled to terminate receives knowledge of such insolvency or termination of business activities by the other Party, by giving the terminated Party notice.

14.3   Nycomed's Additional Rights to Terminate. Further to Section 14.2, Nycomed may terminate this Agreement in the following event and subject to the following conditions:

14.3.1   Termination for Change of Corporate Control Affecting Patheon. Nycomed may terminate this Agreement if Corporate Control of Patheon is being transferred, whether directly or indirectly, to a Third Party, whether by purchase, merger, operation of law or

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otherwise, and if such transfer has within Nycomed's reasonably exercised discretion, a material adverse impact on the business interests of Nycomed. Patheon shall inform Nycomed of any such change of Corporate Control without undue delay (the "Merger Notice"). Nycomed may exercise its termination right for change of Corporate Control within a period of [***] months following receipt of Patheon's Merger Notice, by giving Patheon at least [***] months prior notice. For the purpose of this Section 14.3.1, the term "Corporate Control" means direct or indirect ownership of fifty percent (50%) or more of the outstanding equity voting stock (or such lesser percentage which is the maximum allowed to be owned by a foreign corporation in a particular jurisdiction), or the power to otherwise directly or indirectly determine the business policies, of Patheon.

14.4   Other Remedies. Subject to all the terms and conditions of this Agreement, the right of a Party to terminate this Agreement in accordance with the provisions set forth in Article 14 will not be construed as that Party's sole remedy, and it is understood that the Party may exercise other remedies and rights concurrently or separately as provided for under this Agreement, at law or in equity.

Article 15

Rights and Duties upon Termination

15.1   Pending Orders. Subject to Section 15.2, the termination of this Agreement shall not affect Firm Orders placed by Nycomed in accordance with Section 4.3 hereof and accepted by Patheon pursuant to Section 4.3.2 hereof at the time notice of termination is given and until the time any such termination becomes effective.

15.2   Termination by Nycomed for Reasons of Material Breach by Patheon or Insolvency or Termination of Business Activities Affecting Patheon. In the event of a termination of this Agreement by Nycomed pursuant to Section 14.2.1 or 14.2.2 for reasons of material Breach by Patheon or insolvency or termination of business activities affecting Patheon, Nycomed may cancel any pending Firm Orders without incurring any further obligations, any claims of Nycomed against Patheon for reasons of breach by Patheon of its representations, warranties and covenants hereunder notwithstanding.

15.3   Manufacturing Rights of Nycomed.

15.3.1   Applicable Cases. Nycomed shall have access rights to, and shall be entitled to practice, the Patheon Technology in accordance with Section 15.3.2 to the extent reasonably necessary so as to enable Nycomed to Manufacture its and its Cooperation Partners requirements of Product in the Territory, (i) in the event either Party should terminate this Agreement pursuant to Section 14.1.2 at will, (ii) in the event that Nycomed should terminate this Agreement pursuant to Section 14.2.1 for material breach by Patheon, (iii) in the event that Nycomed should terminate this Agreement pursuant to Section 14.2.2 for reasons of insolvency or termination of business activities affecting Patheon, (iv) in the event that Nycomed should terminate this Agreement pursuant to Section 14.3.1 for Change of Corporate Control of Patheon, and (v) in the event that a Force Majeure Event affecting Patheon should prevent Patheon from supplying for a consecutive period of at least [***] months, on a timely basis, at least [***] of Nycomed's and

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its Cooperation Partners' requirements of Product forecasted and ordered pursuant to Section 4.3.1 and to be accepted by Nycomed pursuant to Section 4.3.2.

15.3.2   Manufacturing Rights of Nycomed. If any of the events referred to in Section 15.3.1 (i) − (v) should occur, then Nycomed shall have a world-wide, irrevocable, fully-paid up and non-exclusive license, including the right to sublicense, to the Patheon Technology, to the extent reasonably necessary so as to enable Nycomed to Manufacture or have Manufactured its and its Cooperation Partners requirements of the Product.

For such purpose, Patheon shall, at Patheon's cost and expense, provide Nycomed with the Patheon Know-how in order to enable Nycomed or its appointee to Manufacture Product. Patheon shall in additional upon Nycomed's request make available appropriately qualified employees of Patheon, that have adequate experience with the Manufacturing process to provide such technical assistance as may reasonable be required to implement the Manufacturing process at a facility appointed by Nycomed. Such Patheon assistance shall be for an overall period of [***] months with a least [***] months prior written notice to Patheon.

The assistance from Patheon is free of charge for Nycomed for the entire period as described above in the event that a termination of this Agreement by Nycomed is pursuant to Section 14.2.1 (material breach by Patheon) or by Nycomed pursuant to Section 14.2.2. (insolvency or termination of business activities by Patheon). Nycomed will pay to Patheon a fee of [***] per hour plus reasonable and documented travel expenses, including accommodation for the assistance provided from Patheon in the event that a termination of this Agreement is made pursuant to Section 14.1.2 (termination at will), or by Nycomed pursuant to Section 14.3.1 (termination for Change of Corporate Control of Patheon).

15.4   General Provisions. In all cases of termination of this Agreement, the following general principles shall apply:

15.4.1   Outstanding Payments. Payments to be made by either Party under this Agreement shall be due on termination and payable within thirty (30) days after the date as of which the termination of this Agreement for any reason whatsoever becomes effective, provided that the amount may be calculated at that time; if this is not the case, such payments shall become due as soon as the amount can be calculated and such amount is correctly billed to the other Party.

15.4.2   Survival of Obligations. The provisions of this Agreement which by their nature or implication are required to survive the termination of this Agreement shall, together with any definitions used and Sections and Schedules necessary to give effect to them, survive the termination of this Agreement either for the period specified in the respective provisions or as foreseen by applicable law.

15.4.3   Ordinary Course of Business. The Parties shall continue to proceed in an ordinary course of business with respect to the performance of this Agreement until the effective date of termination of this Agreement.

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15.4.4   If this Agreement expires or is terminated in whole for any reason other than by Nycomed pursuant to Section 14.2.1 or 14.2.2, then:

1. Nycomed shall purchase, at Patheon's documented cost (including all costs incurred by Patheon in connection with the purchase and handling of such Inventory), the Inventory applicable to the Products which was purchased, produced or maintained by Patheon in contemplation of filling Firm Orders or in accordance with Section 4.5 prior to notice of termination being given;
2. Nycomed shall satisfy the purchase price payable pursuant to Patheon's orders with Suppliers of Excipients and Packaging Materials, provided such orders were made by Patheon in reliance on Firm Orders or in accordance with Section 4.5 and are not subject to cancellation without penalty;
3. Nycomed shall make Commercially Reasonable Efforts, at its own expense, to remove from the Manufacturing Facility, within [***] Business Days, all of Nycomed's Capital Equipment or other moveable property owned by Nycomed, related to the Agreement and located at Manufacturing Facility or that is otherwise under Patheon's care and control ("Nycomed Property"). The Parties have however agreed to an exception for the above time constraint related to Nycomed's API, where Nycomed shall make Commercially Reasonable Efforts, at its own expense, to find another facility to which Nycomed's API can moved as soon as practically possible. It is understood that the risks of API losses or damages, after the above captioned period of [***] Business Days from the expiration or termination of this Agreement, shall remain solely in charge of Nycomed except for cases of gross negligence or wilful misconduct or wrongdoing by Patheon or any Person for whose actions or omission Patheon is legally liable. Nycomed shall pay to Patheon a [***] per pallet space per week storage fee for all Nycomed Property remaining at Patheon's site(s) after the [***] Business Day following the Term of the Agreement. Patheon will invoice Nycomed for such storage charges according to the provisions of section 7.3 of this Agreement;
4. Unless otherwise provided for in this Agreement or by applicable law, Patheon shall promptly upon the effective date of termination of this Agreement return to Nycomed all Information obtained from Nycomed or its Affiliates. If this Agreement is terminated by Nycomed pursuant to Section 14.2.1, paragraphs (a) to (c) above shall be applied only if desired by Nycomed at its sole discretion.

Article 16

Governing Law, Arbitration

16.1   Governing Law. This Agreement shall be construed, and the respective rights of the Parties determined, shall be governed by and construed in accordance with, the laws of Switzerland, without giving effect to the choice of law principles thereof. The UNCITRAL Convention for the International Sale of Goods as well as any other unified law relating to the

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conclusion and implementation of contracts relating to the international sale of goods shall not apply.

16.2   Arbitration. All disputes arising out of or in connection with this Agreement shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with the said Rules. Place of arbitration shall be Zurich, Switzerland. The language to be used in the arbitration proceedings shall be English.

16.3   Survival. All of the provisions set forth in this Article 16 shall survive any termination or expiration of this Agreement.

Article 17

Force Majeure

17.1   Force Majeure Events. Notwithstanding any other provision of this Agreement, Patheon and Nycomed shall each be excused for any delay or default in performing any of their respective obligations hereunder if such delay or default is caused by conditions beyond its reasonable control including, but not limited to, acts of God, government restrictions (including import and export restrictions), wars, insurrections, acts of terrorism, national labor disturbances, earthquake, fires, hurricanes, floods, storm or other casualty or general failure of electrical supply or water and heating supplies, public utilities or common carrier (in each case, a "Force Majeure Event"). When any such Force Majeure Event arises, then the Parties shall discuss in good faith what, if any, modification of the terms of this Agreement may be required in order to arrive at an equitable solution.

17.2   Consequences of Persisting Force Majeure. The Party affected by a Force Majeure Event pursuant to Section 17.1 shall notify the other Party without undue delay in writing of any such Force Majeure Event and the underlying reasons for the delay or default. The Parties shall then reasonably cooperate in good faith so as to seek a resolution of the delay or failure to perform and to reasonably remove the Force Majeure Event, the costs and expenses of so removing any such Force Majeure Event to be borne by the Party so affected unless otherwise agreed in writing, and such Party shall use all reasonable diligence to avoid, remove or mitigate any such causes of non-performance. Always subject to Nycomed's rights pursuant to Section 15.3, the Party whose performance is affected by a Force Majeure Event shall continue performance with reasonable dispatch wherever such causes have been removed.

Article 18

Miscellaneous

18.1   Assignment. Neither Party shall assign its rights and duties under this Agreement in whole or in part without the prior written consent of the other Party, whether to an Affiliate of that Party or a Third Party. In case of the assignment to an Affiliate, neither Party shall unreasonably withhold or delay its consent. Each Party warrants and undertakes that any of its obligations under this Agreement that it assigns to its Affiliate or a Third Party with the prior written consent of the other Party, shall be fulfilled and complied with by such Affiliate or Third

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Party, and that it, as the assigning Party, will assumes all liability for the fulfillment of such obligation directly in relation to the other Party. The assigning Party shall cause its Affiliate or Third Party entrusted by it with obligations hereunder to assume all such obligations directly in relation to the other Party.

18.2   Severability and Gaps. In the event of the invalidity of any provisions of this Agreement or of this Agreement containing any gaps, the Parties agree that such invalidity or gap shall not affect the validity of the remaining provisions of this Agreement. The Parties will replace an invalid provision or fill any gap with valid provisions that most closely approximate the purpose and economic effect of the invalid provision or, in case of a gap, the Parties' presumed intentions. In the event that the terms and conditions of this Agreement are materially altered as a result of the preceding sentences, the Parties shall renegotiate the terms and conditions of this Agreement in order to resolve any inequities. Nothing in this Agreement shall be interpreted so as to require either Party to violate any applicable laws, rules or regulations.

18.3   Waiver and Estoppel. Failure of either Party to insist upon a strict and punctual performance of any of the provisions hereof shall not constitute a waiver nor an estoppel against asserting the right to require such performance, nor shall a waiver or estoppel in one instance constitute a waiver or estoppel with respect to a later breach, whether of similar nature or otherwise. The observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) by the Party entitled to enforce such term, but any such waiver shall be effective only if in writing signed by the Party against whom such waiver is to be asserted.

18.4   Modifications and Amendments. Modifications and amendments to this Agreement shall be effective only if made in writing; this also applies to a waiver of the written form. Evidence of the contents of this Agreement may only be produced in a form of written documents duly executed by authorized representatives of the Parties hereto.

18.5   Notices. Unless otherwise provided for in this Agreement and except for notices provided with regard to the routine execution of this Agreement (including invoicing), which shall be given to the relevant contact persons notified by either Party to the other from time to time, any notice or request required or permitted to be given under or in connection with this Agreement or the subject matter hereof, shall be given in the English language in writing by prepaid registered or first-class airmail, by reputable same-day or overnight courier, or facsimile to the recipient at its address as set forth hereunder or to such other address or addressee as may have therefore been furnished in writing by the recipient to the sending Party in accordance with this clause provided, however, that any notice of termination shall be given reputable same-day or overnight courier. Any such aforementioned notice or request shall be deemed to be effective upon receipt by the Party to which it is addressed. Any notice to be sent by a Party pursuant to this Agreement shall be addressed:

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If directed at Nycomed:	If directed at Patheon:
Nycomed Danmark ApS Attention: Country Manager Langebjerg 1 4000 Roskilde Denmark Fax No.: +45 46 77 12 99	Patheon UK Limited Attention: Manager Director Kingfisher Drive Covingham, Swindon, SN3 5BZ England Fax No.: +44 (0)1793 501081
	With a copy to
	Patheon Italia S.p.A. Attention: Department of Legal Services Viale G.B. Stucchi n. 110 20900 Monza, Italia Fax No.: +39 039 2047219

Any change of these addresses shall be promptly communicated in writing to the other Party.

18.6   No Agency. Nothing herein contained shall be deemed to create an agency, joint venture, amalgamation, partnership or similar relationship between Patheon and Nycomed. Notwithstanding any of the provisions of this Agreement, neither Party shall at any time enter into, incur, or hold itself out to Third Parties as having authority to enter into or incur, on behalf of the other Party, any commitment, expense, or liability whatsoever, and all contracts, expenses and liabilities undertaken or incurred by one Party in connection with or relating to the development, manufacture or sale of Drug Product or Product shall be undertaken, incurred or paid exclusively by that Party, and not as an agent or representative of the other Party.

18.7   Entire Agreement. This Agreement constitutes the entire understanding of the Parties with respect to the subject matter hereof and supersedes and replaces all prior understandings between the Parties with regard to the subject matter hereof.

18.8   Construction and Interpretation.

18.8.1   Headings; Singular and Plural. The heading references herein are for convenience purposes only, do not constitute a part of this Agreement and shall be deemed not to limit or affect any of the provisions hereof and their interpretation. The singular and plural numbers can be substituted for each other when the context requires such substitution.

[Remainder of page intentionally left blank − Signature page follows]

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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the dates written below by their duly authorized representatives.

Nycomed Danmark ApS	Patheon UK Limited
Name: Ghita Astrup Title: Country Manager Signature: /s/ Ghita Astrup Name: Helle Skov Title: Vice President, Global Supply Chain Signature: /s/ Helle Skov Place Roskilde Date: 7.9.2012	Name: Geoff Glass Title: EVP Signature: /s/ Geoff Glass Place Swindon, UK Date: 9/6/12

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FINAL

SCHEDULE 1.1

To the Supply Agreement between
Nycomed and Patheon

Product Description

As described in the Product Specification set forth in the Quality Agreement.

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FINAL

SCHEDULE 1.2

to the Supply Agreement between
Nycomed and Patheon

Copy of Start Up and Development Agreement dated February 9, 2011 as subsequently amended

(enclosed on the next pages)

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START UP AND DEVELOPMENT AGREEMENT
("This Agreement")

Made as of the 9 day of February 2010, by and between Nycomed Danmark ApS, Langebjerg 1, DK-4000 Roskilde, Denmark, hereinafter referred to as "Nycomed", and Patheon International A.G. ("Patheon"), Lindenstrasse 14, 6340 Baar, Switzerland, hereinafter referred to as the "EXTERNAL PROVIDER", shall be effective between the Parties retroactively to 1^st August, 2009 ("Effective Date").

Whereas, Nycomed and the EXTERNAL PROVIDER have initiated discussions and commercial negotiations concerning Nycomed's intention to retain the EXTERNAL PROVIDER to procure the performance of certain manufacturing services related to the Nycomed Product named "Teduglutide" (hereinafter referred to as the "Manufacturing Services") subject to final agreement on such Manufacturing Services on mutually satisfactory contractual terms and conditions (the "Manufacturing Services Agreement");

Whereas, for the sake of meeting Nycomed's proposed time-schedule for the Manufacturing Services the EXTERNAL PROVIDER is required to commence in certain Start-Up Activities (as defined below) prior to the potential signing of the Manufacturing Services Agreement for the commercial production of Teduglutide; and

Whereas, the Parties intend this Agreement to regulate their respective obligations and rights for the period until a Manufacturing Services Agreement for the Manufacturing Services is finalised or until either of the Parties decides not to enter into a Manufacturing Services Agreement for the Manufacturing Services with the other Party (whichever shall be the earlier);

Now, therefore, the Parties have agreed as follows:

1. TERM AND TERMINATION

1.1   This Agreement will expire upon the completion of the Process Validation (the Services) as outlined in the time schedule shown in Appendix 2. In the present project plan the finalisation of these activities has been estimated to 30th June 2010. The Parties have agreed to in good faith to negotiate a Manufacturing Services Agreement during the completion of the Services outlined in this Agreement. The negotiations of such Manufacturing Services Agreement should be finalised at the latest ultimo [December, 2010].

1.2   Either Party may terminate this Agreement with immediate effect if the other Party is in material breach of any provisions of this Agreement and the other Party fails to remedy such breach within [***] days of the date of notice of such breach by the non-breaching Party.

1.3   Upon written notice to the EXTERNAL PROVIDER, Nycomed shall at all time be entitled to terminate this Agreement with immediate effect, thereby immediately ending the EXTERNAL PROVIDER's performance of the Start-Up Activities (as defined below).

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2. SCOPE

2.1   During the term of this Agreement, the EXTERNAL PROVIDER shall cause the Subcontractor (as defined hereinafter) to provide the Start-Up Activities defined in Appendix 1 - Phase 1, with reasonable skill and care in accordance with such requirements and time-schedules as agreed between the Parties and in accordance with all applicable regulatory and governmental requirements. The EXTERNAL PROVIDER warrants that the staffs of the Subcontractor to be assigned to perform any Start-Up Activities is qualified, experienced, dedicated and have adequate training necessary to fulfil the EXTERNAL PROVIDER's obligations under this Agreement.

2.2   The inclusion of the EXTERNAL PROVIDER's offer dated 2^nd April, 2009, as partially amended by the offer dated 18^th November 2009, cf. Appendix 1, is not in any way to be considered a limitation of the Parties right to negotiate the terms and conditions, including pricing (provided that there is a change in the technical assumption (incl. batch size) on which the pricing was based on), in connection with the Manufacturing Services Agreement.

2.3   The Parties will meet periodically in order to discuss the progress of the Start-Up Activities in accordance with Nycomed's specifications. In the event of circumstances arising in the course of performing the Start-Up Activities which in a material way might affect the completion of the Start-Up Activities or the possible future performance of the Manufacturing Services, the EXTERNAL PROVIDER shall without any delay inform Nycomed of such circumstances and assist Nycomed in analysing the impact of the circumstance.

3. MATERIALS AND EQUIPMENT

3.1   When the EXTERNAL PROVIDER is ready to receive or, unless otherwise agreed in writing between the Parties, at least [***] days prior to the scheduled production date, Nycomed shall furnish to the EXTERNAL PROVIDER at the facility owned by Patheon Italia S.p.A (hereinafter referred to as "Subcontractor") located in viale G.B. Stucchi n. 110, Monza — Italy ("Facility"), [***], the Active Pharmaceutical Ingredient ("API"), free of charge in such quantities as are necessary to enable the EXTERNAL PROVIDER to supply the desired quantities of Product on the agreed delivery date. If Nycomed causes any delay to the EXTERNAL PROVIDER's provision of Start-Up Activities for reason within its control (such as a delay in responding to the EXTERNAL PROVIDER and/or Subcontractor inquiry or a delay in the delivery of the API), then the EXTERNAL PROVIDER shall be entitled to charge Nycomed for any additional documented costs incurred in the provision of the Start-Up Activities as a result of the delay. In addition to the foregoing, should the delay in delivery the API cause the postponement or the cancellation of any batch of Product, Section 4.2 will be applied.

3.2   In order to perform the Start-Up Activities, certain capital expenditures are necessary in respect of Capital Equipment required to be acquired and installed at the Subcontractor's Facility. Nycomed therefore hereby agree to deliver to the Subcontractor

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the estimated amount, as specified in Appendix 1 - Part C in respect of purchasing the Capital Equipment. It is understood that, should additional capital expenditures be necessary in order to carry out the Start-up Activities, the Parties will jointly determine and negotiate in good faith the revised aggregate amount payable by Nycomed. Nycomed shall have legal ownership of the Capital Equipment, and will agree to transfer such Capital Equipment to Subcontractor for its use. The EXTERNAL PROVIDER shall be responsible for the total costs and expenses of routine maintenance and servicing of the Capital Equipment, so long as the Capital Equipment remains at the Subcontractor's Facility. Nycomed shall be responsible for the cost of non-routine maintenance and servicing of the Capital Equipment (such as major repairs and parts replacement not due to negligence in routine maintenance). It is agreed between the Parties, that the Subcontractor cannot initiate any non-routine maintenance and servicing of the Capital Equipment without Nycomed's prior written consent. If the non-routine maintenance and servicing of the Capital Equipment is caused by a operation failure by the EXTERNAL PROVIDER, the cost for said non-routine maintenance are to be born solely by the EXTERNAL PROVIDER.

The EXTERNAL PROVIDER will not use the Capital Equipment for any purpose other than the Manufacturing Services for supply to Nycomed without the prior written consent of Nycomed. Nycomed will give due consideration to any such request, but reserves the right to withhold its consent at its own discretion and without any obligation to provide any reason for doing so.

4. REMUNERATION

4.1   Nycomed shall pay for the Start-Up Activities in accordance with the payment schedule set forth in Appendix 1 - Part D Technology Transfer "Technology Transfer (TT) Activities" and "Phase 1 Technology Transfer (TT) Costs". It is agreed upon between the Parties that the activities detailed in Part D this Agreement, will be invoiced to Nycomed directly by the Subcontractor. Each invoice shall be due and payable within [***] days from the related issuing date. All amounts mentioned in this Agreement will be deemed mentioned or specified in Euros.

4.2   In the event Nycomed terminates this Agreement prior to the completion of the Start-Up Activities, for a reason other than the EXTERNAL PROVIDER's breach of this Agreement or the EXTERNAL PROVIDER's insolvency (or anticipated insolvency), Nycomed agrees to refund the EXTERNAL PROVIDER's:

• all actual documented costs incurred by the EXTERNAL PROVIDER to complete activities associated with the termination and closing of the Start-Up Activities rendered up to the date of termination; and
• any additional actual documented costs incurred by the EXTERNAL PROVIDER in connection with the Start-Up Activities that are required to fulfil applicable regulatory and contractual requirements; the actual documented cost of all materials (to the extent that such materials cannot be utilized for other of the EXTERNAL PROVIDER's customers) and equipment which were prior approved by Nycomed,

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purchased or maintained by the EXTERNAL PROVIDER in contemplation of the Start-Up Activities as outlined in this Agreement prior to notice of termination being given. In addition to the foregoing, Nycomed shall satisfy the purchase price or the cancellation fee payable pursuant to the EXTERNAL PROVIDER's orders with suppliers of materials and equipment, provided such orders were made by the EXTERNAL PROVIDER and approved by Nycomed in reliance to the Start-Up Activities. Nycomed determines whether such orders should be terminated or not. In such situation equipment paid for and owned by Nycomed shall be returned to Nycomed at the cost of Nycomed.

In the event of cancellation (if not agreed in good faith between the Parties) by Nycomed within 60 calendar days of the due start date of manufacture of any batch of Product, for reasons not attributed to Patheon, Nycomed agrees to pay to the EXTERNAL PROVIDER a sum equal to [***] of the fees quoted for such manufacturing services in Appendix 1 enclosed herein. If cancellation (if not agreed in good faith between the Parties) is within [***] calendar days of the due start date of manufacture of any batch of Product, Nycomed agrees to pay a sum equal to [***] of the fees quoted for such manufacturing services in Appendix 1 enclosed herein. If work is stopped upon request of Nycomed within [***] working days of the week of manufacture of any batch of Product, for whatever reason, Nycomed agrees to pay a sum equal to [***] of the fees quoted in Appendix 1. It is understood that the EXTERNAL PROVIDER shall use commercially reasonable efforts to mitigate its damages and losses and reallocate its manufacturing capacity, and shall promptly notify Nycomed of any such mitigation, and Nycomed's obligation to pay the above captioned fee shall be reduced to the extent that the EXTERNAL PROVIDER mitigates its losses in this regard. The aggregated compensation from Nycomed to the EXTERNAL PROVIDER under this section 4.2 shall, notwithstanding any condition in this Agreement to the contrary, never exceed an amount corresponding to the total remuneration from Nycomed to the EXTERNAL PROVIDER for the Start-Up Activities as set forth in 4.1.

4.3   Upon termination or expiration of this Agreement, and in any case upon Nycomed's request and at Nycomed costs and expenses, the EXTERNAL PROVIDER shall immediately return or transfer respectively to Nycomed or another party all inputs and outputs provided under this Agreement. In the event Nycomed decides to terminate the Agreement, the EXTERNAL PROVIDER shall not undertake further work, except as agreed to by the EXTERNAL PROVIDER and Nycomed, incur additional expenses or enter into further commitments with regard to this Agreement.

5. LIMITATION OF LIABILITY

5.1   In no event shall either Party be liable or responsible to the other Party under this Agreement for any special, indirect, incidental or consequential loss or damage of any nature whatsoever, including without limitation, any actual or anticipated profits, loss of time, inconvenience, commercial loss or any other similar damages.

5.2   If any parts of the Start-Up Activities procured by the EXTERNAL PROVIDER are not materially performed in accordance with the Nycomed's Specifications, the

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cGMPs and the terms of this Agreement, then Nycomed's sole remedy shall be to request EXTERNAL PROVIDER to:

• repeat that part of the Start-Up Activities at the EXTERNAL PROVIDER's costs, provided that Nycomed provides the API; or
• reimburse Nycomed for the price for that part of the Start-Up Activities, excluding the cost of the API.

5.3   Nycomed acknowledges that during the Start-up Activities it is possible to experience a total loss of the API due to the experimental nature of such activities and therefore Nycomed hereby agrees that under no circumstances whatsoever shall the EXTERNAL PROVIDER reimburse Nycomed for the cost of the API. Notwithstanding the above, and only with reference to the manufacturing of the validation batches, the EXTERNAL PROVIDER will reimburse Nycomed for the lost API to the extent that the API losses or damages are due to gross negligence and intentional misconduct in performing such activity. It is understood and agreed between the Parties that the EXTERNAL PROVIDER's maximum liability for any API loss or damage shall never exceed the amount of [***], in aggregate. The Parties have furthermore agreed that the EXTERNAL PROVIDER's maximum liability for any API loss or damage in an eventual Manufacturing Services Agreement shall never exceed a maximum amount equal to the lesser than: (i) [***] per Year or (ii) the [***] of the Conversion Costs invoiced by Patheon to the Client during the relevant Year.

5.4   The EXTERNAL PROVIDER shall be responsible for the custody, proper care and storage of the API, such responsibility to commence upon receipt at the relevant Facility, from the carrier of the EXTERNAL PROVIDER and ends upon delivery of Product by the EXTERNAL PROVIDER as specified in this Agreement. The EXTERNAL PROVIDER shall maintain storage of Active Ingredients in accordance with the provided Specifications and with the current Good Manufacturing Practices. If any API is lost or damaged due to the EXTERNAL PROVIDER gross negligence or wilful misconduct, then the EXTERNAL PROVIDER shall indemnify Nycomed for any losses, claims, damages, expenses, liabilities, or costs incurred by the Nycomed as a result of such failure. Notwithstanding the foregoing, it is understood and agreed between the Parties that the EXTERNAL PROVIDER's maximum liability for any API loss or damage shall never exceed the amount of [***], in aggregate. The Parties have furthermore agreed that the External Provider's maximum liability for any API loss or damage in an eventual Manufacturing Services Agreement shall never exceed a maximum amount equal to the lesser than: (i) [***] per Year or (ii) the [***] of the Conversion Costs invoiced by Patheon to the Client during the relevant Year.

5.5   EITHER PARTY MAKE NO WARRANTY OF ANY KIND, EITHER EXPRESSED OR IMPLIED, BY FACT OR LAW, OTHER THAN THOSE EXPRESSLY SET FORTH IN THIS AGREEMENT. PATHEON MAKES NO WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE OR WARRANTY OF MERCHANTABILITY IN RESPECT OF THE CUSTOMER'S PRODUCT.

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6. FORCE MAJEURE

Neither Party shall be liable for any loss or damage resulting from its failure or delay in performing its obligations hereunder where such failure or delay arises from circumstances beyond its reasonable control including, without limitation, acts of public enemy, war, riots, acts of any governmental authority including governmental laws, ordinances, rules and regulations, fires, hurricanes, floods, general labour disputes or general failure of electrical supply or water and heating supplies. If a Party is delayed in performing its obligations hereunder for more than three months the other Party shall be entitled to terminate this Agreement without penalty.

7. CONFIDENTIALITY AND INTELLECTUAL PROPERTY RIGHTS

The Parties have prior to this Agreement entered into a Confidential Disclosure Agreement, dated July 13, 2009, attached to this Agreement as Appendix 3. The Parties agree that all their obligations and rights under the aforementioned Confidential Disclosure Agreement shall apply also with respect to the Parties co-operation under this Agreement. The Parties acknowledge that Nycomed is and shall at all times remain the sole owner of all inputs provided by Nycomed under this Agreement (e.g. other study materials, equipment, confidential information) as well as all results and outputs (e.g. all documents like records, results, data stored in respective databases, specimen and other study materials) related to the activities provided hereunder. The EXTERNAL PROVIDER hereby assigns or procure the assignment to Nycomed of any and all rights, title, and interest that the EXTERNAL PROVIDER may have in any and all inventions, improvements, discoveries, developments, trade secrets, software or other intellectual property, developed as a result of performing activities for Nycomed under this Agreement and that are related to the Nycomed Product ("Intellectual Property"). Upon request from Nycomed, the EXTERNAL PROVIDER shall execute such further assignments, documents, and other instruments as may be necessary to assign Intellectual Property to Nycomed and to assist Nycomed, at Nycomed's costs and expenses in applying for, obtaining and enforcing patents or other rights with respect to any Nycomed Intellectual Property.

8. DELIVERY

Delivery of the Product shall be made [***] from the Subcontractor's Facility unless otherwise mutually agreed. Title as the EXTERNAL PROVIDER has in Products and risk of loss or of damage to Products shall remain with the EXTERNAL PROVIDER until Products are loaded onto the carrier's vehicle by the EXTERNAL PROVIDER for shipment at the Subcontractor's Facility at which time title and risk of loss or damage shall transfer to the Nycomed. Any shipment from Nycomed or Nycomed subcontractor to EXTERNAL PROVIDER shall be made [***] the Subcontractor's Facility.

9. REGULATORY FILINGS
1. Nycomed shall have the sole responsibility for filing of all documents with the applicable regulatory authority (such as the United States Food and Drug

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Administration ("FDA") or the European Medicine Evaluation Agency (collectively the "Regulatory Authority") and to take any other actions that may be required for the receipt of approval from the Regulatory Authority for the commercial manufacture of the Nycomed's Product.

2. Where documents provided by EXTERNAL PROVIDER in relation to the Start-up Activities are to be filed by Nycomed with any Regulatory Authority and such filing may create the possibility of a Regulatory Authority audit, inspection or review of the Subcontractor's Facility then, at least [***] days prior to filing any such documents with the Regulatory Authority, Nycomed shall provide EXTERNAL PROVIDER or, upon EXTERNAL PROVIDER instructions directly the Subcontractor, with a copy of the documents incorporating such data so as to give EXTERNAL PROVIDER the opportunity to verify the accuracy and regulatory validity of such documents as it relates to the generated data. EXTERNAL PROVIDER will inform Nycomed as soon as reasonably possible as regards the accuracy and regulatory validity of the documents. The time taken to review the documents will be charged back to Nycomed at the rates detailed in Appendix 1.
3. At least 21 days prior to filing with the Regulatory Authority any documentation which is or is equivalent to the FDA's Chemistry and Manufacturing Controls ("CMC") portion of the New Drug Application or of the Abbreviated New Drug Application, as the case may be, Nycomed shall provide EXTERNAL PROVIDER or, upon EXTERNAL PROVIDER instructions directly the Subcontractor, with a copy of the CMC portion as well as all supporting documents which have been relied upon to prepare the CMC portion so as to permit EXTERNAL PROVIDER to verify that the CMC portion accurately describes the Start-up Activities supplied and the manufacturing processes to be performed pursuant to this Agreement. However, Nycomed may submit certain sections of the CMC section as they are finalized and EXTERNAL PROVIDER will do its best efforts to verify, as soon as reasonably possible, that the described work and manufacturing processes are accurate. The time taken to review the documents will be charged back to Nycomed at the rates detailed in Appendix 1.
4. If Nycomed does not provide EXTERNAL PROVIDER with the documentation requested above within the time stipulated and if EXTERNAL PROVIDER reasonably believes that EXTERNAL PROVIDER's relationship with the Regulatory Authority may be jeopardized, EXTERNAL PROVIDER may, in its sole discretion, but only to the extent that is reasonable, delay or postpone the Regulatory Authority inspection which is or is equivalent to the FDA's pre-approval inspection ("PAI") until such time as EXTERNAL PROVIDER has reviewed the requested documentation and is satisfied with its contents.
5. If in EXTERNAL PROVIDER's sole discretion, acting reasonably, EXTERNAL PROVIDER determines that any of the information provided by the Nycomed is inaccurate or deficient in any manner whatsoever (the "Deficiencies"), EXTERNAL PROVIDER shall notify the Nycomed in writing of such

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Deficiencies. Until such Deficiencies have been resolved or agreement has been reached with the Nycomed for such resolution, EXTERNAL PROVIDER reserves the right not to participate in the PAI. In no event, EXTERNAL PROVIDER's non-participation in the PAI shall be construed as an EXTERNAL PROVIDER's breach of any of its obligations under this Agreement.

10. MISCELLANEOUS

10.1   Each Party agrees to procure and maintain in full force and effect during the term of this Agreement valid and collectible insurance policies in connection with its activities as contemplated herein, which insurance shall afford limits of not less than (i) [***] for each occurrence for personal injury or property damage liability; and (ii) [***] in the aggregate per annum with respect to product and completed operations liability. If requested each party will provide the other with a certificate of insurance evidencing the above and showing the name of the issuing company, the policy number, the effective date, the expiration date and the amount thereof.

10.2   Subject to Section 1.1 of this Agreement, no Party shall be liable to the other Party hereunder due to the fact that the initiated discussions and commercial negotiations concerning Nycomed's intention to retain the EXTERNAL PROVIDER to provide the Manufacturing Services do not result in a Manufacturing Services Agreement between the Parties.

10.3   This Agreement represents the complete understanding between the Parties in relation to the subject matter hereof and shall be amended only be express writing referencing this Agreement and signed on behalf of both Parties. It is specifically agreed without prejudice to the foregoing generality that no printed standard terms that may appear on any purchase orders, invoices or dispatch notices shall be of any effect in relation to any matter hereunder.

10.4   Neither Party shall not assign or transfer any interest, obligation or right in this Agreement nor assign any claims for money due or to become due under this Agreement without the prior written consent of the other Party. Notwithstanding any conditions in this Agreement to the contrary either Party shall, however, always be entitled to assign or transfer any interest, obligation or right in this Agreement to an Affiliate and assign any claims for money due or to become due under this Agreement to an Affiliate without the prior written consent of the other Party. (In this Agreement "Affiliate" shall mean any legal entity controlling, controlled by or under common control with each Party).

10.5   Nycomed hereby agree that the EXTERNAL PROVIDER may subcontract to its affiliate, Patheon ltalia S.p.A ("Subcontractor"), any Start-up Activities under this Agreement. In such case, Nycomed will have a right of access to the Subcontractor's Facility (as defined below) for auditing purposes. It is understood that the EXTERNAL PROVIDER shall enter into an agreement with the Subcontractor that contains any terms necessary to ensure that the EXTERNAL PROVIDER meets its obligations under this Agreement. For avoidance of doubt the subcontracting of any Start-up Activities hereunder to the Subcontractor by the EXTERNAL PROVIDER shall not relieve the

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EXTERNAL PROVIDER of, and the EXTERNAL PROVIDER shall remain solely liable, vis-a-vis the Nycomed, for its obligations under this Agreement. Given the foregoing the Parties hereby agree that the Start-up Activities will be performed at the facility, owned and operated by Patheon Italia S.p.A, that is located at via G.B. Stucchi n. 110, Monza - Italy ("Facility"). Activities to be subsequently agreed upon based on the results of the activities described in this Agreement shall be performed at the Facility described above.

10.6   This Agreement shall be governed by and construed in accordance with the laws of Switzerland and both Parties submit to the exclusive jurisdiction of the public courts of Zürich for all purposes connected with this Agreement.

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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed, in duplicate, each Party taking one copy, as of the Effective Date

NYCOMED DANMARK APS

/s/ Helle Skov
Print name: Helle Skov Title: Vice President, Operations
PATHEON INTERNATIONAL A.G.

/s/ Doaa Fathallah
Print name: Doaa Fathallah Title: Executive Vice President,
            General counsel and Corporate secretary,
            Patheon International AG

/s/ Ghita Astrup
Print name: Ghita Astrup

Title: Managing Director

/s/ Fredrik Bendiksen
Print name: Fredrik Bendiksen

Title: Vice Head, R&D

260310

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ENCLOSURES

APPENDIX 1 - START-UP ACTIVITIES SPECIFICATION
APPENDIX 2 - TIME SCHEDULES
APPENDIX 3 - CONFIDENTIAL DISCLOSURE AGREEMENT

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APPENDIX 1 - START-UP ACTIVITIES SPECIFICATION

[***]

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Appendix 2 - PAGE 1 OF 1
TIME SCHEDULES

[***]

1

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Appendix 3 (Page 1 of 1)
DISCLOSURE AGREEMENT

Disclosure Agreement

Participant's Name Patheon International A.G.
Address:
Lindenstrasse 14, 6340 Baar, Switzerland

To protect certain confidential information, which has been and may be disclosed between them, NYCOMED GmbH ("NYCOMED"), with a principal place of business at Byk-Gulden-Strasse 2, 78467 Konstanz, Germany and the Participant in consideration of such disclosure and the mutual promises made, agree that:

1. The Disclosure of confidential information are NYCOMED and Participant.

2. The confidential information ("Information") disclosed under this Agreement is described as:

NYCOMED Information: All information, including but not limited to tangible products, compounds, structures, materials, formulations, patents and processes relating to NYCOMED's developments and any project and study conducted by NYCOMED. Participant Information: All information about the Participant group of companies, their customers, finance, and processes us well as all price quotations, manufacturing or professional services proposals and other information relating to the manufacturing capabilities and operations of.

3. Participant and NYCOMED shall use the information only for the purpose of:

Evaluating a future business relationship and for discussing possible services and proposals.

4. Participant's and NYCOMED's obligations under this Agreement will expire ten (10) years from the Effective Date.

5. Participant and NYCOMED shall not disclose the Information to any person except to Affiliates, consultants or employees to whom such disclosure is necessary for the purpose of this Agreement. Participating and NYCOMED shall ensure that any and all such Affiliates, employees and consultants observe the obligations in this Agreement. Participant and NYCOMED shall protect the information with the same degree of care used to protect their own confidential information of a like nature, but no less than a reasonable degree of care. "Affiliate" shall in this Agreement mean a company controlling, controlled by or under common control with a party.

6. If Participant or NYCOMED are required by judicial or administrative process to disclose information, Participant or NYCOMED shall promptly notify the other party and allow the other party a reasonable time to oppose such process.

Confidential Treatment Requested. Confidential portions of this document have been
redacted and have been separately filed with the Commission.

7. Unless otherwise agreed, Participant and NYCOMED agree not to analyse or have a third party analyse any tangible products or materials constituting information, which are disclosed by the other party.

8. The Agreement imposes no obligation upon Participant and NYCOMED with respect to information that (a) was known to Participant or NYCOMED before receipt from the other party, (b) is or becomes available to the public through no fault of Participant or NYCOMED; (c) is received in good faith by Participant or NYCOMED from a third party and is not subject to an obligation of confidentiality owed by the third party to NYCOMED or Participant; (d) is independently developed by Participant or NYCOMED without reference to the Information; or (e) subject to Clause 6 above, is required to be disclosed by judicial or administrative process.

9. Participant and NYCOMED agree to return all Information (including tangible products or materials) disclosed by the other party, and all copies thereof, at the conclusion of the purpose set out in Clause 3 above or at an earlier date upon the request of the other party.

10. NYCOMED and Participant warrant that they have the right to make disclosures under this Agreement.

11. None of the parties acquire any license under intellectual property rights of the other parties pursuant to this Agreement except the limited right to use set out in Clause 3 above.

12. None of the parties have an obligation under this Agreement to enter into any business relationship concerning the subject matter thereof.

13. The parties do not intend that any agent or partnership relationship be created between them by this Agreement.

14. All additions and modifications to this Agreement (including any attachment referred to below must be made in writing and must be executed by all parties.

15. This Agreement shall be governed by and construed in accordance with the laws of the Federal Republic of Germany. The Participant hereby irrevocably and unconditionally consent to submit to the exclusive jurisdiction of the courts of Konstanz for any actions, suits or proceeds arising out of or relating to this Agreement.

16. The Participant agrees that all data, materials, plans, reports, inventions and discoveries generated during the course of this Agreement shall be the exclusive property of NYCOMED, and Participant shall execute (if and as required by NYCOMED) all documents and do all that is reasonably required by NYCOMED at NYCOMED's cost as may be necessary or desirable to evidence transfer of title thereto.

	Per and on behalf of NYCOMED GmbHs		Per and on behalf of Participants Patheon International A.G.
Signature:	/s/ Iris Ziegler	/s/ Markus Schaefer	Signature:	/s/ A.J. Kelly
Name:	I.V. Dr. Iris Ziegler	I.V. Dr. Markus Schaefer	Name:	A.J. Kelly
Title:	Director Pharmecutical Development	Senior Outsourcing Manager International R&D Outsourcing	Title:	President Patheon International AG
Date:	15 July 2009	16-Jul-09	Date:	24.07.09

Confidential Treatment Requested. Confidential portions of this document have been
redacted and have been separately filed with the Commission.

SCHEDULE 1.3

to the Supply Agreement between
Nycomed and Patheon

Territory

All member states of the European Economic Area (EEA) on the Effective Date, the United States of America and

Argentina

Australia

Bahrain

Botswana

Brazil

Cambodia

Canada

Chile

China

Colombia

Costa Rica

Curacao

Dominican Republic

Ecuador

Egypt

El Salvador

Guatemala

Honduras

Hong Kong

India

Indonesia

Israel

Jamaica

Kazakhstan

Kenya

Korea, South

Kuwait

Laos

Malaysia

Mexico

Myanmar

Namibia

New Zealand

Nicaragua

Nigeria

Oman

Confidential Treatment Requested. Confidential portions of this document have been
redacted and have been separately filed with the Commission.

Pakistan

Panama

Peru

Philippines

Qatar

Russia

Saudi Arabia

Singapore

South Africa

Switzerland

Syria

Taiwan

Thailand

Turkey

Ukraine

United Arab Emirates

Uzbekistan

Venezuela

Vietnam

Confidential Treatment Requested. Confidential portions of this document have been
redacted and have been separately filed with the Commission.

SCHEDULE 2.2.1

to the Supply Agreement between
Nycomed and Patheon

First Freezer and Additional Freezer

[***]

Confidential Treatment Requested. Confidential portions of this document have been
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SCHEDULE 2.3

to the Supply Agreement between
Nycomed and Patheon

QUALITY AGREEMENT

(ENCLOSED ON THE NEXT PAGES)

Confidential Treatment
Requested.

Date:	02 September 2010
Number of pages:	30
Copies:	3
Name and number of Appendices:	8

QUALITY (GMP and GDP) AGREEMENT

Between

NYCOMED DANMARK ApS ("NYCOMED" OR "CONTRACT GIVER")

and

PATHEON INTERNATIONAL A.G. ("CONTRACT ACCEPTOR")

and

PATHEON ITALIA S.p.A. Monza operations ("PATHEON" or "SUB-CONTRACT ACCEPTOR")

7

Confidential Treatment Requested. Confidential portions of this document have been
redacted and have been separately filed with the Commission.

TABLE OF CONTENTS

1.	Legal Requirements	9
2.	Active Pharmaceutical Ingredients, Excipients and Packaging Materials	10
3.	Manufacture	11
4.	Quality Controls during and after Manufacture	11
5.	Samples	11
6.	Documentation	12
7.	Certification/Confirmation (Release)	12
8.	Product Quality Review (PQR)	13
9.	Storage, Packaging and Transportation	13
10.	Notification and Approval of Deviations	14
11.	Change Control	14
12.	Product Defects	15
13.	Contact Departments and Individuals	15
14.	Confidentiality	15
15.	Final Clauses	16

Confidential Treatment Requested. Confidential portions of this document have been
redacted and have been separately filed with the Commission.

Q U A L I T Y A G R E E M E N T

This Agreement (the "Quality Agreement"), is effective as of February 10^th 2010.

Between
Nycomed Danmark ApS, a company duly established and organized under the laws of Denmark ("Contract Giver"), whose registered office is at Langebjerg 1, DK-4000 Roskilde, Denmark

Patheon International A.G., a corporation existing under the laws of Switzerland whose registered office is at Lindenstrasse 14, 6340 Baar, Switzerland, hereinafter referred to as the "Contract Acceptor";

Patheon Italia S.p.A., a corporation existing under the laws of Italy whose registered office is at Viale GB Stucchi 110, 20052, Monza (MI), Italy hereinafter referred to as the "PATHEON" or "Sub-Contract Acceptor",

each hereinafter referred to also as "a Party" and together as "the Parties"

Witnesseth

Whereas the Contract Acceptor and the Contract Giver has concluded the terms of a definitive Start Up and Development Agreement (the "Agreement") for certain Start-up Activities ("Services") related to the Product (as described in Appendix 1 hereto) and Contract Giver has agreed that the Contract Acceptor could sub-contract the performance of such Services, in their entirety, to the Sub-Contract Acceptor;

Whereas the Parties agree that the Contact Acceptor will remain solely liable vis-à-vis the Contract Giver for any breach of the duties and responsibilities assumed by the Sub-Contract Acceptor under this Quality Agreement;

Whereas this Quality Agreement covers manufacturing and quality control of the Product listed in the appendices; and

Whereas the main roles and responsibilities of the Parties are set out in Appendix 2 hereto;

Now therefore, the Parties hereto have adopted and are bound by the following conditions of this Quality Agreement:

1. Legal Requirements

1..1   PATHEON affirms that it holds the required Manufacturing Authorisation pursuant to the local legal requirements for the manufacturing and quality control of the product listed in Appendix 1 (herein referred to as "the Product").

Confidential Treatment Requested. Confidential portions of this document have been
redacted and have been separately filed with the Commission.

1.2   The Parties shall be obliged to immediately advise each other's Contact, Department and Individuals (cf. Article 12) of any changes in the Manufacturing Authorisation with regard to the Product. PATHEON shall be obliged to forward to NYCOMED a copy of the Manufacturing Authorisation (cf. Article 1.1). PATHEON shall be obliged to forward to NYCOMED a copy of the site master file (at the latest when this Quality Agreement is signed and in case of changes or updates).

1.3   PATHEON warrants that the Product from the first batch and onwards will be manufactured according to the documents agreed upon and as specified in Appendix 2. The manufacture will take place at

PATHEON's plant
Viale G.B. Stucchi 110,
20052 Monza (MB), Italy.

1.4   PATHEON warrants that all activities related to the Product will be in accordance with (i) all current international rules and regulations according to ICH guidelines and (ii) with rules and regulations of the European Union and the United States (as applicable), including but not limited to the EU-Guide to Good Manufacturing Practice for Medicinal Products and valid FDA regulations (as applicable) (iii) as well as the agreed directives of NYCOMED as specified in this Quality Agreement, and (iv) all rules and regulations as defined in the Commercial Agreement (collectively hereinafter called the "Provisions").

1.5   NYCOMED's manufacturing and quality control/assurance personnel as well as the competent authorities of the territories where Product is being marketed have the right at any given time during normal working hours, to enter into and audit or inspect PATHEON's production facilities and quality systems/documents for the Product, upon reasonable prior notice to PATHEON.

1.6   PATHEON will promptly inform NYCOMED of any inspection by competent authorities affecting the Product or the corresponding manufacturing environment and will promptly provide NYCOMED with copies of any inspection observations concerning the Product including processes relevant to the Product.

1.7   Contract Acceptor and Sub-Contract Acceptor agree not to assign or move the performance of any tasks or obligations covered by this Quality Agreement to any other site, any affiliate or any third party without having obtained the prior written consent of NYCOMED.

1.8   NYCOMED will utilise a system termed the product binder. The product binder is a version controlled document handling system used for sharing quality relevant information (e.g. shipping descriptions, specifications, safety data sheet) between PATHEON AND NYCOMED. NYCOMED is responsible for updating the documents in the product binder through written communication to Patheon contact persons listed in appendix 7. PATHEON is responsible for implementing the content of the documents into PATHEON's manufacturing and quality systems.

2. Active Pharmaceutical Ingredients, Excipients and Packaging Materials

10

Confidential Treatment Requested. Confidential portions of this document have been
redacted and have been separately filed with the Commission.

2.1   The excipients and packaging materials listed in Appendix 3 shall be provided by PATHEON, checked for accordance with the specifications in the marketing authorisation and tested using the methods in the Marketing Authorisation and released for manufacturing by PATHEON.

2.2   NYCOMED shall be responsible for providing PATHEON with detailed information from the Marketing Authorisation about Analytical methods and Specification to be used for ascertaining the quality of Starting Materials.

2.3   The active pharmaceutical ingredient indicated in Appendix 4 shall be provided by NYCOMED, checked for accordance with the specification in the marketing authorisation and tested using the methods in the Marketing Authorisation and released for manufacture by NYCOMED.

2.4   In respect of NYCOMED supplied Active Pharmaceutical Ingredient ("API") as set forth in Appendix 4 hereof, PATHEON shall perform an identity ("ID") test on each bottle of API during compounding.

2.5   NYCOMED shall be responsible for qualifying API supplier and shall be responsible for providing to PATHEON proof of cGMP compliance to EU GMP Part II of the API manufacturer.

2.6   PATHEON shall be responsible for auditing and approving all sub-suppliers.

2.7   NYCOMED shall be responsible for proving Patheon safety data sheet for API.

2.8   PATHEON shall be responsible for cleaning the empty API containers prior to shipping them back to the API manufacturer. The cleaning procedure applied shall be validated under PATHEON responsibility.

3. Manufacture

3.1   PATHEON shall be responsible for the manufacturing of the product according to the GMP rules as mentioned in 1.4 of this agreement.

3.2   The Product shall be manufactured in batches, ensuring adherence to the manufacturing instructions agreed upon in Appendix 5, as well as ensuring the quality in accordance with the Product specifications listed in Appendix 6.

3.   The Product is [***]

4. Quality Controls during and after Manufacture

4.1   PATHEON shall conduct in-process controls according to Appendix 5.

4.2   PATHEON shall conduct final quality controls according to Appendix 6.

5. Samples

11

Confidential Treatment Requested. Confidential portions of this document have been
redacted and have been separately filed with the Commission.

5.1   PATHEON shall retain reference samples of all starting materials except the active pharmaceutical ingredients to the Product, including but not limited to excipients (except for gases, solvents and water) and packaging materials for a minimum period of one (1) year beyond expiry date of the Product.

5.2   Nycomed shall retain reference samples of all batches of Active Pharmaceutical Ingredients for a minimum period of one (1) year beyond expiry date of the Product.

5.3   PATHEON is responsible for picking reference samples of the Product. Reference samples of the Product must be taken in a quantity sufficient for two full analytic controls according to Appendix 6.

5.4   PATHEON is responsible for retaining the reference samples for at least one (1) year past the expiry date. Reference samples from batches used in clinical trials has to be kept 2 years after the trial has been formally closed.

5.5   PATHEON is responsible for picking and sending release samples of the product, to a testing laboratory according to appendix 6.

5.6   Upon request from Nycomed, PATHEON is responsible for picking and sending stability samples of the product, to a laboratory outlined by NYCOMED.

6. Documentation

6.1   PATHEON shall keep records on all manufacturing steps on the basis of GMP-guidelines and keep same for a minimum of ten (10) years. PATHEON shall provide NYCOMED all records and documentation related to the product after 10 years if accepted then by NYCOMED. PATHEON must not proceed to destruction before given a written acceptance response from NYCOMED.

6.2   PATHEON shall allow NYCOMED and/or the responsible supervisory authority to audit and inspect all testing and manufacturing documentation related to the product. At the occasional request of NYCOMED, PATHEON will provide a copy of any of the executed batch documents relating to the Product.

7. Certification/Confirmation (Release)

7.1   PATHEON shall release the products for delivery to NYCOMED (Confirmation by Qualified Person cf. EU-GMP Annex 16 paragraph 4.3), whereas NYCOMED shall in all respects be responsible for Release of Finished Product for sale or distribution by a Qualified Person (cf. 2001/83/EC) on behalf of the relevant legal entity ("Certification") (Legal entity will be considered "manufacturer" according to cGMP): whether or not inside the Territory.

7.2   NYCOMED shall receive full batch documentation on request and the following documentation shall for routine delivery be sent to NYCOMED prior to delivery of the product:

7.2.1   Certificate of Conformity (CoC)


7.2.2   Certificate of Analysis (CoA)


7.2.3   Deviation report

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Confidential Treatment Requested. Confidential portions of this document have been
redacted and have been separately filed with the Commission.

7.2.4   GMP yield calculation for compounding, filtration, filling, visual inspection.


7.2.5   Account of material (account of Active Pharmaceutical Ingredients used)


7.2.6   Delivery note with purchase order number.


7.2.7   Index page (listing all documentation send to NYCOMED with the product)

With the first 3 commercial batches manufactured, NYCOMED shall receive copy of full Batch documentation.

See Appendix 8 for examples of CoA/CoC.

8. Product Quality Review (PQR)

PATHEON will issue a Product Quality Review ("PQR") containing the topics described in the table below and submit such review to NYCOMED no later than 3 months after agreed reporting period. A final draft will be available to Nycomed for commenting within 2 months after the reporting period. The PQR is performed annually and covers the period of at least 12 months.

[***]

9. Storage, Packaging and Transportation

9.1   PATHEON shall be responsible for appropriate storage of the Starting Materials, samples and the Product as well as for packaging the Product and samples for transportation in suitable and well-closed containers. PATHEON will communicate any proposed changes in storage or shipping to NYCOMED for review and approval.

9.2   PATHEON will organize collection of Product and Samples in accordance with the agreed qualified transportation requirements provided by NYCOMED ([***] as defined in the contract manufacturer and supply agreement).

9.3   PATHEON will have a system in place for assuring that unreleased Product is not shipped unless authorized by NYCOMED's quality unit.

9.4   The shipping containers for the Product shall be provided by PATHEON displaying the following data:

Name and address of NYCOMED.

9.4.1   Product name including strength and dosage form as well as NYCOMED's Item Number (Material number).

9.4 .2   Purchase order number.

9.4.3   Quantity (gross and net weight), number of units.

9.4.4   Batch number.

9.4.5   Storage conditions.

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Confidential Treatment Requested. Confidential portions of this document have been
redacted and have been separately filed with the Commission.

9.5   NYCOMED is responsible for the transportation of the Product in accordance with the at all times governing European Guidelines for Good Distribution Practices and local legal requirements. ([***] as defined in the contract manufacturer and supply agreement).

9.6   PATHEON is responsible for ensuring that containers used for shipping samples are labelled with storage conditions.

10. Notification and Approval of Deviations

10.1   PATHEON will investigate and document all deviations, out-of-specification results, non-compliance with Good Manufacturing Practices, complaints or any other matter that may affect the quality, safety or efficacy of the Product. Documentation will be linked to batch documentation for the product affected.

10.2   PATHEON shall notify NYCOMED within forty-eight (48) hours of all significant deviations from agreed procedures or specifications (including OOS), which might have an impact on Product quality and/or affect specifications and process compliance or availability of the product. PATHEON will prior to shipping of the concerned product, submit a deviation report to NYCOMED, which will be approved by NYCOMED after completion of the failure investigation.

10.3   PATHEON shall prior to sending the product to NYCOMED, submit written reports to NYCOMED of all deviations, out-of- specification results, non-compliance with Good Manufacturing Practices, or any other matter that may affect the quality, safety or efficacy of the Product.

10.4   NYCOMED shall have the final responsibility to determine the significance of the impact of Deviation on the Product as well as, accordingly, to determine the further disposition of the Product.

11. Change Control

11.1   PATHEON will utilise a documented system of procedures for control of changes to raw materials, packaging materials, suppliers, equipment, facilities, utilities, manufacturing methods, product and material specifications and requirements, sampling, test methods and release requirements.

11.2   PATHEON agrees not to make any changes to the Starting Materials, the manufacturing processes, the specifications or the testing methods of the Product, which may affect the quality, safety or the validation status of the Product without having obtained the prior written consent of NYCOMED.

11.3   PATHEON shall inform NYCOMED well in advance about any suggestions of changes, which could affect the approved Marketing Authorisation of the Product. NYCOMED makes the final decision whether a suggestion of a change implicates an application of a variation. The parties shall agree upon documentation necessary for the variations application and timeline of implementation, including necessary validation activities prior to such implementation.

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Confidential Treatment Requested. Confidential portions of this document have been
redacted and have been separately filed with the Commission.

11.4   NYCOMED will inform PATHEON in writing about the variation application approval promptly after receipt of such approval from the competent authorities. A change must not be implemented before said variation has been approved. Under certain circumstances which the Parties have agreed upon beforehand a change may have been implemented before approval but the Product must not be released for sale before approval has been obtained.

12. Product Defects

12.1   PATHEON shall in relation to Product defects, customer complaints and recall handling:

12.1.1   Perform necessary investigations and respond to queries as fast and comprehensively as possible.

12.1.2   Make available to NYCOMED the relevant batch documentation. This shall also apply if an authority requests it.

12.1.3   PATHEON shall provide a report detailing the findings and conclusions within 20 calendar days of receipt. If a complaint implicates a Critical Deviation both parties shall agree on a timeline for the necessary investigations.

12.2   If a deviation or a product defect which has an impact on the quality of the product after the product has been released is discovered by PATHEON, NYCOMED must be notified immediately.

NYCOMED is responsible for final evaluation of such findings and for the decision of and the conduct of a recall.

13. Contact Departments and Individuals

13.1   PATHEON agrees to provide answers as soon as possible, to all enquiries and complaints from NYCOMED.

13.2   The Parties shall set up and maintain a system that in case of safety related urgencies enables contact possibility 24 hours per day, 365 days a year.

13.3   Any communication between NYCOMED and PATHEON regarding the Quality Agreement shall be addressed to the Individuals mentioned in Appendix 7

14. Confidentiality

14.1   The Parties agree that information exchanged between them under the present Quality Agreement is of a proprietary and confidential nature. Both Parties agree to keep confidential any and all information exchanged under the present Quality Agreement and any other information they acquire about each other during the term of the present Quality Agreement. Both parties warrant to each other to do their utmost in order to ensure that their respective employees respect this confidentiality obligation.

14.2   This obligation does not extend to information for which the receiving Party can prove that:

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Confidential Treatment Requested. Confidential portions of this document have been
redacted and have been separately filed with the Commission.

14.2.1   It had the information prior to the time of disclosure; or

14.2.2   the information has become generally available to the public domain after the date hereof through no fault of the receiving Party.

14.2.3   it has received the information from a third party whose direct or indirect source is not the disclosing Party.

14.3   The receiving Party shall further be entitled to disclose to the competent regulatory or legal authorities such part of the information received from the disclosing Party that is required by law to be disclosed to such authorities. In this event, the receiving Party shall ask the receiving regulatory or legal authority to maintain confidentiality.

15. Final Clauses

15.1   This Quality Agreement shall become effective starting from February 10^th 2010.

15.2   Supplements and amendments to this Quality Agreement shall be in writing and signed by the Parties.

15.3   This Quality Agreement shall remain in effect as long as PATHEON performs development, supply and/or manufacturing services related to the Product, on behalf of the Contract Giver. The termination or expiration of this Quality Agreement for any reason whatsoever shall be without prejudice to any obligations or rights on the part of either Party which have accrued prior to such termination, and shall not affect or prejudice any provision of this Agreement which is expressly (e.g. Retention of Samples in Article 5.1) or by implication provided to come into effect on, or continue in effect after such termination.

15.4   The Parties shall renegotiate the terms of this Quality Agreement if necessary due to major legal or regulatory changes.

15.5   Upon termination of this Quality Agreement, all documents provided by NYCOMED to PATHEON and all reference samples as well as the batch manufacturing and control documents archived according to Article 5 and 6 shall be returned to NYCOMED.

15.6   In the event that any provision in this Quality Agreement is held to be unlawful or invalid in any jurisdiction, the meaning of such provision will be construed to the greatest extent possible so as to render it enforceable. If no such construction can render such provision enforceable, it will be severed. The remainder of this Agreement will remain in full force and effect, and the Parties will negotiate in good faith a reasonable substitute provision that is valid and enforceable in such jurisdiction.

15.7   In case of discrepancy between any provision of the Agreement and the Quality Agreement, the provisions of this Quality Agreement will prevail only with respect to quality issues.

15.8   This Agreement shall be governed by and construed in accordance with the laws of Switzerland and both Parties submit to the exclusive jurisdiction of the public courts of Zürich for all purposes connected with this Agreement.

16

Confidential Treatment Requested. Confidential portions of this document have been
redacted and have been separately filed with the Commission.

NYCOMED /s/ Anya Østergård Name: Anya Østergård Title: Senior Group Leader Date: 12.10.2010	PATHEON ITALIA S.P.A. /s/ Luigi Michielin Name: Luigi Michielin Title: Qualified Person Date: 13/09/2010
/s/ Jan Hassel Pflugh Name: Jan Hassel-Pflugh Title: QA Specialist, Qualified Person Date: 12/10.2010	/s/ Maria Di Cillo Name: Maria Di Cillo Title: QA/QC mgr. Date: 13.09.2010
PATHEON INTERNATIONAL A.G. /s/ Doaa Fathallah Name: Doaa Fathallah Title: Executive Vice-President and General Counsel Date: 04/10/2010

17

Confidential Treatment Requested. Confidential portions of this document have been
redacted and have been separately filed with the Commission.

APPENDIX 1

To The
Quality (GMP and GDP) Agreement

between

NYCOMED

and

PATHEON

Product

[***]

18

Confidential Treatment Requested. Confidential portions of this document have been
redacted and have been separately filed with the Commission.

APPENDIX 2

To The
Quality (GMP and GD)) Agreement

between

NYCOMED

and

PATHEON

[***]

19

Confidential Treatment Requested. Confidential portions of this document have been
redacted and have been separately filed with the Commission.

APPENDIX 3

To The
Quality (GMP and GDP) Agreement

between

NYCOMED

and

PATHEON

Patheon supplied materials

EXCIPIENTS, PACKAGING PRODUCTION AND UTILITY MATERIALS TO BE PROVIDED BY PATHEON

Excipients:

• [***]
• Excipients specifications can be found in the Product binder according to paragraph 1.8 of this agreement

Packaging Material:

[***]

Packaging Material specifications can be found in the Product binder according to paragraph 1.8 of this agreement.

Production Material:

[***]

20

Confidential Treatment Requested. Confidential portions of this document have been
redacted and have been separately filed with the Commission.

APPENDIX 4

To The
Quality (GMP and GDP) Agreement

between

NYCOMED

and

PATHEON

Nycomed provided material

[***]

21

Confidential Treatment Requested. Confidential portions of this document have been
redacted and have been separately filed with the Commission.

APPENDIX 5

To The
Quality (GMP and GDP) Agreement

between

NYCOMED

and

PATHEON

[***]

22

Confidential Treatment Requested. Confidential portions of this document have been
redacted and have been separately filed with the Commission.

APPENDIX 6

To The
Quality (GMP and GDP) Agreement

between

NYCOMED

and

PATHEON

[***]

Product SPECIFICATIONS: See the specifications attached.

The current version of the Product specifications can be found in the Product binder according to paragraph 1.8 of this agreement.

Testing laboratory is described in the product specification. Detailed instruction for shipment of samples to external laboratory is described in the Product binder.

23

Confidential Treatment Requested. Confidential portions of this document have been
redacted and have been separately filed with the Commission.

[***]

24

Confidential Treatment Requested. Confidential portions of this document have been
redacted and have been separately filed with the Commission.

APPENDIX 7

To The
Quality (GMP and GDP) Agreement

between

NYCOMED

and

PATHEON

CONTACT DEPARTMENT AND INDIVIDUALS

NYCOMED
Name	Task	Address, Phone, Fax, Email
Anya Æ stergard Senior Group Leader	QA - issues	Langebjerg 1, DK 4000 Roskilde +45 4677 1489 Anya.Ostergard@Nycomed.com
Jan Hassel-Pflugh QA Specialist, Qualified Person	QA/QC/QP Issues	Langebjerg 1, DK 4000 Roskilde +45 4677 1372 Jan.Hassel-Pflugh@Nycomed.com
Susanne Mårup Møller QA-coordinator	Receiver of Quality related Documentation	Langebjerg 1, DK 4000 Roskilde +45 4677 1407 Susanne-Maarup.Moeller@nycomed.com
In case of safety related issues, that needs urgent action Nycomeds can outside of normal business hours, be contacted at the 24 hour number: +45 46 77 11 11, as to speak to the Qualified Person.
PATHEON
Name	Task	Address, Phone, Fax, Email
Maria Di Cillo	QA/QC mgr	v. G. B. Stucchi 110, Monza (MB) Italy Mobile +39 335 8478631 Fax + 39 039 2047 314 Maria.dicillo@patheon.com
Luigi Michielin	QP	v. G. B. Stucchi 110, Monza (MB) Italy Mobile +39 335 7787 314 Fax + 39 039 2047 314 Luigi.michielin@patheon.com

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redacted and have been separately filed with the Commission.

Isabella Scrocchi	Regulatory Affairs mgr	v. G. B. Stucchi 110, Monza (MB) Italy Mobile +39 039 2047 270 Fax + 39 039 2047 314 Isabella.scrocchi@patheon.com
switchboard		v. G. B. Stucchi 110, Monza (MB) Italy +39 039 2047 200

24h/365 days contact is possible through mobile phone number enclosed in the QA and through switchboard service available 24/365 days.

26

Confidential Treatment Requested. Confidential portions of this document have been
redacted and have been separately filed with the Commission.

APPENDIX 8

To The
Quality (GMP and GDP) Agreement

between

NYCOMED

and

PATHEON

PRODUCT RELEASE DOCUMENTATION

CERTIFICATE OF CONFORMITY

Manufacturing Company: Patheon Italia S.p.A. (Monza)

Manufactured for: XXXXXXX

Product: XXXXXXXXX

Batch Number: _____________________________________

Manufacturing Date: _____________________________________

This batch has been manufactured and tested at the above mentioned site in full compliance with current GMP requirements and according to manufacturing and testing instruction agreed with XXXXX.

The batch processing, filling and analysis records were reviewed and found to be in compliance with EU-GMP.

Environmental (viable and not viable) results have been reviewed, and found to be in full compliance with current GMP requirements for Sterile manufacturing.

No deviation impacting lot release is currently open.
alternative sentence (if major deviations have been opened):
The following major deviations (list below) have been opened and none is currently open impacting lot release.
(list of deviations)

27

Confidential Treatment Requested. Confidential portions of this document have been
redacted and have been separately filed with the Commission.

Signature	____________________________ (Qualified Person)
Date:	____________________________

CERTIFICATE OF ANALYSIS

Certificate No.: XXXX/YYYY	Batch Number:
Product name:	Manufacturing date:
Code Patheon:	Expiry date:
Client:
Package size and type:

TEST SPECIFICATIONS RESULTS

The batch:         COMPLIES             with analytical specifications SPFx 00xx.
                    DOES NOT COMPLY

Quality Control Manager

28

Confidential Treatment Requested. Confidential portions of this document have been
redacted and have been separately filed with the Commission.

CHANGE CONTROL HISTORY

TO THE

QUALITY (GMP AND GDP) Agreement

between

NYCOMED

and

PATHEON

[Not a part of the Agreement]

Rev.	Change	Date
1	New

Confidential Treatment Requested. Confidential portions of this document have been
redacted and have been separately filed with the Commission.

SCHEDULE 2.6.4

to the Supply Agreement between
Nycomed and Patheon

______________________________________________________________

Target Yield, Actual Yield, API Agreed Value

Definitions

Target Yield as defined in Article 2.6.4

• Percentage agreed upon by the parties

Actual Yield as defined in Article 2.6.4

• Percentage actually measured for an agreed period with the formula enclosed

1) Formula

The following formula will apply for the calculation of the Actual Yield:

Yield including samples:

• Samples are required by regulatory, customer, process necessities
• Samples could vary with specific demands of customer, especially during conversion to commercial production

[***]

Yield varies with batch size, as residual volumes in hoses, start up material, release test requirements are more or less fixed and account less with higher batch size.

2) Target Yield

[***]

3) API Agreed value of Nycomed API

The Parties have mutually set an agreed value (which may be different from the procurement cost of the API) as follows:

[***]

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Confidential Treatment Requested. Confidential portions of this document have been
redacted and have been separately filed with the Commission.

SCHEDULE 7.1

to the Supply Agreement between
Nycomed and Patheon

Supply Price

A. PRODUCT PRICE

[***]

B. PRICES FOR SERVICES

[***]

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redacted and have been separately filed with the Commission.

SCHEDULE 7.2.2.1

to the Supply Agreement between
Nycomed and Patheon

[***]

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EX-10.8

10-K 2013 Exhibit 10.8

EX-10.32

10-K 2013 Exhibit 10.32

EX-10.33

10-K 2013 Exhibit 10.33

EX-10.34

10-K 2013 Exhibit 10.34

EX-21.1

EX-23.1

EX-31.1

EX-31.2

EX-32

XML

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	Dec. 31, 2013
Minimum
Property and Equipment, Useful Life	3 years
Maximum
Property and Equipment, Useful Life	5 years

XML

Leases (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013
Leases Details
2014	$ 1,992
2015	1,910
2016	1,287
2017	0
2018	0
Total minimum payments	$ 5,189

XML

Financial Instruments (Fair Value Of Investments) (Details 2) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Marketable investment securities available for sale in an unrealized loss position
In Loss Position for Less Than 12 Months, Fair Value	$ 74,407	$ 45,084
In Loss Position for Less Than 12 Months, Gross Unrealized Losses	60	35
In Loss Position for More Than 12 Months, Fair Value	5,732	0
In Loss Position for More Than 12 Months, Gross Unrealized Losses	0	0
Total, Fair Value	80,139	45,084
Total, Gross Unrealized Losses	60	35
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Marketable investment securities available for sale in an unrealized loss position
In Loss Position for Less Than 12 Months, Fair Value	74,407	37,974
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In Loss Position for More Than 12 Months, Fair Value	5,732	0
In Loss Position for More Than 12 Months, Gross Unrealized Losses	4	0
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Marketable investment securities available for sale in an unrealized loss position
In Loss Position for Less Than 12 Months, Fair Value	0	7,110
In Loss Position for Less Than 12 Months, Gross Unrealized Losses	0	4
In Loss Position for More Than 12 Months, Fair Value	0	0
In Loss Position for More Than 12 Months, Gross Unrealized Losses	0	0
Total, Fair Value	0	7,110
Total, Gross Unrealized Losses	$ 0	$ 4

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Leases (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Inventory Narrative Details
Rent expense for operating leases	$ 1,700	$ 1,600	$ 1,300

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Commitments and Contingencies (Narrative 1) (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2013
Revestive and Natpara
Performance Commitment, Remaining Minimum Amount Committed	$ 15.9
Other Service Agreements
Performance Commitment, Remaining Minimum Amount Committed	$ 29.5

XML

Fair Value Measurement (Liabilities Narrative) (Details 3) (USD $) In Millions, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Fair Value Measurement Liabilities Narrative Details 3
Brigham Women's Hospital royalty liability, fair value	$ 4.3	$ 4.8
Brigham Women's Hospital royalty liability, carrying value	$ 5.6	$ 6.6

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Long-term Debt (Tables)

12 Months Ended

Dec. 31, 2013

Notes to Financial Statements

Long-term Debt (Tables)

The following table reflects the carrying value of our long-term debt under various financing arrangements as of December 31, 2013 and 2012 (in thousands):

		December 31,
		2013		2012
Convertible notes	$	16,545	$	16,545
Non-recourse debt		132,387		159,302
Total debt		148,932		175,847
Less current portion		25,297		6,278
Total long-term debt	$	123,635	$	169,569

Schedule of Contractual Maturities of Long-term Debt (Tables)

The aggregate contractual maturities of long-term debt, including estimated maturities of the Non-recourse Debt, due subsequent to December 31, 2013 are as follows (in thousands):

Year ending December 31:
2014	$	48,909
2015		31,334
2016		5,005
2017		4,648
2018		18,948
Thereafter		40,088
Total long-term debt	$	148,932

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Commitments and Contingencies (Narrative 2) (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Commitments And Contingencies Narrative 2 Details
Purchases under contractual inventory commitments from third-party contract manufacturers	$ 15.0	$ 25.9	$ 14.5

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Income Taxes (Unrecognized Tax Benefits) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Income Taxes Unrecognized Tax Benefits Details
Beginning Balance	$ 4,614	$ 4,614
Additions related to current year positions	0	0
Reductions for prior year tax positions	(677)	0
Ending Balance	$ 3,937	$ 4,614

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Long-term Debt (Narrative) (Details 2) (USD $) In Millions, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Convertible Notes
Debt outstanding	$ 16.5	$ 16.5
Debt classified as current	16.5
Month and year of issue	Aug. 31, 2007
Number of interest payments, per year		4
Effective interest rate		5.90%
Debt amount originally issued		50.0
Net proceeds upon original issuance		49.4
Deferred debt issuance costs amortization period, in years		7 years
Interest accrued	0	0
Debt due date	August 7, 2014
Conversion price of 5.75% convertible notes, per share	$ 5.44
Sensipar and Mimpara-Secured Non-recourse Debt Sensipar Notes
Debt outstanding	54.4	80.2
Debt classified as current	6.8	6.3
Month and year of issue	Sep. 30, 2011
Month and year of amendment	June 2012
Interest rate		9.00%
Effective interest rate		9.00%
Debt amount originally issued		145.0
Net proceeds upon original issuance		144.9
Interest accrued	0.6	0.9
Quarterly limit of royalty offset of the royalty advance	8.0
PTH 1-84-Secured Non-recourse Debt
Debt outstanding	42.8	42.8
Month and year of issue	Jul. 31, 2007
Debt amount originally issued		50.0
Net proceeds upon original issuance		50.0
Interest accrued	0	0
Interest and principal paid to date		45.5
REGPARA-Secured Non-recourse Debt
Debt outstanding	35.2	36.3
Debt classified as current	1.9	0
Month and year of issue	Feb. 28, 2010
Interest rate		15.70%
Effective interest rate		15.70%
Debt amount originally issued		38.4
Net proceeds upon original issuance		38.4
Deferred debt issuance costs amortization period, in years		10 years
Interest accrued	1.1	3.1
Interest and principal paid to date		$ 27.9

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Income Taxes (Narrative of Carryforwards) (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013
U.S. Federal
Operating Loss Carryforwards	$ 381.0
Operating loss carryforwards, expiration dates	Dec. 31, 2015
Capital Loss Carryforwards	10.6
Capital Loss Carryforward, Expiration Dates	Begin in 2014
U.S. Federal Research Tax Credit Carryforwards	68.3
U.S. Federal Research Tax Credit Carryforwards, Expiration Dates	Begin in 2030
New Jersey
Operating Loss Carryforwards	369.9
Operating loss carryforwards, expiration dates	Dec. 31, 2013
Capital Loss Carryforwards	$ 18.0
Capital Loss Carryforward, Expiration Dates	Begin in 2013

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Selected Quarterly Financial Data (Unaudited) (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Selected Quarterly Financial Data Details
Revenues	$ 54,451	$ 39,202	$ 36,505	$ 25,434	$ 27,184	$ 27,019	$ 53,517	$ 22,924	$ 155,592	$ 130,644	$ 101,645
Operating (loss) income	10,588	1,769	(9,321)	(4,531)	(8,018)	733	11,206	(5,045)	(1,495)	(1,124)	545
Net (loss) income	$ 7,768	$ (1,087)	$ (12,389)	$ (7,796)	$ (12,203)	$ (3,324)	$ 7,355	$ (10,563)
Basic net income (loss) per common and potential common share	$ 0.08	$ (0.01)	$ (0.13)	$ (0.09)	$ (0.14)	$ (0.04)	$ 0.08	$ (0.12)	$ (0.14)	$ (0.22)	$ (0.45)
Diluted net income (loss) per common and potential common share	$ 0.07	$ (0.01)	$ (0.13)	$ (0.09)	$ (0.14)	$ (0.04)	$ 0.08	$ (0.12)	$ (0.14)	$ (0.22)	$ (0.45)

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Employee Benefit Plans (Narrative) (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Employee Benefit Plans Narrative Details
Company contribution match of employee contributions up to 3% of employee pre-tax contributions, percent	100.00%	100.00%	100.00%
Company contribution match of employee contributions of next 3% of employee pre-tax contributions, percent	50.00%	50.00%	50.00%
Matching contributions by company to 401(k) plan	$ 1,100,000	$ 620,000	$ 432,000

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Income Taxes (Schedule Of Differences Between Statutory Tax And Effective Tax) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Income Taxes Schedule Of Differences Between Statutory Tax And Effective Tax Details
Computed "expected" tax benefit	$ (4,529)	$ (6,370)	$ (12,325)
Expiration of tax attributes	0	0	360
IRC §382 adjustment	6,575	59,822	94,442
Change in the valuation allowance for deferred tax assets attributable to operations and other adjustments	2,840	(42,124)	(70,514)
U.S. and foreign credits	(12,237)	(10,231)	(11,732)
State income taxes, net of federal tax effect	182	0	0
Equity based compensation expense	678	513	578
Intellectual property	5,440	0	0
Foreign tax rate differences	940	0	0
Other	293	(1,610)	(791)
Income tax expense (benefit)	$ 182	$ 0	$ 18

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Selected Quarterly Financial Data (Unaudited) - Note 17

12 Months Ended

Dec. 31, 2013

Selected Quarterly Financial Data

Selected Quarterly Financial Data (Unaudited)

(17) Selected Quarterly Financial Data (Unaudited)

The following is a summary of the quarterly results of operations for the years ended December 31, 2013 and 2012 (in thousands, except for per share amounts):

	Quarters Ended
	March 31		June 30		September 30		December 31
(in thousands, except per share amounts)
2013
Revenues	$	25,434	$	36,505	$	39,202	$	54,451
Operating (loss) income		(4,531)		(9,321)		1,769		10,588
Net (loss) income		(7,796)		(12,389)		(1,087)		7,768
Basic (loss) income per common share	$	(0.09)	$	(0.13)	$	(0.01)	$	0.08
Diluted (loss) income per common
and potential common share	$	(0.09)	$	(0.13)	$	(0.01)	$	0.07
2012
Revenues	$	22,924	$	53,517	$	27,019	$	27,184
Operating (loss) income		(5,045)		11,206		733		(8,018)
Net (loss) income		(10,563)		7,355		(3,324)		(12,203)
Basic (loss) income per common share	$	(0.12)	$	0.08	$	(0.04)	$	(0.14)
Diluted (loss) income per common
and potential common share	$	(0.12)	$	0.08	$	(0.04)	$	(0.14)

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Financial Instruments (Proceeds) (Details 4) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Financial Instruments Proceeds Details 4
Proceeds from sales and maturities	$ 107,871	$ 119,507	$ 86,668
Realized gains	4	4	0
Realized losses	$ 0	$ 0	$ 0

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Collaborative and License Agreements ( Narrative) (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Amgen Inc.
Year of agreement	1996
Number of days to terminate upon written notice to the Company	90
Percentage of Company costs to develop product	0.00%
Nonrefundable license fee received	$ 10.0
Total milestone payments under the agreement payable to the Company	26.0
Future milestone payments outside the Company's control	5.0
Next future milestone payment outside the Company's control	5.0
Total milestone payments paid to the Company to date	21.0
Milestone payments received by the Company	0	0	0
Recognized royalties from product sales received by the Company	112.9	89.3	77.6
Sale of royalty rights	0	25.0	0
GlaxoSmithKline
Year of agreement	2011
Total milestone payments under the agreement payable to the Company	11.5
Future milestone payments outside the Company's control	1.0
Total milestone payments paid to the Company to date	0
Kyowa Hakko Kirin
Year of agreement	1995
Number of days to terminate upon written notice to the Company	90
Percentage of Company costs to develop product	0.00%
Nonrefundable license fee received	5.0
Total milestone payments under the agreement payable to the Company	13.0
Research support payments under the agreement	7.0
Total milestone payments paid to the Company to date	13.0
Research support payments paid to the Company to date	7.0
Milestone payments received by the Company	0	0	0
Recognized royalties from product sales received by the Company	8.0	8.7	7.6
Takeda Teduglutide
Year of agreement	2007
Number of days to terminate upon written notice to the Company	180 or 365
Percentage of Company costs to develop product	50.00%
Nonrefundable license fee received	35.0
Total milestone payments under the agreement payable to the Company	170.0
Total milestone payments payable upon the achievement of certain pre-specified product development milestones	150.0
Total milestone payments payable upon the achievement of certain pre-specified sales-based milestones	20.0
Company payments to licensor to date	6.6
Future milestone payments outside the Company's control	5.0
Total milestone payments paid to the Company to date	40.0
Milestone payments received by the Company	0	0	5.0
Company payments to licensor			2.4
Takeda Preotact
Year of agreement	2004 and 2007
Number of days to terminate upon written notice to the Company	180
Total milestone payments under the agreement payable to the Company	22.0
Total milestone payments payable upon the achievement of certain pre-specified product development milestones	0.3
Total milestone payments payable upon the achievement of certain pre-specified sales-based milestones	14.5
Future milestone payments outside the Company's control	14.8
Next future milestone payment outside the Company's control	0.3
Total milestone payments paid to the Company to date	7.1
Recognized royalties from product sales received by the Company	0	4.8	9.1
Janssen Pharmaceuticals, Inc.
Year of agreement	2006
Number of days to terminate upon written notice to the Company	60
Percentage of Company costs to develop product	0.00%
Nonrefundable license fee received	8.0
Recognized royalties from product sales received by the Company	2.9	2.8	2.2
Hoffman-La Roche Inc. and F. Hoffmann-La Roche Ltd.
Year of agreement	2008
Number of days to terminate upon written notice to the Company	30
Percentage of Company costs to develop product	0.00%
Nonrefundable license fee received	2.0
Total milestone payments paid to the Company to date	0.3
Milestone payments received by the Company	0	0	0.3
Recognized royalties from product sales received by the Company	0	0	0
In-License and Purchase Agreements
Company maximum royalties to be paid on sales of cinacalcet HCl	15.0
Royalties payable accrued on sales of cinacalcet HCl, to date	15.0
Royalties paid on sales of cinacalcet HCl, to date	9.4
Annual upper limit of royalty payments on sales of cinacalcet HCl	1.0
Royalties recorded in other liabilites on sales of cinacalcet HCl	4.6
Royalties recorded in accrued expenses and other liabilites on sales of cinacalcet HCl	$ 1.0

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Income Taxes (Narrative of Expense) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Income Taxes Narrative Of Expense Details
Income tax expense	$ 182	$ 0	$ 18
Foreign income tax expense	0	0	18
Accrued penalties and interest	$ 0	$ 0

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Summary of Significant Accounting Policies (Cash Equivalents Narrative) (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Summary Of Significant Accounting Policies Cash Equivalents Narrative Details
Cash equivalents	$ 40.6	$ 16.2

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Inventory (Narrative) (Details) (USD $)	Dec. 31, 2013	Mar. 31, 2013	Dec. 31, 2012
Inventory Narrative Details
Revestive raw materials	$ 16,600,000	$ 16,600,000	$ 0
PTH raw materials	17,100,000	17,100,000	0
Total raw materials	29,300,000		0
Finished goods	$ 705,000		$ 0

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Stock-Based Compensation Plans (Aggregate Restricted Stock, Restricted Stock Units and Deferred Stock Units) (Details) (USD $)	12 Months Ended
	Dec. 31, 2013
Stock-Based Compensation Plans Aggregate Restricted Stock Restricted Stock Units And Deferred Stock Units Details
Nonvested at beginning of year	505,000
Granted	570,000
Released	(318,000)
Forfeited	(5,000)
Nonvested at December 31, 2013	752,000
Weighted-average grant date fair market value, beginning balance	$ 6.96
Weighted-average grant date fair market value of restricted stock rights granted	$ 9.18
Weighted-average grant date fair market value, released during period	$ 6.37
Weighted-average grant date fair market value, forfeited during period	$ 8.21
Weighted-average grant date fair market value, ending balance	$ 8.89

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Stock Options (Compensation Expense Narrative) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended	12 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Stock Options Compensation Expense Narrative Details
Compensation expense on share-based awards	$ 2,200	$ 1,400	$ 4,900	$ 9,437	$ 7,548	$ 4,100

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Financial Instruments (Fair Value Of Investments) (Details 1) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Amortized cost	$ 129,285	$ 83,266
Gross unrealized holding gains	45	13
Gross unrealized holding losses	(60)	(35)
Fair value	129,270	83,244
Corporate
Amortized cost	103,175	50,822
Gross unrealized holding gains	23	3
Gross unrealized holding losses	(60)	(31)
Fair value	103,138	50,794
Government agency
Amortized cost	26,110	32,444
Gross unrealized holding gains	22	10
Gross unrealized holding losses	0	(4)
Fair value	$ 26,132	$ 32,450

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Organization Summary of Accounting Policies - Note 1

12 Months Ended

Dec. 31, 2012

Organization and Summary of Significant Accounting Policies Disclosure

Organization and Summary of Significant Accounting Policies

(1) Organization and Summary of Significant Accounting Policies

The consolidated financial statements are comprised of the financial statements of NPS Pharmaceuticals, Inc. and its subsidiaries (NPS), collectively referred to as the Company or NPS. NPS is a biopharmaceutical company pioneering and delivering therapies that transform the lives of patients with rare diseases worldwide. The Company's marketed product, Gattex® (U.S.)/Revestive® (EU) (teduglutide [rDNA origin]) for injection is approved for adult Short Bowel Syndrome (SBS) patients who are dependent on parenteral support. In February 2013, the Company launched and initiated commercial sales of Gattex in the U.S. The Company has also developed Natpara® (rhPTH[1-84]) for the treatment of hypoparathyroidism and submitted its Biologic License Application (BLA) to the FDA in October 2013. In January 2014, the U.S. Food and Drug Administration (FDA) accepted and filed for review the Company's BLA for Natpara. Under the Prescription Drug User Fee Act (PDUFA), the goal date for a decision by the FDA is October 24, 2014. During 2013, the Company reacquired the rights to Revestive and Natpara outside of the U.S. and has defined its international strategy for Gattex/Revestive.

In addition to the Company's proprietary clinical portfolio, it has a number of royalty-based clinical and commercial stage programs.

Since inception, the Company's principal activities have been performing research and development, raising capital, establishing research and license agreements and effecting the commercial launch of Gattex in the U.S. All monetary amounts are reported in U.S. dollars unless specified otherwise.

Subsequent Events

The Company has evaluated all events and transactions since December 31, 2013. The Company did not have any material recognized or non-recognized subsequent events.

Significant Accounting Policies

The following significant accounting policies are followed by the Company in preparing its consolidated financial statements:

(a) Cash Equivalents

The Company considers all highly liquid investments with maturities at the date of purchase of three months or less to be cash equivalents. Cash equivalents at December 31, 2013 and 2012 are carried at cost and consist of commercial paper, money market funds, debt securities and other highly liquid instruments of approximately $40.6 million and $16.2 million, respectively. At December 31, 2013 and 2012, the book value of cash equivalents approximates fair value.

(b) Marketable Investment Securities

The Company classifies its marketable investment securities as available-for-sale and are recorded at fair value. Unrealized holding gains and losses on available-for-sale securities, net of the related tax effect, are excluded from earnings and are reported as a separate component of stockholders' deficit until realized. A decline in the fair value below cost of available-for-sale securities that is deemed other than temporary is charged to results of operations, resulting in the establishment of a new cost basis for the security. Premiums and discounts are amortized or accreted into the cost basis over the life of the related security as adjustments to the yield using the effective-interest method. Interest income is recognized when earned. Realized gains and losses from the sale of marketable investment securities are based on the specific identification method and are included in results of operations and are determined on the specific-identification basis.

The Company conducts periodic reviews to identify and evaluate each investment that has an unrealized loss. An unrealized loss exists when the current fair value of an individual security is less than its amortized cost basis. Unrealized losses on available-for-sale securities that are determined to be temporary, and not related to credit loss, are recorded, net of tax, in accumulated other comprehensive income.

For available-for-sale debt securities with unrealized losses, management performs an analysis to assess whether the Company intends to sell or whether it would more likely than not be required to sell the security before the expected recovery of the amortized cost basis. Where the Company intends to sell a security, or where it may be more likely than not be required to sell the security before the expected recovery of the amortized cost basis, the security's decline in fair value is deemed to be other-than-temporary and the full amount of the unrealized loss is recorded within earnings as an impairment loss.

Regardless of the Company's intent to sell a security, the Company performs additional analysis on all securities with unrealized losses to evaluate losses associated with the creditworthiness of the security. Credit losses are identified where the Company does not expect to receive cash flows sufficient to recover the amortized cost basis of a security.

(c) Trade Accounts Receivable

Trade accounts receivable are recorded for research and development support performed, for license fees, milestone payments and royalty income earned, and for product sales, and do not bear interest. The Company determines an allowance for doubtful accounts based on assessed customers' ability to pay, historical write-off experience, and economic trends. Such allowance for doubtful accounts is the Company's best estimate of the amount of probable credit losses in the Company's existing accounts receivable. The Company reviews its allowance for doubtful accounts monthly. The Company did not record any bad debt expense for the years ended December 31, 2013 2012 and 2011. At December 31, 2013 and 2012 the allowance for bad debts was zero.

(d) Inventory

Inventories are stated at the lower of cost or estimated realizable value. The Company determines the cost of inventory using the first-in, first-out, or FIFO, method. The Company capitalizes inventory costs associated with the Company's products after regulatory approval when, based on management's judgment, future commercialization is considered probable and the future economic benefit is expected to be realized; otherwise, such costs are expensed as research and development. The Company periodically analyzes its inventory levels to identify inventory that may expire prior to expected sale or has a cost basis in excess of its estimated realizable value, and writes-down such inventories as appropriate. In addition, the Company's products are subject to strict quality control and monitoring which the Company performs throughout the manufacturing process. If certain batches or units of product no longer meet quality specifications or become obsolete due to expiration, the Company records a charge to cost of sales sold to write down such unmarketable inventory to its estimated realizable value.

(e) Property and Equipment

Property and equipment is stated at cost. Depreciation and amortization of property and equipment is calculated on the straight-line method over estimated useful lives of 3 to 5 years. Leasehold improvements are amortized using the straight-line method over the shorter of the life of the asset or remainder of the lease term.

(f) Goodwill and Intangibles

Goodwill represents the excess of costs over fair value of assets of businesses acquired. Intangibles represents acquired assets and are measured at fair value as of the date of acquisition. Goodwill and intangible assets acquired in a purchase or business combination and determined to have an indefinite useful life are not amortized, but instead tested for impairment at least annually or sooner if circumstances indicate that impairment might have occurred. Intangible assets with definite useful lives are amortized to their estimated residual values over their estimated useful lives and reviewed for impairment if certain events occur. As a result of the annual impairment test performed by management at year-end, it was noted that fair value significantly exceeded the carrying value of the reporting unit. The company considers itself a single reportable segment and reporting unit.

(g) Income Taxes

The Company utilizes the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement carrying amounts and tax bases of assets and liabilities using enacted tax rates in effect for years in which the temporary differences are expected to reverse. The Company establishes a valuation allowance when it believes it is more likely than not that deferred tax assets will not be realized.

The Company determines the need for a valuation allowance by assessing the probability of realizing deferred tax assets, taking into consideration all available positive and negative evidence, including historical operating results, expectations of future taxable income, carryforward periods available to the Company for tax reporting purposes, various income tax strategies and other relevant factors. Significant judgment is required in making this assessment and to the extent future expectations change, the Company would have to assess the recoverability of its deferred tax assets at that time. At December 31, 2013 and 2012, the Company maintained a full valuation allowance on its deferred tax assets.

At any one time the Company's tax returns for numerous tax years are subject to examination by U.S. federal, state and foreign taxing jurisdictions. The impact of an uncertain tax position taken or expected to be taken on an income tax return must be recognized in the financial statements at the largest amount that is more likely than not to be sustained. An uncertain income tax position will not be recognized in the financial statements unless it is more likely than not to be sustained. The Company adjusts these tax liabilities, as well as the related interest and penalties, based on the latest facts and circumstances, including recently enacted tax law changes, published rulings, court cases, and outcomes of tax audits. While the Company does not expect material changes, it is possible that its actual tax liability will differ from its established tax liabilities for unrecognized tax benefits, and the Company's effective tax rate may be materially impacted. The Company accounts for interest and penalties related to uncertain tax positions as a component of Income tax expense.

For further information, refer to Note 13, Income Taxes.

(h) Revenue Recognition

The Company analyzes its revenue arrangements to determine whether the elements should be separated and accounted for individually or as a single unit of accounting. Allocation of revenue to individual elements which qualify for separate accounting is based on the estimated fair value of the respective elements. The Company earns revenue from license fees, milestone payments, royalty payments and product sales.

License fees. The Company defers and recognizes revenue from up-front nonrefundable license fees on a straight-line basis, unless another pattern is apparent, over the period wherein the Company has continuing involvement in the research and development project. The Company recognizes revenue from up-front nonrefundable license fees upon receipt when there is no continuing involvement in the research and development project.

Milestone payments. The Company recognizes revenue from its milestone payments as agreed-upon events representing the achievement of substantive steps in the development process are achieved and where the amount of the milestone payment approximates the fair value of achieving the milestone.

Royalties. Royalties from licensees are based on third-party sales of licensed products and are recorded in accordance with contract terms when sales results are reliably measurable and collectability is reasonably assured.

Product sales. The Company recognizes revenue from product sales when persuasive evidence of an arrangement exists, title to product and associated risk of loss has passed to the customer, the price is fixed or determinable, collection from the customer is reasonably assured, the Company has no further performance obligations, and returns can be reasonably estimated. Currently, product sales represent U.S. sales of Gattex, which was approved by the FDA in December 2012.

All prescriptions for Gattex, received directly by NPS from the patient's physician, are handled through NPS Advantage, the Company's data management and patient support program, which investigates and determines the patient's insurance coverage for Gattex. Once coverage is confirmed, NPS forwards the prescription to the specialty pharmacy (SP) who then re-confirms the coverage and dispenses Gattex to the patient. The Company sells Gattex directly to a limited number of SPs and a specialty distributor (SD) who dispense product to patients, hospitals or U.S. government entities. The Company invoices and records revenue when the SPs or SD receives Gattex from the Company's third-party logistics warehouse. The Company's SPs order product to fill prescriptions that have been approved for reimbursement by payers.

Specific considerations for Gattex sold in the U.S. are as follows:

• Rebates: Allowances for rebates include mandated discounts under the Medicaid Drug Rebate Program. Rebates are amounts owed after the final dispensing of the product to a benefit plan participant and are based upon contractual agreements or legal requirements with public sector (e.g. Medicaid) benefit providers. The allowance for rebates is based on statutory discount rates and expected utilization. The Company's estimate for expected utilization for rebates is based in part on actual and pending prescriptions for which it has validated the insurance benefits.
• Chargebacks: Chargebacks are discounts that occur when contracted customers purchase from the Company's SPs or SD. Contracted customers, which currently consist primarily of Public Health Service institutions and Federal government entities purchasing via the Federal Supply Schedule, generally purchase the product at a discounted price. The Company's SPs or SD, in turn, charge back the difference between the price initially paid by the SP or SD and the discounted price paid to the SP or SD by the customer. The allowance for chargebacks is based on actual and expected sales to the SPs and SD.

• SP and SD Fees and Deductions: The Company's SPs and its SD are offered prompt payment discounts and are paid fees for their services and data.

• Product returns: The Company will accept product that is damaged or defective when shipped directly to the SP or SD from the Company's third-party logistics provider or for product that is returned with more than two (2) months remaining until the expiration date from its SP or SD only. The Company will not provide any credit for product that has been labeled for or sent to a patient. Product returned is generally not resalable as the product must be temperature-controlled throughout the supply chain and such control is difficult to confirm. The Company makes a reasonable estimate of future potential product returns based on the number of prescriptions that have been approved for reimbursement and sent to an SP with each corresponding shipment of Gattex that has been sent to each respective SP. The Company also has the visibility to see current inventory levels and the current shelf life at the SPs and SD and has the ability to control the amount of product that is sold to the SPs and SD. At the end of each reporting period, the Company determines a product returns reserve by evaluating the units held in its distribution channel, the underlying demand for such units and the risk of potential product returns. 

The following table summarizes the provisions, and credits/payments, for government rebates and chargebacks, distribution-related fees, and returns and other sales-related deductions (in thousands):

					Returns and
	Rebates and		Distribution-		Other Sales-
		Chargebacks		Related Fees		Related Deductions		Total
Balance as of December 31, 2012	$	-	$	-	$	-	$	-
Provision related to current period sales		1,375		332		1,098		2,805
Credits/payments		(262)		(185)		(857)		(1,304)
Balance as of December 31, 2013	$	1,113	$	147	$	241	$	1,501

Product sales are recorded net of accruals for estimated rebates, chargebacks, discounts, and other deductions (collectively, sales deductions) and returns. With the exception of allowances for prompt payment, allowances for sales deductions and returns are included in accounts payable and accrued expenses in the accompanying consolidated balance sheets.

(i) Research and Development Expenses

Research and development expenses, are expensed as incurred and are primarily comprised of the following types of costs incurred in performing research and development activities: clinical trial and related clinical manufacturing costs, contract services, outside costs, salaries and benefits, overhead and occupancy costs.

The Company analyzes how to characterize payments under collaborative agreements based on the relevant facts and circumstances related to each agreement.

(j) Income (Loss) per Common Share

Basic income (loss) per common share is the amount of income (loss) for the period divided by the sum of the weighted average shares of common stock outstanding during the reporting period. Diluted income (loss) per common share is the amount of income (loss) for the period plus interest expense on convertible debt divided by the sum of weighted average shares of common stock outstanding during the reporting period and weighted average share that would have been outstanding assuming the issuance of common shares for all dilutive potential common shares.

(k) Share-Based Compensation

The Company accounts for share-based compensation in accordance with Financial Accounting Standards Board's Accounting Standards Codification ("ASC") 718, "Compensation - Stock Compensation" (ASC 718). Compensation cost is recorded based on the grant date fair value estimated using the Black-Scholes option-pricing for awards which vest based on a service or performance condition or the Monte Carlo simulation model for awards with market conditions. The Company recognizes compensation cost for awards on a straight-line basis over the requisite service period for the entire award, except for performance condition options where vesting is subject to the Company achieving certain performance criteria. Compensation costs for performance condition options will be recognized when the achievement of the performance criteria is probable.

(l) Use of Estimates

Management of the Company has made estimates and assumptions relating to reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these consolidated financial statements in conformity with U.S. generally accepted accounting principles (U.S. GAAP). Actual results could differ from those estimates.

(m) Principles of Consolidation

The consolidated financial statements include the accounts of the Company, all subsidiaries in which it owns a majority voting interest including a variable interest entity in which the Company is the primary beneficiary. The Company eliminates all intercompany accounts and transactions in consolidation.

(n) Accounting for Impairment of Long-Lived Assets

As described in (f), goodwill is tested for impairment at least annually. The Company reviews all other long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets held and used is measured by a comparison of the carrying amount of an asset to future net cash flows (undiscounted) expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets held for sale are reported at the lower of the carrying amount, or fair value, less costs to sell.

(o) Foreign Currency Translation

Assets and liabilities of foreign operations with non-U.S. dollar functional currencies are translated into U.S. dollars at the period end exchange rates. Income, expenses and cash flows are translated at the average exchange rates prevailing during the period. Adjustments resulting from translation are reported as a separate component of accumulated other comprehensive loss in stockholders' deficit. Certain transactions are denominated in currencies other than the functional currency. Transaction gains and losses are included in other income (expense) for the period in which the transaction occurs.

(p) Comprehensive Income (Loss)

Comprehensive income (loss) consists of net income (loss) and other gains and losses affecting stockholders' equity (deficit) that, under U.S. GAAP, are excluded from net income (loss). For the Company, these consist of net unrealized gains or losses on marketable investment securities and foreign currency translation gains and losses. Accumulated other comprehensive income (loss) as of December 31, 2013 and 2012 consists of accumulated net unrealized losses on marketable investment securities of $15,000 and $22,000, respectively, and foreign currency translation gains of $71,000 and $27,000, respectively.

(q) Concentration of Suppliers

The Company has entered into agreements with contract manufacturers to manufacture clinical and commercial supplies of its product candidates. In some instances, the Company is dependent upon a single supplier. The loss of one of these suppliers could have a material adverse effect upon the Company's operations.

(r) Leases

The Company leases its facility under terms of a lease agreement which provides for rent holidays and escalating payments. Rent under operating leases is recognized on a straight-line basis beginning with lease commencement through the end of the lease term. The Company records deferred lease payments in other long-term liabilities.

(s) Deferred Financing Costs

Costs incurred in issuing the 5.75% convertible notes are amortized using the straight-line method over the shorter of the term of the related instrument or the initial date on which the holders can require repurchase of the notes. The amortization of deferred financing costs is included in Interest expense in the Consolidated Statements of Operations.

Costs incurred in connection with the issuance of the Sensipar Notes and under the agreements with DRI, in which the Company sold to DRI its right to receive future royalty payments arising from sales of REGPARA under its license agreement with Kyowa Hakko Kirin and a future royalty in the mid-single digits from the sales of PTH, are amortized using the effective-interest method over the same period and in the same manner as the related debt. The amortization of deferred financing costs is included in Interest expense in the Consolidated Statements of Operations.

(t) Deferred License Fees

Cost of license fees are deferred if they are a direct cost of a revenue generating activity and that revenue is being deferred. These deferred costs are amortized over the same period and in the same manner as the related deferred revenue. The amortization of deferred license fees is included in Cost of license fees in the Consolidated Statements of Operations.

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Stock-Based Compensation Plans (Incentive Plans Narrative) (Details) (USD $)

3 Months Ended

9 Months Ended

12 Months Ended

Sep. 30, 2013

Sep. 30, 2012

Sep. 30, 2012

Dec. 31, 2013

Dec. 31, 2012

Dec. 31, 2011

Share-based Compensation Expense

$ 2,200,000

$ 1,400,000

$ 4,900,000

$ 9,437,000

$ 7,548,000

$ 4,100,000

Directors' Plan

Plan Description

As of December 31, 2013, the Company has four equity incentive plans: the 1994 Nonemployee Directors' Stock Option Plan (the Directors' Plan), the 1998 Stock Option Plan (the 1998 Plan), the 2005 Omnibus Incentive Plan (the 2005 Plan), and the Employee Stock Purchase Plan ("ESPP"). These plans provide that in the event of certain change in control transactions, including a merger or consolidation in which the Company is not the surviving corporation or a reorganization in which more than fifty-percent (50%) of the shares of the Company's common stock entitled to vote are exchanged, all outstanding, unvested equity awards under these plans will vest, and in the case of stock options, will become immediately exercisable.

As of December 31, 2013, there are no shares reserved for future grant under the Directors' Plan and the 1998 Plan. As of December 31, 2013, there are 4,497,990 shares reserved for future grant under the 2005 Plan. The Company's 2005 Plan provides for the grant of nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units, deferred stock units, performance shares, cash-based awards and other stock-based awards. Under the Company's 2005 Plan, the exercise price of stock options, the grant price of stock appreciation rights and the initial value of performance awards, must be equal to at least 100% of the fair market value of the Company's common stock on the date of grant. Stock options generally vest 28% after year one and 2% per month thereafter or 25% after year one and 6.25% every three months thereafter. Under the Company's 1998 Plan, the exercise price of options is not less than the fair market value of the Company's common stock on the date of grant. The number of shares, terms, and exercise period are determined by the board of directors on a grant-by-grant basis, and the exercise period does not extend beyond ten years from the date of the grant. Stock options generally vest 28% after one year and 2% or 3% per month thereafter or 25% after year one and 6.25% every three months thereafter.

During the year ended December 31, 2010, the Company's Board of Directors awarded a total of 1,130,700 performance condition options to certain of the Company's employees. Vesting of these options are subject to the Company achieving certain performance criteria established at the grant date and the individuals fulfilling a service condition (continued employment). As of December 31, 2013, the performance criteria of 825,340 of these options had been satisfied and these options will become exercisable based on the following vesting schedule: 25% on each of the first four anniversaries of the date of grant, which was February 20, 2010 (the date of grant). The Company recognized $277,000, $1.1 million and $153,000 of compensation expense during the years ended December 31, 2013, 2012 and 2011, respectively, related to these options. The next performance criteria is the acceptance of the BLA filing for Natpara by the FDA. The BLA was accepted by the FDA in January 2014 and will trigger approximately $111,000 of compensation expense related to these options being recognized in the first quarter of 2014.

Number of Shares Reserved for Future Issuance

0

1998 Plan

Plan Description

As of December 31, 2013, the Company has four equity incentive plans: the 1994 Nonemployee Directors' Stock Option Plan (the Directors' Plan), the 1998 Stock Option Plan (the 1998 Plan), the 2005 Omnibus Incentive Plan (the 2005 Plan), and the Employee Stock Purchase Plan ("ESPP"). These plans provide that in the event of certain change in control transactions, including a merger or consolidation in which the Company is not the surviving corporation or a reorganization in which more than fifty-percent (50%) of the shares of the Company's common stock entitled to vote are exchanged, all outstanding, unvested equity awards under these plans will vest, and in the case of stock options, will become immediately exercisable.

As of December 31, 2013, there are no shares reserved for future grant under the Directors' Plan and the 1998 Plan. As of December 31, 2013, there are 4,497,990 shares reserved for future grant under the 2005 Plan. The Company's 2005 Plan provides for the grant of nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units, deferred stock units, performance shares, cash-based awards and other stock-based awards. Under the Company's 2005 Plan, the exercise price of stock options, the grant price of stock appreciation rights and the initial value of performance awards, must be equal to at least 100% of the fair market value of the Company's common stock on the date of grant. Stock options generally vest 28% after year one and 2% per month thereafter or 25% after year one and 6.25% every three months thereafter. Under the Company's 1998 Plan, the exercise price of options is not less than the fair market value of the Company's common stock on the date of grant. The number of shares, terms, and exercise period are determined by the board of directors on a grant-by-grant basis, and the exercise period does not extend beyond ten years from the date of the grant. Stock options generally vest 28% after one year and 2% or 3% per month thereafter or 25% after year one and 6.25% every three months thereafter.

Number of Shares Reserved for Future Issuance

0

2005 Plan

Number of Shares Reserved for Future Issuance

3,248,782

ESPP

Plan Description

As of December 31, 2013, the Company has four equity incentive plans: the 1994 Nonemployee Directors' Stock Option Plan (the Directors' Plan), the 1998 Stock Option Plan (the 1998 Plan), the 2005 Omnibus Incentive Plan (the 2005 Plan), and the Employee Stock Purchase Plan ("ESPP"). These plans provide that in the event of certain change in control transactions, including a merger or consolidation in which the Company is not the surviving corporation or a reorganization in which more than fifty-percent (50%) of the shares of the Company's common stock entitled to vote are exchanged, all outstanding, unvested equity awards under these plans will vest, and in the case of stock options, will become immediately exercisable.

On May 19, 2010, the shareholders approved an ESPP whereby qualified employees are allowed to purchase limited amounts of the Company's common stock at the lesser of 85% of the market price at the beginning or end of the offering period. The shareholders have authorized 500,000 shares for purchase by employees. During the years ended December 31, 2013, 2012 and 2011, employees purchased 72,937, 45,553 and 37,065 shares, respectively, under the ESPP. The Company has 329,585 shares available for future purchase as of December 31, 2013.

Number of Shares Authorized

500,000

Number of Shares Reserved for Future Issuance

329,585

Shares of Stock Issued under plan

72,937

45,553

37,065

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Net Income (Loss) Per Share (Narrative) (Details)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Anti-dilutive shares	7.2	8.0	8.3
Convertible Notes Payable
Anti-dilutive shares	3.0	3.0	4.7
Stock Options Restricted Stock And Restricted Stock Units
Anti-dilutive shares	4.1	5.0	3.6

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Fair Value Measurement (Tables)

12 Months Ended

Dec. 31, 2013

Notes to Financial Statements

Fair Value Measurement (Tables)

In accordance with the fair value hierarchy described above, the following table shows the fair value of the Company's financial assets (all marketable investment securities) that are required to be measured at fair value as of December 31, 2013 and December 31, 2012 (in thousands):

As of December 31, 2013:		Level 1		Level 2		Level 3		Total
Marketable investment securities	$	116,250	$	13,020	$	-	$	129,270

As of December 31, 2012:		Level 1		Level 2		Level 3		Total
Marketable investment securities	$	67,723	$	15,521	$	-	$	83,244

Fair and Carrying Value of Debt Instruments

The fair and carrying value of our debt instruments are detailed as follows (in thousands):

		As of December 31, 2013				As of December 31, 2012
	Fair		Carrying		Fair		Carrying
		Value		Value		Value		Value
5.75% Convertible Notes	$	92,338	$	16,545	$	28,131	$	16,545
Sensipar Notes		54,097		54,395		79,129		80,234
PTH 1-84-Secured Debt		50,058		42,790		28,605		42,816
Regpara-Secured Debt		37,348		35,202		48,887		36,252
Total	$	233,841	$	148,932	$	184,752	$	175,847

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Collaborative and License Agreements (Tables)

12 Months Ended

Dec. 31, 2013

Collaborative And License Agreements Tables

Revenues from Takeda related to the Preotact agreement

Revenues from Takeda related to the Preotact agreement, for the years ended December 31, are as follows (in thousands):

		2012		2011		2010
Royalties	$	4,786	$	9,116	$	9,467
Product sales		-		-		452
Total revenues	$	4,786	$	9,116	$	9,919

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Long-term Debt (Details 1) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Long-Term Debt Details 1
Dec. 31, 2013	$ 16,545	$ 16,545
Non-recourse debt	132,387	159,302
Total debt	148,932	175,847
Less current portion	25,297	6,278
Total long-term debt	$ 123,635	$ 169,569

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Fair Value Measurement (Securities) (Details 1) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Marketable investment securities	$ 129,270	$ 83,244
Level 1
Marketable investment securities	116,250	67,723
Level 2
Marketable investment securities	13,020	15,521
Level 3
Marketable investment securities	$ 0	$ 0

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Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2013

Notes to Financial Statements

Marketable investment securities

The following is a summary of the Company's marketable investment securities (in thousands):

				Gross		Gross
				unrealized		unrealized
		Amortized		holding		holding		Fair
As of December 31, 2013:		cost		gains		losses		value
Debt securities:
Corporate	$	103,175	$	23	$	(60)	$	103,138
Government agency		26,110		22		-		26,132
Total marketable investment securites	$	129,285	$	45	$	(60)	$	129,270

				Gross		Gross
				unrealized		unrealized
		Amortized		holding		holding		Fair
As of December 31, 2012:		cost		gains		losses		value
Debt securities:
Corporate	$	50,822	$	3	$	(31)	$	50,794
Government agency		32,444		10		(4)		32,450
Total marketable investment securites	$	83,266	$	13	$	(35)	$	83,244

Marketable investment securities available for sale in an unrealized loss position

Marketable investment securities available for sale in an unrealized loss position as of December 31, 2013 and 2012 are summarized as follows (in thousands):

		Held for less than 12 months				Held for more than 12 months				Total
				Unrealized				Unrealized				Unrealized
		Fair value		losses		Fair value		losses		Fair value		losses
December 31, 2013
Available for Sale:
Debt securities:
Corporate	$	74,407	$	56	$	5,732	$	4	$	80,139	$	60
Government agency		-		-		-		-		-		-
	$	74,407	$	56	$	5,732	$	4	$	80,139	$	60
December 31, 2012
Available for Sale:
Debt securities:
Corporate	$	37,974	$	31	$	-	$	-	$	37,974	$	31
Government agency		7,110		4		-		-		7,110		4
	$	45,084	$	35	$	-	$	-	$	45,084	$	35

Maturities of marketable investment securities

Summary of Contractual Maturities

Maturities of marketable investment securities are as follows at December 31, 2013 and December 31, 2012 (in thousands):

		As of December 31, 2013				As of December 31, 2012
		Amortized				Amortized
		cost		Fair value		cost		Fair value
Due within one year	$	103,280	$	103,266	$	65,637	$	65,632
Due after one year through five years		26,005		26,004		17,629		17,612
Due after five years through ten years		-		-		-		-
Due after ten years		-		-		-		-
Total debt securities	$	129,285	$	129,270	$	83,266	$	83,244

Proceeds from maturities and sales of available for sale securities and resulting gain and losses

The proceeds from maturities and sales of available for sale securities and resulting realized gains and losses, were as follows (in thousands):

		For the Years Ended December 31,
		2013		2012		2011
Proceeds from sales and maturities	$	107,871	$	119,507	$	86,668
Realized gains		4		4		-
Realized losses		-		-		-

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Property and Equipment, Net (Tables)

12 Months Ended

Dec. 31, 2013

Property And Equipment Net Tables

Property and equipment (Tables)

Property and equipment is recorded at cost and consists of the following (in thousands):

		December 31,
		2013		2012
Office Equipment	$	5,519	$	4,379
Laboratory Equipment		216		216
Leasehold Improvements		2,023		1,795
Total property and equipment		7,758		6,390
Less accumulated depreciation		(3,356)		(2,197)
Total equipment, net	$	4,402	$	4,193

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Condensed Consolidated Statements of Cash Flows (Parenthetical)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Statement of Cash Flows [Abstract]
6.1 million shares of NPS common stock issued	6.1	0	0

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Leases (Tables)

12 Months Ended

Dec. 31, 2013

Leases Tables

Leases (Tables)

The future lease payments under non-cancelable operating leases as of December 31, 2013 are as follows (in thousands):

		Operating
		leases
Year ending December 31:
2014	$	1,992
2015		1,910
2016		1,287
2017		-
2018		-
Total minimum lease payments	$	5,189

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Summary of Significant Accounting Policies (Sales Related Deductions Activity) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Activity of Sales Related Deductions [Roll Forward]
Balance	$ 1,501	$ 0
Provision related to current period sales	2,805
Credits/payments	(1,304)
Rebates and Chargebacks
Activity of Sales Related Deductions [Roll Forward]
Balance	1,113	0
Provision related to current period sales	1,375
Credits/payments	(262)
Distribution Related Fees
Activity of Sales Related Deductions [Roll Forward]
Balance	147	0
Provision related to current period sales	332
Credits/payments	(185)
Returns and Other Sales Related Deductions
Activity of Sales Related Deductions [Roll Forward]
Balance	241
Provision related to current period sales	1,098
Credits/payments	$ (857)

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Property and Equipment, Net (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Property And Equipment Net Details
Office Equipment	$ 5,519	$ 4,379
Laboratory Equipment	216	216
Leasehold Improvements	2,023	1,795
Total property and equipment	7,758	6,390
Less accumulated depreciation	(3,356)	(2,197)
Total equipment, net	$ 4,402	$ 4,193

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Income Taxes (Tax Effects of Temporary Differences That Give Rise to Deferred Tax Assets) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Income Taxes Tax Effects Of Temporary Differences That Give Rise To Deferred Tax Assets Details
Net operating loss carryforward	$ 132,101	$ 140,416
Research credit carryforward	68,277	49,960
Capital loss carryforward	4,186	4,169
Non-recourse debt	27,769	32,619
Acquired intellectal property	29,452	29,287
Capitalization of inventory	9,429	13,146
Stock compensation expense	2,935	5,631
Accrued compensation	3,117	2,105
Other	555	273
Total gross deferred tax assets	277,821	277,606
Less valuation allowance	(277,821)	(277,606)
Deferred tax assets	0	0
Deferred tax liabilities	0	0
Net deferred tax asset (liability)	$ 0	$ 0

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Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Current assets
Cash and cash equivalents	$ 51,204	$ 17,471
Marketable investment securities	129,270	83,244
Accounts receivable	41,242	30,276
Inventory	30,035	0
Prepaid expenses	5,621	4,317
Other current assets	1,380	1,743
Total current assets	258,752	137,051
Property and equipment, net	4,402	4,193
Goodwill	9,429	9,429
Intangibles, net	19,301	0
Debt issuance costs, net	338	436
Total assets	292,222	151,109
Current Liabilities
Accounts payable	10,919	4,373
Accrued expenses and other current liabilities	17,037	9,297
Accrued research and development expenses	3,541	5,636
Accrued interest expense	1,620	3,983
Convertible notes payable	16,545	0
Current portion of non-recourse debt	8,752	6,278
Total current liabilities	58,414	29,567
Non-recourse debt, less current portion	123,635	153,024
Convertible notes payable	0	16,545
Other liabilities	5,283	6,614
Total liabilities	187,332	205,750
Commitments and contingencies (notes 6 and 8)
Stockholders' equity (deficit):
Preferred stock, $0.001 par value. Authorized 5,000,000 shares; issued and outstanding no shares	0	0
Common stock, $0.001 par value. Authorized 175,000,000 shares; issued and outstanding 102,613,780 shares and 86,799,049 shares, respectively	103	87
Additional paid-in capital	1,127,420	954,452
Accumulated other comprehensive income	56	5
Accumulated deficit	(1,022,689)	(1,009,185)
Total stockholders' equity (deficit)	104,890	(54,641)
Total liabilities and stockholders' equity (deficit)	$ 292,222	$ 151,109

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Fair Value Measurement (Debt Instruments) (Details 2) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Debt instruments, fair value	$ 233,841	$ 184,752
Debt instruments, carrying value	148,932	175,847
Convertible Notes
Debt instruments, fair value	92,338	28,131
Debt instruments, carrying value	16,545	16,545
Sensipar Notes
Debt instruments, fair value	54,097	79,129
Debt instruments, carrying value	54,395	80,234
PTH 1-84-(Europe, CIS and Turkey)-Secured Debt
Debt instruments, fair value	50,058	28,605
Debt instruments, carrying value	42,790	42,816
Regpara-Secured Debt
Debt instruments, fair value	37,348	48,887
Debt instruments, carrying value	$ 35,202	$ 36,252

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Consolidated Statements of Stockholders' Deficit (USD $) In Thousands, except Share data	Preferred Stock	Common Stock	Additional Paid-In Capital	Accumulated Other Comprehensive (Loss) Income	Accumulated Deficit	Total
Beginning balances at Dec. 31, 2010		$ 67	$ 798,840	$ 1	$ (954,183)	$ (155,275)
Beginning balances, shares at Dec. 31, 2010		66,986,940
Stock options exercised			1,130			1,130
Stock options exercised, shares		257,435
Compensation expense on share-based awards			4,100			4,100
Net proceeds from sale of shares		13	107,020			107,033
Net proceeds from sale of shares, shares		12,687,065
Conversion of 5.75% convertible notes		6	33,254			33,260
Conversion of 5.75% convertible notes, shares		6,149,727
Other comprehensive income (loss)				(97)		(97)
Net loss					(36,267)	(36,267)
Ending balances at Dec. 31, 2011		86	944,344	(96)	(990,450)	(46,116)
Ending balances, shares at Dec. 31, 2011		86,081,167
Stock options exercised		1	2,407			2,408
Stock options exercised, shares		481,058
Shares issued for services rendered			149			149
Shares issued for services rendered, shares		171,271
Compensation expense on share-based awards			7,298			7,298
Net proceeds from sale of shares			254			254
Net proceeds from sale of shares, shares		45,553
Other comprehensive income (loss)				101		101
Net loss					(18,735)	(18,735)
Ending balances at Dec. 31, 2012		87	954,452	5	(1,009,185)	(54,641)
Ending balances, shares at Dec. 31, 2012		86,779,049
Stock options exercised		3	14,528			14,531
Stock options exercised, shares		2,521,764				(2,522,000)
Restricted stock vesting		0	339			339
Restricted stock vesting, shares		211,389
Compensation expense on share-based awards			8,480			8,480
Excess tax benefit from stock options			178			178
Stock issued in connection with the Takeda Termination and Transition agreement		6	55,397			55,403
Stock issued in connection with the Takeda Termination and Transition agreement, shares		6,128,641
Net proceeds from sale of shares		7	94,046			94,053
Net proceeds from sale of shares, shares		6,972,937
Other comprehensive income (loss)				51		51
Net loss					(13,504)	(13,504)
Ending balances at Dec. 31, 2013		$ 103	$ 1,127,420	$ 56	$ (1,022,689)	$ 104,890
Ending balances, shares at Dec. 31, 2013		102,613,780

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Takeda Termination and Transition Agreement (Narrative) (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Mar. 31, 2013
Takeda Termination And Transition Agreement Narrative Details
Shares of Common Stock issued	6.1	0	0
Value of Common Stock issued	$ 54,900,000
Future milestone payment in cash or common stock	30,000,000
Milestone payment trigger amount on worldwide net sales	750,000,000
Assets acquired:
Revestive raw materials	16,600,000	0		16,600,000
PTH raw materials	17,100,000	0		17,100,000
Revestive product rights	20,700,000
Estimated useful life of agreement	12 years
Revestive products rights amortization expense	1,400,000
Estimated annual amortization for each of the next five years	$ 1,800,000

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2013

Income Taxes Tables

Components of loss before income taxes, domestic and foreign

The components of loss before income taxes for the years ended December 31, 2013, 2012 and 2011 includes the following (in thousands):

		Years ended December 31,
		2013		2012		2011
United States	$	(9,748)	$	(18,735)	$	(36,249)
Foreign		(3,574)		-		-
Loss before income taxes	$	(13,322)	$	(18,735)	$	(36,249)

Reconciliation of U.S. statutory income tax rate to company's effective tax rate

Income tax differed from the amounts computed by applying the U.S. federal income tax rate of 34% to loss before income tax expense (benefit) as a result of the following (in thousands):

		Years ended December 31,
		2013		2012		2011
Computed "expected" tax benefit	$	(4,529)	$	(6,370)	$	(12,325)
Expiration of tax attributes		-		-		360
IRC §382 adjustment		6,575		59,822		94,442
Change in the valuation allowance for deferred tax assets
attributable to operations and other adjustments		2,840		(42,124)		(70,514)
U.S. and foreign credits		(12,237)		(10,231)		(11,732)
State income taxes, net of federal tax effect		182		-		-
Equity based compensation expense		678		513		578
Intellectual property		5,440		-		-
Foreign tax rate differences		940		-		-
Other		293		(1,610)		(791)
	$	182	$	-	$	18

Schedule of tax effects of temporary differences that give rise to deferred tax assets and liabilities

The tax effects of temporary differences that give rise to the deferred tax assets at December 31, 2013 and 2012 are presented below (in thousands):

		2013		2012
Deferred tax assets:
Net operating loss carryforward	$	132,101	$	140,416
Research credit carryforward		68,277		49,960
Capital loss carryforward		4,186		4,169
Non-recourse debt		27,769		32,619
Acquired intellectual property		29,452		29,287
Capitalization of inventory		9,429		13,146
Stock compensation expense		2,935		5,631
Accrued compensation		3,117		2,105
Other		555		273
Total deferred tax assets		277,821		277,606
Less valuation allowance		(277,821)		(277,606)
Deferred tax assets		-		-
Deferred tax liabilities		-		-
Net deferred tax asset (liability)	$	-	$	-

Reconciliation of beginning and ending amount of unrecognized tax benefits

A reconciliation of the beginning and ending amounts of gross unrecognized tax benefits (excluding interest and penalties) is as follows (in thousands):

	Unrecognized
		Tax Benefits
Balance as of January 1, 2012	$	4,614
Additions for current year tax positions		-
Reductions for prior year tax positions		-
Balance as of December 31, 2012		4,614
Additions for current year tax positions		-
Reductions for prior year tax positions		(677)
Balance as of December 31, 2013	$	3,937

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Share-Based Compensation Plans (Option Assumptions Used in Black-Scholes) (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Share-Based Compensation Plans Option Assumptions Used In Black-Scholes Details
Dividend yield	$ 0	$ 0	$ 0
Expected volatility, minimum	59.15%	61.22%	60.50%
Expected volatility, maximum	60.69%	67.58%	67.80%
Risk-free interest rate, minimum	0.70%	0.60%	0.90%
Risk-free interest rate, maximum	3.70%	1.10%	3.00%
Expected term, in years, minimum	5 years 73 days	5 years 37 days	4 years 292 days
Expected term, in years, maximum	6 years	5 years 329 days	5 years 329 days

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Employee Benefit Plans - Note 14

12 Months Ended

Dec. 31, 2012

Employee Benefit Plans Disclosure

Employee Benefit Plans - Note 14

(14) Employee Benefit Plans

The Company maintains a tax-qualified employee savings and retirement plan (401(k) Plan) covering all of the Company's employees in the United States. Pursuant to the 401(k) Plan, employees may elect to reduce their current compensation up to the maximum percent allowable, not to exceed the limits of code section 401(k), 403(b), 404 and 415, of eligible compensation or the prescribed IRS annual limit and have the amount of such reduction contributed to the 401(k) Plan. The 401(k) Plan permits, but does not require, additional matching contributions to the 401(k) Plan by the Company on behalf of all participants. During the years ended December 31, 2013, 2012 and 2011, the Company matched 100% of employee contributions up to 3% of employee pre-tax contributions and 50% of employee contribution on the next 3% of employee pre-tax contributions. The Company recorded an expense associated with these matching contributions for the years ended December 31, 2013, 2012, and 2011 of $1.1 million, $620,000 and $432,000, respectively.

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Selected Quarterly Financial Data (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2013

Selected Quarterly Financial Data Tables

Selected Quarterly Financial Data (Unaudited) (Tables)

The following is a summary of the quarterly results of operations for the years ended December 31, 2013 and 2012 (in thousands, except for per share amounts):

	Quarters Ended
	March 31		June 30		September 30		December 31
(in thousands, except per share amounts)
2013
Revenues	$	25,434	$	36,505	$	39,202	$	54,451
Operating (loss) income		(4,531)		(9,321)		1,769		10,588
Net (loss) income		(7,796)		(12,389)		(1,087)		7,768
Basic (loss) income per common share	$	(0.09)	$	(0.13)	$	(0.01)	$	0.08
Diluted (loss) income per common
and potential common share	$	(0.09)	$	(0.13)	$	(0.01)	$	0.07
2012
Revenues	$	22,924	$	53,517	$	27,019	$	27,184
Operating (loss) income		(5,045)		11,206		733		(8,018)
Net (loss) income		(10,563)		7,355		(3,324)		(12,203)
Basic (loss) income per common share	$	(0.12)	$	0.08	$	(0.04)	$	(0.14)
Diluted (loss) income per common
and potential common share	$	(0.12)	$	0.08	$	(0.04)	$	(0.14)

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Commitment and Contingencies - Note 16

12 Months Ended

Dec. 31, 2013

Commitments and Contingencies Disclosure

Commitments and Contingencies

(16) Commitments and Contingencies

The Company has agreed to indemnify, under certain circumstances, certain manufacturers and service providers from and against any and all losses, claims, damages or liabilities arising from services provided by such manufacturers and service providers or from any use, including clinical trials, or sale by the Company or any Company agent of any product supplied by the manufacturers.

The Company has contractual commitments of $15.9 million with external marketing, commercial readiness and market research organizations relating to pre-launch activities for Revestive and Natpara. These agreements are cancellable on notice of up to six months. The Company also has approximately $29.5 million in contractual commitments for other service agreements with varying terms and conditions.

The Company has entered into long-term agreements with various third-party contract manufacturers for the production and packaging of drug substance and drug product. Under the terms of these various contracts, the Company will be required to purchase certain minimum quantities of drug product each year.

The Company has contractual commitments of $26.1 million for drug substance, drug product and other manufacturing processes as of December 31, 2013 for the manufacture of clinical and commercial supplies of Gattex/Revestive and Natpara. Amounts owed to third- party contract manufacturers are based on firm commitments for the purchase of drug product. Amounts purchased under contractual inventory commitments from third-party contract manufacturers for the years ended December 31, 2013, 2012 and 2011 were $15.0 million, $25.9 million and $14.5 million, respectively.

In December 2009, the Company sold a majority interest in its subsidiary, Allelix, to a group of investors ("Investors"). NPS received $5.6 million in connection with the transactions in 2009. NPS is entitled to receive an additional Canadian. $4.8 million, which would only be paid upon further investment in Allelix by the Investors, which would be expected to occur upon the successful completion of certain Canadian court proceedings. In connection with the transaction, the Company has indemnified the Investors for various items including product liabilities arising from the past operations of Allelix and has guaranteed that certain tax attributes exist as of the closing date. The maximum potential future payments related to these indemnifications or guarantees shall not exceed the amounts the Company has received in connection with the transaction ($5.5 million at December 31, 2013).

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Stock-Based Compensation Plans (Stock Option Narrative) (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Stock-Based Compensation Plans Stock Option Narrative Details
Weighted-average grant-date fair value of options granted	$ 5.66	$ 4.46	$ 4.57
Total intrinsic value of stock options exercised	$ 33,400	$ 2,000	$ 1,000

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Condensed Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Cash flows from operating activities:
Net loss	$ (13,504)	$ (18,735)	$ (36,267)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	2,630	1,083	462
Accretion of premium (discount) on marketable investment securities	2,956	2,005	1,379
Shares issued for payment of services	549	0	0
Non-cash interest expense	10,982	17,239	18,115
Non-cash royalties	(39,804)	(55,993)	(57,467)
Realized gain on sale of marketable investment securities	(4)	(4)	0
Loss on disposal of equipment	41	0	0
Loss on extinguishment of debt	0	0	646
Compensation expense on share-based awards	9,437	7,548	4,100
(Increase) decrease in operating assets:
Accounts receivable	(11,324)	(16,010)	18,663
Inventory	3,663	0	0
Prepaid expenses, other current assets and other assets	(466)	1,803	(2,948)
(Decrease) increase in operating liabilities:
Accounts payable and accrued expenses	11,859	1,321	(3,425)
Other liabilities	(1,331)	(1,249)	84
Net cash used in operating activities	(24,316)	(60,992)	(56,658)
Cash flows from investing activities:
Sales of marketable investment securities	11,850	7,628	240
Maturities of marketable investment securities	96,021	111,879	86,428
Purchases of marketable investment securities	(156,842)	(124,809)	(111,380)
Acquisitions of property and equipment	(1,142)	(1,187)	(3,407)
Net cash used in investing activities	(50,113)	(6,489)	(28,119)
Cash flows from financing activities:
Proceeds from issuance of non-recourse debt	0	0	145,000
Principal payments on debt	0	0	(213,848)
Excess tax benefit from stock options	178	0	0
Payment of debt issuance costs	0	0	(96)
Net proceeds from the sale of common stock and exercise of stock options	107,940	2,561	108,163
Decrease in restricted cash and cash equivalents	0	0	50,784
Net cash provided by financing activities	108,118	2,561	90,003
Effect of exchange rate changes on cash	44	(10)	5
Net increase (decrease) in cash and cash equivalents	33,733	(64,930)	5,231
Cash and cash equivalents at beginning of period	17,471	82,401	77,170
Cash and cash equivalents at end of period	51,204	17,471	82,401
Supplemental Disclosures of Cash Flow Information
Cash paid for interest	952	954	27,109
Cash paid for income taxes	4	0	0
Supplemental Disclosure of Non-cash Investing and Financing Activities
6.1 million shares of NPS common stock issued in connection with the Takeda Termination and Transition agreement, see note 10	55,403	0	0
Unrealized gains (losses) on marketable investment securities	7	111	(102)
Accrued acquisition of equipment	428	96	353
Noncash principal payments	26,915	52,050	19,899
Conversion of 5.75% convertible notes	$ 0	$ 0	$ 33,260

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $)	Dec. 31, 2013	Dec. 31, 2012
Stockholders' deficit
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	175,000,000	175,000,000
Common stock, shares issued	102,613,780	86,779,049
Common stock, shares outsatnding	102,613,780	86,779,049

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Long-term Debt - Note 9

12 Months Ended

Dec. 31, 2013

Long-Term Debt Disclosure

Long-Term Debt

(9) Long-term Debt

The following table reflects the carrying value of our long-term debt under various financing arrangements as of December 31, 2013 and 2012 (in thousands):

		December 31,
		2013		2012
Convertible notes	$	16,545	$	16,545
Non-recourse debt		132,387		159,302
Total debt		148,932		175,847
Less current portion		25,297		6,278
Total long-term debt	$	123,635	$	169,569

(a) Convertible Notes

In August 2007, the Company completed a private placement of $50.0 million in 5.75% Convertible Notes due August 7, 2014 (5.75% Convertible Notes). The Company received net proceeds from the 5.75% Convertible Notes of approximately $49.4 million, after deducting costs associated with the offering. The 5.75% Convertible Notes accrue interest at an annual rate of 5.75% payable quarterly in arrears on the first day of the succeeding calendar quarter commencing January 1, 2008. As of December 31, 2013, the Company classified the 5.75% Convertible Notes as current debt. Accrued interest on the 5.75% Convertible Notes was $0 as of December 31, 2013 and 2012, respectively. The holders may convert all or a portion of the 5.75% Convertible Notes into common stock at any time, subject to certain limitations, on or before August 7, 2014. The 5.75% Convertible Notes are convertible into common stock at a conversion price of $5.44 per share (see below), subject to adjustments in certain events. The 5.75% Convertible Notes are unsecured debt obligations and rank equally in right of payment with all existing and future unsecured senior indebtedness. The 5.75% Convertible Notes provide for certain events of default, including payment defaults, breaches of covenants and certain events of bankruptcy, insolvency and reorganization. The 5.75% Convertible Notes also provide that if there shall occur a fundamental change, as defined, at any time prior to the maturity of the Note, then the holder shall have the right, at the Holder's option, to require the Company to redeem the notes, or any portion thereof plus accrued interest and liquidated damages, if any. If a change of control, as defined, occurs and if the holder converts notes in connection with any such transaction, the Company will pay a make whole premium by increasing the conversion rate applicable to the notes. If any event of default occurs and is continuing, the principal amount of the 5.75% Convertible Notes, plus accrued and unpaid interest, if any, may be declared immediately due and payable. The Company incurred debt issuance costs of approximately $600,000, which have been deferred and which are being amortized over a seven-year period. The effective interest rate on the 5.75% Convertible Notes, including debt issuance costs, is 5.9%.

On January 31, 2011 and April 14, 2011, certain holders of the 5.75% Convertible Notes converted portions of the outstanding notes at a conversion price of $5.44 per share. The Company issued 529,282 and 5,620,445 shares on January 31, 2011 and April 14, 2011, respectively, pursuant to this conversion and retired $2.9 million and $30.6 million, respectively, of the outstanding 5.75% Convertible Notes. The Company has $16.5 million of the 5.75% Convertible Notes outstanding as of December 31, 2013.

Pursuant to the Registration Rights Agreement, the Company has filed a shelf registration statement with the SEC, covering resales of the common stock issuable upon conversion of the 5.75% Convertible Notes. The registration statement has been declared effective. The Company agreed to use its reasonable best efforts to keep the registration statement effective until the earlier of (i) the date as of which holders may sell all of the securities covered by the registration statement without restriction pursuant to Rule 144(k) promulgated under the Securities Act of 1933 or (ii) the date on which holders shall have sold all of the securities covered by the registration statement. If the Company fails to comply with these covenants or suspends use of the registration statement for periods of time that exceed what is permitted under the Registration Rights Agreement, the Company is required to pay liquidated damages in an amount equivalent to 1% per annum of (a) the principal amount of the notes outstanding, or (b) the conversion price of each underlying share of common stock that has been issued upon conversion of a note, in each case, until the Company is in compliance with these covenants. The Company believes the likelihood of such an event occurring is remote and, as such, the Company has not recorded a liability as of December 31, 2013.

(b) Non-recourse Debt

Sensipar and Mimpara-secured Non-recourse Debt

As of December 31, 2013 and 2012, the outstanding principal balances on Sensipar and Mimpara-secured debt were $54.4 million and $80.2 million, respectively. The Sensipar and Mimpara-secured debt is non-recourse to the Company and solely secured and serviced by its Sensipar and Mimpara (cinacalcet HCl) royalty revenues and milestone payments. The Sensipar and Mimpara-secured non-recourse debt relates to the following royalty monetization transactions: (i) the private placement of $175.0 million in non-recourse 8.0% Notes due March 30, 2017 (Class A Notes), (ii) the private placement of $100.0 million in non-recourse 15.5% Notes due March 30, 2017 (Class B Notes), and (iii) the amendment of the Company's agreement with Amgen in August 2011.

The Class A Notes were paid in full on March 30, 2011 and the Class B Notes were paid in full on September 30, 2011 when they were redeemable at their par value.

The Company amended its agreement with Amgen effective September 30, 2011 whereby Amgen advanced $145.0 million of Sensipar and Mimpara royalties to the Company. The Sensipar Notes accrue interest at an annual rate of 9%, compounded quarterly and payable forty-five days after the close of each quarter. The payment of the royalty advance and discount shall be satisfied solely by Amgen's withholding of royalties and except in the event of a breach of certain customary representations and warranties under the agreement, the Company will have no obligation to repay any unsettled amount. The Company further amended the agreement with Amgen effective June 29, 2012, limiting the royalty offset of the royalty advance up to $8.0 million per quarter with royalties in excess of $8.0 million paid to the Company for the respective quarter, thereby extending the royalty advance repayment period. After the payment of the royalty advance and a 9 percent per annum discount on the balance of the advance, Amgen will resume paying NPS all royalties earned through December 31, 2018. As of December 31, 2013, the Company classified $6.8 million of the Sensipar Notes as current based on royalty payments accrued as of December 31, 2013. The Sensipar Notes are non-recourse to the Company. The outstanding principal balance on the Sensipar Notes, was $54.4 million and $80.2 million as of December 31, 2013 and 2012, respectively. Accrued interest on the Sensipar Notes was approximately $592,000 and $874,000 as of December 31, 2013 and 2012, respectively. The Company incurred debt issuance costs of $96,000, which are being amortized using the effective interest method. The effective interest rate on the Sensipar Notes, including debt issuance costs, is approximately 9%.

Under the Company's agreement for the Sensipar Notes, the Company would potentially be liable for its breaches or defaults, if any.

PTH 1-84-secured Non-recourse Debt

As of December 31, 2013 and 2012, the outstanding principal balances on the PTH 1-84-secured debt were $42.8 million, respectively. In July 2007, the Company entered into an agreement with DRI Capital, or DRI, formerly Drug Royalty L.P.3, in which the Company sold to DRI its right to receive future royalty payments arising from sales of recombinant human parathyroid hormone 1-84 [rDNA origin] ("PTH") under its license agreement with Takeda. Under the agreement, DRI paid the Company an up-front purchase price of $50.0 million. If and when DRI receives two and a half times the amount paid to the Company, the agreement will terminate and the remainder of the royalties, if any, will revert back to the Company. In connection with the Company's July 2007 agreement with DRI, the Company granted DRI a security interest in its license agreement with Takeda for Preotact and certain of its patents and other intellectual property underlying that agreement. In the event of a default by NPS under the agreement with DRI, DRI would be entitled to enforce its security interest against NPS and the property described above.

In December 2013, the Company entered into an amendment and restatement (the "Amendment and Restatement") to its agreement with DRI. Pursuant to the Termination and Transition Agreement between NPS and Takeda (See note 10), NPS' license agreement with Takeda was terminated and NPS re-acquired exclusive rights worldwide, excluding Israel, to develop and commercialize PTH. Preotact is the brand name that Takeda had used to market PTH for the treatment of osteoporosis in certain of its licensed territories. NPS is developing PTH in the U.S. under the trade name Natpara for the treatment of hypoparathyroidism. NPS filed a BLA for Natpara with the FDA in October 2013.

Pursuant to the Amendment and Restatement, (i) DRI has consented to the commercialization of PTH by the Company, (ii) the terms of the 2007 Agreement are tolled, and (iii) the parties' rights and obligations regarding PTH and related technology are governed by the Amendment and Restatement.

The Company will be required to pay royalties in the mid-single digits to DRI based upon sales of PTH by the Company and its licensees (if any) worldwide, excluding Israel. The Company has agreed to undertake certain efforts to commercialize PTH. If the Company does not submit a Marketing Authorization Application to the European Medicines Agency for PTH in the European Union by an agreed upon date, DRI will have the right to revoke the consent granted in the Amendment and Restatement, reinstate the 2007 Agreement, and either cause the Company to enter into a new license agreement with a third party with respect to PTH on terms that are substantially similar and no more extensive (when taken as a whole) than the terms contained in the terminated Takeda License Agreement, or negotiate such an agreement on NPS' behalf.

The Company's obligation to pay royalties to DRI under the Amendment and Restatement shall expire on a country-by-country basis upon the later of (i) the last to expire patent controlled by the Company with claims covering PTH in such country or (ii) the expiration of any period of regulatory exclusivity applicable to PTH in such country. The Company's obligation to pay royalties to DRI under the Amendment and Restatement shall terminate in its entirety once cumulative royalty payments made to DRI by Takeda and the Company total $125.0 million. As of December 31, 2013, $45.5 million in royalties had been paid to DRI.

DRI continues to maintain a security interest in NPS patents that contain claims covering PTH and certain other NPS intellectual property related to PTH. In the event of a default by NPS under the Amendment and Restatement, DRI would be entitled to enforce its security interest against NPS and such intellectual property.

The Company determined the initial up-front purchase price is debt and is being amortized into earnings using the effective interest method over the estimated life. Accrued interest under the DRI agreement was $0 as of December 31, 2013 and 2012, respectively. The repayment of the remaining $42.8 million is secured solely by future royalty payments arising from sales of PTH by the Company. The PTH- secured debt is non-recourse to the Company.

REGPARA-secured Non-recourse Debt

As of December 31, 2013 and 2012, the outstanding principal balances on REGPARA-secured debt were $35.2 million and $36.3 million, respectively. In February 2010, the Company entered into an agreement with an affiliate of DRI, in which the Company sold to DRI its right to receive future royalty payments arising from sales of REGPARA^® (cinacalcet HC1) under its license agreement with Kyowa Hakko Kirin. Under the agreement, DRI paid the Company an up-front purchase price of $38.4 million. If and when DRI receives two and a half times the amount paid to the Company, the agreement will terminate and the remainder of the royalties, if any, will revert back to the Company. In connection with the Company's February 2010 agreement with DRI, the Company granted DRI a security interest in its license agreement with Kyowa Hakko Kirin for REGPARA and certain of its patents and other intellectual property underlying that agreement. In the event of a default by NPS under the agreement with DRI, DRI would be entitled to enforce its security interest against NPS and the property described above. The Company determined the initial up-front purchase price is debt and is being amortized into earnings using the effective interest method over the estimated life of approximately 11 years. In accordance with the agreement, on March 1, 2010, DRI received the $2.1 million royalty owed to NPS for REGPARA sales during the six months ended December 31, 2009, which reduced the liability recorded for the DRI transaction to $36.3 million. As of December 31, 2013 and 2012, the Company classified $1.9 million and $0, respectively, of the REGPARA-secured debt as current based on royalty payments accrued as of December 31, 2013 and 2012, respectively. Accrued interest under the DRI agreement was $1.1 million and $3.1 million as of December 31, 2013 and 2012, respectively. Through December 31, 2013, $27.9 million has been paid to DRI. The repayment of the remaining $35.2 million is secured solely by future royalty payments arising from sales of REGPARA by Kyowa Hakko Kirin. The effective interest rate under the agreement, including issuance costs, is approximately 15.7%. The REGPARA-secured debt is non-recourse to the Company.

(c) Contractual maturities of long-term debt

The aggregate contractual maturities of long-term debt, including estimated maturities of the Non-recourse Debt, due subsequent to December 31, 2013 are as follows (in thousands):

Year ending December 31:
2014	$	48,909
2015		31,334
2016		5,005
2017		4,648
2018		18,948
Thereafter		40,088
Total long-term debt	$	148,932

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Document and Entity Information (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Feb. 11, 2014	Jun. 30, 2013
Document And Entity Information
Entity Registrant Name	NPS PHARMACEUTICALS INC
Entity Central Index Key	0000890465
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	FY
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		102,801,552
Entity Public Float			$ 1,540,963,266

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Takeda Termination and Transition Agreement - Note 10

12 Months Ended

Dec. 31, 2013

Takeda Termination and Transition Agreement Disclosure

Termination and Transition Agreement

(10) Takeda Termination and Transition Agreement

On March 18, 2013, the Company entered into a Termination and Transition Agreement (the Agreement), with Takeda GmbH (Takeda GmbH), and Takeda Pharma A/S (Takeda Pharma and, together with Takeda GmbH, Takeda).

The Agreement provides for the termination of the license agreement, dated July 2, 2007, as amended, which granted Takeda Pharma the exclusive license to sell, market and commercialize recombinant human parathyroid hormone 1-84 [rDNA origin] (rhPTH 1-84) worldwide, except for the U.S., Israel, and Japan, and a non-exclusive license to manufacture and develop rhPTH 1-84 (the rhPTH 1-84 License Agreement). Pursuant to the rhPTH 1-84 License Agreement the rights were returned to the Company without consideration. Preotact is the brand name that Takeda Pharma has used to market rhPTH 1-84 for the treatment of osteoporosis in certain of its licensed territories. The Company is developing rhPTH 1-84 in the U.S. under the trade name Natpara for the treatment of hypoparathyroidism.

The Agreement also provides for the termination of the license agreement, dated September 24, 2007, as amended, which granted Takeda GmbH the exclusive license to develop and commercialize teduglutide worldwide, except for North America and Israel (the Revestive License Agreement). Takeda GmbH developed and obtained approval in the EU in August 2012 for teduglutide under the trade name Revestive for the treatment of Short Bowel Syndrome (SBS) in adults. The Company obtained U.S. Food and Drug Administration approval in the U.S. in December 2012 for teduglutide under the trade name Gattex for adult patients with SBS who are dependent on parenteral support. As a result of the termination of the License Agreements, the Company now has the exclusive rights worldwide to develop and commercialize teduglutide and PTH, except as noted in Note 9.

Takeda assigned to NPS its assets related to the two products, including all of its active pharmaceutical ingredient inventory and information related to the products' continued development, manufacture, and commercialization, including life cycle management assets. Takeda received 6.1 million shares of NPS common stock that were valued at $54.9 million as of the date of the transaction. Takeda will also earn a $30.0 million milestone payment in the first calendar year that combined worldwide net sales of both products exceed $750 million. This milestone includes an early payment trigger upon a qualified change of control. NPS has the option of making this milestone payment in cash or NPS common stock.

The Company engaged an independent valuation firm to assist it in determining the fair value of the assets acquired. Using these fair values, the Company assigned $16.6 million to the Revestive active pharmaceutical ingredient (API), $17.1 million to the PTH API and $20.7 million to the Revestive product rights. The Company capitalized the Revestive and PTH API as inventory and capitalized the product rights to intangibles, net on the Company's balance sheet due to the fact that Revestive and Preotact are approved in the EU for SBS and Osteoporosis, respectively. The Company is amortizing the Revestive product rights on a straight-line basis over the estimated useful life of approximately 12 years. Through December 31, 2013, $1.4 million of the Revestive products rights have been amortized and expensed. The estimated amortization expense for each of the next five years is approximately $1.8 million.

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Commitments and Contingencies (Narrative 3) (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2013
Commitments And Contingencies Narrative 3 Details
Future payments related to indemnifications or guaraantees, maximum	$ 5.5

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Condensed Consolidated Statements of Operations (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Revenues:
Product sales, net	$ 31,752	$ 0	$ 99
Royalties	123,804	105,587	96,502
Sale of royalty rights	0	25,000	0
Other	36	57	5,044
Total revenues	155,592	130,644	101,645
Operating expenses:
Cost of sales	3,587	0	0
Cost of royalties	0	0	500
Cost of license fees	9	0	2,543
Research and development	85,421	94,839	73,831
Selling, general and administrative	68,070	36,929	24,226
Total operating expenses	153,491	131,768	98,057
Operating (loss) income	(1,495)	(1,124)	545
Other income (expense)
Interest income, net	340	292	321
Interest expense	(11,938)	(18,198)	(37,736)
Gain on sale of marketable investment securities, net	4	4	0
Foreign currency transaction (loss) gain	(233)	54	318
Other	0	237	303
Total other expense, net	(11,827)	(17,611)	(36,794)
Loss before income tax expense	(13,322)	(18,735)	(36,249)
Income tax expense	182	0	18
Net loss	$ (13,504)	$ (18,735)	$ (36,267)
Net loss per common and potential common share
Basic	$ (0.14)	$ (0.22)	$ (0.45)
Diluted	$ (0.14)	$ (0.22)	$ (0.45)
Weighted average common and potential common shares outstanding
Basic	97,750	86,999	81,279
Diluted	97,750	86,999	81,279

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Fair Value Measurement - Note 4

12 Months Ended

Dec. 31, 2013

Fair Value Measurement Disclosure

Fair Value Measurement

(4) Fair Value Measurement

Summary of Assets Recorded at Fair Value

The Company's financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy. The three levels are as follows:

Level 1- Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2- Inputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).

Level 3- Inputs are unobservable and reflect the Company's assumptions that market participants would use in pricing the asset or liability. The Company develops these inputs based on the best information available.

In accordance with the fair value hierarchy described above, the following table shows the fair value of the Company's financial assets (all marketable investment securities) that are required to be measured at fair value as of December 31, 2013 and December 31, 2012 (in thousands):

As of December 31, 2013:		Level 1		Level 2		Level 3		Total
Marketable investment securities	$	116,250	$	13,020	$	-	$	129,270

As of December 31, 2012:		Level 1		Level 2		Level 3		Total
Marketable investment securities	$	67,723	$	15,521	$	-	$	83,244

As of December 31, 2013 and December 31, 2012, the fair values of the Company's Level 2 securities were $13.0 million and $15.5 million, respectively. These securities are certificates of deposit or commercial paper issued by domestic companies with an original maturity of greater than ninety days. These securities are currently rated A-1 or higher. The Company's cash equivalents are classified within Level 1 or Level 2 of the fair value hierarchy because they are valued using quoted market prices or broker or dealer quotations for similar assets. These investments are initially valued at the transaction price and subsequently valued utilizing third party pricing providers or other market observable data. Data used in the analysis include reportable trades, broker/dealer quotes, bids and offers, benchmark yields and credit spreads. The Company validates the prices provided by its third party pricing providers by reviewing their pricing methods, analyzing pricing inputs and confirming that the securities have traded in normally functioning markets. The Company did not adjust or override any fair value measurements provided by its pricing providers as of December 31, 2013 or 2012.

As of December 31, 2013 and 2012, the Company did not have any investments in Level 3 securities.

There were no transfers of assets or liabilities between Level 1 and Level 2 during the years ended December 31, 2013 and 2012.

The carrying amounts reflected in the consolidated balance sheets for certain short-term financial instruments including cash and cash equivalents, restricted cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, and other liabilities approximate fair value due to their short-term nature except that the estimated fair value and carrying value of the Brigham and Women's Hospital royalty liability using a discounted cash flow model is approximately $4.3 million and $5.6 million, respectively, at December 31, 2013 and $4.8 million and $6.6 million, respectively, at December 31, 2012.

Summary of Liabilities Recorded at Carrying Value

The fair and carrying value of our debt instruments are detailed as follows (in thousands):

		As of December 31, 2013				As of December 31, 2012
	Fair		Carrying		Fair		Carrying
		Value		Value		Value		Value
5.75% Convertible Notes	$	92,338	$	16,545	$	28,131	$	16,545
Sensipar Notes		54,097		54,395		79,129		80,234
PTH 1-84-Secured Debt		50,058		42,790		28,605		42,816
Regpara-Secured Debt		37,348		35,202		48,887		36,252
Total	$	233,841	$	148,932	$	184,752	$	175,847

The fair values of the Company's convertible notes were estimated using the (i) terms of the convertible notes; (ii) rights, preferences, privileges, and restrictions of the underlying security; (iii) time until any restriction(s) are released; (iv) fundamental financial and other characteristics of the Company; (v) trading characteristics of the underlying security (exchange, volume, price, and volatility); and (vi) precedent sale transactions. The fair values of the Company's non-recourse Sensipar notes, PTH 1-84-secured debt and REGPARA-secured debt were estimated using a discounted cash flow model. Within the hierarchy of fair value measurements, these are Level 3 fair values.

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Income (Loss) Per Common Share - Note 3

12 Months Ended

Dec. 31, 2013

Income (Loss) Per Common Share

(3) Income (Loss) Per Common Share

Basic income (loss) per common share is the amount of income (loss) for the period divided by the weighted average shares of common stock outstanding during the reporting period. Diluted income (loss) per common share is the amount of income (loss) for the period plus interest expense on convertible debt divided by the sum of weighted average shares of common stock outstanding during the reporting period and weighted average shares that would have been outstanding assuming the issuance of common shares for all dilutive potential common shares.

Potential common shares of approximately 7.2 million, 8.0 million and 8.3 million during the years ended December 31, 2013, 2012, and 2011, respectively, that could potentially dilute basic income (loss) per common share in the future were not included in the computation of diluted income (loss) per share because to do so would have been anti-dilutive for the periods presented. Potential dilutive common shares for the years ended December 31, 2013, 2012 and 2011 include approximately 3.0 million, 3.0 million and 4.7 million common shares related to convertible debentures, respectively, and 4.1 million, 5.0 million, and 3.6 million shares, respectively, related to stock options, restricted stock, and restricted stock units.

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Recent Accounting Pronouncements - Note 15

12 Months Ended

Dec. 31, 2013

Recent Accounting Pronouncements Disclosure

Recent Accounting Pronouncements

(15) Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption.

In February 2013, the FASB issued ASU 2013-02 Reporting of Amounts Reclassified out of Accumulated Other Comprehensive Income (ASU 2013-02), an Accounting Standards Update to the Comprehensive Income Topic in the Accounting Standards Codifications (ASC). This update requires separate presentation of the components that are reclassified out of accumulated other comprehensive income either on the face of the financial statements or in the notes to the financial statements. This update also requires companies to disclose the income statement line items impacted by any significant reclassifications, such as the realized gain on marketable investment securities. These items are required for both interim and annual reporting for public companies and became effective for the Company beginning with its quarterly report on Form 10-Q for the period ending March 31, 2013. The Company adopted this ASU on January 1, 2013. The adoption of this ASU did not have a material impact on the Company's financial position or results of operations.

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Capital Stock - Note 11

12 Months Ended

Dec. 31, 2013

Capital Stock Disclosure

Capital Stock

(11) Capital Stock

Equity Financing

In May 2013, the Company completed a public sale of 6,900,000 shares of its common stock at a per share price of $14.53. Net proceeds to the Company from the sale totaled approximately $93.5 million, after deducting expenses and the commission in connection with the offering paid by the Company.

In April 2011, the Company completed a public sale of 12,650,000 shares of its common stock at a per share price of $9.00. Net proceeds to the Company from the sale totaled approximately $106.8 million, after deducting expenses and the commission in connection with the offering paid by the Company.

Convertible Debt

As of December 31, 2013, the Company had outstanding $16.5 million in aggregate principal amount of its 5.75% Convertible Notes and has classified it as current debt. The holders of the 5.75% Convertible Notes may convert all or a portion of their notes into common stock at any time, subject to certain limitations, on or before August 7, 2014 at a conversion price equal to approximately $5.44 per share, subject to adjustment in certain events. The Company has reserved 3,041,451 shares of its common stock for issuance upon conversion of the 5.75% Convertible Notes.

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Property and Equipment - Note 7

12 Months Ended

Dec. 31, 2013

Property and Equipment Disclosure

Property and Equipment - Note 7

(7) Property and Equipment, Net

Property and equipment is recorded at cost and consists of the following (in thousands):

		December 31,
		2013		2012
Office Equipment	$	5,519	$	4,379
Laboratory Equipment		216		216
Leasehold Improvements		2,023		1,795
Total property and equipment		7,758		6,390
Less accumulated depreciation		(3,356)		(2,197)
Total equipment, net	$	4,402	$	4,193

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Capital Stock (Narrative) (Details) (USD $) In Thousands, except Share data, unless otherwise specified	1 Months Ended	12 Months Ended
	May 31, 2013	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Capital Stock Narrative Details
Stock Issued During Period, Shares, New Issues	6,900,000
Stock Issued During Period, Per Share, New Issues	$ 14.53
Stock Issued During Period, Value, New Issues	$ 93,500	$ 94,053	$ 254	$ 107,033
Shares reserved for issuance upon conversion of Convertible Notes		3,041,451

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Financial Instruments - Note 5

12 Months Ended

Dec. 31, 2013

Financial Instruments Disclosure

Financial Instruments

(5) Financial Instruments

Financial instruments that potentially subject the Company to concentrations of credit risk are accounts receivable and marketable investment securities. The majority of the Company's accounts receivable are payable by large pharmaceutical companies and specialty pharmacies and collateral is generally not required from these companies. Substantially all of the Company's royalty revenues and the related accounts receivable balances for the years ended December 31, 2013 and 2012 were from three and four licensees of the Company, respectively. Substantially all of the Company's product sales revenues for the year ended December 31, 2013 and substantially all of the Company's trade accounts receivable balances at December 31, 2013 were from six specialty pharmacies. The Company's portfolio of marketable investment securities is subject to concentration limits set within the Company's investment policy that help to mitigate its credit exposure.

The following is a summary of the Company's marketable investment securities (in thousands):

				Gross		Gross
				unrealized		unrealized
		Amortized		holding		holding		Fair
As of December 31, 2013:		cost		gains		losses		value
Debt securities:
Corporate	$	103,175	$	23	$	(60)	$	103,138
Government agency		26,110		22		-		26,132
Total marketable investment securites	$	129,285	$	45	$	(60)	$	129,270

				Gross		Gross
				unrealized		unrealized
		Amortized		holding		holding		Fair
As of December 31, 2012:		cost		gains		losses		value
Debt securities:
Corporate	$	50,822	$	3	$	(31)	$	50,794
Government agency		32,444		10		(4)		32,450
Total marketable investment securites	$	83,266	$	13	$	(35)	$	83,244

Marketable investment securities available for sale in an unrealized loss position as of December 31, 2013 and 2012 are summarized as follows (in thousands):

		Held for less than 12 months				Held for more than 12 months				Total
				Unrealized				Unrealized				Unrealized
		Fair value		losses		Fair value		losses		Fair value		losses
December 31, 2013
Available for Sale:
Debt securities:
Corporate	$	74,407	$	56	$	5,732	$	4	$	80,139	$	60
Government agency		-		-		-		-		-		-
	$	74,407	$	56	$	5,732	$	4	$	80,139	$	60
December 31, 2012
Available for Sale:
Debt securities:
Corporate	$	37,974	$	31	$	-	$	-	$	37,974	$	31
Government agency		7,110		4		-		-		7,110		4
	$	45,084	$	35	$	-	$	-	$	45,084	$	35

Summary of Contractual Maturities

Maturities of marketable investment securities are as follows at December 31, 2013 and December 31, 2012 (in thousands):

		As of December 31, 2013				As of December 31, 2012
		Amortized				Amortized
		cost		Fair value		cost		Fair value
Due within one year	$	103,280	$	103,266	$	65,637	$	65,632
Due after one year through five years		26,005		26,004		17,629		17,612
Due after five years through ten years		-		-		-		-
Due after ten years		-		-		-		-
Total debt securities	$	129,285	$	129,270	$	83,266	$	83,244

Impairments

No impairment losses were recognized through earnings related to available for sale securities during the years ended December 31, 2013 or 2012.

Proceeds from Available for Sale Securities

The proceeds from maturities and sales of available for sale securities and resulting realized gains and losses, were as follows (in thousands):

		For the Years Ended December 31,
		2013		2012		2011
Proceeds from sales and maturities	$	107,871	$	119,507	$	86,668
Realized gains		4		4		-
Realized losses		-		-		-

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Inventory - Note 6

12 Months Ended

Dec. 31, 2013

Inventory Disclosure

Inventory

(6) Inventory

Inventories, stated at the lower of cost or market, consisted of raw materials of $29.3 million and finished goods of $705,000 as of December 31, 2013. The Company began to capitalize inventory after the FDA approval of Gattex in December 2012. The Company acquired approximately $16.6 million of Revestive raw materials and $17.1 million of PTH raw materials related to the March 18, 2013 Transition and Termination Agreement with Takeda (See note 10). During June 2013, certain lots of this PTH inventory were designated for research and development activities and were accordingly expensed during the period.

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Leases - Note 8

12 Months Ended

Dec. 31, 2012

Leases Disclosure

Leases - Note 8

(8) Leases

The Company has a non-cancelable operating lease for its office space in Bedminster, New Jersey that expires in 2016. The Company also has non-cancelable operating leases for office space in Europe for the expansion of the Company's global business and certain equipment that expire between 2014 and 2015. Rent-free periods and other incentives granted under the leases and scheduled rent increases are charged to rent expense on a straight-line basis over the related terms of the lease. Rental expense for operating leases was approximately $1.7 million, $1.6 million, and $1.3 million for 2013, 2012, and 2011, respectively. The future lease payments under non-cancelable operating leases as of December 31, 2013 are as follows (in thousands):

		Operating
		leases
Year ending December 31:
2014	$	1,992
2015		1,910
2016		1,287
2017		-
2018		-
Total minimum lease payments	$	5,189

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Stock-Based Compensation Plans (Stock-Based Compensation Expense By Statement Of Operations) (Details) (USD $)	3 Months Ended		9 Months Ended	12 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2012	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Stock-based employee compensation expense related to employee stock options and emolyee stock purchases, pre tax	$ 2,200,000	$ 1,400,000	$ 4,900,000	$ 9,437,000	$ 7,548,000	$ 4,100,000
Research and Development
Stock-based employee compensation expense related to employee stock options and emolyee stock purchases, pre tax				4,107,000	3,343,000	1,544,000
General and Administrative
Stock-based employee compensation expense related to employee stock options and emolyee stock purchases, pre tax				$ 5,330,000	$ 4,205,000	$ 2,556,000

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Stock-Based Compensation Plans (Aggregate Activity Under Stock Option Plans) (Details) (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2013
Stock-Based Compensation Plans Aggregate Activity Under Stock Option Plans Details
Options outstanding at beginning of year	7,390,000
Options granted	2,178,000
Options exercised	2,522,000
Options forfeited/expired	390,000
Options outstanding at December 31, 2013	6,656,000
Weighted-average exercise price of options outstanding, beginning of year	$ 6.75
Weighted-average exercise price of options granted during period	$ 10.69
Weighted-average exercise price of options exercised during the period	$ 5.76
Weighted-average exercise price of options forfeited/expired during the period	$ 13.29
Weighted-average exercise price of options outstanding, at December 31, 2013	$ 8.03
Weighted-average remaining contractual term of options outstanding, at December 31, 2013	7 years 179 days
Aggregate intrinsic value of options outstanding, at December 31, 2013	$ 148,651
Options Vested and Expected to Vest, Number of Shares	6,264,000
Options Vested and Expected to Vest, Weighted-Average Exercise Price Per Share	$ 7.87
Options Vested and Expected to Vest, Weighted-Average Remaining Contractual Term	7 years 146 days
Options Vested and Expected to Vest, Aggregate Intrinsic Value	140,880
Options Exercisable, Number of Shares	2,690,000
Options Exercisable, Weighted-Average Exercise Price Per Share	$ 6.69
Options Exercisable, Weighted-Average Remaining Contractual Term	6 years 18 days
Options Exercisable, Aggregate Intrinsic Value	$ 63,690

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Stock-Based Compensation Plans (Performance Conditions Options Narrative) (Details) (USD $)

3 Months Ended

9 Months Ended

12 Months Ended

Sep. 30, 2013

Sep. 30, 2012

Sep. 30, 2012

Dec. 31, 2013

Dec. 31, 2012

Dec. 31, 2011

Share-based Compensation Expense

$ 2,200,000

$ 1,400,000

$ 4,900,000

$ 9,437,000

$ 7,548,000

$ 4,100,000

Performance Condition Options

Description of award

During the year ended December 31, 2010, the Company's Board of Directors awarded a total of 1,130,700 performance condition options to certain of the Company's employees. Vesting of these options are subject to the Company achieving certain performance criteria established at the grant date and the individuals fulfilling a service condition (continued employment). As of December 31, 2013, the performance criteria of 825,340 of these options had been satisfied and these options will become exercisable based on the following vesting schedule: 25% on each of the first four anniversaries of the date of grant, which was February 20, 2010 (the date of grant). The Company recognized $277,000, $1.1 million and $153,000 of compensation expense during the years ended December 31, 2013, 2012 and 2011, respectively, related to these options. The next performance criteria is the acceptance of the BLA filing for Natpara by the FDA. The BLA was accepted by the FDA in January 2014 and will trigger approximately $111,000 of compensation expense related to these options being recognized in the first quarter of 2014.

The Company utilized the Black-Scholes option pricing model to determine the grant date fair value of the awards. As of December 31, 2013, except for the 825,340 options discussed above, the Company does not believe that the achievement of the performance criteria for the other options is probable and therefore has not recognized any compensation expense related to those options during the years ended December 31, 2013, 2012 and 2011, respectively. Compensation expense will be recognized only once the performance condition is probable of being achieved and then only the cumulative amount related to the service condition that has been fulfilled.

On May 19, 2010, the shareholders approved an ESPP whereby qualified employees are allowed to purchase limited amounts of the Company's common stock at the lesser of 85% of the market price at the beginning or end of the offering period. The shareholders have authorized 500,000 shares for purchase by employees. During the years ended December 31, 2013, 2012 and 2011, employees purchased 72,937, 45,553 and 37,065 shares, respectively, under the ESPP. The Company has 329,585 shares available for future purchase as of December 31, 2013.

Share-based Compensation Expense

$ 244,000

Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized

1,130,700

Share-based Compensation Arrangement by Share-based Payment Award, Number of Additional Shares Authorized

3,500,000

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Stock-Based Compensation And Employee Purchase Plans (Tables)

12 Months Ended

Dec. 31, 2013

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

	Years ended December 31,
	2013	2012	2011
Dividend yield	—	—	—
Expected volatility	59.15% - 60.69%	61.22% - 67.58%	60.5% - 67.8%
Risk-free interest rate	0.7% - 3.7%	0.6% - 1.1%	0.9% - 3.0%
Expected term (in years)	5.2 - 6.0	5.1 - 5.9	4.8 - 5.9

Stock-based employee compensation expense

The following table summarizes the effect of compensation cost arising from share-based payment arrangements in the Company's Statements of Operations for the years ended December 31, 2013, 2012 and 2011 for the Company's stock option plans, the ESPP and other share-based awards (in thousands):

		Years ended December 31,
		2013		2012		2011
Research and development	$	4,107	$	3,343	$	1,544
Selling, general and administrative		5,330		4,205		2,556
Amounts charged against income, before
income tax expense	$	9,437	$	7,548	$	4,100

Stock Options

Disclosure Of Share-Based Compensation Arrangements By Share-Based Payment Award

A summary of activity related to aggregate stock options under all plans is indicated in the following table (in thousands, except per share amounts):

	Year ended December 31, 2013
			Weighted	Weighted
	Number		average	average remaining		Aggregate
	of		exercise	contractual		intrinsic
	options		price	term		value
	(in thousands)			(in years)		(in thousands)
Options outstanding at beginning
of year	7,390	$	6.75
Options granted	2,178		10.69
Options exercised	2,522		5.76
Options forfeited/expired	390		13.29
Options outstanding at end of year	6,656		8.03	7.49	$	148,651
Vested and expected to vest	6,264		7.87	7.40	$	140,880
Options exercisable at end of year	2,690	$	6.69	6.05	$	63,690

Restricted Stock Units

Disclosure Of Share-Based Compensation Arrangements By Share-Based Payment Award

A summary of activity related to aggregate restricted stock, restricted stock units and deferred stock units as of December 31, 2013, is indicated in the following table (shares in thousands):

	Number of		Weighted-average
	shares		grant date fair value
Nonvested at beginning of year	505	$	6.96
Granted	570		9.18
Vested	(318)		6.37
Forfeited	(5)		8.21
Nonvested at December 31, 2013	752	$	8.89

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Financial Instruments (Narrative) (Details 5) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Financial Instruments Narrative Details 5
Impairment losses	$ 0	$ 0	$ 0

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Income Taxes - Note 13

12 Months Ended

Dec. 31, 2013

Income Taxes Disclosure

Income Taxes

(13) Income Taxes

The components of loss before income taxes for the years ended December 31, 2013, 2012 and 2011 includes the following (in thousands):

		Years ended December 31,
		2013		2012		2011
United States	$	(9,748)	$	(18,735)	$	(36,249)
Foreign		(3,574)		-		-
Loss before income taxes	$	(13,322)	$	(18,735)	$	(36,249)

The Company has recorded income tax expense for the years ended December 31, 2013, 2012 and 2011 of $182,000, $0, and $18,000, respectively. The income tax expense for the years ended December 31, 2013 and 2011 was primarily related to a non-cash charge for state income taxes and to the Company's Canadian subsidiary based in the Canadian province of Quebec, respectively.

Income tax differed from the amounts computed by applying the U.S. federal income tax rate of 34% to loss before income tax expense (benefit) as a result of the following (in thousands):

		Years ended December 31,
		2013		2012		2011
Computed "expected" tax benefit	$	(4,529)	$	(6,370)	$	(12,325)
Expiration of tax attributes		-		-		360
IRC §382 adjustment		6,575		59,822		94,442
Change in the valuation allowance for deferred tax assets
attributable to operations and other adjustments		2,840		(42,124)		(70,514)
U.S. and foreign credits		(12,237)		(10,231)		(11,732)
State income taxes, net of federal tax effect		182		-		-
Equity based compensation expense		678		513		578
Intellectual property		5,440		-		-
Foreign tax rate differences		940		-		-
Other		293		(1,610)		(791)
	$	182	$	-	$	18

The tax effects of temporary differences that give rise to the deferred tax assets at December 31, 2013 and 2012 are presented below (in thousands):

		2013		2012
Deferred tax assets:
Net operating loss carryforward	$	132,101	$	140,416
Research credit carryforward		68,277		49,960
Capital loss carryforward		4,186		4,169
Non-recourse debt		27,769		32,619
Acquired intellectual property		29,452		29,287
Capitalization of inventory		9,429		13,146
Stock compensation expense		2,935		5,631
Accrued compensation		3,117		2,105
Other		555		273
Total deferred tax assets		277,821		277,606
Less valuation allowance		(277,821)		(277,606)
Deferred tax assets		-		-
Deferred tax liabilities		-		-
Net deferred tax asset (liability)	$	-	$	-

Carryfowards

At December 31, 2013, the Company had U.S. federal net operating loss carryforwards of approximately $381.0 million which begin to expire in 2018, U.S. federal research credit carryforwards of $68.3 million, which begin to expire in 2030, and U.S. federal capital loss carryforwards of $10.7 million which begin to expire in 2015. The Company's domestic tax loss carryforwards for alternative minimum tax purposes is approximately the same as the Company's regular tax loss carryforwards. The Company also has New Jersey state net operating loss and capital loss carryforwards of approximately $369.9 million and $18.1 million, respectively, which begin to expire in 2014, and other domestic state net operating loss carryforwards and tax credit carryforwards in varying amounts depending on the different state laws.

The Company uses the "with-and-without" approach in determining the order in which tax attributes are utilized. Using the "with-and-without" approach, the Company will only recognize a tax benefit from stock-based awards in additional paid-in capital if an incremental tax benefit is realized after all other net operating loss carryforwards currently available to the Company have been utilized, but prior to the utilization of other tax attributes.

The U.S. federal net operating loss carryforwards of approximately $381.0 million include approximately $10.1 million of excess tax benefits related to share-based payments that are presented on a tax effected basis within the deferred tax assets. Since this amount was recorded through additional paid-in capital, the related valuation allowance on these net operating loss carryforwards will be reversed through additional paid-in capital when these excess tax benefits are realized. Also, included in the U.S. federal net operating loss carryforwards are excess tax benefits related to share-based payments of approximately $24.5 million that are not recognized as a deferred tax asset as the amounts would not have resulted in a reduction in current taxes payable if all other net operating loss carryforwards currently available to the Company were utilized. The benefit of these deductions will be recognized through additional paid-in capital at the time the tax deduction results in a reduction of current taxes payable.

Section 382 of the Internal Revenue Code can potentially limit a company's ability to use net operating loss, tax credits, capital loss, and other tax attributes in periods subsequent to a change in ownership. The Company periodically updates its Section 382 study to assess whether the Company has undergone certain greater than 50% changes of ownership as defined in Section 382 of the Internal Revenue Code.  This study concluded that the Company had an ownership change in 2010. As a result, the Company determined that certain net operating loss, tax credit and capital loss carryforwards will expire prior to their utilization due to the expected annual Section 382 limitation, and accordingly the net operating loss, tax credit, and capital loss carryforwards on the above deferred tax asset table have been reduced.

Valuation Allowance

The Company determines the need for a valuation allowance by assessing the probability of realizing deferred tax assets, taking into consideration all available positive and negative evidence, including historical operating results, expectations of future taxable income, carryforward periods available to the Company for tax reporting purposes, various income tax strategies and other relevant factors. Significant judgment is required in making this assessment and to the extent future expectations change, the Company would have to assess the recoverability of its deferred tax assets at that time.

At December 31, 2013 and 2012, the Company maintained a full valuation allowance on its deferred tax assets. The Company has a history of cumulative losses. The Company's cumulative loss position was significant negative evidence in assessing the need for a valuation allowance. The valuation allowance for deferred tax assets increased by $215,000 in 2013 and decreased by $49.1 million in 2012.

Unrecognized Tax Benefits

A reconciliation of the beginning and ending amounts of gross unrecognized tax benefits (excluding interest and penalties) is as follows (in thousands):

	Unrecognized
		Tax Benefits
Balance as of January 1, 2012	$	4,614
Additions for current year tax positions		-
Reductions for prior year tax positions		-
Balance as of December 31, 2012		4,614
Additions for current year tax positions		-
Reductions for prior year tax positions		(677)
Balance as of December 31, 2013	$	3,937

The total amount of unrecognized tax benefits relating to the Company's tax positions is subject to change based on future events including, but not limited to, the settlements of ongoing audits and/or the expiration of applicable statutes of limitations. Although the outcomes and timing of such events are highly uncertain, it is reasonably possible that the balance of gross unrecognized tax benefits will not change during the next 12 months. However, changes in the occurrence, expected outcomes and timing of those events could cause the Company's current estimate to change materially in the future.

Due to the Company's net operating loss carryforwards, any adjustment related to an unrecognized tax benefit would not be expected to result in a cash tax liability. Accordingly, the Company has not accrued for interest or penalties for the U.S. (both Federal and State) as of December 31, 2013 and 2012. Assuming the continued existence of a full valuation allowance on the Company's deferred tax assets, future recognition of any of the Company's unrecognized tax benefits would not impact the effective tax rate.

The Company files income tax returns in the United States and various foreign jurisdictions. Of the major jurisdictions, the Company is subject to examination in: the United States for U.S. federal purposes for 2010 and forward and for New Jersey for 2011 and forward. In August 2012, the IRS completed its examination of the Company's U.S. federal income tax returns for the year ended December 31, 2009.  In May 2013, the State of New Jersey completed its examination of the Company's New Jersey income tax returns through the year ended December 31, 2010. There were no adjustments as a result of these examinations.

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2013

Notes to Financial Statements

Cash Equivalents

The Company considers all highly liquid investments with maturities at the date of purchase of three months or less to be cash equivalents. Cash equivalents at December 31, 2013 and 2012 are carried at cost and consist of commercial paper, money market funds, debt securities and other highly liquid instruments of approximately $40.6 million and $16.2 million, respectively. At December 31, 2013 and 2012, the book value of cash equivalents approximates fair value.

Marketable Investment Securities

The Company classifies its marketable investment securities as available-for-sale and are recorded at fair value. Unrealized holding gains and losses on available-for-sale securities, net of the related tax effect, are excluded from earnings and are reported as a separate component of stockholders' deficit until realized. A decline in the fair value below cost of available-for-sale securities that is deemed other than temporary is charged to results of operations, resulting in the establishment of a new cost basis for the security. Premiums and discounts are amortized or accreted into the cost basis over the life of the related security as adjustments to the yield using the effective-interest method. Interest income is recognized when earned. Realized gains and losses from the sale of marketable investment securities are based on the specific identification method and are included in results of operations and are determined on the specific-identification basis.

The Company conducts periodic reviews to identify and evaluate each investment that has an unrealized loss. An unrealized loss exists when the current fair value of an individual security is less than its amortized cost basis. Unrealized losses on available-for-sale securities that are determined to be temporary, and not related to credit loss, are recorded, net of tax, in accumulated other comprehensive income.

For available-for-sale debt securities with unrealized losses, management performs an analysis to assess whether the Company intends to sell or whether it would more likely than not be required to sell the security before the expected recovery of the amortized cost basis. Where the Company intends to sell a security, or where it may be more likely than not be required to sell the security before the expected recovery of the amortized cost basis, the security's decline in fair value is deemed to be other-than-temporary and the full amount of the unrealized loss is recorded within earnings as an impairment loss.

Regardless of the Company's intent to sell a security, the Company performs additional analysis on all securities with unrealized losses to evaluate losses associated with the creditworthiness of the security. Credit losses are identified where the Company does not expect to receive cash flows sufficient to recover the amortized cost basis of a security.

Trade Accounts Receivable

Trade accounts receivable are recorded for research and development support performed, for license fees, milestone payments and royalty income earned, and for product sales, and do not bear interest. The Company determines an allowance for doubtful accounts based on assessed customers' ability to pay, historical write-off experience, and economic trends. Such allowance for doubtful accounts is the Company's best estimate of the amount of probable credit losses in the Company's existing accounts receivable. The Company reviews its allowance for doubtful accounts monthly. The Company did not record any bad debt expense for the years ended December 31, 2013 2012 and 2011. At December 31, 2013 and 2012 the allowance for bad debts was zero.

Inventory

Inventories are stated at the lower of cost or estimated realizable value. The Company determines the cost of inventory using the first-in, first-out, or FIFO, method. The Company capitalizes inventory costs associated with the Company's products after regulatory approval when, based on management's judgment, future commercialization is considered probable and the future economic benefit is expected to be realized; otherwise, such costs are expensed as research and development. The Company periodically analyzes its inventory levels to identify inventory that may expire prior to expected sale or has a cost basis in excess of its estimated realizable value, and writes-down such inventories as appropriate. In addition, the Company's products are subject to strict quality control and monitoring which the Company performs throughout the manufacturing process. If certain batches or units of product no longer meet quality specifications or become obsolete due to expiration, the Company records a charge to cost of sales sold to write down such unmarketable inventory to its estimated realizable value.

Property and Equipment

Property and equipment is stated at cost. Depreciation and amortization of property and equipment is calculated on the straight-line method over estimated useful lives of 3 to 5 years. Leasehold improvements are amortized using the straight-line method over the shorter of the life of the asset or remainder of the lease term.

Goodwill and Intangibles

Goodwill represents the excess of costs over fair value of assets of businesses acquired. Intangibles represents acquired assets and are measured at fair value as of the date of acquisition. Goodwill and intangible assets acquired in a purchase or business combination and determined to have an indefinite useful life are not amortized, but instead tested for impairment at least annually or sooner if circumstances indicate that impairment might have occurred. Intangible assets with definite useful lives are amortized to their estimated residual values over their estimated useful lives and reviewed for impairment if certain events occur. As a result of the annual impairment test performed by management at year-end, it was noted that fair value significantly exceeded the carrying value of the reporting unit. The company considers itself a single reportable segment and reporting unit.

Income Taxes

The Company utilizes the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement carrying amounts and tax bases of assets and liabilities using enacted tax rates in effect for years in which the temporary differences are expected to reverse. The Company establishes a valuation allowance when it believes it is more likely than not that deferred tax assets will not be realized.

The Company determines the need for a valuation allowance by assessing the probability of realizing deferred tax assets, taking into consideration all available positive and negative evidence, including historical operating results, expectations of future taxable income, carryforward periods available to the Company for tax reporting purposes, various income tax strategies and other relevant factors. Significant judgment is required in making this assessment and to the extent future expectations change, the Company would have to assess the recoverability of its deferred tax assets at that time. At December 31, 2013 and 2012, the Company maintained a full valuation allowance on its deferred tax assets.

At any one time the Company's tax returns for numerous tax years are subject to examination by U.S. federal, state and foreign taxing jurisdictions. The impact of an uncertain tax position taken or expected to be taken on an income tax return must be recognized in the financial statements at the largest amount that is more likely than not to be sustained. An uncertain income tax position will not be recognized in the financial statements unless it is more likely than not to be sustained. The Company adjusts these tax liabilities, as well as the related interest and penalties, based on the latest facts and circumstances, including recently enacted tax law changes, published rulings, court cases, and outcomes of tax audits. While the Company does not expect material changes, it is possible that its actual tax liability will differ from its established tax liabilities for unrecognized tax benefits, and the Company's effective tax rate may be materially impacted. The Company accounts for interest and penalties related to uncertain tax positions as a component of Income tax expense.

Revenue Recognition

The Company analyzes its revenue arrangements to determine whether the elements should be separated and accounted for individually or as a single unit of accounting. Allocation of revenue to individual elements which qualify for separate accounting is based on the estimated fair value of the respective elements. The Company earns revenue from license fees, milestone payments, royalty payments and product sales.

License fees. The Company defers and recognizes revenue from up-front nonrefundable license fees on a straight-line basis, unless another pattern is apparent, over the period wherein the Company has continuing involvement in the research and development project. The Company recognizes revenue from up-front nonrefundable license fees upon receipt when there is no continuing involvement in the research and development project.

Milestone payments. The Company recognizes revenue from its milestone payments as agreed-upon events representing the achievement of substantive steps in the development process are achieved and where the amount of the milestone payment approximates the fair value of achieving the milestone.

Royalties. Royalties from licensees are based on third-party sales of licensed products and are recorded in accordance with contract terms when sales results are reliably measurable and collectability is reasonably assured.

Product sales. The Company recognizes revenue from product sales when persuasive evidence of an arrangement exists, title to product and associated risk of loss has passed to the customer, the price is fixed or determinable, collection from the customer is reasonably assured, the Company has no further performance obligations, and returns can be reasonably estimated. Currently, product sales represent U.S. sales of Gattex, which was approved by the FDA in December 2012.

All prescriptions for Gattex, received directly by NPS from the patient's physician, are handled through NPS Advantage, the Company's data management and patient support program, which investigates and determines the patient's insurance coverage for Gattex. Once coverage is confirmed, NPS forwards the prescription to the specialty pharmacy (SP) who then re-confirms the coverage and dispenses Gattex to the patient. The Company sells Gattex directly to a limited number of SPs and a specialty distributor (SD) who dispense product to patients, hospitals or U.S. government entities. The Company invoices and records revenue when the SPs or SD receives Gattex from the Company's third-party logistics warehouse. The Company's SPs order product to fill prescriptions that have been approved for reimbursement by payers.

Specific considerations for Gattex sold in the U.S. are as follows:

• Rebates: Allowances for rebates include mandated discounts under the Medicaid Drug Rebate Program. Rebates are amounts owed after the final dispensing of the product to a benefit plan participant and are based upon contractual agreements or legal requirements with public sector (e.g. Medicaid) benefit providers. The allowance for rebates is based on statutory discount rates and expected utilization. The Company's estimate for expected utilization for rebates is based in part on actual and pending prescriptions for which it has validated the insurance benefits.
• Chargebacks: Chargebacks are discounts that occur when contracted customers purchase from the Company's SPs or SD. Contracted customers, which currently consist primarily of Public Health Service institutions and Federal government entities purchasing via the Federal Supply Schedule, generally purchase the product at a discounted price. The Company's SPs or SD, in turn, charge back the difference between the price initially paid by the SP or SD and the discounted price paid to the SP or SD by the customer. The allowance for chargebacks is based on actual and expected sales to the SPs and SD.

• SP and SD Fees and Deductions: The Company's SPs and its SD are offered prompt payment discounts and are paid fees for their services and data.

• Product returns: The Company will accept product that is damaged or defective when shipped directly to the SP or SD from the Company's third-party logistics provider or for product that is returned with more than two (2) months remaining until the expiration date from its SP or SD only. The Company will not provide any credit for product that has been labeled for or sent to a patient. Product returned is generally not resalable as the product must be temperature-controlled throughout the supply chain and such control is difficult to confirm. The Company makes a reasonable estimate of future potential product returns based on the number of prescriptions that have been approved for reimbursement and sent to an SP with each corresponding shipment of Gattex that has been sent to each respective SP. The Company also has the visibility to see current inventory levels and the current shelf life at the SPs and SD and has the ability to control the amount of product that is sold to the SPs and SD. At the end of each reporting period, the Company determines a product returns reserve by evaluating the units held in its distribution channel, the underlying demand for such units and the risk of potential product returns. 

The following table summarizes the provisions, and credits/payments, for government rebates and chargebacks, distribution-related fees, and returns and other sales-related deductions (in thousands):

					Returns and
	Rebates and		Distribution-		Other Sales-
		Chargebacks		Related Fees		Related Deductions		Total
Balance as of December 31, 2012	$	-	$	-	$	-	$	-
Provision related to current period sales		1,375		332		1,098		2,805
Credits/payments		(262)		(185)		(857)		(1,304)
Balance as of December 31, 2013	$	1,113	$	147	$	241	$	1,501

Product sales are recorded net of accruals for estimated rebates, chargebacks, discounts, and other deductions (collectively, sales deductions) and returns. With the exception of allowances for prompt payment, allowances for sales deductions and returns are included in accounts payable and accrued expenses in the accompanying consolidated balance sheets.

Research and Development Expenses

Research and development expenses, are expensed as incurred and are primarily comprised of the following types of costs incurred in performing research and development activities: clinical trial and related clinical manufacturing costs, contract services, outside costs, salaries and benefits, overhead and occupancy costs.

The Company analyzes how to characterize payments under collaborative agreements based on the relevant facts and circumstances related to each agreement.

Income (Loss) per Common Share

Basic income (loss) per common share is the amount of income (loss) for the period divided by the sum of the weighted average shares of common stock outstanding during the reporting period. Diluted income (loss) per common share is the amount of income (loss) for the period plus interest expense on convertible debt divided by the sum of weighted average shares of common stock outstanding during the reporting period and weighted average share that would have been outstanding assuming the issuance of common shares for all dilutive potential common shares.

Share-Based Compensation

The Company accounts for share-based compensation in accordance with Financial Accounting Standards Board's Accounting Standards Codification ("ASC") 718, "Compensation - Stock Compensation" (ASC 718). Compensation cost is recorded based on the grant date fair value estimated using the Black-Scholes option-pricing for awards which vest based on a service or performance condition or the Monte Carlo simulation model for awards with market conditions. The Company recognizes compensation cost for awards on a straight-line basis over the requisite service period for the entire award, except for performance condition options where vesting is subject to the Company achieving certain performance criteria. Compensation costs for performance condition options will be recognized when the achievement of the performance criteria is probable.

Use of Estimates

Management of the Company has made estimates and assumptions relating to reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these consolidated financial statements in conformity with U.S. generally accepted accounting principles (U.S. GAAP). Actual results could differ from those estimates.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company, all subsidiaries in which it owns a majority voting interest including a variable interest entity in which the Company is the primary beneficiary. The Company eliminates all intercompany accounts and transactions in consolidation.

Accounting for Impairment of Long-Lived Assets

As described in (f), goodwill is tested for impairment at least annually. The Company reviews all other long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets held and used is measured by a comparison of the carrying amount of an asset to future net cash flows (undiscounted) expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets held for sale are reported at the lower of the carrying amount, or fair value, less costs to sell.

Foreign Currency Translation

Assets and liabilities of foreign operations with non-U.S. dollar functional currencies are translated into U.S. dollars at the period end exchange rates. Income, expenses and cash flows are translated at the average exchange rates prevailing during the period. Adjustments resulting from translation are reported as a separate component of accumulated other comprehensive loss in stockholders' deficit. Certain transactions are denominated in currencies other than the functional currency. Transaction gains and losses are included in other income (expense) for the period in which the transaction occurs.

Comprehensive Income (Loss)

Comprehensive income (loss) consists of net income (loss) and other gains and losses affecting stockholders' equity (deficit) that, under U.S. GAAP, are excluded from net income (loss). For the Company, these consist of net unrealized gains or losses on marketable investment securities and foreign currency translation gains and losses. Accumulated other comprehensive income (loss) as of December 31, 2013 and 2012 consists of accumulated net unrealized losses on marketable investment securities of $15,000 and $22,000, respectively, and foreign currency translation gains of $71,000 and $27,000, respectively.

Concentration of Suppliers

The Company has entered into agreements with contract manufacturers to manufacture clinical and commercial supplies of its product candidates. In some instances, the Company is dependent upon a single supplier. The loss of one of these suppliers could have a material adverse effect upon the Company's operations.

Leases

The Company leases its facility under terms of a lease agreement which provides for rent holidays and escalating payments. Rent under operating leases is recognized on a straight-line basis beginning with lease commencement through the end of the lease term. The Company records deferred lease payments in other long-term liabilities.

Deferred Financing Costs and Deferred License Fees

Deferred Financing Costs

Costs incurred in issuing the 5.75% convertible notes are amortized using the straight-line method over the shorter of the term of the related instrument or the initial date on which the holders can require repurchase of the notes. The amortization of deferred financing costs is included in Interest expense in the Consolidated Statements of Operations.

Costs incurred in connection with the issuance of the Sensipar Notes and under the agreements with DRI, in which the Company sold to DRI its right to receive future royalty payments arising from sales of REGPARA under its license agreement with Kyowa Hakko Kirin and a future royalty in the mid-single digits from the sales of PTH, are amortized using the effective-interest method over the same period and in the same manner as the related debt. The amortization of deferred financing costs is included in Interest expense in the Consolidated Statements of Operations.

(t) Deferred License Fees

Cost of license fees are deferred if they are a direct cost of a revenue generating activity and that revenue is being deferred. These deferred costs are amortized over the same period and in the same manner as the related deferred revenue. The amortization of deferred license fees is included in Cost of license fees in the Consolidated Statements of Operations.

Fair Value of Financial Instruments

The Company's financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy. The three levels are as follows:

Level 1- Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2- Inputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).

Level 3- Inputs are unobservable and reflect the Company's assumptions that market participants would use in pricing the asset or liability. The Company develops these inputs based on the best information available.

The fair values of the Company's convertible notes were estimated using the (i) terms of the convertible notes; (ii) rights, preferences, privileges, and restrictions of the underlying security; (iii) time until any restriction(s) are released; (iv) fundamental financial and other characteristics of the Company; (v) trading characteristics of the underlying security (exchange, volume, price, and volatility); and (vi) precedent sale transactions. The fair values of the Company's non-recourse Sensipar notes, PTH 1-84-secured debt and REGPARA-secured debt were estimated using a discounted cash flow model. Within the hierarchy of fair value measurements, these are Level 3 fair values.

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Financial Instruments (Contractual Maturities) (Details 3) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Financial Instruments Contractual Maturities Details 3
Due within one year, amortized cost	$ 103,280	$ 65,637
Due after one year through five years, amortized cost	26,005	17,629
Due after five years through ten years, amortized cost	0	0
Due after ten years, amortized cost	0	0
Due within one year, fair value	103,266	65,632
Due after one year through five years, fair value	26,004	17,612
Due after five years through ten years, fair value	0
Due after ten years, fair value	0
Total debt securities, amortized cost	129,285	83,266
Total debt securities, fair value	$ 129,270	$ 83,244

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Summary of Significant Accounting Policies (Comprehensive Income (Loss) Narrative) (Details) (USD $)	Dec. 31, 2013	Dec. 31, 2012
Summary Of Significant Accounting Policies Comprehensive Income Loss Narrative Details
Accumulated net unrealized losses on marketable investment securities	$ 15,000	$ 22,000
Accumulated foreign currency translation gains	$ 71,000	$ 27,000

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Condensed Conslidated Statements of Comprehensive Income (Loss) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Statement of Comprehensive Income [Abstract]
Net (loss)	$ (13,504)	$ (18,735)	$ (36,267)
Unrealized gains (losses) on securities:
Unrealized holding (losses) gains arising during period	3	107	(102)
Reclassification for recognized gain (loss) on marketable investment securities during the period	4	4	0
Net unrealized (loss) gain on marketable investment securities	7	111	(102)
Foreign currency translation (loss) gain	44	(10)	5
Other comprehensive income	51	101	(97)
Comprehensive loss	$ (13,453)	$ (18,634)	$ (36,364)

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Collaborative and License Agreements - Note 2

12 Months Ended

Dec. 31, 2012

Collaborative and License Agreements Disclosure

Collaborative and License Agreements - Note 2

(2) Collaborative and License Agreements

The Company has granted exclusive development, commercialization, and marketing rights under certain of the below-described collaborative research, development, and license agreements, the success of each program is dependent upon the efforts of the licensees. Each of the respective agreements may be terminated early. If any of the licensees terminates an agreement, such termination may have a material adverse effect on the Company's operations.

Following is a description of significant collaborations and license agreements:

(a) Amgen Inc.

In 1996, the Company licensed worldwide rights (with the exception of China, Japan, North and South Korea, and Taiwan) to Amgen, Inc. to develop and commercialize cinacalcet HCl for the treatment of hyperparathyroidism and indications other than osteoporosis and related bone metabolism disorders. Amgen is incurring all costs of developing and commercializing these products. Amgen paid the Company a $10.0 million nonrefundable license fee and agreed to pay up to $400,000 per year through 2000 in development support, potential additional development milestone payments totaling $26.0 million, and royalties on any future product sales. Such $26.0 million of potential additional milestone payments includes the Company's potential to earn a $5.0 million milestone payment upon the FDA approval to sell a compound under the license agreement having a different structural formula from cinacalcet HC1. The future milestone is tied to future events outside the Company's control. The Company believes these are substantive in nature and there is no assurance that they will be achieved. Through December 31, 2013, Amgen has paid the Company $21.0 million in milestone payments, of which none were recognized during 2013, 2012, and 2011, respectively. The Company recognized royalties from product sales of $112.9 million, $89.3 million and $77.6 million in 2013, 2012 and 2011, respectively, under the contract.

The Company receives a royalty from Amgen that represents a percentage in the high single digits to low double digits of Amgen's sales of cinacalcet HCl. In June 2012, we amended our agreement with Amgen and received a one-time non-refundable $25.0 million payment in July 2012 in exchange for our rights to receive royalties under the license agreement that are earned after December 31, 2018. Amgen has a right to terminate upon 90 days written notice to the Company, and either party may terminate upon material default by the other party subject to a right to cure such default.

(b) GlaxoSmithKline

In 1993, the Company entered into an agreement with GlaxoSmithKline (GSK) to collaborate on the research, development and commercialization of calcium receptor active compounds to treat osteoporosis and other bone metabolism disorders, excluding hyperparathyroidism. Under the terms of the agreement, the Company may receive milestone payments and royalties from any product sales under the license and a share of the profits from co-promoted products. To date, GSK has paid the Company $12.0 million in milestone payments, of which none were recognized during 2013, 2012 or 2011. The Company granted GSK the exclusive license to develop and market worldwide compounds described under the GSK agreement, subject to the Company's right to co-promote in the United States. Once compounds have been selected for development, GSK has agreed to conduct and fund all development of such products, including all human clinical trials and regulatory submissions. In December 2006, the Company entered into an amendment to the agreement with GSK that permits GSK to develop additional compounds. In consideration for this amendment, the Company received a $3.0 million fee during 2006. The Company recognized no revenue related to its agreement with GSK in 2013, 2012 or 2011.

The Company is entitled to receive a royalty from GSK that represents a percentage in the high single digits or low double digits, depending on sales, of such compounds should GSK commercialize any such compounds. The license agreement with GSK is effective for the longer of ten years from first marketing in the last country in the territory or the expiration of the last patent. GSK may terminate the agreement on 30-day written notice on a country-by-country basis if it reasonably determines that any compound developed under the agreement is not worth continued development. NPS may terminate the agreement on 90-day written notice if no compound is under development or commercialization for a period of twelve consecutive months, subject to GSK showing that it has a compound under development or commercialization or that it intends to enter development within six months. Either party may terminate upon material default by the other party subject to a right to cure such default. Upon termination, the rights and licenses the Company granted GSK revert to the Company.

In August 2011, the Company formed a new agreement with GSK which terminated and replaced the 1993 agreement. Under the agreement, GSK assigned to NPS the investigational new drug filings for two Phase 1 calcilytic compounds, NPSP790 and NPSP795. The Company believes calcilytics may have clinical application in treating rare disorders involving increased calcium receptor activity, such as autosomal dominant hypocalcemia with hypercalciuria (ADHH). The new agreement also expands GSK's licensed field of research for Ronacaleret to include stem cell transplants, in addition to osteoporosis and other bone disorders. Under the terms of the agreement, the Company has the potential to earn up to $11.5 million in future milestone payments upon the achievement of certain pre-specified product development and sales-based milestones plus royalties on product sales. The Company has the potential to earn the next product development milestone of $1.0 million upon the decision by GSK to continue development in the first indication following the proof of concept trial. The remaining milestones vary by additional indications, with $7.5 million relating to successful proof of concept studies and acceptance of regulatory filings, and $4.0 million relating to the first commercial sale of each indication. The future milestones are tied to future events outside the Company's control. The Company believes these are substantive in nature and there is no assurance that they will be achieved.

(c) Kyowa Hakko Kirin

In 1995, the Company entered into an agreement with the pharmaceutical division of Kyowa Hakko Kirin Co. Ltd, formerly Kirin Brewery Company Limited, to develop and commercialize compounds for the treatment of hyperparathyroidism in Japan, China, North Korea, South Korea and Taiwan. Kyowa Hakko Kirin paid the Company a $5.0 million license fee during 2005 and agreed to pay up to $7.0 million in research support, potential additional milestone payments totaling $13.0 million and royalties on product sales. Kyowa Hakko Kirin is incurring all costs of developing and commercializing products. Any payments subsequent to June 2000 represent milestone and royalty payments. Through December 31, 2013, Kyowa Hakko Kirin has paid the Company $7.0 million in research support and $13.0 million in milestone payments none of which were recognized during 2013, 2012 or 2011. In October 2007, Kyowa Hakko Kirin received approval from the Japanese Pharmaceuticals and Medical Devices Agency to market cinacalcet HCl in Japan for the treatment of patients with secondary hyperparathyroidism during maintenance dialysis. The parties participate in a collaborative research program utilizing the Company's parathyroid calcium receptor technology. Under the Company's agreement with Kyowa Hakko Kirin, the Company recognized no milestone and license fee revenue in 2013, 2012 and 2011, respectively, and royalty revenue of $8.0 million in 2013, $8.7 million in 2012 and $7.6 million in 2011.

The Company receives a royalty from Kyowa Hakko Kirin that represents a percentage in the single digits of sales. The agreement with Kyowa Hakko Kirin is effective until expiration of the last patent. Kyowa Hakko Kirin has a right to terminate upon 90 days written notice to the Company, and either party may terminate upon material default by the other party subject to a right to cure such default. Kyowa Hakko Kirin also has the right to terminate the agreement with respect to individual countries based upon a reasonable determination by if that continued development or marketing of a compound is not justified in such country, subject to providing 60 days notice and the Company's right to delay termination for up to 90 days. Certain agreements between the Company and DRI Capital Inc., or DRI (formerly Drug Royalty L.P.3) limit the Company's right to terminate this license (see note 8).

(d) Takeda GmbH

On March 18, 2013, the Company entered into a Termination and Transition Agreement, with Takeda GmbH, whereby the following two agreements were terminated. (see note 10)

Teduglutide

In September 2007 the Company entered into a license agreement with Takeda GmbH, formerly known as Nycomed (Takeda) in which the Company granted Takeda the right to develop and commercialize teduglutide, outside the United States, Canada and Mexico for the treatment of gastrointestinal disorders. The Company had been developing teduglutide for the treatment of adults with short bowel syndrome (SBS). A positive opinion was issued in June 2012 by the Committee for Medicinal Products for Human Use, followed by the European Commission granting European market authorization on August 30, 2012 for the medicinal product teduglutide (trade name in Europe: Revestive®) as a once-daily treatment for adult patients with SBS.

The Company received $35.0 million in up-front fees under the agreement during 2007. Additionally, under a previously existing licensing agreement with a third party, the Company paid $6.6 million in 2007 to the licensor and was required to make future payments based on teduglutide royalties and milestone payments earned. Due to the Company's continuing involvement, the Company recognized revenue associated with the upfront fees over the estimated performance period and for the years ended December 31, 2013, 2012 and 2011, the Company recognized no license fee revenue.

During 2011, Takeda paid the Company $5.0 million for Takeda's submission of a Marketing Authorization Application (MAA) to the European Medicines Agency (EMA) for clearance to market teduglutide (Revestive®) as a once-daily subcutaneous treatment for SBS. Additionally, under a previously existing licensing agreement with a third party, the Company paid $2.4 million in 2011 to the licensor and will be required to make future payments based on teduglutide royalties and milestone payments earned. The Company recognized revenue from this milestone payment due to the achievement of an as agreed-upon event of a substantive step in the development process and due to the amount of the milestone payment approximated the fair value of achieving the milestone.

Cumulatively through December 31, 2013, the Company had received $40.0 million in license fees and milestone payments from Takeda under the license agreement of which none was received during the years ended December 31, 2013 and 2012 and $5.0 million was received during the year ended December 31, 2011.

Preotact® (parathyroid hormone 1-84)

In 2004, the Company signed a distribution and license agreement with Takeda in which the Company granted Takeda the right to develop and market Preotact® (recombinant parathyroid hormone 1-84) in Europe. The agreement required Takeda to pay the Company up to 22.0 million euros in milestone payments upon regulatory approvals and achievement of certain sales targets. The Company was also entitled to royalties on product sales. In July 2007, the Company entered into a new license agreement with Takeda which superseded the 2004 agreement, pursuant to which the Company granted to Takeda the right to commercialize Preotact in all non-U.S. territories, excluding Japan and Israel; however, Takeda's licensed rights in Canada and Mexico, reverted back to the Company if the Company received regulatory approval for the compound in the U.S. The 2007 license agreement contains milestone and royalty payment obligations which were similar to those under the 2004 distribution and license agreement. Takeda was required to pay the Company royalties on sales of Preotact only in the European Union, European countries outside the European Union, the Commonwealth of Independent States and Turkey. As part of the manufacturing and supply transfer, Takeda paid the Company $11.0 million during 2007, for a significant portion of the Company's existing bulk drug inventory. Cumulatively through December 31, 2013, the Company has received 7.1 million euros in milestone payments from Takeda under the 2004 and 2007 agreements, all of which have been recognized as revenue.

The Company received a royalty from Takeda that represented a percentage, depending on the amount of sales of Preotact, in the teens to low twenties of the Takeda net sales of Preotact in the European Union, European countries outside the European Union, the Commonwealth of Independent States and Turkey. Either party may have terminated upon material breach by the other party subject to a right to cure such breach. Certain agreements with DRI Capital Inc., (DRI) limited the Company's right to terminate this license (see note 9).

Revenues from Takeda related to the Preotact agreement, were $0, $4.8 million and $9.1 million for the years ended December 31, 2013, 2012 and 2011, respectively.

(e) Janssen Pharmaceuticals, Inc.

In December 2006, the Company entered into an agreement with Janssen Pharmaceuticals, Inc. formerly known as Ortho-McNeil Pharmaceutical (Janssen) pertaining to certain NPS patents. Janssen paid the Company an $8.0 million fee and agreed to pay royalties on sales of licensed products. NPS will not incur any development or commercialization costs for these products. The Company is responsible for patent prosecution and maintenance of the related patents. The Company may terminate the agreement if Janssen fails to make a payment and does not cure that default within 30 days, or if it does not cure any other default within sixty days of notice. Janssen may terminate the agreement on 60 days written notice for material breach if NPS has not cured the breach by that time or on 60 days written notice. Termination does not affect any previously-matured payment obligations. In November 2008, the U.S. Food and Drug Administration (FDA) approved Nucynta (tapentadol) hydrochloride immediate release (IR) tablets for the relief of moderate to severe acute pain. This compound is covered under our agreement and Janssen is required to pay the Company a royalty on the product's sales. Nucynta is a novel investigational, centrally acting oral analgesic, which was launched in the second quarter of 2009. The Company recognized revenue of $2.9 million, $2.8 million and $2.2 million in 2013, 2012 and 2011, respectively.

(f) Hoffman-La Roche Inc. and F. Hoffmann-La Roche Ltd.

In December 2008, the Company entered into an agreement with Hoffman-La Roche Inc. and F. Hoffmann-La Roche Ltd. (Roche), under which the Company granted the Roche entities a non-exclusive license (with the right to grant sublicenses) to develop, make, import, use of for sale or sell products covered by patents relating to modulation of NMDA receptor activity using glycine uptake antagonists. In return Roche paid the Company an upfront licensing fee of $2.0 million, and agreed to make additional payments for the achievement of certain regulatory milestones. Through December 31, 2013, Roche has paid the Company $250,000 in milestone payments. Further, Roche agreed to pay royalties on sales of licensed products, if any. Either party may terminate the agreement on 30 days written notice due to a material breach by the other, or in the case of the other party's insolvency. Amounts due prior to termination will remain due thereafter. NPS will not incur any development or commercialization costs for these products. The Company has not recognized revenue in 2013, 2012 and 2011, respectively, as the Company had no continuing involvement in the arrangement.

(g) In-License and Purchase Agreements

Depending on the commercial success of certain products, the Company may be required to pay license fees or royalties. Additionally, the Company is required to pay royalties on sales of cinacalcet HCl up to a cumulative maximum of $15.0 million. To date, $15.0 million has been accrued for related royalties payable on sales of cinacalcet HC1, of which, $9.4 million has been paid. Annual payments due are limited to a maximum of $1.0 million. Accruals of $4.6 million and $1.0 million at December 31, 2013 are recorded in other liabilities and accrued expenses and other current liabilities, respectively.

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Long-term Debt (Maturities) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Long-Term Debt Maturities Details
2014	$ 48,909
2015	31,334
2016	5,005
2017	4,648
2018	18,948
Thereafter	40,088
Total long-term debt	$ 148,932	$ 175,847

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Stock-Based Compensation Plans (Vesting of Restricted Stock Narrative) (Details)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Stock-Based Compensation Plans Vesting Of Restricted Stock Narrative Details
Deferred stock units granted to directors for services, which did not contain any vesting restrictions	35,097	20,334	64,792
Deferred stock units granted to directors for services, vesting over one year	75,940	106,575	0
Deferred stock units outstanding	642,506
Shares of restricted stock granted to employees which will vest over a period of one to three years	458,719	307,720	10,000

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Sales Related Deductions Activity (Tables)

12 Months Ended

Dec. 31, 2013

Sales Related Deductions Activity Tables

Sales Related Deductions Activity

The following table summarizes the provisions, and credits/payments, for government rebates and chargebacks, distribution-related fees, and returns and other sales-related deductions (in thousands):

					Returns and
	Rebates and		Distribution-		Other Sales-
		Chargebacks		Related Fees		Related Deductions		Total
Balance as of December 31, 2012	$	-	$	-	$	-	$	-
Provision related to current period sales		1,375		332		1,098		2,805
Credits/payments		(262)		(185)		(857)		(1,304)
Balance as of December 31, 2013	$	1,113	$	147	$	241	$	1,501

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Income Taxes (Narrative) (Details) (USD $)

12 Months Ended

Dec. 31, 2013

Dec. 31, 2012

Dec. 31, 2011

Income Taxes Narrative Details

Valuation Allowance, Change in Amount

$ (49,100,000)

$ 215,000

$ 0

Other Information Pertaining to Income Taxes

The Company files income tax returns in the United States and various foreign jurisdictions. Of the major jurisdictions, the Company is subject to examination in: the United States for U.S. federal purposes for 2010 and forward and for New Jersey for 2011 and forward. In August 2012, the IRS completed its examination of the Company's U.S. federal income tax returns for the year ended December 31, 2009.  In May 2013, the State of New Jersey completed its examination of the Company's New Jersey income tax returns through the year ended December 31, 2010. There were no adjustments as a result of these examinations.

Accrued penalties and interest

$ 0

$ 0

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Summary of Significant Accounting Policies (Trade Accounts Receivable Narrative) (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Summary Of Significant Accounting Policies Trade Accounts Receivable Narrative Details
Allowance for bad debts	$ 0	$ 0
Bad debt expense	$ 0	$ 0	$ 0

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Share-Based Compensation Plans - Note 12

12 Months Ended

Dec. 31, 2013

Share-Based Compensation Plans

(12) Share-Based Compensation Plans

As of December 31, 2013, the Company has four equity incentive plans: the 1994 Nonemployee Directors' Stock Option Plan (the Directors' Plan), the 1998 Stock Option Plan (the 1998 Plan), the 2005 Omnibus Incentive Plan (the 2005 Plan), and the Employee Stock Purchase Plan ("ESPP"). These plans provide that in the event of certain change in control transactions, including a merger or consolidation in which the Company is not the surviving corporation or a reorganization in which more than fifty-percent (50%) of the shares of the Company's common stock entitled to vote are exchanged, all outstanding, unvested equity awards under these plans will vest, and in the case of stock options, will become immediately exercisable.

As of December 31, 2013, there are no shares reserved for future grant under the Directors' Plan and the 1998 Plan. As of December 31, 2013, there are 4,497,990 shares reserved for future grant under the 2005 Plan. The Company's 2005 Plan provides for the grant of nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units, deferred stock units, performance shares, cash-based awards and other stock-based awards. Under the Company's 2005 Plan, the exercise price of stock options, the grant price of stock appreciation rights and the initial value of performance awards, must be equal to at least 100% of the fair market value of the Company's common stock on the date of grant. Stock options generally vest 28% after year one and 2% per month thereafter or 25% after year one and 6.25% every three months thereafter. Under the Company's 1998 Plan, the exercise price of options is not less than the fair market value of the Company's common stock on the date of grant. The number of shares, terms, and exercise period are determined by the board of directors on a grant-by-grant basis, and the exercise period does not extend beyond ten years from the date of the grant. Stock options generally vest 28% after one year and 2% or 3% per month thereafter or 25% after year one and 6.25% every three months thereafter.

During the year ended December 31, 2010, the Company's Board of Directors awarded a total of 1,130,700 performance condition options to certain of the Company's employees. Vesting of these options are subject to the Company achieving certain performance criteria established at the grant date and the individuals fulfilling a service condition (continued employment). As of December 31, 2013, the performance criteria of 825,340 of these options had been satisfied and these options will become exercisable based on the following vesting schedule: 25% on each of the first four anniversaries of the date of grant, which was February 20, 2010 (the date of grant). The Company recognized $277,000, $1.1 million and $153,000 of compensation expense during the years ended December 31, 2013, 2012 and 2011, respectively, related to these options. The next performance criteria is the acceptance of the BLA filing for Natpara by the FDA. The BLA was accepted by the FDA in January 2014 and will trigger approximately $111,000 of compensation expense related to these options being recognized in the first quarter of 2014.

The Company utilized the Black-Scholes option pricing model to determine the grant date fair value of the awards. As of December 31, 2013, except for the 825,340 options discussed above, the Company does not believe that the achievement of the performance criteria for the other options is probable and therefore has not recognized any compensation expense related to those options during the years ended December 31, 2013, 2012 and 2011, respectively. Compensation expense will be recognized only once the performance condition is probable of being achieved and then only the cumulative amount related to the service condition that has been fulfilled.

On May 19, 2010, the shareholders approved an ESPP whereby qualified employees are allowed to purchase limited amounts of the Company's common stock at the lesser of 85% of the market price at the beginning or end of the offering period. The shareholders have authorized 500,000 shares for purchase by employees. During the years ended December 31, 2013, 2012 and 2011, employees purchased 72,937, 45,553 and 37,065 shares, respectively, under the ESPP. The Company has 329,585 shares available for future purchase as of December 31, 2013.

The Company estimates expected volatility considering implied volatility based on market-traded options on the Company's common stock and historical volatility of the Company's common stock over the expected life of the options. In estimating volatility for the years ended December 31, 2013, 2012 and 2011 the Company weighted implied volatility at zero percent and historical volatility at 100%. The Company recognizes compensation cost for awards on a straight-line basis over the requisite service period for the entire award. Additionally, the Company's policy is to issue new shares of common stock to satisfy stock option exercises, ESPP purchases or grants of restricted shares or deferred stock units.

The compensation expense related to stock options, ESPP purchases, restricted shares and deferred stock units are recorded in expense categories based on where other compensation cost is recorded for employees receiving the awards.

The following table summarizes the effect of compensation cost arising from share-based payment arrangements in the Company's Statements of Operations for the years ended December 31, 2013, 2012 and 2011 for the Company's stock option plans, the ESPP and other share-based awards (in thousands):

		Years ended December 31,
		2013		2012		2011
Research and development	$	4,107	$	3,343	$	1,544
Selling, general and administrative		5,330		4,205		2,556
Amounts charged against income, before
income tax expense	$	9,437	$	7,548	$	4,100

The fair value of each option award is estimated, on the date of grant using the Black-Scholes option-pricing valuation model, which incorporates ranges of assumptions for inputs as shown in the following table. The assumptions are as follows:

• The expected volatility is a blend of implied volatility based on market-traded options on the Company's common stock and historical volatility of the Company's stock over the expected term of the options.

• The Company uses historical data to estimate the expected term of the option; separate groups of employees that have similar historical exercise behavior are considered separately for valuation purposes. The expected term of options granted represents the period of time the options are expected to be outstanding.

• The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods within the expected term of the option.

• The expected dividend yield is based on the Company's current dividend yield as the best estimate of projected dividend yield for periods within the expected term of the option.

	Years ended December 31,
	2013	2012	2011
Dividend yield	—	—	—
Expected volatility	59.15% - 60.69%	61.22% - 67.58%	60.5% - 67.8%
Risk-free interest rate	0.7% - 3.7%	0.6% - 1.1%	0.9% - 3.0%
Expected term (in years)	5.2 - 6.0	5.1 - 5.9	4.8 - 5.9

A summary of activity related to aggregate stock options under all plans is indicated in the following table (in thousands, except per share amounts):

	Year ended December 31, 2013
			Weighted	Weighted
	Number		average	average remaining		Aggregate
	of		exercise	contractual		intrinsic
	options		price	term		value
	(in thousands)			(in years)		(in thousands)
Options outstanding at beginning
of year	7,390	$	6.75
Options granted	2,178		10.69
Options exercised	2,522		5.76
Options forfeited/expired	390		13.29
Options outstanding at end of year	6,656		8.03	7.49	$	148,651
Vested and expected to vest	6,264		7.87	7.40	$	140,880
Options exercisable at end of year	2,690	$	6.69	6.05	$	63,690

The weighted-average grant-date fair value of options granted during the years ended December 31, 2013, 2012 and 2011 was $5.66, $4.46 and $4.57, respectively. The intrinsic value for stock options is defined as the difference between the current market value and the grant price. The total intrinsic value of stock options exercised during the years ended December 31, 2013, 2012 and 2011 was $33.4 million, $2.0 million and $1.0 million, respectively.

Restricted stock, restricted stock units and deferred stock unit grants consist of the Company's common stock. The fair value of each restricted stock grant, restricted stock unit and deferred stock unit is equal to the market price of the Company's stock at the date of grant. Restricted stock and restricted stock unit grants are time vested. During the years ended December 31, 2013, 2012 and 2011, the Company granted 35,097, 20,334 and 64,792 deferred stock units, respectively, to directors for services, which did not contain any vesting restrictions. During the years ended December 31, 2013, 2012 and 2011, the Company granted 75,940, 106,575 and 0 restricted stock units, respectively, to directors for services, which vest over one year. At December 31, 2013, there are 642,506 deferred stock units outstanding. During the years ended December 31, 2013, 2012 and 2011 the Company granted to employees 458,719, 307,720 and 10,000 shares of restricted stock, respectively, which will vest over a period of one to three years.

A summary of activity related to aggregate restricted stock, restricted stock units and deferred stock units as of December 31, 2013, is indicated in the following table (shares in thousands):

	Number of		Weighted-average
	shares		grant date fair value
Nonvested at beginning of year	505	$	6.96
Granted	570		9.18
Vested	(318)		6.37
Forfeited	(5)		8.21
Nonvested at December 31, 2013	752	$	8.89

As of December 31, 2013, there was $17.0 million of total unrecognized compensation cost related to all unvested share-based compensation arrangements that is expected to be recognized over a weighted-average period of 2.55 years.