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).