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Table of Contents
 
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 10–Q
 
x    Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
For the quarterly period ended June 30, 2002
 
¨    Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
For the Transition Period from                                                   to                                                  .
 
Commission File Number    0-23272
 
NPS PHARMACEUTICALS, INC.
(Exact name of Registrant as specified in its charter)
 
Delaware
  
87–0439579
(State or other jurisdiction
of incorporation or organization)
  
(I.R.S. Employer Identification No.)
 
420 Chipeta Way, Salt Lake City, Utah
  
84108-1256
(Address of principal executive offices)
  
(Zip Code)
 
(801) 583-4939
(Registrant’s telephone number, including area code)
 
N/A
(Former name, former address and former fiscal year, if changed since last report)
 
 
 
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities 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  ¨
 
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
 
Class
  
Outstanding at July 19, 2002
Common Stock $.001 par value
  
30,423,017*
 
* Includes 402,598 shares of exchangeable stock which are exchangeable at any time into common stock on a one-for-one basis. Holders of shares of exchangeable stock are entitled to dividends and other rights economically equivalent to those of the common stock, and, through a voting trust, holders are entitled to vote at all meetings of stockholders of the Registrant, also on a one-for-one basis.
 

Table of Contents
 
TABLE OF CONTENTS
 
PART I
   
FINANCIAL INFORMATION
   
Page No.
Item 1.
   
Condensed Consolidated Financial Statements.
     
       
3  
       
4  
       
5  
       
7  
Item 2.
      
10
Item 3.
      
15
PART II
   
OTHER INFORMATION
     
Item 4.
      
16
Item 5.
      
17
Item 6.
      
17
  
18

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Table of Contents
PART I    FINANCIAL INFORMATION
 
Item 1.    Condensed Consolidated Financial Statements.
 
NPS PHARMACEUTICALS, INC. AND SUBSIDIARIES
(a Development Stage Enterprise)
 
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
    
June 30, 2002
       
December 31, 2001
  
Assets
                    
Current assets:
                    
Cash and cash equivalents
   
$
48,378
 
     
$
39,142
 
Marketable investment securities
   
 
127,370
 
     
 
168,376
 
Accounts receivable
   
 
2,306
 
     
 
8,609
 
Other current assets
   
 
2,944
 
     
 
3,228
 
    
    
Total current assets
   
 
180,998
 
     
 
219,355
 
Plant and equipment:
                    
Land
   
 
428
 
     
 
409
 
Building
   
 
1,166
 
     
 
1,097
 
Equipment
   
 
9,327
 
     
 
8,892
 
Leasehold improvements
   
 
3,020
 
     
 
2,988
 
    
    
    
 
13,941
 
     
 
13,386
 
Less accumulated depreciation and amortization
   
 
9,362
 
     
 
8,518
 
    
    
Net plant and equipment
   
 
4,579
 
     
 
4,868
 
Goodwill, net of accumulated amortization
   
 
7,165
 
     
 
6,838
 
Purchased intangible assets, net of accumulated amortization
   
 
3,417
 
     
 
3,913
 
Other assets
   
 
2
 
     
 
2
 
    
    
    
$
196,161
 
     
$
234,976
 
    
    
Liabilities and Stockholders’ Equity
                    
Current liabilities:
                    
Current installments of obligations under capital leases
   
$
2
 
     
$
4
 
Accounts payable
   
 
9,862
 
     
 
10,737
 
Accrued expenses
   
 
4,514
 
     
 
2,060
 
Accrued severance
   
 
6
 
     
 
240
 
Deferred revenue
   
 
162
 
     
 
—  
 
    
    
Total current liabilities
   
 
14,546
 
     
 
13,041
 
Stockholders’ equity:
                    
Common stock
   
 
30
 
     
 
30
 
Additional paid-in capital
   
 
385,409
 
     
 
382,681
 
Deferred compensation
   
 
(13
)
     
 
(34
)
Accumulated other comprehensive income
   
 
341
 
     
 
261
 
Deficit accumulated during development stage
   
 
(204,152
)
     
 
(161,003
)
    
    
Net stockholders’ equity
   
 
181,615
 
     
 
221,935
 
    
    
    
$
196,161
 
     
$
234,976
 
    
    
 
See accompanying notes to condensed consolidated financial statements.

3

Table of Contents
 
 
NPS PHARMACEUTICALS, INC. AND SUBSIDIARIES
(A Development Stage Enterprise)
 
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
 
    
Three Months Ended
June 30,
     
Six Months Ended
June 30,
       
October 22, 1986,
(inception) through June 30, 2002
  
    
2002
     
2001
     
2002
     
2001
       
Revenues from research and license agreements
   
$
1,094
 
   
$
491
 
   
$
1,881
 
   
$
982
 
     
$
75,400
 
Operating expenses:
                                               
Research and development
   
 
20,239
 
   
 
16,930
 
   
 
41,343
 
   
 
24,197
 
     
 
220,889
 
General and administrative
   
 
3,577
 
   
 
2,797
 
   
 
7,159
 
   
 
6,476
 
     
 
66,310
 
Amortization of goodwill and acquired intangibles
   
 
332
 
   
 
858
 
   
 
657
 
   
 
1,724
 
     
 
7,629
 
In-process research and development acquired
   
 
—  
 
   
 
—  
 
   
 
—  
 
   
 
—  
 
     
 
17,760
 
    
  
  
  
    
Total operating expenses
   
 
24,148
 
   
 
20,585
 
   
 
49,159
 
   
 
32,397
 
     
 
312,588
 
    
  
  
  
    
Operating loss
   
 
(23,054
)
   
 
(20,094
)
   
 
(47,278
)
   
 
(31,415
)
     
 
(237,188
)
Other income (expense):
                                               
Interest income
   
 
1,817
 
   
 
3,173
 
   
 
3,833
 
   
 
6,978
 
     
 
32,385
 
Interest expense
   
 
—  
 
   
 
—  
 
   
 
—  
 
   
 
(5
)
     
 
(806
)
Gain (loss) on sale of marketable investment securities
   
 
(39
)
   
 
371
 
   
 
96
 
   
 
824
 
     
 
1,936
 
Gain (loss) on disposition of equipment, leasehold improvements and leases
   
 
13
 
   
 
—  
 
   
 
13
 
   
 
11
 
     
 
(1,174
)
Foreign currency transaction gain
   
 
74
 
   
 
18
 
   
 
56
 
   
 
21
 
     
 
244
 
Other
   
 
54
 
   
 
365
 
   
 
141
 
   
 
1,351
 
     
 
2,279
 
    
  
  
  
    
Total other income
   
 
1,919
 
   
 
3,927
 
   
 
4,139
 
   
 
9,180
 
     
 
34,864
 
    
  
  
  
    
Loss before tax expense
   
 
(21,135
)
   
 
(16,167
)
   
 
(43,139
)
   
 
(22,235
)
     
 
(202,324
)
Income tax expense
   
 
10
 
   
 
—  
 
   
 
10
 
   
 
—  
 
     
 
1,328
 
    
  
  
  
    
Loss before cumulative effect of change in accounting principle
   
 
(21,145
)
   
 
(16,167
)
   
 
(43,149
)
   
 
(22,235
)
     
 
(203,652
)
Cumulative effect on prior years (to December 31, 1999) of changing to a different revenue recognition method
   
 
—  
 
   
 
—  
 
   
 
—  
 
   
 
—  
 
     
 
(500
)
    
  
  
  
    
Net loss
   
$
(21,145
)
   
$
(16,167
)
   
$
(43,149
)
   
$
(22,235
)
     
$
(204,152
)
    
  
  
  
    
Basic and diluted net loss per common and common equivalent share:
   
$
(0.70
)
   
$
(0.54
)
   
$
(1.42
)
   
$
(0.75
)
           
    
  
  
  
          
Weighted average common and common-equivalent shares outstanding—basic and diluted
   
 
30,364
 
   
 
29,846
 
   
 
30,288
 
   
 
29,790
 
           
    
  
  
  
          
 
See accompanying notes to condensed consolidated financial statements.

4

Table of Contents
 
NPS PHARMACEUTICALS, INC. AND SUBSIDIARIES
(a Development Stage Enterprise)
 
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)