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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 September 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
(State or other jurisdiction
of incorporation or organization)
   
87-0439579
(I.R.S. Employer
Identification No.)
420 Chipeta Way, Salt Lake City, Utah
(Address of principal executive offices)
   
84108-1256
(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 October 16, 2002
Common Stock $.001 par value
   
30,453,282*
 
*
 
Includes 323,320 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
 
          
Page No.
PART I
  
FINANCIAL INFORMATION
       
Item 1.
  
Condensed Consolidated Financial Statements.
       
        
3
        
4
        
5
        
6
Item 2.
       
10
Item 3.
       
16
Item 4.
       
17
PART II
  
OTHER INFORMATION
       
Item 5.
       
17
Item 6.
       
18
    
19
    
20

2

Table of Contents
PART I    FINANCIAL INFORMATION
 
Item 1.    Consolidated Financial Statements.
 
NPS PHARMACEUTICALS, INC. AND SUBSIDIARIES
(a Development Stage Enterprise)
 
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
 
    
September 30, 2002
     
December 31, 2001
  
Assets
                  
Current assets:
                  
Cash and cash equivalents
   
$
33,478
 
   
$
39,142
 
Marketable investment securities
   
 
124,123
 
   
 
168,376
 
Accounts receivable
   
 
1,601
 
   
 
8,609
 
Other current assets
   
 
2,385
 
   
 
3,228
 
    
  
Total current assets
   
 
161,587
 
   
 
219,355
 
Plant and equipment:
                  
Land
   
 
412
 
   
 
409
 
Building
   
 
1,122
 
   
 
1,097
 
Equipment
   
 
9,460
 
   
 
8,892
 
Leasehold improvements
   
 
3,007
 
   
 
2,988
 
    
  
    
 
14,001
 
   
 
13,386
 
Less accumulated depreciation and amortization
   
 
9,679
 
   
 
8,518
 
    
  
Net plant and equipment
   
 
4,322
 
   
 
4,868
 
Goodwill, net of accumulated amortization
   
 
6,892
 
   
 
6,838
 
Purchased intangible assets, net of accumulated amortization
   
 
2,958
 
   
 
3,913
 
Other assets
   
 
2
 
   
 
2
 
    
  
    
$
175,761
 
   
$
234,976
 
    
  
Liabilities and Stockholders’ Equity
                  
Current liabilities:
                  
Current installments of obligations under capital leases
   
$
—
 
   
$
4
 
Accounts payable
   
 
5,942
 
   
 
10,737
 
Accrued expenses
   
 
5,099
 
   
 
2,060
 
Accrued severance
   
 
—  
 
   
 
240
 
Deferred revenue
   
 
119
 
   
 
—  
 
    
  
Total current liabilities
   
 
11,160
 
   
 
13,041
 
Stockholders’ equity:
                  
Common stock
   
 
30
 
   
 
30
 
Additional paid-in capital
   
 
385,692
 
   
 
382,681
 
Deferred compensation
   
 
(5
)
   
 
(34
)
Accumulated other comprehensive income
   
 
1,320
 
   
 
261
 
Deficit accumulated during development stage
   
 
(222,436
)
   
 
(161,003
)
    
  
Net stockholders’ equity
   
 
164,601
 
   
 
221,935
 
    
  
    
$
175,761
 
   
$
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
September 30,
     
Nine Months Ended
September 30,
       
October 22, 1986,
(inception) through
September 30, 2002
  
    
2002
     
2001
     
2002
     
2001
       
Revenues from research and license agreements
   
$
140
 
   
$
395
 
   
$
2,021
 
   
$
1,377
 
     
$
75,540
 
Operating expenses:
                                               
Research and development
   
 
16,874
 
   
 
14,041
 
   
 
58,217
 
   
 
38,238
 
     
 
237,763
 
General and administrative
   
 
3,206
 
   
 
2,512
 
   
 
10,365
 
   
 
8,988
 
     
 
69,516
 
Amortization of goodwill and acquired intangibles
   
 
334
 
   
 
856
 
   
 
991
 
   
 
2,580
 
     
 
7,963
 
In-process research and development acquired
   
 
—  
 
   
 
—  
 
   
 
—  
 
   
 
—  
 
     
 
17,760
 
    
  
  
  
    
Total operating expenses
   
 
20,414
 
   
 
17,409
 
   
 
69,573
 
   
 
49,806
 
     
 
333,002
 
    
  
  
  
    
Operating loss
   
 
(20,274
)
   
 
(17,014
)
   
 
(67,552
)
   
 
(48,429
)
     
 
(257,462
)
Other income (expense):
                                               
Interest income
   
 
1,563
 
   
 
2,688
 
   
 
5,396
 
   
 
9,666
 
     
 
33,948
 
Interest expense
   
 
—  
 
   
 
—  
 
   
 
—  
 
   
 
(5
)
     
 
(806
)
Gain on sale of marketable investment securities
   
 
375
 
   
 
137
 
   
 
471
 
   
 
961
 
     
 
2,311
 
Gain (loss) on disposition of equipment, leasehold improvements and leases
   
 
—  
 
   
 
—  
 
   
 
13
 
   
 
11
 
     
 
(1,174
)
Foreign currency transaction gain (loss)
   
 
(71
)
   
 
17
 
   
 
(15
)
   
 
38
 
     
 
173
 
Other
   
 
123
 
   
 
47
 
   
 
264
 
   
 
1,398
 
     
 
2,402
 
    
  
  
  
    
Total other income
   
 
1,990
 
   
 
2,889
 
   
 
6,129
 
   
 
12,069
 
     
 
36,854
 
    
  
  
  
    
Loss before tax expense
   
 
(18,284
)
   
 
(14,125
)
   
 
(61,423
)
   
 
(36,360
)
     
 
(220,608
)
Income tax expense
   
 
—  
 
   
 
—  
 
   
 
10
 
   
 
—  
 
     
 
1,328
 
    
  
  
  
    
Loss before cumulative effect of change in accounting principle
   
 
(18,284
)
   
 
(14,125
)
   
 
(61,433
)
   
 
(36,360
)
     
 
(221,936
)
Cumulative effect on prior years (to December 31, 1999) of changing to a different revenue recognition method
   
 
—  
 
   
 
—  
 
   
 
—  
 
   
 
—  
 
     
 
(500
)
    
  
  
  
    
Net loss
   
$
(18,284
)
   
$
(14,125
)
   
$
(61,433
)
   
$
(36,360
)
     
$
(222,436
)
    
  
  
  
    
Basic and diluted net loss per common and common equivalent share
   
$
(0.60
)
   
$
(0.47
)
   
$
(2.02
)
   
$
(1.22
)
           
    
  
  
  
          
Weighted average common and common-equivalent shares outstanding—basic and diluted
   
 
30,435
 
   
 
29,993
 
   
 
30,338
 
   
 
29,859