UNITED STATES
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 March 31, 2004
| ¨ | 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) |
(IRS 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 by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). 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 May 13, 2004 | |
| Common Stock $.001 par value | 37,231,618 |
| Page No. | ||||||
| PART I |
FINANCIAL INFORMATION | |||||
| Item 1. | ||||||
| 3 | ||||||
| 4 | ||||||
| 5 | ||||||
| 7 | ||||||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
11 | ||||
| Item 3. | 20 | |||||
| Item 4. | 21 | |||||
| PART II |
OTHER INFORMATION | |||||
| Item 1. | 22 | |||||
| Item 6. | 23 | |||||
| 23 | ||||||
2
PART I
NPS PHARMACEUTICALS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
| March 31, 2004 |
December 31, 2003 |
|||||||
| Assets |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 55,417 | $ | 63,324 | ||||
| Marketable investment securities |
206,816 | 240,550 | ||||||
| Accounts receivable |
10,053 | 42 | ||||||
| Other current assets |
3,895 | 2,713 | ||||||
| Total current assets |
276,181 | 306,629 | ||||||
| Restricted cash and cash equivalents |
5,269 | — | ||||||
| Plant and equipment: |
||||||||
| Land |
497 | 502 | ||||||
| Building |
1,479 | 1,448 | ||||||
| Equipment |
12,972 | 11,654 | ||||||
| Leasehold improvements |
3,209 | 3,199 | ||||||
| 18,157 | 16,803 | |||||||
| Less accumulated depreciation and amortization |
12,013 | 11,684 | ||||||
| 6,144 | 5,119 | |||||||
| Construction-in-progress |
1,058 | 136 | ||||||
| Net plant and equipment |
7,202 | 5,255 | ||||||
| Goodwill |
8,320 | 8,406 | ||||||
| Purchased intangible assets, net of accumulated amortization |
1,190 | 1,603 | ||||||
| Debt issuance costs, net of accummulated amortization |
5,158 | 5,464 | ||||||
| Other assets |
151 | 151 | ||||||
| $ | 303,471 | $ | 327,508 | |||||
| Liabilities and Stockholders’ Equity |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 18,002 | $ | 12,461 | ||||
| Accrued expenses and other liabilities |
12,578 | 8,553 | ||||||
| Accrued income taxes |
1,558 | 1,696 | ||||||
| Deferred income |
3 | 13 | ||||||
| Total current liabilities |
32,141 | 22,723 | ||||||
| Convertible notes payable |
192,000 | 192,000 | ||||||
| Total liabilities |
224,141 | 214,723 | ||||||
| Stockholders’ equity: |
||||||||
| Common stock |
37 | 37 | ||||||
| Additional paid-in capital |
536,346 | 533,929 | ||||||
| Deferred compensation |
(3,418 | ) | (3,716 | ) | ||||
| Accumulated other comprehensive income (loss): |
||||||||
| Net unrealized gain on marketable investment securities |
1,132 | 1,266 | ||||||
| Foreign currency translation |
(886 | ) | (501 | ) | ||||
| Deficit accumulated during development stage |
(453,881 | ) | (418,230 | ) | ||||
| Net stockholders’ equity |
79,330 | 112,785 | ||||||
| $ | 303,471 | $ | 327,508 | |||||
See accompanying notes to condensed consolidated financial statements.
3
NPS PHARMACEUTICALS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
| Three Months Ended March 31, |
||||||||
| 2004 |
2003 |
|||||||
| Revenues from research and license agreements |
$ | 12,011 | $ | 138 | ||||
| Operating expenses: |
||||||||
| Research and development |
40,598 | 24,821 | ||||||
| General and administrative |
6,531 | 4,979 | ||||||
| Amortization of goodwill and acquired intangibles |
394 | 343 | ||||||
| Total operating expenses |
47,523 | 30,143 | ||||||
| Operating loss |
(35,512 | ) | (30,005 | ) | ||||
| Other income (expense): |
||||||||
| Interest income |
1,469 | 1,428 | ||||||
| Interest expense |
(1,744 | ) | — | |||||
| Gain (loss) on sale of marketable investment securities |
72 | 205 | ||||||
| Gain (loss) on disposition of equipment, leasehold improvements and leases |
— | 24 | ||||||
| Foreign currency transaction gain (loss) |
108 | 175 | ||||||
| Other |
37 | 83 | ||||||
| Total other income (expense) |
(58 | ) | 1,915 | |||||
| Loss before income taxes |
(35,570 | ) | (28,090 | ) | ||||
| Income tax expense (benefit) |
81 | — | ||||||
| Net loss |
$ | (35,651 | ) | $ | (28,090 | ) | ||
| Basic and diluted net loss per common and potential common share: |
$ | (0.96 | ) | $ | (0.80 | ) | ||
| Weighted average common and potential common shares outstanding - basic and diluted |
37,182 | 35,132 | ||||||
See accompanying notes to condensed consolidated financial statements.
4
NPS PHARMACEUTICALS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
| Three Months Ended March 31, |
||||||||
| 2004 |
2003 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net loss |
$ | (35,651 | ) | $ | (28,090 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
| Depreciation and amortization |
1,051 | 670 | ||||||
| Loss (gain) on disposition of equipment, leasehold improvements and leases |
— | (24 | ) | |||||
| Realized gain on sale of marketable investment securities |
(72 | ) | (205 | ) | ||||
| Issuance of common stock in lieu of cash for services |
750 | 457 | ||||||
| Compensation expense on stock options |
523 | 36 | ||||||
| Decrease (increase) in operating assets: |
||||||||
| Accounts receivable |
(10,011 | ) | — | |||||
| Other current assets and other assets |
(1,177 | ) | 1,014 | |||||
| Restricted cash and cash equivalents |
(5,269 | ) | — | |||||
| Increase (decrease) in operating liabilities: |
||||||||
| Accounts payable, accrued expenses and other liabilities |
9,677 | 1,367 | ||||||
| Accrued income taxes |
(120 | ) | — | |||||
| Deferred income |
(11 | ) | (44 | ) | ||||
| Net cash used in operating activities |
(40,310 | ) | (24,819 | ) | ||||
| Cash flows from investing activities: |
||||||||
| Net sale (purchase) of marketable investment securities |
33,673 | (1,440 | ) | |||||
| Acquisition of equipment and leasehold improvements |
(2,325 | ) | (523 | ) | ||||
| Proceeds from sale of equipment |
— | 24 | ||||||
| Cash paid for acquisition, net of cash received |
— | (406 | ) | |||||
| Net cash provided by (used in) investing activities |
31,348 | (2,345 | ) | |||||
| Cash flows from financing activities: |
||||||||
| Proceeds from issuance of common stock |
1,441 | 305 | ||||||
| Net cash provided by financing activities |
1,441 | 305 | ||||||
| Effect of exchange rate changes on cash |
(386 | ) | 61 | |||||
| Net increase (decrease) in cash and cash equivalents |
(7,907 | ) | (26,798 | ) | ||||
| Cash and cash equivalents at beginning of period |
63,324 | 96,094 | ||||||
| Cash and cash equivalents at end of period |
$ | 55,417 | $ | 69,296 | ||||
See accompanying notes to condensed consolidated financial statements.
5
NPS PHARMACEUTICALS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
| Three Months Ended March 31, |
||||||||
| 2004 |
2003 |
|||||||
| Supplemental Disclosure of Cash Flow Information: |
||||||||
| Cash paid for interest |
$ | — | $ | — | ||||
| Cash paid for income taxes |
200 | — | ||||||
| Supplemental Schedule of Noncash Investing and Financing Activities: |
||||||||
| Unrealized loss on marketable investment securities |
(134 | ) | (323 | ) | ||||
| Accrued acquisition costs |
— | 3,206 | ||||||
See accompanying notes to condensed consolidated financial statements.
6
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
| (1) | Basis of Presentation |
The accompanying unaudited condensed consolidated financial statements included herein have been prepared by NPS Pharmaceuticals, Inc. (NPS) in accordance with the rules and regulations of the Securities and Exchange Commission (SEC). The condensed consolidated financial statements are comprised of the financial statements of NPS and its subsidiaries, collectively referred to as the Company. The Company carries one investment in a non-public corporation at cost. In management’s opinion, the interim financial data presented includes all adjustments (consisting solely of normal recurring items) necessary for fair presentation. All intercompany accounts and transactions have been eliminated. All monetary amounts are reported in U.S. dollars unless specified otherwise. Through December 31, 2003, the Company had been considered a development stage enterprise. During the first quarter of 2004, the Company commenced its principle operations when Sensipar®