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 September 30, 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) |
(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 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 November 5, 2004 | |
| Common Stock $.001 par value | 38,771,507 |
2
FINANCIAL INFORMATION
NPS PHARMACEUTICALS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
| September 30, 2004 |
December 31, 2003 |
|||||||
| Assets |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 56,627 | $ | 63,324 | ||||
| Marketable investment securities |
167,397 | 240,550 | ||||||
| Accounts receivable |
730 | 42 | ||||||
| Other current assets |
4,446 | 2,713 | ||||||
| Total current assets |
229,200 | 306,629 | ||||||
| Restricted cash and cash equivalents |
5,277 | — | ||||||
| Plant and equipment: |
||||||||
| Land |
512 | 502 | ||||||
| Building |
1,476 | 1,448 | ||||||
| Equipment |
14,533 | 11,654 | ||||||
| Leasehold improvements |
3,709 | 3,199 | ||||||
| 20,230 | 16,803 | |||||||
| Less accumulated depreciation and amortization |
12,931 | 11,684 | ||||||
| 7,299 | 5,119 | |||||||
| Construction-in-progress |
9,478 | 136 | ||||||
| Net plant and equipment |
16,777 | 5,255 | ||||||
| Goodwill |
8,566 | 8,406 | ||||||
| Purchased intangible assets, net of accumulated amortization |
409 | 1,603 | ||||||
| Debt issuance costs, net of accumulated amortization |
4,546 | 5,464 | ||||||
| Other assets |
151 | 151 | ||||||
| $ | 264,926 | $ | 327,508 | |||||
| Liabilities and Stockholders’ Equity |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 15,094 | $ | 12,461 | ||||
| Accrued expenses and other liabilities |
16,648 | 8,553 | ||||||
| Accrued income taxes |
1,393 | 1,696 | ||||||
| Deferred revenue |
— | 13 | ||||||
| Total current liabilities |
33,135 | 22,723 | ||||||
| Convertible notes payable |
192,000 | 192,000 | ||||||
| Total liabilities |
225,135 | 214,723 | ||||||
| Stockholders’ equity: |
||||||||
| Common stock |
39 | 37 | ||||||
| Additional paid-in capital |
578,132 | 533,929 | ||||||
| Deferred compensation |
(2,810 | ) | (3,716 | ) | ||||
| Accumulated other comprehensive income (loss): |
||||||||
| Net unrealized gain on marketable investment securities |
59 | 1,266 | ||||||
| Foreign currency translation |
(1,196 | ) | (501 | ) | ||||
| Accumulated deficit |
(534,433 | ) | (418,230 | ) | ||||
| Net stockholders’ equity |
39,791 | 112,785 | ||||||
| $ | 264,926 | $ | 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 September 30, |
Nine Months Ended September 30, |
|||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
| Revenues from research and license agreements |
$ | 710 | $ | 7,700 | $ | 13,163 | $ | 7,911 | ||||||||
| Operating expenses: |
||||||||||||||||
| Cost of royalties received |
105 | — | 105 | — | ||||||||||||
| Merger costs and termination fees |
— | 351 | — | 40,223 | ||||||||||||
| Research and development |
32,204 | 31,253 | 104,141 | 79,505 | ||||||||||||
| General and administrative |
7,074 | 4,888 | 23,544 | 14,185 | ||||||||||||
| Amortization of goodwill and acquired intangibles |
396 | 376 | 1,172 | 1,091 | ||||||||||||
| Total operating expenses |
39,779 | 36,868 | 128,962 | 135,004 | ||||||||||||
| Operating loss |
(39,069 | ) | (29,168 | ) | (115,799 | ) | (127,093 | ) | ||||||||
| Other income (expense): |
||||||||||||||||
| Interest income |
1,242 | 1,521 | 3,918 | 4,218 | ||||||||||||
| Interest expense, net |
(1,687 | ) | (1,731 | ) | (5,156 | ) | (1,972 | ) | ||||||||
| Gain (loss) on sale of marketable investment securities |
1 | (69 | ) | 77 | 303 | |||||||||||
| Gain on disposition of equipment, leasehold improvements and leases |
— | — | — | 24 | ||||||||||||
| Foreign currency transaction gain |
204 | 67 | 488 | 357 | ||||||||||||
| Other |
68 | 42 | 151 | 163 | ||||||||||||
| Total other income (expense) |
(172 | ) | (170 | ) | (522 | ) | 3,093 | |||||||||
| Loss before income taxes |
(39,241 | ) | (29,338 | ) | (116,321 | ) | (124,000 | ) | ||||||||
| Income tax benefit |
(71 | ) | (395 | ) | (118 | ) | (2,091 | ) | ||||||||
| Net loss |
$ | (39,170 | ) | $ | (28,943 | ) | $ | (116,203 | ) | $ | (121,909 | ) | ||||
| Basic and diluted net loss per common and potential common share: |
$ | (1.02 | ) | $ | (0.79 | ) | $ | (3.08 | ) | $ | (3.40 | ) | ||||
| Weighted average common and potential common shares outstanding - basic and diluted |
38,589 | 36,796 | 37,677 | 35,864 | ||||||||||||
See accompanying notes to condensed consolidated financial statements.
4
NPS PHARMACEUTICALS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
| Nine Months Ended September 30, |
||||||||
| 2004 |
2003 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net loss |
$ | (116,203 | ) | $ | (121,909 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
| Depreciation and amortization |
3,281 | 2,455 | ||||||
| Gain on disposition of equipment, leasehold improvements and leases |
— | (24 | ) | |||||
| Realized gain on sale of marketable investment securities |
(77 | ) | (303 | ) | ||||
| Issuance of common stock in lieu of cash for services |
804 | 495 | ||||||
| Compensation expense on stock options |
1,400 | 768 | ||||||
| Issuance of common stock in lieu of merger termination fee |
— | 35,621 | ||||||
| Increase in operating assets: |
||||||||
| Accounts receivable |
(688 | ) | (49 | ) | ||||
| Other current assets and other assets |
(1,701 | ) | (466 | ) | ||||
| Restricted cash and cash equivalents |
(5,277 | ) | — | |||||
| Increase (decrease) in operating liabilities: |
||||||||
| Accounts payable, accrued expenses and other liabilities |
10,174 | 8,395 | ||||||
| Accrued income taxes |
(321 | ) | ||||||
| Deferred revenue |
(11 | ) | (51 | ) | ||||
| Net cash used in operating activities |
(108,619 | ) | (75,068 | ) | ||||
| Cash flows from investing activities: |
||||||||
| Net sale of marketable investment securities |
72,024 | (82,061 | ) | |||||
| Acquisition of equipment and leasehold improvements |
(12,639 | ) | (1,400 | ) | ||||
| Proceeds from sale of equipment |
— | 24 | ||||||
| Net cash provided by (used in) investing activities |
59,385 | |||||||