NPS first quarter net loss increases to $10.6 million

NPS Pharmaceuticals, Inc. (NASDAQ: NPSP), a specialty pharmaceutical company developing orphan therapeutics for rare gastrointestinal and endocrine disorders, today reported its results for the first quarter of 2012.    

NPS reported a net loss of $10.6 million or $0.12 per diluted share for the first quarter of 2012, compared to a net loss of $9.2 million or $0.13 per diluted share for the first quarter of 2011. Cash and investments totaled $137.7 million at March 31, 2012, compared with $162.2 million at December 31, 2011.

"It's an exciting time for NPS as we pursue marketing approvals for both Gattex and Natpara," said Francois Nader, MD, president and chief executive officer of NPS Pharmaceuticals. "We were very pleased to report earlier today that four additional patients completely eliminated their dependence on parenteral nutrition and intravenous fluids while on long-term Gattex therapy in the ongoing STEPS 2 open-label extension study. There are now a total of 11 patients who achieved independence from PN and IV fluids while on Gattex therapy. This is a dramatic finding that reinforces our belief in the value of Gattex as a first-in-class therapy. The FDA is reviewing our New Drug Application for Gattex with a current action date of September 30, 2012."

Dr. Nader added, "In parallel, we are preparing our Biologics License Application (BLA) for Natpara in hypoparathyroidism and our submission remains on track for later this year. We expect to gain additional insights at our pre-BLA meeting with the FDA later this month. And we are also eager to present additional data from the REPLACE study at the annual meeting of the Endocrine Society in June."

Recent product development highlights

Gattex^® (teduglutide) in short bowel syndrome

• Today the company reported that four additional patients were successfully weaned from parenteral nutrition (PN) and intravenous (IV) fluids in STEPS 2, a 24-month open-label continuation study in which all participants receive Gattex therapy. To date, a total of seven patients participating in the ongoing STEPS 2 study have achieved independence from PN and IV fluids. These seven patients had depended on PN/IV fluids for periods ranging from two to 14 years.
• NPS recently received confirmation from the U.S. Food and Drug Administration (FDA) that it will convene an advisory committee meeting with respect to the Gattex New Drug Application (NDA) and scheduling activities are ongoing. If the advisory committee meeting cannot be scheduled in a timely manner or if additional information or analyses are solicited by FDA as a result of their Mid-cycle Review Meeting, the current Prescription Drug User Fee Act (PDUFA) target action date of September 30, 2012 could be extended.
• The characteristics of seven patients with short bowel syndrome who previously achieved independence from PN and IV fluids while on Gattex therapy in two Phase 3 studies will be presented during a poster session at Digestive Disease Week^® (DDW^®) in May. Three patients are from the ongoing STEPS 2 study and four patients were from the company's earlier Phase 3 studies. Additional poster presentations will include an analysis of plasma citrulline in patients treated with Gattex, as well as the effects of Gattex on gastric emptying in healthy subjects.

Natpara™ (recombinant human parathyroid hormone [1-84]) in hypoparathyroidism

• Results of REPLACE, the company's Phase 3 registration study of Natpara in hypoparathyroidism, have been accepted as an oral presentation at ENDO 2012, the annual meeting of The Endocrine Society, in June. Additional poster presentations will include: (i) baseline demographics and subject characteristics and (ii) safety and tolerability in the REPLACE study.

NPSP790 and NPSP795 (calcilytics)

The transfer of technology from GlaxoSmithKline (GSK) is underway for two Phase 1 calcilytic compounds, NPSP790 and NPSP795. NPS believes calcilytics may have clinical application in treating rare disorders involving increased calcium receptor activity, such as autosomal dominant hypocalcemia with hypercalciuria or ADHH. NPS received these two compounds under an August 2011 agreement with GSK.

Financial results

Royalties

Royalty revenues were $22.9 million for the first quarter of 2012, compared with $18.6 million for the first quarter of 2011. NPS earns royalties on (i) Amgen's sales of Sensipar^®/Mimpara^® (cinacalcet HCl), (ii) Nycomed's sales of Preotact^® (recombinant parathyroid hormone 1-84 [rDNA origin] injection), (iii) Kyowa Hakko Kirin's sales of REGPARA^® (cinacalcet HCl), and (iv) Janssen Pharmaceuticals' sales of NUCYNTA^® (tapentadol) and NUCYNTA^® ER (tapentadol extended-release tablets).

The components of royalties are summarized as follows:

The company's royalty rights related to Sensipar/Mimpara, Preotact, and REGPARA have been partially monetized and classified as non-recourse debt. After repayment of the obligations, as set forth in the agreements, any remaining cash flows from these royalties will return to NPS.

Research and development

Research and development expenses were $20.2 million for the first quarter of 2012, compared with $14.9 million for the first quarter of 2011. The increase in research and development expenses was due to the advancement of the company's short bowel syndrome and hypoparathyroidism product registration programs.

General and administrative

General and administrative expenses were $7.8 million for the first quarter of 2012, compared with $5.1 million for the first quarter of 2011. The increase in general and administrative expenses was due to costs related to commercial-readiness activities.

Interest expense

Interest expense was $5.5 million for the first quarter of 2012 and $10.2 million for the first quarter of 2011. Interest expense is largely attributable to non-recourse debt secured by the company's Sensipar/Mimpara, Preotact, and REGPARA royalties. The decline in interest expense was primarily attributable to a reduction in the outstanding principal and interest rate associated with Sensipar/Mimpara-secured non-recourse debt.

Cash and investments

At March 31, 2012, the company's cash, cash equivalents, and marketable investment securities totaled approximately $138 million compared with $162 million at December 31, 2011.

NPS continues to expect its 2012 cash burn to be in the range of $105 to $125 million. The company's cash burn is defined as the net change in cash, cash equivalents, and marketable investment securities, excluding any proceeds from external financing activities.

Cash burn is a non-GAAP financial measure that may be considered in addition to results prepared in accordance with U.S. generally accepted accounting principles (GAAP). This non-GAAP measure should not be considered a substitute for, or superior to, GAAP results. NPS believes that cash burn is relevant and useful information for the company and its investors as it provides a meaningful way of determining cash available for and net cash used in operations of the company.

Long-term debt

At March 31, 2012, the company's only recourse debt was $16.5 million in 5.75% convertible notes due in 2014.

The other debt on the company's balance sheet is non-recourse to the company and solely secured by its royalty rights related to Sensipar/Mimpara, Preotact, and REGPARA. After repayment of the obligations, as set forth in the agreements, the cash flows from the royalties will return to NPS.