NPS Pharmaceuticals, Inc. (NASDAQ: NPSP), a biopharmaceutical company pioneering and delivering therapies that transform the lives of patients with rare diseases worldwide, reported its results for the fourth quarter and year ended December 31, 2012.
“We executed our business plan exceptionally well in 2012 and secured FDA approval of our first proprietary product, Gattex®,” said Francois Nader, M.D., president and chief executive officer of NPS Pharmaceuticals. “The launch of Gattex is underway as the first and only long-term treatment for adult short bowel syndrome, an ultra-orphan and highly debilitating disorder. Gattex has tremendous potential to transform patients’ lives and grow our business substantially. In the year ahead, we look forward to providing updates on our launch progress, reporting results from our STEPS 2 study, and beginning a pediatric development program for Gattex. We are also preparing for other important milestones including the submission of our Biologics License Application for our second proprietary product, Natpara®, as the first replacement therapy for hypoparathyroidism.”
Dr. Nader added: “It is especially notable that our royalty-based portfolio continues to provide an important financial foundation for our business, including our Sensipar royalty agreement with Amgen that is now generating more than $64 million in annual cash flows that are expected to increase to more than $100 million after repayment of the Amgen royalty advance.”
Gattex launch highlights
Other business highlights
Gattex® (teduglutide) in short bowel syndrome
Natpara® (recombinant human parathyroid hormone [1-84]) in hypoparathyroidism
Royalty revenues were $27.1 million for the fourth quarter of 2012 and $26.3 million for the fourth quarter of 2011. For the full year, royalty revenues were $105.6 million for 2012 compared with $96.5 million for 2011. NPS earns royalties on (i) Amgen’s sales of Sensipar®/Mimpara® (cinacalcet HCl), (ii) Kyowa Hakko Kirin’s sales of REGPARA® (cinacalcet HCl), (iii) Nycomed’s sales of Preotact® (recombinant parathyroid hormone 1-84 [rDNA origin] injection), and (iv) Janssen Pharmaceuticals’ sales of NUCYNTA® (tapentadol) and NUCYNTA® ER (tapentadol extended-release tablets).
The components of royalties are summarized as follows:
|NUCYNTA and other||0.8||0.6||2.8||2.2|
On February 15, 2013, the company received a cash payment of $16 million for the Sensipar royalties earned during the fourth quarter of 2012. The remaining $8 million of Sensipar royalties will be retained to repay a royalty advance received in August 2011 from Amgen. At December 31, 2012, NPS had $80.2 million in long-term, non-recourse debt secured by its Sensipar royalties.
Research and development
Research and development expenses were $24.0 million for the fourth quarter of 2012 and $21.6 million for the fourth quarter of 2011. The increase in fourth-quarter research and development expense is primarily driven by personnel-related expenses, including non-cash expense associated with equity awards that vested upon Gattex approval. For the full year, research and development expenses were $94.8 million for 2012 compared with $73.8 million for 2011. The increase in 2012 research and development expenses was primary due to the production of pre-launch Gattex and Natpara inventory, regulatory activities, medical affairs activities, and personnel-related costs, which included non-cash expense associated with equity awards that vested upon the approval of Gattex.
General and administrative
General and administrative expenses were $11.2 million for the fourth quarter of 2012 and $7.2 million for the fourth quarter of 2011. For the full year, general and administrative costs were $36.9 million for 2012 compared with $24.2 million for 2011. The increase in general and administrative expenses was primarily due to commercial-readiness activities for Gattex and personnel-related expenses, including non-cash expense associated with equity awards that vested upon the approval of Gattex.
Interest expense was $3.8 million for the fourth quarter of 2012 and $6.6 million for the fourth quarter of 2011. For the full year, interest expense was $18.2 million in 2012 versus $37.7 million in 2011. Interest expense was largely attributable to non-recourse debt secured by the company’s Sensipar/Mimpara, REGPARA, and Preotact 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
The company’s cash, cash equivalents, and marketable investment securities were approximately $101 million at December 31, 2012 compared with $162 million at December 31, 2011.
At December 31, 2012, the company’s only recourse debt was $16.5 million in 5.75% convertible notes due in 2014.
All other debt on the company’s balance sheet is non-recourse and secured solely by its royalty rights related to Sensipar/Mimpara, Preotact, and REGPARA. After repayment of these obligations, the cash flows from these royalties will revert to NPS in accordance with the terms set forth in each agreement.
The following table reflects the company’s non-recourse debt at December 31, 2012 and 2011:
|Total non-recourse debt||159.3||211.4|
|Less current portion||6.3||19.3|
|Total long-term non-recourse debt||$153.0||$192.1|
2013 Financial guidance
NPS is providing the following financial guidance for 2013. The guidance comprises projections based on numerous assumptions, all of which are subject to certain risks and uncertainties. For a discussion of the risks and uncertainties associated with these forward-looking statements, please see the disclosure notice below.
In 2013, NPS expects its operating expenses, including the impact of share-based compensation, to be between $135 and $145 million.
For 2013, the company will provide the number of patients on Gattex at the end of each quarter, starting with its second quarter financial results announcement.
Conference Call Information
NPS will host a conference call beginning today at 4:30 p.m. Eastern Time. To participate in the conference call, dial (866) 783-2137 and use pass code 99534128. International callers may dial (857) 350-1596, using the same pass code. In addition, a live audio of the conference call will be available over the Internet. Interested parties can access the event through the NPS website, http://www.npsp.com.
For those unable to participate in the live call, a replay will be available at (888) 286-8010, with pass code 99734684, until midnight Eastern Time, March 7, 2013. International callers may access the replay by dialing (617) 801-6888, using the same pass code. The webcast will also be available through the NPS website for the same period.
About NPS Pharmaceuticals
NPS Pharmaceuticals is a biopharmaceutical company pioneering and delivering therapies that transform the lives of patients with rare diseases worldwide. The company’s lead product, Gattex® 0.05 mg/kg/d (teduglutide [rDNA origin]) for injection is FDA-approved for the treatment of adult patients with short bowel syndrome (SBS) who are dependent on parenteral support. NPS is also developing Natpara® (rhPTH[1-84]) for the treatment of adult hypoparathyroidism and expects to submit its Biologic License Application (BLA) to the FDA in 2013.
NPS's earlier stage pipeline includes two calcilytic compounds, NPSP790 and NPSP795, with potential application in rare disorders involving increased calcium receptor activity, such as autosomal dominant hypocalcemia with hypercalciuria (ADHH). NPS complements its proprietary programs with a royalty-based portfolio of products and product candidates that includes agreements with Amgen, GlaxoSmithKline, Janssen Pharmaceuticals, Kyowa Hakko Kirin, and Takeda GmbH.
"NPS," "NPS Pharmaceuticals," "Gattex," and "Natpara" are the company's trademarks. All other trademarks, trade names or service marks appearing in this press release are the property of their respective owners.
Statements made in this press release, which are not historical in nature, constitute forward-looking statements for purposes of the safe harbor provided by the Private Securities Litigation Reform Act of 1995. These statements are based on the company's current expectations and beliefs and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Forward looking statements include, but are not limited to, statements concerning our future financial performance. Risks associated to the company's business include, but are not limited to, the risks associated with any failure by the company to successfully commercialize Gattex, including the risk that physicians and patients may not see the advantages of Gattex and may therefore be reluctant to utilize the product, the risk that private and public payers may be reluctant to cover or provide reimbursement for Gattex, the risks that the company may be unable to resolve the manufacturing issue in order to submit its BLA for Natpara, the risks associated with the company's strategy, global macroeconomic conditions, the impact of changes in management or staff levels, the effect of legislation effecting healthcare reform in the United States, as well as other risk factors described in the company's periodic filings with the U.S. Securities and Exchange Commission, including its Annual Report on Form 10-K and Form 10-Qs. All information in this press release is as of the date of this release and NPS undertakes no duty to update this information, whether as a result of new information, future events or otherwise.
(Financial statements to follow)
NPS Pharmaceuticals and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
|Three Months Ended|
Twelve months ended
|December 31,||December 31,|
|Sale of royalty rights||--||--||25,000||--|
|Milestones and license fees||50||--||57||5,044|
|Costs and expenses:|
|Cost of royalties||--||--||--||500|
|Cost of license fees||--||3||--||2,543|
|Research and development||24,042||21,564||94,839||73,831|
|General and administrative||11,160||7,198||36,929||24,226|
|Total operating expenses||35,202||28,765||131,768||101,100|
|Operating income (loss)||(8,018||)||(2,507||)||(1,124||)||545|
|Other (expense) income:|
|Interest income, net||68||61||292||321|
|Total other expense, net||(4,185||)||(6,129||)||(17,611||)||(36,794||)|
|Loss before income tax expense||(12,203||)||(8,636||)||(18,735||)||(36,249||)|
|Income tax expense||--||--||--||18|
Net loss per common and potential common share:
|Weighted average common and potential common share:|
NPS Pharmaceuticals and Subsidiaries
Condensed Consolidated Balance Sheets
|December 31,||December 31,|
|Cash, cash equivalents and marketable investment securities||$100,715||$162,233|
|Other current assets||6,060||7,863|
|Property and equipment, net||4,193||4,346|
|Debt issuance costs, net||436||577|
|Liabilities and Stockholders’ Deficit:|
|Non-recourse debt, less current portion*||153,024||192,085|
|Other long-term liabilities||6,614||7,863|
|Common stock and additional paid-in capital||954,539||944,430|
|Accumulated other comprehensive income||5||(96||)|
|Total stockholders' deficit||(54,641||)||(46,116||)|
|Total liabilities and stockholders' deficit||$151,109||$213,980|
|* Non-recourse debt secured by Sensipar®/Mimpara®, Preotact® and REGPARA® royalty revenue|