UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

       x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2013

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.)

550 Hills Drive, 3 rd Floor, Bedminster, NJ    07921
(Address of Principal Executive Offices including Zip Code)

(908) 450-5300
(Registrant's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title Of Each Class


Name Of Each Exchange On Which Registered


Common Stock, $.001 Par Value Per Share

The NASDAQ Stock Market LLC
(NASDAQ Global Market)

Securities registered pursuant to Section 12(g) of the Act: None


Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    YES   x     NO   o

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange Act.    YES   o     NO   x

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   o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     YES   x     NO   o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   x

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," and large "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer    x

Accelerated filer    ¨

Non-accelerated filer    ¨
(Do not check if a smaller reporting company)

Smaller reporting company    ¨

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    YES   o     NO   x

The aggregate market value of the common stock held by non-affiliates of the Registrant was $1,540,963,266 as of June 30, 2013, based upon the closing price for the shares of common stock reported on The NASDAQ Global Market on such date.

As of February 11, 2014, there were 102,801,552 shares of common stock, par value $0.001 per share, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE:

Portions of the Registrant's definitive Proxy Statement for its 2014 Annual Meeting of Stockholders are incorporated by reference into Part II - "Securities Authorized For Issuance Under Equity Compensation Plans" and Part III of this Form 10-K.



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TABLE OF CONTENTS

Item

Page

PART I

1.

Business

3

1A.

Risk Factors

26

1B.

Unresolved Staff Comments

41

2.

Properties

41

3.

Legal Proceedings

41

4.

Mine Safety Disclosures

43

PART II

5.

Market for the Company's Common Equity, Related Stockholder Matters and Company Purchases of Equity Securities

44

6.

Selected Financial Data

45

7.

Management's Discussion and Analysis of Financial Condition and Results of Operations

46

7A.

Quantitative and Qualitative Disclosures About Market Risk

61

8.

Financial Statements and Supplementary Data

62

9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

95

9A.

Controls and Procedures

95

9B.

Other Information

96

PART III

10.

Directors, Executive Officers and Corporate Governance

96

11.

Executive Compensation

96

12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

96

13.

Certain Relationships and Related Transactions, and Director Independence

96

14.

Principal Accountant Fees and Services

96

PART IV

15.

Exhibits and Financial Statement Schedules

97

SIGNATURES

2


PART I

Unless the context requires otherwise, references in this report to "NPS", the "Company", "we", "us", "our" and similar terms mean NPS Pharmaceuticals, Inc. and its subsidiaries.

This Annual Report on Form 10-K and the documents incorporated by reference into this report contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on our current expectations and are subject to uncertainty and changes in circumstances. We cannot guarantee the accuracy of such statements, and you should be aware that results and events could differ materially from those contained in such statements. You should consider carefully the statements set forth in Item 1A of this report entitled "Risk Factors" and Item 7 of this report entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations".

ITEM 1. Business

Overview

We are a biopharmaceutical company focused on pioneering and delivering therapies that transform the lives of patients with rare diseases worldwide. Our strategy is focused on the global development and commercialization of `first-in' or `best-in' rare disease therapeutics. We incorporated in Utah in 1986 and reincorporated in Delaware in 1992. Our marketed product, Gattex® 0.05 mg/kg/d (teduglutide [rDNA origin]) for injection, for subcutaneous use was approved by the U.S. Food and Drug Administration (FDA) in December 2012 for the treatment of adult patients with Short Bowel Syndrome (SBS) who are dependent on parenteral support. SBS is an ultra-rare potentially fatal disorder in which the body is unable to absorb enough nutrients and fluids through the gastrointestinal tract. In the EU, teduglutide (trade name: Revestive®) is approved for the treatment of adult patients with SBS; patients should be stable following a period of intestinal adaptation after surgery. We expect commercial sales of Revestive to begin in certain ex-US territories in 2014. We plan to begin pricing and reimbursement discussions in certain EU countries during the first half of 2014. In addition, named-patient programs have been initiated in a number of countries and we are implementing our regulatory strategy for Japan, which includes filing for orphan drug status. We are also seeking to expand our SBS franchise by evaluating the safety and efficacy of Gattex/Revestive in a global registration study of pediatric patients with SBS patients.

Our second product, Natpara® (rhPTH[1-84]) for injection, has been developed for hypoparathyroidism, a rare multidimensional disorder characterized by deficient or absent parathyroid hormone (PTH). The review of our Biologic License Application for Natpara is ongoing and the Prescription Drug User Fee Act (PDUFA) goal date for a decision by FDA is October 24, 2014. Within our Filing Review Notification, also referred to as the Day-74 letter, the FDA told us they plan to discuss our Natpara application at an advisory committee meeting. We expect to file our Marketing Authorization Application (MAA) for Natpara in hypoparathyroidism with the European Medicines Agency (EMA) in 2014.

We are actively pursuing in-licensing opportunities to build a global pipeline of `first-in' or `best-in' therapies for rare disorders of high unmet medical need. Our lead clinical-stage product candidate is NPSP795, a calcilytic compound with potential application in rare disorders involving increased calcium receptor activity, such as autosomal dominant hypocalcemia (ADH).

We have collaborations or royalty agreements with a number of pharmaceutical companies. In 2013, we recorded $123.8 million of royalty revenue that was driven by (i) Amgen's sales of Sensipar ® and Mimpara ® (cinacalcet HCl), (ii) Kyowa Hakko Kirin's sales of REGPARA ® (cinacalcet HCl) in Japan, and (iii) Janssen's sales of Nucynta® (tapentadol) in the U.S. As described further herein, we have partially monetized our royalty rights related to Sensipar and Mimpara under our agreement with Amgen through the issuance of non-recourse debt and we have sold certain of our rights to receive royalty payments arising from sales of REGPARA under our agreement with Kyowa Hakko Kirin.

We consider our operations to be a single reportable segment. Financial results of this reportable segment are presented in our audited consolidated financial statements.

3


Significant Developments

  • In February 2013, we launched and initiated commercial sales of Gattex in the US and we reported net sales of $31.8 million for the year ended December 31, 2013. At December 31, 2013, 530 Gattex/Revestive prescriptions had been received and 303 patients were on therapy in the U.S. We expect commercial sales of Revestive to begin in certain ex-US territories during the first half of 2014 with meaningful sales to begin in the later part of the year.
  • In March 2013, we entered into an agreement, with Takeda GmbH and Takeda Pharma A/S (together, Takeda), which, among other things, terminated our existing license agreements with Takeda with respect to teduglutide and rhPTH 1-84. As a result of the transaction, we now have the exclusive worldwide rights, excluding Israel, to develop and commercialize teduglutide and rhPTH 1-84. Takeda received 6.1 million shares of NPS common stock that were valued at $54.9 million as of the date of the transaction. Takeda will also earn a $30.0 million milestone, payable in cash or stock at our option, in the first calendar year that combined worldwide net sales of both products exceed $750 million.
  • In May 2013, we completed a public sale of 6,900,000 shares of our common stock at a per share price of $14.53. We received net proceeds from the sale of approximately $93.5 million, after deducting expenses and the commission in connection with the offering.
  • In January 2014, the FDA accepted and filed for review our BLA for Natpara. Under PDUFA, the goal date for a decision by the FDA is October 24, 2014. Within our Filing Review Notification, also referred to as the Day-74 letter, the FDA also noted that they plan to hold an advisory committee meeting to discuss our Natpara application.

Product and Development Programs and Royalty-Based Agreements

The table below includes our proprietary product and development programs:

Product Indication   Status   Market
         
Gattex ® (teduglutide) for injection Adult SBS   Commercial   U.S.
           
Revestive (teduglutide) Adult SBS   Approved   EU
           
Gattex/Revestive (teduglutide) SBS (Registry)   Phase 4   Worldwide ex-Israel
           
Gattex/Revestive (teduglutide) Pediatric SBS   Registration study   Worldwide ex-Israel
           
Natpara ® (recombinant human parathyroid hormone 1-84) Hypoparathyroidism   BLA filed   U.S.
           
Natpara Hypoparathyroidism   Phase 3   Ex-U.S.
           
NPSP795 ADH   Phase 2   Worldwide

4


The table below includes certain of our royalty-based agreements:

Product   Indication   Status   Market   Rights
Sensipar ® /Mimpara ® (cinacalcet HCl) 1   Secondary hyperparathyroidism   Commercial   Worldwide Ex-Asia   Amgen
                 
Sensipar ® (cinacalcet HCl) 1   Hypercalcemia in parathyroid cancer   Commercial   Worldwide Ex-Asia   Amgen
                 
Cinacalcet HCl 1   Primary hyperparathyroidism   Commercial   Worldwide Ex-Asia   Amgen
                 
REGPARA ® (cinacalcet HCl) 2   Secondary hyperparathyroidism   Commercial   Asia   Kyowa Hakko Kirin
                 
NUCYNTA ® (tapentadol) and   Moderate to severe acute pain   Commercial   U.S.   Janssen
Nucynta ER   Moderate to severe chronic pain            
    Neuropathic pain associated with diabetic peripheral neuropathy in adults            
                 
Ronacaleret (calcilytic compound)   Stem cell mobilization   Phase 2   Worldwide   GlaxoSmith Kline

 

1

We currently receive cash payments for royalties earned in excess of $8.0 million per quarter related to Amgen's sales of Sensipar and Mimpara. The $8.0 million per quarter services non-recourse debt.

2

We currently do not receive cash payments related to our REGPARA royalties as we have sold certain of our rights to receive these payments to service our non-recourse debt.