UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
___________________
 
SCHEDULE TO
TENDER OFFER STATEMENT UNDER SECTION 14(D)(1)
OR 13(E)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
 
(Amendment No. 1)
 
NPS PHARMACEUTICALS, INC.
(Name of Subject Company (Issuer))
 
KNIGHT NEWCO 2, INC.
SHIRE PHARMACEUTICAL HOLDINGS IRELAND LIMITED
SHIRE PLC
(Names of Filing Persons (Offeror))
 
Common Stock, Par Value $0.001 Per Share
(Title of Class of Securities)
 
62936P103
(Cusip Number of Class of Securities)
 
Mark Enyedy
Interim General Counsel
Shire plc
5 Riverwalk, Citywest Business Campus,
Dublin 24, Ireland
+353 1 429 7700
 
(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of Filing Persons)
 
Copies to:
George R. Bason, Jr.
William J. Chudd
Davis Polk & Wardwell LLP
450 Lexington Avenue
New York, New York 10017
Telephone: (212) 450-4000
 
 
o
Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer.
 
Check the appropriate boxes below to designate any transactions to which the statement relates:
x
third-party tender offer subject to Rule 14d-1.
o
issuer tender offer subject to Rule 13e-4.
o
going-private transaction subject to Rule 13e-3.
o
amendment to Schedule 13D under Rule 13d-2.
 
Check the following box if the filing is a final amendment reporting the results of the tender offer.
 
 
 
 
 
 
 
This Amendment No. 1 (this “Amendment”) amends and supplements the Tender Offer Statement on Schedule TO filed by Shire plc, a company incorporated in Jersey, Channel Islands (“Shire”), Shire Pharmaceutical Holdings Ireland Limited, a company incorporated in Ireland (“SPHIL”), and Knight Newco 2, Inc., a Delaware corporation and an indirect wholly owned subsidiary of each of Shire and SPHIL (“Purchaser”), with the Securities and Exchange Commission on January 23, 2015 (the “Schedule TO”). The Schedule TO relates to the offer by Purchaser to purchase all outstanding shares of common stock, par value $0.001 per share, of NPS Pharmaceuticals, Inc., a Delaware corporation (“NPS”), for $46.00 per share, net to the seller in cash, without interest and less any required withholding taxes, upon the terms and subject to the conditions set forth in the Offer to Purchase dated January 23, 2015 (the “Offer to Purchase”) and in the related Letter of Transmittal, copies of which are attached as Exhibit (a)(1)(i) and (a)(1)(ii), respectively, to the Schedule TO.
 
Except as otherwise set forth in this Amendment, the information set forth in the Schedule TO remains unchanged and is incorporated herein by reference to the extent relevant to the items in this Amendment.  Capitalized terms used but not defined herein have the meanings ascribed to them in the Schedule TO.
 
Items 1 through 9, and Item 11.
 
Items 1 through 9, and Item 11 of the Schedule TO are hereby amended and supplemented as follows:
 
(a)      The first paragraph under the heading “16. Certain Legal Matters; Regulatory Approvals—Litigation Related to the Merger” of the Offer to Purchase is hereby amended and restated in its entirety to read as follows:
 
“As of January 26, 2015, we are aware of four putative class action lawsuits challenging the transactions contemplated by the Merger Agreement, filed by purported NPS stockholders, in the Delaware Court of Chancery against various combinations of NPS, the members of the NPS Board, Shire, SPHIL and Purchaser (collectively, the “Defendants”). The actions are captioned Bragger v. NPS Pharmaceuticals, Inc. et al., Case No. 10553-VCN, Grimaldi v. NPS Pharmaceuticals, Inc. et al., Case No. 10563-VCN, Goldstein v. NPS Pharmaceuticals, Inc., et al., Case No. 10577-VCN and Mantler v. NPS Pharmaceuticals, Inc. et al., Case No. 10580-VCN. The complaints generally allege, among other things, that the NPS Board breached its fiduciary duties to NPS’s stockholders, and that the corporate defendants aided and abetted such breaches, by engaging in a flawed sales process, agreeing to a transaction price that does not adequately compensate stockholders and agreeing to certain deal protection provisions in the Merger Agreement that the plaintiff alleges impede or preclude a potential topping bid. The complaints seek, among other things, to enjoin the Defendants from consummating the transactions contemplated by the Merger Agreement, damages, and an award of attorneys’ fees and costs.”

(b)      The following text is hereby added to Items 1 through 9, and Item 11 of the Schedule TO:
 
“On January 23, 2015, Shire noted the announcement on January 23, 2015 by NPS that the U.S. Food and Drug Administration (FDA) has approved NATPARA® (parathyroid hormone) as an adjunct to calcium and vitamin D to control hypocalcemia in patients with hypoparathyroidism. The press release issued by Shire noting the foregoing is filed as Exhibit (a)(5)(x) hereto and is incorporated herein by reference.”
 
 
 
 
 
 
Item 12.  Exhibits.
 
Item 12 of the Schedule TO is hereby amended and supplemented by adding the following exhibits:
 
(a)(5)(x)
Press Release issued by Shire plc dated January 23, 2015 commenting on press release from NPS Pharmaceuticals, Inc. regarding FDA approval of NATPARA.
(a)(5)(xi)
Complaint filed in the Court of Chancery of the State of Delaware on January 23, 2015 (Goldstein v. NPS Pharmaceuticals, Inc. et al.).
(a)(5)(xii)
Complaint filed in the Court of Chancery of the State of Delaware on January 26, 2015 (Mantler v. NPS Pharmaceuticals, Inc. et al.).
 
 
 
 
 
SIGNATURES
 
After due inquiry and to the best knowledge and belief of the undersigned, each of the undersigned certify that the information set forth in this statement is true, complete and correct.
 
Date:  January 26, 2015
 
 
Knight Newco 2, Inc.
  
     
     
 
By:
/s/ Gary Sender
  
   
Name:
 Gary Sender  
   
Title:
President
  
 

 
Shire Pharmaceutical Holdings Ireland Limited
  
     
     
 
By:
/s/ Michael Garry
  
   
Name:
Michael Garry
  
   
Title:
Director
  
 
 
 
Shire plc
  
     
     
 
By:
 /s/ Mark Enyedy  
    Name: Mark Enyedy  
    Title:
Interim General Counsel
  
 

 
 
 
 
 
EXHIBIT INDEX
 
Exhibit No.
  
Description
(a)(1)(i)
  
Offer to Purchase dated January 23, 2015.
(a)(1)(ii)
  
Letter of Transmittal (including Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9).
(a)(1)(iii)
  
Notice of Guaranteed Delivery.
(a)(1)(iv)
  
Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
(a)(1)(v)
  
Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
(a)(1)(vi)
  
Summary Advertisement dated January 23, 2015.
(a)(5)(i)
  
Joint Press Release issued by Shire plc and NPS Pharmaceuticals, Inc. dated January 11, 2015 (incorporated by reference to Exhibit 99.1 to the Current Report on Form 8-K filed by Shire plc on January 12, 2015).
(a)(5)(ii)
  
Slide Presentation for Investor Conference Call dated January 11, 2015 (incorporated by reference to the Schedule TO-C filed by Shire plc, Shire Pharmaceutical Holdings Ireland Limited and Knight Newco 2, Inc. on January 12, 2015).
(a)(5)(iii)
  
Transcript of Investor Conference Call dated January 11, 2015 (incorporated by reference to the Schedule TO-C filed by Shire plc, Shire Pharmaceutical Holdings Ireland Limited and Knight Newco 2, Inc. on January 12, 2015).
(a)(5)(iv)
  
Letter to NPS Employees dated January 12, 2015 (incorporated by reference to the Schedule TO-C filed by Shire plc, Shire Pharmaceutical Holdings Ireland Limited and Knight Newco 2, Inc. on January 12, 2015).
(a)(5)(v)
  
Slide Presentation (incorporated by reference to the Schedule TO-C filed by Shire plc, Shire Pharmaceutical Holdings Ireland Limited and Knight Newco 2, Inc. on January 14, 2015).
(a)(5)(vi)
  
Extracts from the transcript of a presentation given by Flemming Ornskov, MD, Chief Executive of Shire, on January 13, 2015 at the J.P. Morgan 33rd Annual Healthcare Conference (incorporated by reference to the Schedule TO-C filed by Shire plc, Shire Pharmaceutical Holdings Ireland Limited and Knight Newco 2, Inc. on January 14, 2015).
(a)(5)(vii)
  
Selected slides from a presentation given by Flemming Ornskov, MD, Chief Executive of Shire, on January 16, 2015 to employees of NPS Pharmaceuticals, Inc. (incorporated by reference to the Schedule TO-C filed by Shire plc, Shire Pharmaceutical Holdings Ireland Limited and Knight Newco 2, Inc. on January 16, 2015).
(a)(5)(viii)
  
Complaint filed in the Court of Chancery of the State of Delaware on January 16, 2015 (Bragger v. NPS Pharmaceuticals, Inc. et al.).
(a)(5)(ix)
  
Complaint filed in the Court of Chancery of the State of Delaware on January 20, 2015 (Grimaldi v. NPS Pharmaceuticals, Inc. et al.)
(a)(5)(x)
  
Press Release issued by Shire plc dated January 23, 2015 commenting on press release from NPS Pharmaceuticals, Inc. regarding FDA approval of NATPARA.
(a)(5)(xi)
  
Complaint filed in the Court of Chancery of the State of Delaware on January 23, 2015 (Goldstein v. NPS Pharmaceuticals, Inc. et al.).
(a)(5)(xii)
  
Complaint filed in the Court of Chancery of the State of Delaware on January 26, 2015 (Mantler v. NPS Pharmaceuticals, Inc. et al.).
(b)(1)
  
US $2,100,000,000 Multicurrency Revolving and Swingline Facilities Agreement dated 12 December 2014 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by Shire plc on December 12, 2014).
(b)(2)
  
Facilities Agreement dated January 11, 2015 among Shire plc, Citigroup Global Markets Limited, as mandated lead arranger and bookrunner, and the other parties thereto (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by Shire plc on January 12, 2015).
(c)   
  
Not applicable.
(d)(1)
  
Agreement and Plan of Merger dated as of January 11, 2015 among Shire Pharmaceutical Holdings Ireland Limited, Knight Newco 2, Inc., NPS Pharmaceuticals, Inc. and Shire plc (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed by Shire plc on January 12, 2015).
(d)(2)
  
Confidentiality Agreement dated as of December 16, 2014 between NPS Pharmaceuticals, Inc. and Shire Human Genetics Therapies, Inc.
(e)   
  
Not applicable.
(f)   
  
Not applicable.
(g)   
  
Not applicable.
(h)   
  
Not applicable.
 
 


Exhibit (a)(5)(x)
 
Press Release
www.shire.com
  

Shire Comments on Press Release from NPS Pharma Regarding FDA Approval of NATPARA® (parathyroid hormone)


Dublin, Ireland – January 23, 2015 – Shire plc (LSE: SHP, NASDAQ: SHPG) notes the announcement today by NPS Pharmaceuticals, Inc. (NASDAQ: NPSP) that the U.S. Food and Drug Administration (FDA) has approved NATPARA® (parathyroid hormone) as an adjunct to calcium and vitamin D to control hypocalcemia in patients with hypoparathyroidism. Hypoparathyroidism is a rare endocrine disorder characterized by insufficient levels of parathyroid hormone, or PTH. NATPARA is a bioengineered replica of human PTH. NPS has previously indicated that this product is expected to be available in the second quarter of 2015. The full text of the NPS Pharma announcement was posted today on the company’s website.

Shire’s Chief Executive Officer, Flemming Ornskov, MD, MPH, commented:

“The FDA’s approval of NATPARA provides a new treatment option for patients with hypoparathyroidism – a devastating rare disease with significant unmet need. The NATPARA label is in line with our expectations, and we believe this approval further validates Shire’s decision to acquire NPS Pharma, which is an excellent strategic fit allowing us to leverage our  market expertise, core capabilities in rare disease patient management, and global footprint. We look forward to combining our strengths with NPS Pharma to launch NATPARA in the U.S. after the expected close of the transaction in Q1 of this year.”

Pending satisfaction of customary closing conditions, it is anticipated that the transaction will close during the first quarter of 2015.

About Natpara® (parathyroid hormone) for Injection

Natpara® (parathyroid hormone) for injection is indicated as an adjunct to calcium and vitamin D to control hypocalcemia in patients with hypoparathyroidism. Natpara is a bioengineered replica of human parathyroid hormone.

Because of the potential risk of osteosarcoma, Natpara is recommended only for patients who cannot be well-controlled on calcium and active forms of vitamin D alone. Natpara was not studied in patients with hypoparathyroidism caused by calcium-sensing receptor mutations or in patients with acute post-surgical hypoparathyroidism.

In clinical studies, Natpara has been shown to increase serum calcium levels while reducing the need for oral calcium and active vitamin D and, in some cases, eliminate the need for active vitamin D altogether. The most common adverse reactions associated with Natpara and occurring in greater than 10% of individuals were: paresthesia, hypocalcemia, headache, hypercalcemia, nausea, and hypoesthesia, diarrhea, vomiting, arthralgia, hypercalciuria and pain in extremity.

Natpara is self-administered once daily by subcutaneous injection. The starting dose of Natpara is 50 mcg once daily.

Natpara received orphan drug status for the treatment of hypoparathyroidism from the FDA in 2007 and the EMA in 2013.

Important Safety Information

 
 
 
 
What is NATPARA?
·
NATPARA is a prescription parathyroid hormone (PTH) used with calcium and vitamin D to control low blood calcium (hypocalcemia) in people with low PTH blood levels (hypoparathyroidism).
 
·
NATPARA is only for people who do not respond well to treatment with calcium and active forms of vitamin D alone, because it may increase the possible risk of bone cancer (osteosarcoma).
 
·
NATPARA was not studied in people with hypoparathyroidism caused by calcium sensing receptor mutations.
 
·
NATPARA was not studied in people who get sudden hypoparathyroidism after surgery.
 
·
It is not known if NATPARA is safe and effective for children 18 years of age and younger. NATPARA should not be used in children and young adults whose bones are still growing.
 
 
What is the most important information I should know about NATPARA?
NATPARA may cause serious side effects, including:
Possible bone cancer (osteosarcoma).
·
During animal drug testing, NATPARA caused some rats to develop a bone cancer called osteosarcoma. It is not known if people who take NATPARA will have a higher chance of getting osteosarcoma.
 
·
NATPARA is only available through the NATPARA Risk Evaluation and Mitigation Strategy (REMS) Program. The purpose of the NATPARA REMS program is to inform patients about the potential risk of osteosarcoma associated with the use of NAPTARA.  For more information about this REMS program, call 1-855-628-7272 or go to www.NATPARAREMS.com.
 
High blood calcium (hypercalcemia)
 
·
NATPARA can cause some people to have a higher blood calcium level than normal.
 
 
o
Your doctor should check your blood calcium before you start and during your treatment with NATPARA
 
 
o
Tell your doctor if you have nausea, vomiting, constipation, low energy, or muscle weakness.  These may be signs that you have too much calcium in your blood.
 
Low blood calcium (hypocalcemia)
 
·
People who stop using or miss a dose of NATPARA may have an increased risk of severe low blood calcium levels
 
 
·
Tell your doctor if you have tingling of your lips, tongue, fingers and feet, twitching of face muscles, cramping of feet and hands, seizures, depression, or have problems thinking or remembering.
 
Tell your doctor right away if you have any of these signs and symptoms of high or low blood calcium levels.

Tell your doctor about all the medicines you take, including prescription and over-the-counter medicines, vitamins, and herbal supplements.

What are the most common side effects of NATPARA?
The most common side effects of NATPARA include
 
·
Tingling, tickling, or a burning feeling of your skin (paresthesia), headache and nausea
 
These are not all the possible side effects of NATPARA. For more information, ask your doctor. Call your doctor for medical advice about side effects.
 
 
2
 

You may report side effects to the NPS Adverse Event/Product Complaint Line at 1-855-215-5550 or by calling the Food and Drug Administration (FDA) at 1-800-FDA- 1088 or www.fda.gov/medwatch.
 
U.S. full prescribing information for Natpara, including boxed warning, is available at http://www.npsp.com/file_depot/0-10000000/0-10000/262/folder/2023/NatparaPI.pdf
 

For further information please contact:

Investor Relations
    
Sarah Elton-Farr
seltonfarr@shire.com
+44 1256 894157
Media
    
Stephanie Fagan
sfagan@shire.com
+1 201 572 9581
Jessica Cotrone
jcotrone@shire.com
+1 781 482 9538
 
NOTES TO EDITORS

Shire enables people with life-altering conditions to lead better lives.

Our strategy is to focus on developing and marketing innovative specialty medicines to meet significant unmet patient needs.

We focus on providing treatments in Rare Diseases, Neuroscience, Gastrointestinal, and Internal Medicine and we are developing treatments for symptomatic conditions treated by specialist physicians in other targeted therapeutic areas, such as Ophthalmics.

www.shire.com


SHIRE FORWARD-LOOKING STATEMENTS

Statements included herein that are not historical facts are forward-looking statements. Such forward-looking statements involve a number of risks and uncertainties and are subject to change at any time. In the event such risks or uncertainties materialize, Shire’s results could be materially adversely affected. The risks and uncertainties include, but are not limited to, that:

 
·
Shire’s products may not be a commercial success;
 
 
·
revenues from ADDERALL XR and INTUNIV are subject to generic erosion;
 
 
·
the failure to obtain and maintain reimbursement, or an adequate level of reimbursement, by third-party payors in a timely manner for Shire's products may impact future revenues, financial condition and results of operations;
 
 
·
Shire conducts its own manufacturing operations for certain of its products and is reliant on third party contract manufacturers to manufacture other products and to provide goods and services. Some of Shire’s products or ingredients are only available from a single approved source for manufacture. Any disruption to the supply chain for any of Shire’s products may result in Shire being unable to continue marketing or developing a product or may result in Shire being unable to do so on a commercially viable basis for some period of time;
 
 
·
the development, approval and manufacturing of Shire’s products is subject to extensive oversight by various regulatory agencies. Submission of an application for regulatory approval of any of our product candidates, such as our planned submission of a New Drug Application to the FDA for Lifitegrast, may be delayed for any number of
 
 
3
 

reasons and, once submitted, may be subjected to lengthy review and ultimately rejected. Moreover, regulatory approvals or interventions associated with changes to manufacturing sites, ingredients or manufacturing processes could lead to significant delays, increase in operating costs, lost product sales, an interruption of research activities or the delay of new product launches;
 
 
·
the actions of certain customers could affect Shire's ability to sell or market products profitably. Fluctuations in buying or distribution patterns by such customers can adversely impact Shire’s revenues, financial condition or results of operations;
 
 
·
investigations or enforcement action by regulatory authorities or law enforcement agencies relating to Shire’s activities in the highly regulated markets in which it operates may result in significant legal costs and the payment of substantial compensation or fines;
 
 
·
adverse outcomes in legal matters and other disputes, including Shire’s ability to enforce and defend patents and other intellectual property rights required for its business, could have a material adverse effect on Shire’s revenues, financial condition or results of operations;
 
 
·
Shire faces intense competition for highly qualified personnel from other companies, academic institutions, government entities and other organizations. Shire is undergoing a corporate reorganization and the consequent uncertainty could adversely impact Shire’s ability to attract and/or retain the highly skilled personnel needed for Shire to meet its strategic objectives;
 
 
·
failure to achieve Shire’s strategic objectives with respect to the acquisition of ViroPharma Incorporated may adversely affect Shire’s financial condition and results of operations;
 
 
·
Shire’s proposed acquisition of NPS Pharma may not be consummated due to the occurrence of an event, change or other circumstances that gives rise to the termination of the merger agreement;
 
 
·
a governmental or regulatory approval required for the proposed acquisition of NPS Pharma may not obtained, or may be obtained subject to conditions that are not anticipated, or another condition to the closing of the proposed acquisition may not be satisfied;
 
 
·
NPS Pharma may be unable to retain and hire key personnel and/or maintain its relationships with customers, suppliers and other business partners pending the consummation of the proposed acquisition by Shire, or NPS Pharma’s business may be disrupted by the proposed acquisition, including increased costs and diversion of management time and resources;
 
 
·
difficulties in integrating NPS Pharma into Shire may lead to the combined company not being able to realize the expected operating efficiencies, cost savings, revenue enhancements, synergies or other benefits at the time anticipated or at all;
 

and other risks and uncertainties detailed from time to time in Shire’s or NPS Pharma’s filings with the Securities and Exchange Commission, including their respective most recent Annual Reports on Form 10-K.

ADDITIONAL INFORMATION AND WHERE TO FIND IT
THIS COMMUNICATION IS FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE AN OFFER TO PURCHASE OR A SOLICITATION OF AN OFFER TO SELL NPS PHARMA COMMON STOCK. THE TENDER OFFER IS BEING MADE PURSUANT TO A TENDER OFFER STATEMENT ON SCHEDULE TO (INCLUDING THE OFFER TO PURCHASE, LETTER OF TRANSMITTAL AND OTHER RELATED TENDER OFFER MATERIALS) FILED BY SHIRE AND A SUBSIDIARY OF SHIRE WITH THE SECURITIES AND EXCHANGE COMMISSION (SEC) ON JANUARY 23, 2015. IN ADDITION, ON JANUARY 23, 2015, NPS PHARMA FILED WITH THE SEC A
 
 
4
 

SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE 14D-9 WITH RESPECT TO THE TENDER OFFER.  THE TENDER OFFER STATEMENT (AND RELATED MATERIALS), AS IT MAY BE AMENDED FROM TIME TO TIME, AND THE SOLICITATION/RECOMMENDATION STATEMENT, AS IT MAY BE AMENDED FROM TIME TO TIME, CONTAIN IMPORTANT INFORMATION, INCLUDING THE TERMS AND CONDITIONS OF THE OFFER, THAT SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE TENDER OFFER.  INVESTORS AND SECURITY HOLDERS MAY OBTAIN A FREE COPY OF THESE MATERIALS AND OTHER DOCUMENTS FILED BY SHIRE AND NPS PHARMA WITH THE SEC AT THE WEBSITE MAINTAINED BY THE SEC AT WWW.SEC.GOV. THE TENDER OFFER STATEMENT AND RELATED MATERIALS, AND THE SOLICITATION/RECOMMENDATION STATEMENT, MAY ALSO BE OBTAINED FOR FREE BY CONTACTING SHIRE INVESTOR RELATIONS AT +1 484 595 2220 OR +44 1256 894157.
 
COPIES OF THESE MATERIALS AND ANY DOCUMENTATION RELATING TO THE TENDER OFFER ARE NOT BEING, AND MUST NOT BE, DIRECTLY OR INDIRECTLY, MAILED OR OTHERWISE FORWARDED, DISTRIBUTED OR SENT IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD BE UNLAWFUL.
 
 
5
 



Exhibit (a)(5)(xi)
 
 
EFiled: Jan 23 2015 03:22PM EST
Transaction ID 56655578
Case No. 10577-VCN
 
 
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
 
DAVID GOLDSTEIN, On Behalf of )       
Himself and All Others Similarly )       
Situated, )       
  )       
Plaintiff, )       
  )       
v. ) 
 Civil Action No.
    
  )       
NPS PHARMACEUTICALS, INC., )       
PETER G. TOMBROS, MICHAEL W. )       
BONNEY, COLIN BROOM, GEORGES )       
GEMAYEL, PEDRO GRANADILLO, )       
JAMES G. GRONINGER, FRANCOIS )       
NADER, PIERRE LEGAULT, RACHEL )       
R. SELISKER, SHIRE PLC, SHIRE )       
PHARMACEUTICAL HOLDINGS )       
IRELAND LIMITED, and KNIGHT )       
NEWCO 2, INC., )       
Defendants. )       
  )       
 
VERIFIED CLASS ACTION COMPLAINT
 
Plaintiff David Goldstein (“Plaintiff”), on behalf of himself and all others similarly situated, after an examination and inquiry conducted by and through his counsel, alleges the following for his Complaint:
 
NATURE AND SUMMARY OF THE ACTION
 
1.      This is a stockholder class action brought by Plaintiff on behalf of himself and all other public stockholders of NPS Pharmaceuticals, Inc. (“NPS” or the “Company”) against NPS and its Board of Directors (the “Board” or the “Individual Defendants”), arising out of their breaches of fiduciary duties and/or
 
 
 
 
 
 
 
the aiding and abetting of such breaches in connection with the Board’s agreement to sell the Company to Shire plc (“Shire”) through its wholly-owned subsidiary, Shire Pharmaceutical Holdings Ireland Limited (“Parent”), and Parent’s wholly-owned subsidiary, Knight Newco 2, Inc. (“Merger Sub”), pursuant to a tender offer (the “Tender Offer”) (the “Proposed Transaction”).
 
2.      On January 11, 2015, NPS and Shire issued a joint press release announcing entry into an Agreement and Plan of Merger dated January 11, 2015 (the “Merger Agreement”), to sell NPS to Shire, whereby Shire will launch the Tender Offer as promptly as practicable, but in no event later than January 26, 2015, to purchase all of NPS’s outstanding common shares at a purchase price of $46.00 per share without interest, net to the seller in cash (the “Offer Price”).  The Proposed Transaction is valued at approximately $5.2 billion.
 
3.      NPS is a biopharmaceutical company engaged in the development of therapeutic products for rare diseases.  The Company’s strategy focuses on the development of orphan drugs, defined by the United States Food and Drug Administration (the “FDA”) as those intended for the treatment of rare diseases that affect fewer than 200,000 people.  Orphan drug status allows the developer of a drug to sell it without competition for seven years, where conventional drugs typically get five years without competition, and offers quicker approval timelines and clinical trial tax incentives for the developer.  Without competition, developers
 
 
 
2
 
 
 
of orphan drugs can charge prices far higher than prices for conventional drugs, allowing the developer to recoup its research and development costs and also generate high revenues.   According  to an article published in the  Wall Street Journal on January 30, 2013, almost a third of orphan drugs reported more than $1 billion in annual sales.    NPS has a portfolio of products already approved by the FDA, nearing the end of the FDA approval process, and in the development pipeline.
 
4.      The Company’s leading product, Gattex, was approved by the FDA in December 2012 for the treatment of adult patients with short bowel syndrome (“SBS”) who are dependent on parenteral support, i.e., feeding tubes.  The FDA has designated Gattex as an orphan drug, and it is priced accordingly.  The Wall Street Journal reported on January 30, 2013, that due to streamlined clinical trials available to orphan drugs, Gattex cost NPS $250 million to develop, compared to the $1 billion or more that it might cost to bring a conventional drug to market.  As reported by Forbes on January 3, 2013, NPS priced Gattex at $295,000 per year per patient, or triple analysts’ expectations.  Gattex is also approved for use in Europe, where it is marketed as Revestive.   The January 11, 2015 joint press release issued by NPS and Shire announcing the Proposed Transaction states that Gattex/Revestive generated revenue of approximately $68 million in the nine months ended September 30, 2014.  According to analysts’ estimates compiled by
 
 
 
3
 
 
 
Bloomberg, Gattex/Revestive will generate more than $300 million in revenue in 2016.  NPS is also developing teduglutide as a treatment for pediatric patients with SBS who are dependent upon feeding tubes, and is currently conducting a global study in support of that treatment.
 
5.      The Company also developed Natpara, a treatment for hypoparathyroidism, a rare and potentially fatal hormone abnormality.  The drug is awaiting approval by the FDA, which is scheduled to make a decision by January 24, 2015.   On September 12, 2014, the FDA’s Endocrinologic and Metabolic Drugs Advisory Committee voted 8-5 that the available data support the approval of Natpara, and the Company’s Chief Executive Officer (“CEO”), Individual Defendant Francois Nader (“Nader”), has stated that he is “confident” that the FDA will approve Natpara.  As reported in the Wall Street Journal on January 12, 2015, analysts forecast that Natpara could generate up to $575 million in annual revenue.
 
6.      NPS   also   earns   royalty   revenue   from   licensed   products   sold worldwide, including cinacalcet HCI, which is marketed by Amgen as Sensipar in the U.S.  The Company earned royalty revenues of approximately $123.8 million in 2013 and $89.5 million for the nine months ended September 30, 2014.
 
7.      Fueled  by  the  Company’s  promising  portfolio  of  pharmaceutical products, NPS has reported robust and steady growth since 2008.   In 2008, the
 
 
 
4
 
 
 
price of the Company’s stock was less than $4.00 per share.  On January 9, 2015, the last trading day before the Proposed Transaction was announced, the price of NPS stock closed at $41.91 per share, or over ten times greater than its 2008 prices.  Indeed, before the Proposed Transaction was announced, two analysts set price targets above the Offer Price of $46.00 per share, with a high price target of $50.00 per share.  Moreover, the Offer Price is a premium of less than 9% over the January 6, 2015 price, and well below the $50.00 per share price target.
 
8.      Unfortunately, the Individual Defendants are attempting to prevent Plaintiff and the Class (defined herein) from realizing the benefits of the Company’s strong financial results and bright future. The Offer Price drastically undervalues the Company in light of its strong recent financial performance and prospects for future growth.
 
9.      Furthermore, the Offer Price fails to recognize the substantial value of NPS to Shire. During the January 11, 2015 conference call following the announcement of the Proposed Transaction, Shire’s CEO, Flemming Ornskov (“Ornskov”), stated, among other things, that “we expect the acquisition to enhance revenue growth from 2015 onward and [be] accretive to earnings from 2016 onward.”
 
10.    The Merger Agreement also features several onerous deal protection measures that work to preclude other bidders from stepping forward with a
 
 
 
5
 
 
 
superior alternative offer, including a termination fee, which may require NPS to pay a termination fee of $155,939,696 to Shire in the event that the Company decides to pursue another offer, thereby requiring that the alternate bidder agree to pay a naked premium for the right to provide NPS stockholders with a superior offer.
 
11.    The Proposed Transaction also provides lucrative change in control payments and stock proceeds to the Individual Defendants that are not available to the Company’s public stockholders.  The Individual Defendants have hedged their bets at the expense of the public stockholders of the Company by approving the Merger Agreement before the FDA issues its decision on Natpara.  The Individual Defendants  will  receive  millions  of  dollars  in  change  in  control  payments regardless of the FDA’s decision.   If the FDA does approve Natpara, a decision that Nader has stated he is “confident” the FDA will reach, the Company’s public stockholders will be cashed out in the Tender Offer and will not share in the upside resulting from future revenues from Natpara and the Company’s other products.
 
12.    Defendants (defined herein) are working quickly to close the deal; absent judicial intervention, the Tender Offer will close in as little as a month from now.  The Proposed Transaction will be effectuated pursuant to Delaware General Corporation Law § 251(h), which eliminates a required stockholder vote in the second step of a two-step transaction as soon as the buyer has a simple majority of
 
 
 
6
 
 
 
shares, i.e., 50.1%.  The timing of the Proposed Transaction is telling: the Tender Offer is expected to commence on or before January 26, 2015, and expire as soon as twenty business days after commencement.   As a result, non-tendering stockholders may be cashed out without an opportunity to vote on the Proposed Transaction.
 
13.    As described below, both the value to NPS stockholders contemplated in the Proposed Transaction, and the process by which Defendants propose to consummate the Proposed Transaction, are fundamentally unfair to Plaintiff and the other public stockholders of the Company. The Individual Defendants’ conduct constitutes a breach of the fiduciary duties owed to NPS stockholders, and a violation of applicable legal standards governing the Individual Defendants’ conduct.
 
14.    For these reasons and as set forth in detail herein, Plaintiff seeks to enjoin Defendants from taking any steps to consummate the Proposed Transaction or, in the event the Proposed Transaction is consummated, to recover damages resulting from the Individual Defendants’ violations of their fiduciary duties.
 
THE PARTIES
 
15.    Plaintiff is, and was all times relevant hereto, a stockholder of NPS.
 
16.    Defendant NPS, a Delaware corporation, is a commercial-stage rare disease-focused biopharmaceutical company.NPS’s corporate headquarters are
 
 
 
7
 
 
 
located at 550 Hills Drive, Bedminster, New Jersey 07921.  Its common stock is traded on the NASDAQ under the symbol “NPSP.”
 
17.    Defendant  Peter  G.  Tombros  (“Tombros”)  has  served  as  an  NPS director since 1998 and as Chairman of the Board since January 2008.
 
18.    Defendant Michael W. Bonney (“Bonney”) has served as an NPS director since January 2005.
 
19.    Defendant Colin Broom (“Broom”) has served as an NPS director since July 2009.
 
20.    Defendant  Georges  Gemayel  (“Gemayel”)  has  served  as  an  NPS director since February 2012.
 
21.    Defendant  Pedro  Granadillo  (“Granadillo”)  has  served  as  an  NPS director since November 2010.
 
22.    Defendant James G. Groninger (“Groninger”) has served as an NPS director since 1988.
 
23.    Defendant Nader has served as an NPS director and the Company’s President and CEO since March 2008.  Nader previously served as Executive Vice President and Chief Operating Officer of NPS from June 2006 until March 2008.
 
24.    Defendant Pierre Legault (“Legault”) has served as an NPS director since November 2014.
 
 
 
8
 
 
 
25.    Defendant  Rachel  R.  Selisker  (“Selisker”)  has  served  as  an  NPS director since January 2005.
 
26.    Defendants  set  forth  in  paragraphs  seventeen  to  twenty-five  are referred to herein as the “Board” or the “Individual Defendants.”  By virtue of their positions as directors and/or officers of NPS, the Individual Defendants are in a fiduciary relationship with Plaintiff and the other public stockholders of NPS.
 
27.    Each of the Individual Defendants at all relevant times had the power to control and direct NPS to engage in the misconduct alleged herein.   The Individual  Defendants’  fiduciary  obligations  required  them  to  act  in  the  best interest of plaintiff and all NPS stockholders.
 
28.    Each of the Individual Defendants owes fiduciary duties of loyalty, good faith, due care, and full and fair disclosure to plaintiff and the other members of the Class.  The Individual Defendants are acting in concert with one another in violating their fiduciary duties as alleged herein, and, specifically, in connection with the Proposed Transaction.
 
29.    The Company’s public stockholders must receive the maximum value for their shares through the Proposed Transaction.  Plaintiff alleges herein that the Individual Defendants, separately and together, in connection with the Proposed Transaction, violated, and are continuing to violate, the fiduciary duties they owe to plaintiff and the Company’s other public stockholders, due to the fact that they
 
 
 
9
 
 
 
have engaged in all or part of the unlawful acts, plans, schemes, or transactions complained of herein.
 
30.    Defendant Shire is a leading global specialty pharmaceutical company. Shire is incorporated in Jersey and maintains its headquarters at 5 Riverwalk, Citywest Business Campus, Dublin 24, Ireland. Shire’s common stock is traded on the NASDAQ under the ticker symbol “SHPG.”
 
31.    Defendant Parent is a company incorporated in Ireland and a wholly-owned subsidiary of Shire.
 
32.    Defendant Merger Sub is a Delaware corporation and a wholly-owned subsidiary of Parent.
 
33.    Defendant NPS, the Individual Defendants, Shire, Parent, and Merger Sub are referred to herein as the “Defendants.”
 
CLASS ACTION ALLEGATIONS
 
34.     Plaintiff brings this action individually and on behalf of all holders of the common stock of NPS, and their successors in interest, who have been and will be harmed by the wrongful conduct of the Defendants as alleged herein (the “Class”).  The Class excludes Defendants, and any person, firm, trust, corporation, or other entity related to, affiliated with, or controlled by any of the Defendants, as well as the immediate families of the Defendants.
 
 
 
10
 
 
 
35.    This  action  is properly maintainable as a class  action  pursuant to Delaware Court of Chancery Rule 23.
 
36.    The Class is so numerous that joinder of all members is impracticable. As of January 8, 2015, the total number of issued and outstanding NPS shares was 107,098,107.  Members of the Class are scattered throughout the United States and are so numerous that it is impracticable to bring them all before this Court.
 
37.    Questions of law and fact exist that are common to the Class and predominate over questions affecting any individual Class member, including, among others:
 
(a)    whether  the  Individual  Defendants  have  fulfilled  and  are capable of fulfilling their fiduciary duties owed to Plaintiff and the Class;
 
(b)    whether  the  Individual  Defendants  have  breached  their fiduciary duty to secure and obtain the best price reasonable under the circumstances for the benefit of Plaintiff and other Class members;
 
(c)    whether the consideration payable to Plaintiff and the Class under the Proposed Transaction is unfair and inadequate;
 
(d)    whether Shire, Parent, and Merger Sub have aided and abetted the Individual Defendants’ breaches of fiduciary duties; and
 
(e)    whether Plaintiff and the other members of the Class will be irreparably damaged if Defendants are not enjoined from continuing the conduct
 
 
 
11
 
 
 
described  herein,  or  alternatively,  whether  they  have  suffered  compensable damages.
 
38.    Plaintiff is committed to prosecuting this action and has retained competent counsel experienced in litigation of this nature.   Plaintiff’s claims are typical of the claims of the other members of the Class and Plaintiff has the same interests as the other members of the Class.  Accordingly, Plaintiff is an adequate representative of the Class and will fairly and adequately protect the interests of the Class.
 
39.    The prosecution of separate actions by individual members of the Class would create the risk of inconsistent or varying adjudications with respect to individual members of the Class, which would establish incompatible standards of conduct for Defendants, or adjudications with respect to individual members of the Class which would, as a practical matter, be dispositive of the interests of the other members not parties to the adjudications or substantially impair or impede their ability to protect their interests.
 
40.    Preliminary and final injunctive relief on behalf of the Class as a whole is entirely appropriate because Defendants have acted, or refused to act, on grounds generally applicable and causing injury to the Class.
 
 
 
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SUBSTANTIVE ALLEGATIONS
 
The Proposed Transaction
 
41.    On January 11, 2015, NPS and Shire issued a joint press release announcing the Proposed Transaction. The press release stated, in pertinent part:
 
Dublin, Ireland and Bedminster, NJ — January 11, 2015 — Shire plc (LSE: SHP, NASDAQ: SHPG) and NPS Pharmaceuticals, Inc. (NASDAQ: NPSP) today announced that the companies have entered into a merger agreement pursuant to which Shire will acquire all the outstanding shares of NPS Pharma for $46.00 per share in cash, for a total   consideration   of   approximately   $5.2   billion.      Shire   will accelerate the growth of NPS Pharma’s innovative portfolio through its market expertise in gastrointestinal (GI) disorders, core capabilities in rare disease patient management, and global footprint. The transaction  has  been  approved  unanimously  by  the  Boards  of Directors of both Shire and NPS Pharma.
 
The Company Background and its Poise for Growth
 
42.    NPS develops and markets pharmaceuticals targeted at rare diseases that affect a limited number of people.  These orphan drugs are protected from competition for seven years, compared to five years for conventional drugs, and are eligible for a quicker approval process and clinical trial tax incentives.   The lack of a competitive market has resulted in high prices and increasing revenues for pharmaceutical companies that develop and market orphan drugs.  An article titled “Tiger in the Fiscal Room: Beware the Increasing Cost and Number of Orphan Drugs,” published in the March 2013 issue of Managed Care reported that five of the drugs granted orphan status at that time cost at least $150,000 per patient per
 
 
 
13
 
 
 
year, and three cost $300,000 or more annually per patient.  The article further reported that the compound annual growth rate of the lucrative orphan drug market between 2001 and 2010 was 25.8%, compared with 20.1% for conventional drugs. The  Wall  Street  Journal  reported  on  January  30,  2013  that  the  orphan  drug category reported more than $50 billion in worldwide annual sales, and that almost a third of orphan drugs generate over $1 billion in annual sales.
 
43.     The Company generates revenue through the sale and licensing of its portfolio of orphan drugs.  The Company’s leading product, Gattex/Revestive, is approved in the U.S. and Europe for the treatment of adult patients with SBS who are dependent on feeding tubes.  The Company began selling Gattex in the U.S. in February 2013.  As reported by Forbes on January 3, 2013, NPS priced Gattex at $295,000 per year per patient, or triple analysts’ expectations.   The January 11, 2015, joint press release issued by NPS and Shire announcing the Proposed Transaction states that Gattex/Revestive generated revenue of approximately $68 million in the nine months ended September 30, 2014.  According to analysts’ estimates compiled by Bloomberg, Gattex/Revestive will generate more than $300 million in revenue in 2016.  NPS is also developing teduglutide as a treatment for pediatric patients with SBS who are dependent upon feeding tubes, and is currently conducting a global study in support of that treatment.
 
 
 
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44.    The Company also developed, Natpara, a treatment for hypoparathyroidism, a rare and potentially fatal hormone abnormality.  Natpara is currently under review by the FDA and the European Medicines Agency (“EMA”). The FDA is scheduled to issue its decision on Natpara by January 24, 2015.  As reported in the Wall Street Journal on January 12, 2015, analysts forecast that Natpara could generate up to $575 million in annual revenue.
 
45.    NPS also licenses products sold worldwide by Amgen and other pharmaceutical companies. The Company earned royalty revenues of approximately $123.8 million in 2013 and $89.5 million for the nine months ended September 30, 2014.
 
46.    NPS is also developing NPSP795, a drug to treat autosomal dominant hypocalcemia (“ADH”) a rare genetic disorder that affects both adults and children. There is currently no approved therapy for this disorder.
 
47.    As  further  described  below,  the  Company’s  expanding  product portfolio, strong recent financial performance and prospects for rapid future growth all demonstrate that the Offer Price is inadequately compensates NPS stockholders for their shares.
 
48.    NPS  has  reported  robust  and  steady  growth  since  2008.  The Company’s recent financial performance reports sequential increases in revenue and strong prospects for continued growth.
 
 
 
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49.    On May 8, 2014, NPS announced its financial results for the first quarter of fiscal year 2014.   The Company reported total  revenues of $44.04 million, compared to $25.4 million for the same period of 2013, and net global product sales of $17.9 million, compared to $0.7 million for the same period of 2013, representing 17% sequential growth over net sales in the fourth quarter of 2013.  NPS further reported that net global sales of Gattex/Revestive were $18 million.  The Company also reported a narrowing net loss of $6.6 million, or $0.06 per diluted share, compared to a net loss of $7.8 million, or $0.09 per share, for the same period of 2013.
 
50.    On August 6, 2014, NPS announced its financial results for the second quarter of fiscal year 2014. NPS reported total revenues of $56.1 million, compared to $36.5 million for the same period of 2013. Net global sales of Gattex/Revestive were $22.0 million, compared to $4.8 million for the same period of 2013, a sequential growth rate of 22%. The Company also moved into profitability, posting net income of $2.0 million, or $0.02 per diluted share, compared to a net loss of $12.4 million, or $0.13 per diluted share, for the same period of 2013.
 
51.    On September 12, 2014, NPS announced that the Endocrinologic and Metabolic Drugs Advisory Committee of the FDA voted 8 to 5 that the available data   support   the   approval   of   Natpara   for   the   long-term   treatment   of
 
 
 
16
 
 
 
hypoparathyroidism, and that the committee’s recommendation will be considered by the FDA in determining whether to approve Natpara.
 
52.    On November 10, 2014, NPS announced its financial results for the third quarter of fiscal year 2014. The Company reported total revenues of $57.2 million, compared to $39.2 million for the same quarter of 2013. Net global sales of Gattex/Revestive were $28 million, compared to $11 million for the same quarter of 2013, or a sequential growth rate of 28%. NPS reported a net loss of $2.1 million, or $0.02 per diluted share, compared to a net loss of $1.1 million, or $0.01 per diluted share, for the same quarter of 2013. Defendant Nader touted the Company’s financial performance to date and prospects for continued growth anticipating FDA approval of Natpara, stating: “We are pleased with the continued success of Gattex/Revestive, which has achieved $68 million of net sales so far this year leaving us on track to deliver more than 200% year-over-year growth.” Defendant Nader further stated:
 
We were very gratified to receive a positive Advisory Committee vote recommending the approval of Natpara for the long-term treatment of hypoparathyroidism.  We are working with the FDA to finalize our label and Risk Evaluation and Mitigation Strategy.  In parallel, we are advancing a number of pre-commercial activities to prepare for the successful launch of Natpara in the second quarter of 2015.
 
53.    On December 2, 2014, NPS announced that the EMA validated and initiated its review of the Company’s marketing authorization application for Natpara for the treatment of hypoparathyroidism.  The press release quoted Nader
 
 
 
17
 
 
 
as stating that the agency’s action “is an important achievement for our emerging global endocrine franchise.”
 
54.    Fueled by the Company’s strong recent financial performance and news about the potential approval of Natpara by the FDA and EMA, the price of NPS  stock  climbed  to  close  at  $38.13  per  share  on  January  5,  2015,  on extraordinary trading volume of 3.8 million shares.   By way of comparison, the price of the Company’s stock was below $4.00 per share in 2008, before the Company’s resurgence.
 
55.    On  January  6,  2015,  Barclays  Capital  analyst  Geoffrey  Meacham issued a research report noting the Company’s strong prospects for growth and setting a price target of $50 per share:
 
[T]he FDA approval and launch of Natpara (PDUFA date: January 25, 2015) are major milestones as it will be NPS’ second orphan drug launch, which further diversifies the revenue base.  Notably, Natpara expectations look low with a consensus of ~$35M (Barclays: $32M) with upside potential from pricing and early demand.   For Gattex, sales grew >20% q/q on average in 2014; our forecasts assume 68% y/y growth in 2015, which could be conservative. . . .   Overall, we think that the combination of potentially two commercial rollouts (Gattex/Revestive and Natpara) and pipeline catalysts (NPSP795) should  be  upside  drivers  of  NPSP  shares;  accordingly,  we  are initiating coverage with an Overweight rating and a $50 price target.
 
The Board’s Failure to Maximize Stockholder Value
 
56.    In light of the Company’s robust recent financial performance, strong prospects for future growth, and the imminent decisions by the FDA and EMA
 
 
 
18
 
 
 
whether to approve Natpara detailed above, the $46.00 per share Offer Price undervalues the Company’s shares and fails to adequately compensate NPS stockholders for the benefits that Shire will receive from the Proposed Transaction. Indeed, the Offer Price is a premium of less than 9% to NPS stock’s $41.91 per share closing price on January 9, 2015, the last trading day before the Proposed Transaction was announced.
 
57.    The January 11, 2015 joint press release highlighted the benefits Shire will receive from the Proposed Transaction, including:
 
 
●
Excellent strategic fit; strengthens Shire’s focus on rare diseases while leveraging industry-leading GI commercial capabilities and global footprint
 
 
●
Shire anticipates enhanced revenue and earnings growth profile
 
 
●
Adds innovative product portfolio with multiple growth catalysts:
 
 
●
GATTEX/REVESTIVE (teduglutide [rDNA origin]) with growing sales for the treatment of adults with SBS, a rare GI condition
 
 
●
NATPARA/NATPAR (rhPTH [1-84]), if approved, would be the only bioengineered hormone replacement therapy for use in the treatment of HPT, a rare endocrine disease
 
 
●
Shire expects transaction to be accretive to Non GAAP EPS from 2016 onward.
 
58.    Shire’s CEO, Ornovsky, further stated in the January 11, 2015 press release:
 
 
 
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The acquisition of NPS Pharma is a significant step in advancing Shire’s strategy to become a leading biotechnology company. With our global strength and expertise in both rare diseases and GI, Shire is uniquely positioned to drive the continued success of GATTEX/REVESTIVE, and, if approved, commercialize NPS Pharma’s pipeline compound NATPARA/NATPAR.
 
We look forward to accelerating the growth of the NPS Pharma portfolio based on our proven track record of maximizing value from acquired assets and commercial execution. The NPS Pharma organization will be a welcome addition to Shire as we continue to help transform the lives of patients with rare diseases.
 
59.    NPS and Shire also conducted a conference call with analysts on January 11, 2015.  When asked about the upcoming FDA decision whether to approve Natpara, Individual Defendant Nader responded, “as everyone knows, we have a PDUFA date of 24th January and I’m confident that Natpara will be approved.  No one can 100% guarantee what the FDA will do, but we have had numerous interactions with the FDA and I would say so far, so good.”  Ornovsky also emphasized that Shire conducted due diligence on the FDA approval of Natpara: “we have looked at all the relevant regulatory documentation.  There’s no guarantees  in  life,  but  we  feel  as  confident  as  we  can”  that  Natpara  will  be approved.   Shire’s head of Research and Development, Phil Vickers, was even more direct:  “We feel very confident based on the in-depth analysis of all the regulatory correspondence that there will be an approval. . . .  So yeah, we’re very confident.”
 
 
 
20
 
 
 
60.    During the January 11, 2015 conference call, Ornovsky elaborated on the substantial benefits of the Proposed Transaction to Shire, stating that:
 
We expect the acquisition to enhance revenue growth from 2015 onward and [be] accretive to earnings from 2016 onward. . . . We expect synergies of approximately 25-35% of the Street’s consensus forecast of NPS Pharma’s standalone future operating cost base from 2017 onward, which will be realized beginning in 2016 and growing substantially thereafter.
 
6.     Ornovsky further discussed the benefits of the Proposed Transaction to Shire, including that “NPS Pharma provides Shire two key products that will allow  us  to  further  expand  our  rare  disease  portfolio,”  that  the  Proposed Transaction “will enhance Shire’s short and long term growth profile,” and that “NPS Pharma’s contribution will provide Shire with additional upside potential beyond our 2020 goals.”  Ornovsky also stated that “the NPS Pharma acquisition is well aligned with our strategy, we will reinforce our core GI business, grow NPS Pharma’s portfolio through commercial excellence and our GI and rare disease expertise.”
 
62.    Although  the  Proposed  Transaction  is  valued  at  $5.2  billion  and would be Shire’s largest acquisition to date, it is not only directly in line with Shire’s strategy, but also affordable for Shire in light of the $1.635 billion breakup fee it received after Abbvie Inc. (“Abbvie”) terminated its attempt to acquire Shire in late 2014.
 
 
 
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63.    Analysts agree that the Proposed Transaction is highly beneficial to Shire.  As reported on Bloomberg.com on January 12, 2015, Morningstar analyst Stefan Quenneville stated that the Proposed Transaction “fits right into what Shire wants to do and where they have infrastructure.”
 
64.    Despite these strong synergies, the Individual Defendants failed to secure a fair deal for the Company, either for the intrinsic value of its assets or the value of the Company’s assets to Shire in a combined entity.
 
The Unfair Deal Protection Devices
 
65.    In addition to concerns regarding the inadequate consideration offered to NPS stockholders in the Proposed Transaction, the Merger Agreement features several provisions that work to preclude other bidders from stepping forward with a superior alternative offer.  At best, these provisions place stockholders in an unfortunate position and, at worst, question the impartiality of the Board in the negotiation process.
 
66.    First, the Merger Agreement includes a “no solicitation” provision that impairs the ability of the NPS Board to secure an offer that adequately captures the inherent value of the Company and adequately compensates NPS’s stockholders for their ownership interest in the Company. Specifically, Section 7.03(a) of the Merger Agreement prohibits the Board and any Company personnel from soliciting, initiating, facilitating, or encouraging alternative proposals in an
 
 
 
22
 
 
 
attempt to procure a price in excess of the amount offered by Shire.  In conjunction with the matching rights and termination fee discussed below, the no solicitation provision will deter any potential buyers from making a competing bid.
 
67.    Similarly, Section 7.03(c) of the Merger Agreement provides an “information rights” provision whereby the Company must notify Shire of any unsolicited competing bidder’s offer within 24 hours.   Then, if and only if the Board determines that the competing offer warrants an “Adverse Recommendation Change,” Section 7.03(d) grants Shire “matching rights,” providing Shire four business days to amend the terms of the Merger Agreement so that the competing offer ceases to be a Superior Proposal (as defined in the Merger Agreement).
 
68.    The foregoing provisions have the effect of ensuring that no other company will put forth a competing offer because their offer would be immediately communicated to Shire, giving Shire an informational advantage against any competing proposal as well as the ability to match any competing bid.
 
69.    The  Individual  Defendants  have  also  agreed  to  a  termination  fee, which may require NPS to pay a termination fee of $155,939,696 to Shire in the event that the Company decides to pursue another offer, thereby requiring that the alternate bidder agree to pay a naked premium for the right to provide NPS stockholders with a superior offer.
 
 
 
23
 
 
 
Conflicts of Interest
 
70.    Compounding the Individual Defendants’ breaches of fiduciary duties, the Board ignored or failed to protect against numerous conflicts of interest in connection with the Proposed Transaction.  NPS hired Goldman, Sachs & Co. (“Goldman”) to act as its financial advisor in recommending whether NPS should enter into a transaction with Shire and whether the Offer Price of $46.00 per share is fair.  However, Goldman is conflicted as it has a prior and existing relationship with Shire.
 
71.    On July 18, 2014, Abbvie and Shire entered into a merger agreement pursuant to which Abbvie would acquire Shire in a cash and stock transaction valued at approximately $54 million.  Goldman was one of the financial advisors that advised Shire on that transaction.  The deal was ultimately terminated by Abbvie after the U.S. government revised the rules governing tax inversion deals. Further highlighting the business relationship between Goldman and Shire, Goldman   previously  advised   Shire   in   connection   with   its   February  2007 acquisition of New River Pharmaceuticals Inc. for approximately $2.6 billion.
 
72.    However, the conflicts of interest of the Proposed Transaction did not end with Goldman.  Defendant Broom, a Board member, also worked as the Vice President and Chief Scientific Officer of ViroPharma, Inc., a biopharmaceutical company, which was later acquired by Shire in January 2014.  Despite this conflict
 
 
 
24
 
 
 
of interest, Defendant Broom did not recuse himself as a member of the Board in evaluating and recommending the transaction, which was unanimously recommended and approved by the Board.
 
73.    Moreover,  the  Individual  Defendants  have  a  substantial  financial interest in the Proposed Transaction in that they own significant amounts of vested or unvested stock options and/or restricted stock units that will vest and become payable immediately upon the consummation of the Proposed Transaction.  If the Proposed Transaction closes, Board members and certain of the Company’s executives will receive millions from the sale of their illiquid NPS stock.
 
74.    As such, the executives of NPS, particularly Defendant Nader, would be well taken care of in the sale of the Company and faced little downside in selling the Company prior to the FDA’s potential approval of Natpara on January 24, 2015, as they will very likely secure employment with the combined company. In addition, any securities they receive in the combined company will allow the insiders to reap the benefits of an FDA-approved Natpara, whereas NPS stockholders will be cashed out and foreclosed from participating in the future growth of NPS.
 
75.    As a result of the Individual Defendants’ breaches of their fiduciary duties, Plaintiff and the Class will suffer irreparable injury in that they have not and will not receive their fair portion of the value of NPS’s assets and business and
 
 
 
25
 
 
 
will be prevented from obtaining the intrinsic value of their equity ownership of the Company.
 
76.    Unless enjoined by this Court, the Individual Defendants will continue to breach their fiduciary duties owed to Plaintiff and the Class, and may consummate the Proposed Transaction, to the irreparable harm of the Class.
 
77.    Plaintiff and the members of the Class have no adequate remedy at law.  Only through the exercise of this Court’s equitable powers can Plaintiff and the Class be fully protected from the immediate and irreparable injury, which the Individual Defendants’ actions threaten to inflict.
 
COUNT I
 
Claim for Breach of Fiduciary Duties
(Against the Individual Defendants)
 
78.    Plaintiff incorporates by reference and realleges each and every allegation contained above, as though fully set forth herein.
 
79.    By the acts, transactions, and courses of conduct alleged herein, the Individual Defendants are attempting to unfairly deprive Plaintiff and other members of the Class of the true value of their investment in NPS.
 
80.    By the acts, transaction, and courses of conduct alleged herein, the Individual Defendants have violated their fiduciary duties by contractually preventing themselves from obtaining higher offers from other interested buyers
 
 
 
26
 
 
 
and attempting to unfairly deprive Plaintiff and other members of the Class of the true value of their investment in NPS.
 
81.    By the acts, transactions, and courses of conduct alleged herein, the Individual Defendants have failed to exercise ordinary care and diligence in the exercise of their fiduciary obligations toward Plaintiff and the Class.
 
82.    As demonstrated by the allegations above, the Individual Defendants have breached their duties of loyalty, good faith, and due care owed to the public stockholders of NPS because, among other reasons, they have failed to take steps to maximize the value of NPS to its public stockholders and/or are attempting to improperly put their personal interests ahead of the interests of NPS stockholders.
 
83.    As a result of the actions of the Individual Defendants, Plaintiff and the Class will suffer irreparable injury in that they will not receive their fair portion of the value of NPS’s assets and businesses and will be prevented from obtaining fair value for their investment.
 
84.    Unless the Individual Defendants are enjoined by the Court, they will continue to breach their fiduciary duties owed to Plaintiff and the members of the Class to the irreparable harm of the members of the Class.
 
85.    Plaintiff and the members of the Class have no adequate remedy at law.  Only through the exercise of this Court’s equitable powers can Plaintiff and
 
 
 
27
 
 
 
the Class be fully protected from the immediate and irreparable injury which the Individual Defendants’ actions threaten to inflict.
 
COUNT II
 
Claim for Aiding and Abetting the Board’s Breach of Fiduciary Duties
(Against Shire plc, Parent, and Merger Sub)
 
86.    Plaintiff incorporates by reference and realleges each and every allegation contained above, as though fully set forth herein.
 
87.    Defendants Shire, Parent, and Merger Sub are well aware that the Individual Defendants have not sought, and are not seeking, to obtain the best possible transaction for the Company’s public stockholders.
 
88.    As alleged in more detail above, Shire, Parent, and Merger Sub have aided and abetted the Individual Defendants’ breaches of fiduciary duties by causing the Board members to accept inadequate consideration for the Company’s public stockholders and negotiating unreasonably preclusive deal protection terms.
 
89.    As a result, Plaintiff and the Class members are being harmed, for which they have no adequate remedy at law.
 
PRAYER FOR RELIEF
 
WHEREFORE, Plaintiff demands judgment as follows:
 
A.     Declaring  this  action  to  be  a  proper  class  action  and  certifying Plaintiff as Class representative and Plaintiff’s counsel as Class counsel;
 
 
 
28
 
 
 
B.      Preliminarily  and  permanently  enjoining  Defendants  and  all  those acting in concert with them from consummating the Proposed Transaction until such time, as any, that the Individual Defendants have adequately undertaken all appropriate and available methods to maximize stockholder value;
 
C.     In the event that the Proposed Transaction is consummated, rescinding it or awarding actual and punitive damages to Plaintiff and the Class;
 
D.     Awarding  Plaintiff  fees   and  expenses  in  connection   with   this litigation, including reasonable attorneys’ and experts’ fees and expenses; and
 
E.      Granting such other and further relief as the Court deems just and proper.
 
 
Dated: January 23, 2015 RIGRODSKY & LONG, P.A.  
       
 
By:
/s/ Brian D. Long  
    Seth D. Rigrodsky (#3147)  
    Brian D. Long (#4347)  
    Gina M. Serra (#5387)  
    Jeremy J. Riley (#5791)  
    2 Righter Parkway, Suite 120  
    Wilmington, DE 19803  
    (302) 295-5310  
OF COUNSEL:      
    Attorneys for Plaintiff  
WEISSLAW LLP      
Richard A. Acocelli      
Michael A. Rogovin      
Kelly C. Keenan      
1500 Broadway, Suite 1600      
New York, NY 10036      
(212) 682-3025      
 
 
 
29


Exhibit (a)(5)(xii)
 
 
 
EFiled: Jan 26 2015 11:40AM EST
Transaction ID 56661300
Case No. 10580-VCN
 
 
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
 
 
 
RICHARD MANTLER, On Behalf of
  
)
Himself and All Others Similarly
  
)
Situated,
  
)
 
   )
Plaintiff,
  
)
    )
v.
  
)   Civil Action No. __________
    )
NPS PHARMACEUTICALS, INC.,
  
)
PETER G. TOMBROS, MICHAEL W.
  
)
BONNEY, COLIN BROOM, GEORGES 
   )
GEMAYEL, PEDRO GRANADILLO,
  
)
JAMES G. GRONINGER, FRANCOIS
  
)
NADER, PIERRE LEGAULT, RACHEL
   )
R. SELISKER, SHIRE
  
)
PHARMACEUTICAL HOLDINGS
  
)
IRELAND LIMITED, KNIGHT
  
)
NEWCO 2, INC., and SHIRE PLC,
  
)
 
   )
Defendants.
  
)

 
VERIFIED CLASS ACTION COMPLAINT

Plaintiff, by his undersigned attorneys, for this Verified Class Action Complaint against defendants, alleges upon personal knowledge with respect to himself, and upon information and belief based upon, inter alia, the investigation of counsel as to all other allegations herein, as follows:

NATURE OF THE ACTION

1.        This is a stockholder class action brought by plaintiff on behalf of himself and the public stockholders of NPS Pharmaceuticals, Inc. (“NPS Pharma” or the “Company”) against NPS Pharma, the members of NPS Pharma’s Board of
 
 
 
 
 

Directors (the “Board” or the “Individual Defendants”), Shire plc (“Shire”), and Shire’s affiliates, Shire Pharmaceutical Holdings Ireland Limited and Knight Newco 2, Inc. (the “Shire Affiliates”), arising out of the Individual Defendants’ agreement to sell NPS Pharma to Shire (the “Proposed Transaction”). In pursuing the Proposed Transaction, each of the defendants has violated applicable law by directly breaching and/or aiding breaches of fiduciary duties of loyalty and due care owed to plaintiff and the proposed Class (defined herein).

2.  On January 11, 2015, NPS Pharma entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which Shire will acquire NPS Pharma in a transaction valued at approximately $5.2 billion, after which NPS Pharma will become a wholly-owned subsidiary of Shire. Under the terms of the Merger Agreement, NPS Pharma stockholders will receive $46.00 in cash per share of NPS Pharma stock (the “Merger Consideration”). The Proposed Transaction has been approved by the Board.

3.  The Company agreed to the Proposed Transaction a mere three weeks before it expects the U.S. Food and Drug Administration (“FDA”) to announce the outcome of its review of the Company’s drug Natpara – capping any potential upside to stockholders who have endured the drug’s approval delays.

4.  To limit outside bidders from making a proposal to acquire the Company, the Board agreed to deal protection devices that all but assure that the

 
2
 



Proposed Transaction will be consummated. The onerous deal protections include a “no-solicitation” provision that prevents representatives of the Company from actively seeking out other bidders; an information rights provision that requires the Company to inform Shire within twenty-four hours if another bidder materializes; a matching rights provision that requires NPS Pharma to consider any changes to the Merger Agreement for a period of four business days if another bidder emerges; and a termination fee of over $155 million, payable by NPS Pharma to Shire in the event NPS Pharma accepts an offer from another bidder.

5.    The Proposed Transaction is the product of a flawed process that is designed to ensure the sale of NPS Pharma to Shire on terms preferential to Shire, but detrimental to plaintiff and the other public stockholders of NPS Pharma. Plaintiff seeks to enjoin the Proposed Transaction.
 
PARTIES

6.    Plaintiff is, and has been at all times relevant hereto, a NPS Pharma stockholder.

7.  Defendant NPS Pharma is a Delaware corporation that maintains its principal executive offices at 550 Hills Drive, Bedminster, New Jersey 07921. The Company’s securities trade on the NASDAQ under the symbol “NPSP.” NPS Pharma is a commercial-stage rare disease-focused biopharmaceutical company.


 
3
 



8.  Defendant Shire is a Jersey corporation that maintains its principal executive offices at 5 Riverwalk, Citywest Business Campus, Dublin 24, Republic of Ireland. Shire’s securities trade on the London Stock Exchange under the symbol “SHP” and whose American depository receipts trade on the NASDAQ under the symbol “SHPG.” Shire is a global specialty biopharmaceutical company.



9.  Defendant Shire Pharmaceutical Holdings Ireland Limited is an Irish corporation and wholly-owned subsidiary of Shire.

10.  Defendant Knight Newco 2, Inc. is a Delaware corporation and wholly-owned subsidiary of Shire Pharmaceutical Holdings Ireland Limited.

11.  Defendant Peter G. Tombros (“Tombros”) has served as a Company director since 1998. Tombros is the Chairman of the Board, a position he has held since 2008. Tombros is a member of the Company’s Audit, Compensation, and Nominating and Governance Committees.

12.  Defendant Michael W. Bonney (“Bonney”) has served as a Company director since 2005. Bonney is the Chairman of the Company’s Nominating and Governance Committee.

13.  Defendant Colin Broom (“Broom”) has served as a Company director since 2009. Broom is a member of the Company’s Audit and Nominating and Governance Committees.
 

 
 
4
 

 

14.  Defendant Georges Gemayel (“Gemayel”) has served as a Company director since 2012. Gemayel is a member of the Company’s Audit and Compensation Committees.

15.  Defendant Pedro Granadillo (“Granadillo”) has served as a Company director since 2010. Granadillo is the Chairman of the Company’s Compensation Committee.

16.  Defendant James G. Groninger (“Groninger”) has served as a Company director since 1988. Groninger is a member of the Company’s Audit and Nominating and Governance Committees.

17.  Defendant Francois Nader (“Nader”) has served as a director and as the Company’s President and Chief Executive Officer (“CEO”) since 2008.

18.  Defendant Pierre Legault (“Legault”) has served as a Company director since November 2014. Legault is a member of the Company’s Audit Committee.

19.  Defendant Rachel R. Selisker (“Selisker”) has served as a Company director since 2005. Selisker is the Chairwoman of the Company’s Audit and Committee.

20.  The defendants named above in paragraphs 11 through 19 are sometimes collectively referred to herein as the “Individual Defendants.”


 
5
 

 
21.  The Individual Defendants, as officers and/or directors of the Company, owe fiduciary duties to its public stockholders. As alleged herein, they have breached their fiduciary duties.
 
CLASS ACTION ALLEGATIONS

22.  Plaintiff brings this action as a class action, pursuant to Court of Chancery Rule 23, on behalf of himself and all holders of Company stock who are being and will be harmed by defendants’ actions described herein (the “Class”). Excluded from the Class are defendants herein and any person, firm, trust, corporation or other entity related to or affiliated with any defendants.

23.  This action is properly maintainable as a class action.

24.  The Class is so numerous that joinder of all members is impracticable. According to recent filings with the United States Securities and Exchange Commission (“SEC”), NPS Pharma has over 106 million shares of common stock outstanding, likely owned by thousands of stockholders.

25.  There are questions of law and fact that are common to the Class and that predominate over questions affecting any individual Class member. The common questions include, inter alia, the following:

(a)  Whether  defendants  have  breached  their  fiduciary  duties  of loyalty and due care with respect to plaintiff and the other members of the Class in connection with the Proposed Transaction;


 
6
 


(b) Whether the Individual Defendants have breached their fiduciary duties to secure and obtain the best price reasonably available under the circumstances for the sale of NPS Pharma;

(c) Whether the other defendants have aided and abetted the Individual Defendants’ breaches of fiduciary duties; and

(d) Whether plaintiff and the other members of the Class will be irreparably harmed were the transactions complained of herein consummated.

26.  Plaintiff’s claims are typical of the claims of the other members of the Class and plaintiff does not have any interests adverse to the Class.

27.  Plaintiff is an adequate representative of the Class, has retained competent counsel experienced in litigation of this nature, and will fairly and adequately protect the interests of the Class.

28.  The prosecution of separate actions by individual members of the Class would create a risk of inconsistent or varying adjudications with respect to individual members of the Class, which would establish incompatible standards of conduct for the party opposing the Class or adjudications that would, as a practical matter, be dispositive of the interests of individual members of the Class who are not parties to the adjudications or would substantially impair or impede those non-party Class members’ ability to protect their interests.


 
7
 


29. Defendants have acted on grounds generally applicable to the Class with respect to the matters complained of herein, thereby making appropriate the relief sought herein with respect to the Class as a whole.

FACTUAL ALLEGATIONS

Background of the Company

30.  According to its public filings, NPS Pharma is a biopharmaceutical company focused on pioneering and delivering therapies that transform the lives of patients with rare diseases worldwide. The Company’s strategy is focused on the global development and commercialization of ‘first-in’ or ‘best-in’ rare disease therapeutics.

31.  The Company’s sole marketed product, Gattex®, was approved by the 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 European Union, 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. In addition, named-patient programs have been initiated in a number of countries and the Company is implementing a regulatory strategy for Japan, which includes filing for orphan drug status. NPS Pharma is also seeking to expand its SBS
 
 
 
8
 

 
franchise by evaluating the safety and efficacy of Gattex/Revestive in a global registration study of pediatric patients with SBS patients.

32.  The Company’s second product, Natpara®, has been developed for hypoparathyroidism, a rare multidimensional disorder characterized by deficient or absent parathyroid hormone (PTH). The review of the Biologic License Application for Natpara is ongoing and the Prescription Drug User Fee Act (“PDUFA”) goal date for a decision by the FDA is January 25, 2015. Within the Filing Review Notification, also referred to as the Day-74 letter, the FDA told the Company it plans to discuss its Natpara application at an advisory committee meeting.

33.  NPS Pharma also actively pursues in-licensing opportunities to build a pipeline of ‘first-in’ or ‘best-in’ therapies for rare disorders of high unmet medical need. The Company’s 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”).

34.  The Company also has collaborations or royalty agreements with a number of pharmaceutical companies. In 2013, NPS Pharma 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®

 
 
9
 

 
(cinacalcet HCl) in Japan; and (iii) Janssen’s sales of Nucynta® (tapentadol) in the U.S.  NPS Pharma has partially monetized royalty rights related to Sensipar and Mimpara under an agreement with Amgen through the issuance of non-recourse debt and has sold certain of rights to receive royalty payments arising from sales of REGPARA under an agreement with Kyowa Hakko Kirin.

The Company’s Recent Growth

35.     On August 6, 2014, the Company reported its second quarter 2014 financial results.  The Company reported net global Gattex®/Revestive® sales of $22.0 million for the second quarter of 2014, compared to $4.8 million for the same period of 2013.  The Company also reported that it expected to achieve full-year 2014 global net sales of $100 to $110 million representing more than 200 percent year-over-year growth.   Individual Defendant Nader commented in the Company’s August 6, 2014 press release:

‘Our gastrointestinal rare disease franchise continues to flourish with the success of Gattex in the U.S., including the expansion of our label to include long-term data from the STEPS 2 study,’ said Francois Nader, MD, president and chief executive officer of NPS Pharma. ‘Internationally, we are pleased with the progress we are making toward the commercialization of Revestive in key EU markets, and the execution of our development strategy in Japan.’

36.     On  September  12, 2014  the  Company  announced  that  the  FDA’s Endocrinologic and Metabolic Drugs Advisory Committee voted 8 to 5 that the available data supported the approval of Natpara for the long-term treatment of


 
10
 
 
Hypoparathyroidism.   This recommendation would be part of the ultimate FDA review of Natpara, which contained a PDUFA date of October 24, 2014.  As Nader noted in the Company’s September 12, 2014 press release:

‘We are very pleased with the Committee’s vote. Their recommendation reinforces our belief in the favorable benefit-risk profile of Natpara and its potential as a long-term treatment option for Hypoparathyroidism,’ said Francois Nader, MD, president and chief executive officer of NPS Pharma. ‘As a bioengineered replacement therapy targeting the underlying cause of the disorder, Natpara has been shown in clinical studies to maintain serum calcium while demonstrating similar physiologic effects to the native parathyroid hormone. We look forward to working with the FDA to complete the final stages of review of our BLA for Natpara.’

37.   The Company updated stockholders on the status of Natpara on October 23, 2014. The FDA informed the Company that the PDUFA action date for Natpara was extended by three months – to January 24, 2015. The FDA requested that NPS Pharma submit a Risk Evaluation and Mitigation Strategy in advance of the revised PDUFA action date. The Company’s stock price closed down 10% on the news.

38.   On November 10, 2014, NPS Pharma reported third quarter 2014 financial results. The Company again reaffirmed its full-year global net sales guidance and reported net global Gattex/Revestive sales of $28.1 million for the third quarter of 2014, compared to $11.0 million for the same period of 2013. Individual Defendant Nader noted in the Company’s November 10, 2014 press release:
 
 
 
11
 
 

‘We are pleased with the continued success of Gattex/Revestive, which has achieved $68 million of net sales so far this year leaving us on track to deliver more than 200% year-over-year growth,’ said Francois Nader, MD, president and chief executive officer of NPS Pharma. ‘We continue to identify new Short Bowel Syndrome patients and grow our prescriber base leaving us confident in the long-term outlook for Gattex. Internationally, we are also making important progress. Revestive is now officially launched in Germany and we filed for orphan drug designation in Japan.’

39.     Notably, Nader further commented in the November 10, 2014 press release on the potential for Natpara:

We were very gratified to receive a positive Advisory Committee vote recommending the approval of Natpara for the long-term treatment of hypoparathyroidism. We are working with the FDA to finalize our label and Risk Evaluation and Mitigation Strategy. In parallel, we are advancing a number of pre-commercial activities to prepare for the successful launch of Natpara in the second quarter of 2015.

40.     The Company’s strategy in Japan received a boost on November 24, 2014 when the Company announced that its drug Teduglutide received orphan drug status by the Japanese Ministry of Health, Labor, and Welfare.  Japanese regulations further required the Company to initiate a clinical study on Japanese patients.   As  NPS  Pharma’s  Chief  Medical  Officer  noted  in  the  Company’s November 24, 2014 press release:

‘The decision to grant teduglutide orphan drug status in Japan underscores the need for new treatment options for people living with Short Bowel Syndrome,’ said Roger Garceau, MD, executive vice president and chief medical officer of NPS Pharma. ‘We look forward to initiating our study and advancing the regulatory process for teduglutide in Japan.’


 
12
 


 
The Proposed Transaction

41.     Despite the impending opportunities for the Company in Japan and the prospects for Natpara in the U.S., the Company instead agreed to cash out stockholders by agreeing to the Proposed Transaction.  The Company’s January 11, 2015 press release stated, in pertinent part:

Shire plc (LSE: SHP, NASDAQ: SHPG) and NPS Pharmaceuticals, Inc. (NASDAQ: NPSP) today announced that the companies have entered into a merger agreement pursuant to which Shire will acquire all the outstanding shares of NPS Pharma for $46.00 per share in cash, for a total consideration of approximately $5.2 billion. Shire will accelerate the growth of NPS Pharma’s innovative portfolio through its market expertise in gastrointestinal (GI) disorders, core capabilities in rare disease patient management, and global footprint. The transaction has been approved unanimously by the Boards of Directors of both Shire and NPS Pharma.

NPS Pharma is a rare disease-focused biopharmaceutical company and its first product, GATTEX®/REVESTIVE® (teduglutide [rDNA origin]) for injection, is approved in the United States and Europe[1] to treat adults with short bowel syndrome (SBS) who are dependent on parenteral support. NPS Pharma also has a registration phase product, NATPARA®/NATPAR® (rhPTH [1-84]) for the treatment of hypoparathyroidism (HPT).

The $46.00 per share price in the transaction represents a 51% premium to NPS Pharma’s unaffected share price of $30.47 on December 16, 2014.

Transaction highlights

 
●
Excellent strategic fit; strengthens Shire’s focus on rare diseases while leveraging industry-leading GI commercial capabilities and global footprint

 
●
Shire anticipates enhanced revenue and earnings growth profile


 
13
 
 
 
●
Adds innovative product portfolio with multiple growth catalysts:


 
o
GATTEX/REVESTIVE (teduglutide [rDNA origin]) with growing sales for the treatment of adults with SBS, a rare GI condition

 
o
NATPARA/NATPAR (rhPTH [1-84]), if approved, would be the only bioengineered hormone replacement therapy for use in the treatment of HPT, a rare endocrine disease
 
 
●
Shire expects transaction to be accretive to Non GAAP EPS from 2016 onward
 
 
●
Acquisition to be effected by a tender offer and funded from Shire’s cash resources, as well as existing and new bank facilities
 
 
●
Conference call for investors today (full details below)


--------------------------------------------------

In Europe, Revestive is indicated for the treatment of adult patients with short bowel syndrome who should be stable following a period of intestinal adaptation after surgery.

Shire’s Chief Executive Officer, Flemming Ornskov, MD, MPH, commented:

“The acquisition of NPS Pharma is a significant step in advancing Shire’s strategy to become a leading biotechnology company. With our global strength and expertise in both rare diseases and GI, Shire is uniquely positioned to drive the continued success of GATTEX/REVESTIVE, and, if approved, commercialize NPS Pharma’s pipeline compound NATPARA/NATPAR.

“We look forward to accelerating the growth of the NPS Pharma portfolio based on our proven track record of maximizing value from acquired assets and commercial execution. The NPS Pharma organization will be a welcome addition to Shire as we continue to help transform the lives of patients with rare diseases.”

Francois Nader, MD, President, Chief Executive Officer and Director of NPS Pharma, stated:


 
14
 

“Shire shares NPS Pharma’s commitment to patients with rare diseases. We believe that joining our two companies will drive value for shareholders and ensure we continue to transform the lives of patients with short bowel syndrome, hypoparathyroidism, and autosomal dominant hypocalcemia worldwide. I am confident that this transaction will accelerate our ambition of creating a world where every person living with a rare disease has a therapy. I would like to thank all of our employees for their continued outstanding contributions and steadfast commitment to the patients we serve.”

The Preclusive Deal Protection Devices

42.  The Merger Agreement provides Shire with benefits that all but assure it will acquire the Company.

43.  The Company has agreed to a “no-solicitation” provision, which prevents the Company or its affiliates from actively seeking another bidder. According to Section 7.03 of the Merger Agreement, the Company cannot “solicit, initiate or take any action to knowingly facilitate or encourage the submission of any Acquisition Proposal.”

44.  According to Section 7.03(c) of the Merger Agreement, NPS Pharma must also notify Shire within twenty-four hours if it receives an unsolicited offer to acquire the Company. This provision also requires the Company to provide Shire with any and all written materials from the unsolicited bidder – including the identity of the bidder.

45.  Further, even if another offer were made to acquire the Company, Shire has received a “matching right,” which permits Shire the right to make a

 
15
 

 
topping offer. In the event an unsolicited offer to acquire the Company materializes, Section 7.03(d) of the Merger Agreement requires the Company to negotiate in good faith with Shire for a period of four business days to consider in good faith any changes to Shire’s offer to acquire the Company. In other words, the Merger Agreement gives Shire access to any rival bidder’s information and allows Shire a free right to top any superior offer simply by matching it. Accordingly, no rival bidder is likely to emerge and act as a stalking horse because the Merger Agreement unfairly assures that any “auction” will favor Shire and piggy-back upon the due diligence of the foreclosed second bidder.

46.  Finally, a potential bidder would have to address a “termination fee” of as high as $155.9 million if it accepts an unsolicited offer to acquire the Company. The termination fee, as outlined in Section 12.04(b) of the Merger Agreement, thereby essentially requires that a competing bidder agree to pay a naked premium for the right to provide NPS Pharma’s stockholders with a superior offer.

47.  Ultimately, these preclusive deal protection provisions illegally restrain the Company’s ability to solicit or engage in negotiations with any third party regarding a proposal to acquire all or a significant interest in the Company. The circumstances under which the Board may respond to an unsolicited written bona  fide  proposal  for  an  alternative  acquisition  that  constitutes  or  would
 

 
 
16
 


 
reasonably  be  expected  to  constitute  a  superior  proposal  are  too  narrowly circumscribed to provide an effective “fiduciary out” under the circumstances.
 
48.  Unless enjoined by this Court, defendants will continue to breach and/or aid the breaches of fiduciary duties owed to plaintiff and the Class, and may consummate the Proposed Transaction to the irreparable harm of the Class.

49.  NPS Pharma stockholders will not see the long run; instead they will be cashed out by the Board and unable to benefit from the Company’s new position on a level playing field and its future growth and profits.

COUNT I

BREACH OF FIDUCIARY DUTIES AGAINST THE INDIVIDUAL DEFENDANTS

50.  Plaintiff repeats and realleges each allegation set forth herein.

51.  The Individual Defendants have violated their fiduciary duties of care and loyalty owed to the public stockholders of NPS Pharma. By the acts, transactions, and courses of conduct alleged herein, the Individual Defendants are attempting to unfairly deprive plaintiff and other members of the Class of the value of their investment in NPS Pharma.

52.  As demonstrated by the allegations above, the Individual Defendants have failed to exercise the necessary care required and breached their duties of loyalty because, among other reasons: (a) they have failed to properly value the Company; and (b) they have failed to take steps to maximize the value of NPS Pharma to its public stockholders.
 
 
 
17
 

53.  Unless enjoined by this Court, the Individual Defendants will continue to breach their fiduciary duties owed to plaintiff and the other members of the Class, and may consummate the Proposed Transaction, which will deprive the Class of its fair and proportionate share of NPS Pharma’s valuable assets and businesses, to the irreparable harm of the Class.

54.  Plaintiff and the Class have no adequate remedy at law. Only through the exercise of this Court’s equitable powers can plaintiff and the Class be fully protected from the immediate and irreparable injury that the Individual

Defendants’ actions threaten to inflict.

COUNT II

AIDING AND ABETTING THE BOARD’S BREACHES OF FIDUCIARY DUTIES AGAINST
NPS PHARMA, SHIRE, AND THE SHIRE AFFILIATES

55.  Plaintiff repeats and re-alleges each allegation set forth herein.

56.  Defendants NPS Pharma, Shire, and the Shire Affiliates, by reason of their status as parties to the Merger Agreement and their possession of non-public information, have aided and abetted the Individual Defendants in the aforesaid breaches of their fiduciary duties.

57.  Such breaches of fiduciary duties could not and would not have occurred but for the conduct of defendants NPS Pharma, Shire, and the Shire Affiliates, who, therefore, have aided and abetted such breaches in the possible sale of NPS Pharma to Shire.


 
18
 

58.  As a result of the unlawful actions of defendants NPS Pharma, Shire, and the Shire Affiliates, plaintiff and the other members of the Class will be irreparably harmed in that they will not receive fair value for NPS Pharma’s assets and business. Unless the actions of NPS Pharma, Shire, and the Shire Affiliates are enjoined, they will continue to aid and abet the Individual Defendants’ breaches of their fiduciary duties owed to plaintiff and the members of the Class.

59.  Plaintiff and the Class have no adequate remedy at law.

PRAYER FOR RELIEF

WHEREFORE, plaintiff demands injunctive relief, in plaintiff’s favor and

in favor of the Class and against defendants, as follows:

A.   Declaring that this action is properly maintainable as a class action;

B.   Enjoining defendants, their agents, counsel, employees, and all persons acting in concert with them from consummating the Proposed Transaction, unless and until the Company adopts and implements a procedure or process to obtain the highest possible price for stockholders;

C.   Directing defendants to account to plaintiff and the Class for their damages sustained because of the wrongs complained of herein;

D.   Awarding plaintiff the costs and disbursements of this action, including reasonable attorneys’ and experts’ fees; and
 
E.      Granting such other and further equitable relief as this Court may deem just and proper.
 
 
 
19
 

 
Dated: January 26, 2015
By:
RIGRODSKY & LONG, P.A.
     
   
/s/ Brian D. Long
   
Seth D. Rigrodsky (#3147)
   
Brian D. Long (#4347)
   
Gina M. Serra (#5387)
   
Jeremy J. Riley (#5791)
   
2 Righter Parkway, Suite 120
   
Wilmington, DE 19803
   
(302) 295-5310
OF COUNSEL:
    
   
Attorneys for Plaintiff
THE WEISER LAW FIRM, P.C.
    
James M. Ficaro
    
Jeffrey J. Ciarlanto
    
22 Cassatt Avenue
    
Berwyn, PA 19312
    
(610) 225-2677
    
     
RYAN & MANISKAS, LLP
    
Richard A. Maniskas
    
995 Old Eagle School Road, Suite 311
    
Wayne, PA 19087
    
(484) 588-5516
    




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