NPS Pharmaceuticals cuts staff, halts bone-drug plans

NPS Pharmaceuticals Inc. will fire more than half its employees and stop preparation work to introduce the Preos osteoporosis drug, which was delayed by U.S. regulators. The shares fell as much as 19 percent.

The job cuts will reduce the number of workers to 230, the company said today in a statement. NPS today moved its headquarters to Parsippany, New Jersey from Salt Lake City.

Eliminating jobs, including in the commercial sales force, will allow NPS to end the year with as much as $124 million, enough to allow it to survive for two years. The U.S. Food and Drug Administration delayed Preos in March, requesting more information. The cuts announced today suggest that the company isn't close to answering the agency's questions, analysts said.

"There were some people who had held out hope that they could refile some data and perhaps get on the market, even this year," said Charles Duncan, an analyst at San Francisco-based JMP Securities, in a telephone interview today. "At this point, it's pretty clear they need some additional clinical work." Duncan rated the shares "market perform" before the news was announced and said he doesn't own shares.

The shares dropped 80 cents, or 14 percent, to $4.78 at 3:03 p.m. New York time in Nasdaq Stock Market composite trading. Earlier they fell as low as $4.52.

Preos is already on the market in Europe, where it is sold by Rosklide, Denmark-based Nycomed under the brand name Preotact.

Answering Questions

NPS Chief Executive Officer Anthony Coles said today that the company still believes it can answer the questions raised by the FDA without conducting new clinical trials. If the agency does require new trials, NPS will seek a partner to help fund the research, Coles said today on a conference call.

NPS will announce its plans for Preos as soon as this year, he said.

The company also said that it will end an agreement to promote Allergan Inc.'s Restasis dry-eye drug. NPS had rights to sell the drug to rheumatologists. That suggests the partnership wasn't profitable for NPS, according to JMP's Duncan.

The cutbacks will help the company preserve cash, NPS said.

"We are taking these measures to reduce operating expenses and preserve cash so we can pursue projects with the highest potential returns," Coles said today in the statement. "These cost saving measures will result in an immediate and significant decrease in spending."