NPS Pharmaceuticals Inc. said Monday that it will lay off more than half of its U.S. employees and move its headquarters from Salt Lake City to Parsippany, N.J.
In addition, the company announced it would discontinue all U.S. commercialization of its osteoporosis drug Preos because of a delay in the U.S. Food and Drug Administration's approval process.
The firing of 260 employees includes the elimination of the company's commercial sales operations including the entire field force and related management and support functions and the closing of a technical operations facility in Ontario, Canada.
Brandi Simpson, NPS senior director of investor relations, said the job cuts will reduce the company's Salt Lake workforce to 76 positions from the current 120.
She added that New Jersey represented a better fit for the company's headquarters.
"It is really the commercial center and business center for pharmaceuticals and biotech," Simpson said. "As we've tried to build out our executive team, it has been harder and harder to recruit people to Salt Lake City, unfortunately."
About half of the company's 92,000-square-foot Salt Lake facility at Research Park will be subleased. The Salt Lake site includes a research group as well as the company's finance and legal teams.
Following the layoffs, NPS will have a worldwide workforce of 230 employees.
Tony Coles, chief executive officer, said the changes were needed to "maximize shareholder value."
"We are taking these measures now to reduce operating expenses and preserve cash to pursue projects with the highest potential returns and to build a stronger and a healthier company," Coles said. "We have worked hard to be fair and prudent in deciding which positions remain and which ones will be eliminated. In the final analysis, we believe this is the right thing to do for the health of NPS."
Just last year, NPS celebrated the opening of its new Salt Lake headquarters building. At the April 2005 opening, Gov. Jon Huntsman Jr. called NPS "a wonderful success story."
On Monday, NPS stock dropped $1.04, or 18.6 percent, to close at a 52-week low of $4.54 a share on Nasdaq. The share price had been as high as $16 in the last year.
Coles said Preos continued to be a valuable asset for NPS. The drug, designed for post-menopausal women with osteoporosis, was launched commercially in Europe last week. But the FDA has raised questions about the drug that could result in a new clinical trial.
"There were some people who had held out hope that they could refile some data and perhaps get on the market, even this year," Charles Duncan, an analyst at San Francisco-based JMP Securities, told Bloomberg News. "At this point, it's pretty clear they need some additional clinical work."
The layoffs and restructuring are expected to decrease the company's "cash burn" for 2006 to $135 million to $145 million. The company expects to end 2006 with two years of cash, with a year-end cash balance between $114 million and $124 million.NPS Pharmaceuticals reported a net loss of $38.3 million, or 83 cents per share, for the quarter ended March 31. That compares with a loss of $45 million, or $1.16 per share, for the 2005 first quarter.