Revenues were $20.1 million for the third quarter of 2009, as compared to $26.1 million for the third quarter of 2008. Third quarter 2008 revenues included the recognition of $4.4 million of previously deferred license fee revenue related to an agreement with Nycomed for teduglutide. The company's net loss was $7.8 million or $0.16 per diluted share for the third quarter of 2009 versus a net loss of $11.4 million or $0.24 per diluted share for the third quarter of 2008. The net loss for the third quarter of 2008 included a non-operating charge of $10.8 million related to a decline in the estimated fair value of the company's auction-rate securities (ARS) investments.

The company's cash, cash equivalents and short- and long-term investments totaled $88.0 million at September 30, 2009 versus $106.1 million at December 31, 2008. The company's net cash burn was $22.2 million for the nine months ended September 30, 2009. NPS is reducing its 2009 cash burn guidance to a range of $43 million to $50 million, versus its previous guidance of $55 million to $65 million. The decrease in the company's 2009 cash burn from previous guidance is principally due to (i) the shifting of certain expenses from 2009 to 2010, (ii) improvements in working capital, and (iii) higher-than-anticipated royalty revenue on REGPARA® (cinacalcet HCl). The company's reported cash burn and cash burn guidance exclude changes in the estimated fair value of the company's ARS investments and proceeds from external financing activities.

"We continue to aggressively manage our cash burn," said Francois Nader, M.D., president and chief executive officer of NPS Pharmaceuticals. "Additionally, we have made strong progress advancing the STEPS study for teduglutide in short bowel syndrome and continue to expect full enrollment by the end of next quarter. We also held a pre-IND meeting with FDA to discuss a path forward for developing teduglutide for chemotherapy-induced gastrointestinal mucositis.

"Our REPLACE study is also advancing, although we have experienced slower-than-expected enrollment largely due to prolonged turnaround times for certain outsourced activities related to site-readiness. We have taken a number of corrective actions and we now expect to achieve full enrollment in the middle of 2010. All of our regulatory-readiness and commercial supply chain activities for GATTEX and NPSP558 are advancing as planned."

Product Pipeline Update

Teduglutide

The STEPS study remains on track to reach full patient enrollment before the end of the first quarter of 2010. Substantially all sites are actively screening patients and nearly half of the currently targeted number of patients has been enrolled. STEPS is an international, double-blind, placebo-controlled Phase 3 registration study to confirm that GATTEX® (teduglutide) is well tolerated and reduces parenteral nutrition (PN) dependence in short bowel syndrome (SBS) patients. NPS is advancing STEPS with the support of its partner, Nycomed, and the two companies are sharing external clinical costs.

The STEPS 2 study is now underway. STEPS 2 is an open-label follow-on study that will enroll patients who have participated in the STEPS study and elect to continue on GATTEX (teduglutide) for up to an additional 24 months. NPS is advancing STEPS 2 with the support of its partner, Nycomed, and the two companies are sharing external clinical costs.

Clinical investigators presented new data from the completed 24-week, placebo-controlled Phase 3 clinical trial at the 2009 American College of Gastroenterology Annual Scientific Meeting and Postgraduate Course. In one presentation, data showed that teduglutide significantly improved lean body mass and total bone mineral content in PN-dependent SBS patients. A separate presentation showed that teduglutide improves intestinal electrolyte and wet weight absorption in SBS patients.

The company is completing preclinical studies evaluating teduglutide in chemotherapy-induced gastrointestinal mucositis or CIGIM and recently completed a pre-investigational new drug application (pre-IND) meeting with the U.S. Food and Drug Administration (FDA) about the path forward for this indication.

Preclinical activities evaluating teduglutide in pediatric indications continue to advance.

NPSP558 (parathyroid hormone 1-84)

Substantially all original sites are now actively screening patients for the REPLACE study; however, the study has experienced slower-than-expected enrollment to date. NPS has taken a number of corrective actions to accelerate enrollment in REPLACE, including transitioning certain activities to a new service provider, adding new sites, and expanding the base of eligible patients to better match the target patient population. NPS now expects to achieve full enrollment in REPLACE near the middle of 2010, rather than the first quarter of 2010. REPLACE is an international, double-blind, placebo-controlled Phase 3 registration study evaluating NPSP558 for the treatment of hypoparathyroidism in adults.

Financial Results

Revenues

Revenues are comprised of royalties, product sales, and milestones and license fees.

NPS earns royalties on (i) Amgen's sales of Sensipar® (cinacalcet HCl), (ii) Nycomed's sales of Preotact® (parathyroid hormone 1-84 [rDNA origin] injection), (iii) Kyowa Kirin's sales of REGPARA® (cinacalcet HCl), and (iv) Ortho-McNeil-Janssen's sales of Nucynta (tapentadol).