BioWorld Today Contributing Writer

NPS Pharmaceuticals Inc. will receive a $145 million advance on royalties from Sensipar/Mimpara (cinacalcet HCL) sales from partner Amgen Inc. and will retire its 15.5 percent secured class B notes when they become redeemable Sept. 20. The move will save NPS about $13 million in interest expenses over the next two years.

The 15.5 percent class B notes were created in August 2007 through a private placement and are worth about $135 million. NPS CEO Francois Nader called the combined operation "neutral," saying that the $10 million difference was "more of a technical number than a true financing." Rather, the significance of it was in exchanging higher-cost debt for lower-cost debt.

Retiring older, higher-cost debt is an option many companies overlook in the hunt for cash, but it can be very beneficial in the long run, and also a fairly painless way to improve a balance sheet and reduce burden. "We pride ourselves on being very opportunistic when it comes to financing," Nader said.

Indeed, NPS's recent financings have been large and generally oversubscribed. In April, it netted $93 million in an underwritten public offering of 11 million shares at $9 per share. In 2010, the firm conducted two public offerings: an offering of 7.91 million shares of common stock at $6 per share for net proceeds of $44.4 million and a public offering and overallotment sale of 10.35 million shares of common stock at $5.50 per share for $53.3 million. And in August 2009, NPS opened a $40 million credit line with Azimuth Opportunity Ltd. (See BioWorld Today, Aug. 7, 2009, April 19, 2010, Sept. 17, 2010, and April 15, 2011.)

The latest royalty-selling deal was advantageous for Amgen as well. "In a way, it's a win-win situation for both of us," Nader told BioWorld Today.

Thousand Oaks, Calif.-based Amgen will take repayment out of future royalties at a 9 percent per annum discount on the balance of the advance, after which it will resume paying royalties on Sensipar sales.

The deal is expected to allow NPS to generate capital to benefit shareholders in preparation for commercialization of two late-stage product candidates, Gattex (teduglutide) and NPSP558.

Gattex is an analogue of glucagon-like peptide 2 (GLP-2) that NPS is developing for short bowel syndrome. Natural GLP-2 is secreted in the distal intestine and helps with regeneration and repair of the epithelium.

NPS's studies have shown activity of the drug in expanding the surface area of the intestine for absorption of nutrients. The therapy is intended to help maintain fluid electrolyte and nutrient balance throughout dietary management of the disease, or parenteral nutrition.

The Bedminster, N.J.-based biotech reported positive Phase III results for Gattex in January and is preparing to submit a new drug application to the FDA in the second half of this year. That study, designated STEPS, was a confirmatory trial supporting a 2007 Phase III that showed mixed results, with Gattex hitting statistical significance at low doses but missing at the high-dose regimen. (See BioWorld Today, Oct. 12, 2007, and Feb. 1, 2011.)

The STEPS study, however, hit its primary endpoint, showing that 63 percent of patients receiving Gattex had a 20 percent or greater reduction in weekly parenteral nutrition (PN) vs. 30 percent of patients in the placebo arm of the study. Patients treated with Gattex also showed greater reductions in weekly PN compared to placebo, a drop of 4.4 liters vs. 2.3 liters.

NPS has a good stream of income flowing already from Gattex. In March, it qualified for a seven-digit milestone payment from Nycomed GmbH triggered by the filing of a European marketing authorization for teduglutide in short bowel syndrome. Nycomed paid $35 million up front in 2007 for a license to develop and commercialize Gattex outside of North America. (See BioWorld Today, Nov. 1, 2007.)

NPS also is developing NPSP558, an analogue of human parathyroid hormone, for hypoparathyroidism. Low parathyroid levels result in low calcium in the blood and cause symptoms such as tingling of the extremities, muscle cramping and convulsions.

NPSP558 is in a Phase III trial (REPLACE) to evaluate effective replacement of parathyroid hormone through once-daily subcutaneous injections with NPSP558 at various dose levels. NPS randomized the last of 135 patients in REPLACE in March and is expecting top-line results in the fourth quarter.

Shares of NPS (NASDAQ:NPSP) closed Tuesday at $7.41, up 3 cents.