NPS Pharmaceuticals DEF 14A Definitive proxy

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )


	Filed by the Registrantý
	Filed by a Party other than the Registranto
	Check the appropriate box:
	o		Preliminary Proxy Statement
	o		Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
	ý		Definitive Proxy Statement
	o		Definitive Additional Materials
	o		Soliciting Material Pursuant to §240.14a-12


NPS PHARMACEUTICALS, INC.
(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):
ý	No fee required.
o	Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
	(1)	Title of each class of securities to which transaction applies: Not Applicable
	(2)	Aggregate number of securities to which transaction applies: Not Applicable
	(3)	Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): Not Applicable
	(4)	Proposed maximum aggregate value of transaction: Not Applicable
	(5)	Total fee paid: Not Applicable
o	Fee paid previously with preliminary materials.
o	Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
	(1)	Amount Previously Paid: Not Applicable
	(2)	Form, Schedule or Registration Statement No.: Not Applicable
	(3)	Filing Party: Not Applicable
	(4)	Date Filed: Not Applicable

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550 Hills Drive, 3^rd Floor
Bedminster, New Jersey 07921

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

May 14, 2009 at 2:00 p.m. (ET)
at the
Newark Marriott, located at the
Newark Liberty International Airport
Newark, New Jersey 07114
(973) 623-0006

TO THE STOCKHOLDERS OF NPS PHARMACEUTICALS, INC.:

NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of NPS Pharmaceuticals, Inc., a Delaware corporation, will be held on Thursday, May 14, 2009, at 2:00 p.m. (ET) at the Newark Marriott, located at the Newark Liberty International Airport, Newark, New Jersey 07114 for the purposes of considering and acting on the following:

1.: to elect six members to the Board of Directors, each for a term of one year;
2.: to amend our 2005 Omnibus Incentive Plan to increase by 1,800,000 shares the aggregate number of shares of common stock reserved for issuance thereunder;
3.: to ratify the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2009; and
4.: to transact such other business as may properly come before the meeting or any adjournment thereof.

The foregoing items of business are more fully described in the Proxy Statement accompanying this notice.

The Board of Directors has fixed the close of business on March 31, 2009, as the record date for the determination of stockholders entitled to notice of and to vote at this Annual Meeting of Stockholders and at any adjournment thereof. This notice and the accompanying Proxy Statement are being mailed on or about April 15, 2009.


		By Order of the Board of Directors Andrew Rackear Senior Vice President, General Counsel and Secretary

Bedminster, New Jersey
April 13, 2009

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be Held on May 14, 2009: Our Annual Report to Stockholders and the accompanying Proxy Statement are available online atwww.proxyvote.com.

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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND THE ANNUAL MEETING			1
PROPOSAL NO. 1: ELECTION OF DIRECTORS			8
	General Information		8
	Nominees For Election		9
	Responsibilities of the Board		11
	Independence of the Board		12
	Committees of the Board		12
	Code of Ethics		15
	Non-employee Director Stock Ownership Guidelines		15
	Communications from Stockholders		16
PROPOSAL NO. 2: INCREASE OF SHARES UNDER 2005 OMNIBUS INCENTIVE PLAN			17
PROPOSAL NO. 3: RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS			24
AUDIT COMMITTEE REPORT			25
EXECUTIVE COMPENSATION			26
	Compensation Discussion and Analysis		26
		Role of Board of Directors and Compensation Committee	26
		Compensation Policy and Objectives	26
		Compensation Consultant	26
		Role of Executives in Compensation Decisions	27
		Setting Executive Compensation	27
		2008 Executive Compensation Components	29
		Employment Agreements	38
		Post Termination Compensation	39
		Perquisites	39
		Policy Regarding Tax Gross-ups	39
		Policy Regarding Deductibility	39
	Compensation Committee Report		40
	Summary Compensation Table		41
	Grants of Plan Based Awards		43
	Employment Agreements		44
	Outstanding Equity Awards at Fiscal Year End		47
	Option Exercises and Stock Vested in 2008		48
	Pension Benefits and Nonqualified Deferred Compensation		48
	Potential Payments Upon Termination or Change in Control		48
	Company Separation Agreements		51
EQUITY COMPENSATION PLAN INFORMATION			52
DIRECTOR COMPENSATION			52
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT			55
	Rule 10b5-1 Plans		57
	Compliance with Section 16(a) of the Securities Exchange Act		57
REVIEW AND APPROVAL OF TRANSACTIONS WITH RELATED PERSONS			58
OTHER MATTERS			59
ANNEX A—2005 Omnibus Incentive Plan, as amended			A-1

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PROXY STATEMENT

QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND THE ANNUAL MEETING

Q: Why am I receiving these materials?

A:: We sent you this Notice of Annual Meeting, Proxy Statement and the accompanying Proxy Card because according to our stockholder records you own shares of common stock of NPS Pharmaceuticals, Inc. ("NPS", the "Company", "we", "us", or "our"), a Delaware corporation with its principal executive offices located at 550 Hills Drive, 3^rd Floor, Bedminster, New Jersey 07921. Any record or beneficial holder of shares of NPS common stock at the close of business on March 31, 2009 is entitled to vote those shares at the upcoming Annual Meeting of Stockholders ("Annual Meeting"), which will be held on Thursday, May 14, 2009 at 2:00 p.m. (ET), at the Newark Marriott, located at the Newark Liberty International Airport, Newark, New Jersey 07114. Our Board of Directors (or the "Board") is soliciting your proxy to vote at the Annual Meeting. All stockholders are invited to attend the Annual Meeting and are entitled to and requested to vote on the items of business described in this Proxy Statement. However, you do not need to attend the meeting to vote your shares. Instead, you may simply complete, sign and return the accompanying Proxy Card, or follow the instructions below to submit your proxy by telephone or on the internet. Although the Annual Report and Proxy Statement are being delivered together, the Annual Report should not be deemed to be a part of the Proxy Statement.

Q: What information is contained in this Proxy Statement?

A:: The information in this Proxy Statement relates to the proposals to be voted on at the Annual Meeting, the voting process, our Board and Board committees, the compensation of directors and certain executive officers for the 2008 fiscal year, and certain other required information.

Q: What items of business will be voted on at the Annual Meeting?

A:

Items of business scheduled to be voted on at the Annual Meeting are:

•: the election of six directors;
•: to amend our 2005 Omnibus Incentive Plan to increase by 1,800,000 shares the aggregate number of shares of common stock reserved for issuance thereunder; and
•: the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the 2009 fiscal year.

We will also consider any other business as may properly come before the meeting or any adjournment thereof. See "What happens if additional matters are presented at the Annual Meeting?" below.

Q: How does the Board recommend that I vote?

A:: For the reasons set forth in more detail later in the Proxy Statement, our Board recommends that you vote your shares "FOR ALL" of the nominees to the Board, "FOR" the increase of shares under our 2005 Omnibus Incentive Plan, and "FOR" ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the 2009 fiscal year.

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Q: What shares can I vote?

A:: Each holder of NPS common stock is entitled to one vote for each share of common stock held as of the record date on each matter to be voted on at the Annual Meeting. March 31, 2009 is the record date for the Annual Meeting. You may vote all shares owned by you as of the record date, including (i) shares held directly in your name as the stockholder of record and (ii) shares held for you as the beneficial owner through a broker, bank or other agent. On the record date, we had 47,516,957 shares of common stock issued, outstanding and entitled to vote at the meeting.

Q: What is the difference between holding shares as a stockholder of record and as a beneficial owner?

A:: Most of our stockholders hold their shares through a broker or other nominee rather than directly in their own name. As summarized below, there are some distinctions between shares held of record and those owned beneficially.

Stockholder of Record—If, as of the record date, your shares are registered directly in your name with our transfer agent, Computershare Investor Services, or Computershare, you are considered to be the stockholder of record for those shares and we have sent these proxy materials directly to you. As the stockholder of record, you have the right to grant your voting proxy directly to NPS or to a third party, or to vote in person at the Annual Meeting. We have enclosed or sent a Proxy Card for you to use.

Beneficial Owner—If, as of the record date, your shares were held not in your name, but rather in an account at a brokerage firm, bank or other agent, then you are considered to be the beneficial owner of shares held in "street name" and you have the right to direct your broker or nominee on how to vote the shares. You should receive these proxy materials from your broker, bank or other agent rather than from us. You should have also received, with this Proxy Statement, a Proxy Card and voting instructions from the organization that forwarded these proxy materials to you.

The broker, bank or other agent holding your account is considered to be the stockholder of record for purposes of the Annual Meeting. As the beneficial owner, you have the right to direct your broker, bank or other agent how to vote the shares in your account. However, since you are not the stockholder of record, you may not vote your shares in person at the Annual Meeting unless you request and obtain a valid proxy issued in your name from your broker, bank or other agent.

Q: What if I have questions for NPS's transfer agent?

A:: Please contact our transfer agent, at the phone number or address listed below, with questions concerning stock certificates, transfer of ownership or other matters pertaining to your stock account.

Computershare Trust Company, N.A.
P.O. Box 43070
Providence, RI 02940-3070
800-962-4264

Q: How can I attend the Annual Meeting?

A:: You are entitled to attend the Annual Meeting only if you were an NPS stockholder or joint holder as of the close of business on March 31, 2009 or you hold a valid proxy for the Annual Meeting. You should be prepared to present photo identification for admittance. In addition, if you are a stockholder of record your name will be verified against the list of stockholders of record on the record date prior to your being admitted to the Annual Meeting. If you are not a stockholder of record but hold shares as a beneficial owner through a broker, bank or other agent in "street

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name" you should provide proof of beneficial ownership on the record date, such as your most recent account statement as of or prior to March 31, 2009, a copy of the voting instruction card provided by your broker, bank or other agent or other similar evidence of ownership. If you do not provide photo identification or comply with the other procedures outlined above, you will not be admitted to the Annual Meeting.

Q: How can I vote my shares in person at the Annual Meeting?

A:: Shares held in your name as the stockholder of record may be voted in person at the Annual Meeting. Shares held beneficially in "street name" may be voted in person at the Annual Meeting only if you obtain a legal proxy from the broker, bank or other agent that holds your shares giving you the right to vote the shares.Even if you plan to attend the Annual Meeting, we recommend that you also submit your proxy or voting instructions as described below so that your vote will be counted if you later decide not to attend the meeting.

Q: How can I vote my shares without attending the Annual Meeting?

A:: Whether you hold shares directly as the stockholder of record or beneficially in "street name", you may direct how your shares are voted without attending the Annual Meeting. If you are a stockholder of record, you may vote by submitting a proxy or you may also vote on the internet or by telephone. If you hold shares beneficially in "street name", you may vote by submitting voting instructions to your broker, bank or other agent.

By Internet—If you are a stockholder of record, you may go tohttp://www.proxyvote.com to vote on the Internet. You will be required to provide the company number and control number contained on your Proxy Cards. You will then be asked to complete an electronic Proxy Card. The votes will be generated on the computer screen and you will be prompted to submit or revise them as desired. If you hold shares beneficially in "street name", you should review the voting instructions received from your bank or broker to determine whether you can vote your shares on the Internet.

By Telephone—If you are a stockholder of record, you may vote by using a touch-tone telephone and calling 1-800-690-6903 (toll-free) and following the recorded instructions. If you hold shares beneficially in "street name", you should review the voting instructions received from your bank or broker to determine whether you can vote your shares by telephone.

By Mail—If you are a stockholder of record, you may submit your proxies by completing, signing and dating your Proxy Card and mailing them in the accompanying pre-addressed envelopes. If you hold shares beneficially in "street name" you may vote by mail by completing, signing and dating the voting instruction cards provided and mailing them in the accompanying pre-addressed envelopes.

Q: What is the deadline for voting my shares?

A:: If you hold shares as the stockholder of record, your vote by proxy must be received before the polls close at the Annual Meeting. If you hold your shares beneficially in "street name" with a broker, bank, or other agent, please follow the voting instructions provided by that agent. You may vote your shares in person at the Annual Meeting only if you are a stockholder of record or if you hold your shares beneficially in "street name" and at the Annual Meeting you provide a legal proxy obtained from your broker, bank or other agent.

Q: Can I change my vote or revoke my proxy?

A:: You may change your vote or revoke your proxy at any time prior to the vote at the Annual Meeting. If you are the stockholder of record, you may change your vote by granting a new proxy

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bearing a later date (which automatically revokes the earlier proxy), by providing a written notice of revocation to the NPS Corporate Secretary prior to your shares being voted, or by attending the Annual Meeting and voting in person. Attendance at the meeting will not cause your previously granted proxy to be revoked unless you specifically so request. For shares you hold beneficially in "street name", you may change your vote by submitting new voting instructions to your broker, bank or other agent. If you have obtained a legal proxy from your broker or agent giving you the right to vote your shares, you may also change your vote by attending the meeting and voting in person.

Q: Who can help answer my questions?

A:: If you have any questions about the Annual Meeting or how to vote or revoke your proxy, you should contact our Corporate Secretary or Office of General Counsel at (908) 450-5300 or by writing to NPS Pharmaceuticals, Inc., Attn: Corporate Secretary or Office of General Counsel, 550 Hills Drive, 3^rd Floor, Bedminster, New Jersey 07921.

Q: Is my vote confidential?

A:: We handle proxy instructions, ballots and voting tabulations that identify individual stockholders in a manner that protects your voting privacy. Your vote will not be disclosed within NPS or to third parties, except: (1) as necessary to meet applicable legal requirements, (2) to allow for the tabulation of votes and certification of the vote, and (3) to facilitate a successful proxy solicitation. Occasionally, stockholders provide on their Proxy Card written comments, which are then forwarded to our management.

Q: How many shares must be present or represented to conduct business at the Annual Meeting?

A:: A quorum of stockholders is necessary to hold a valid meeting. A quorum will be present if at least a majority of the outstanding shares are represented in person or by proxy at the Annual Meeting. All votes will be tabulated by the inspector of elections appointed for the Annual Meeting, who will separately tabulate affirmative and negative votes, abstentions, and broker non-votes. Abstentions and broker non-votes are considered present and entitled to vote at the Annual Meeting for purposes of determining a quorum, but are not counted for any purpose in determining whether a matter has been approved.

Q: How are votes counted?

A:: Votes will be counted by the inspector of elections appointed for the Annual Meeting, who will separately count "FOR ALL", "WITHOLD ALL" and "FOR ALL EXCEPT" votes, with respect to the election of directors, and, with respect to any other proposal, "FOR," "AGAINST" or "ABSTAIN" votes, and broker non-votes.

For the election of directors, you may vote "FOR ALL," "AGAINST ALL" of the nominees or "FOR ALL EXCEPT" with respect to one or more of the nominees. For the other items of business, you may vote "FOR," "AGAINST", or "ABSTAIN." If you elect to "ABSTAIN," your vote will not be counted in determining whether a matter has been approved. If you provide specific instructions with regard to certain items, your shares will be voted as you instruct on such items.

Q: What is the voting requirement to approve each of the proposals?

A:: For the election of directors, the six persons receiving the most affirmative votes at the Annual Meeting will be elected. All other proposals require the affirmative vote of a majority of the votes cast on those proposals at the Annual Meeting. Abstentions and "broker non-votes" are not

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counted for any purpose in determining whether a matter has been approved, but are considered present and entitled to vote at the Annual Meeting for purposes of determining a quorum.

If you hold shares beneficially in "street name" and do not provide your broker, bank or other agent with voting instructions, your shares may constitute "broker non-votes." Generally, broker non-votes occur on a matter when a broker is not permitted to vote on that matter without instructions from the beneficial owner and instructions are not given. In tabulating the voting result for any particular proposal, shares that constitute broker non-votes are not considered entitled to vote on that proposal. Thus, broker non-votes will not affect the outcome of any matter being voted on at the meeting, assuming that a quorum is obtained. However, if you are a beneficial owner and you do not provide your broker, bank or other agent with voting instructions, the broker bank or other agent has authority to vote your shares for or against certain "routine" matters. "Routine" matters include all of the proposals to be voted on at the Annual Meeting, other than the proposal to increase the shares under our 2005 Omnibus Incentive Plan.

If you sign your Proxy Card or voting instruction card without giving specific instructions, your shares will be voted in accordance with the recommendations of the Board ("FOR ALL" of our nominees to the Board, "FOR" increase of shares under our 2005 Omnibus Incentive Plan, and "FOR" ratification of the appointment of KPMG, LLP as our independent registered public accounting firm).

Q: What happens if additional matters are presented at the Annual Meeting?

A:: Other than the three items of business described in this Proxy Statement, we are not aware of any other business to be acted upon at the Annual Meeting. If you grant a proxy, the persons named as proxy holders will have the discretion to vote your shares on any additional matters properly presented for a vote at the meeting. If for any reason any of our nominees is not available as a candidate for director, the persons named as proxy holders will vote your proxy for such other candidates as may be nominated by the Board.

Q: What should I do if I receive more than one set of voting materials?

A:: You may receive more than one set of voting materials, including multiple copies of this Proxy Statement and multiple Proxy Cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you may receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a stockholder of record and your shares are registered in more than one name, you will receive more than one Proxy Card. Please complete, sign, and date and return each NPS Proxy Card and voting instruction card that you receive to ensure that all of your shares are voted.

Q: How may I obtain a separate set of proxy materials or request a single set for my household?

A:: The Securities and Exchange Commission, or SEC, has adopted rules that permit companies and intermediaries (such as banks and brokers) to satisfy the delivery requirements for Proxy Statements and annual reports with respect to two or more stockholders sharing the same address by delivering a single Proxy Statement addressed to those stockholders. This process, which is commonly referred to as "householding," potentially means extra convenience for stockholders and cost savings for companies.

This year, a number of brokers with account holders who are NPS stockholders will be "householding" our proxy materials. A single Proxy Statement will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker that they will be "householding" communications to your address, "householding" will continue until you are notified otherwise or

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until you revoke your consent. If, at any time, you no longer wish to participate in "householding" and would prefer to receive a separate Proxy Statement and annual report, you may direct your request as follows:

•: by notifying your broker;
•: by writing to Investor Relations, NPS Pharmaceuticals, Inc., 550 Hills Drive, 3^rd Floor, Bedminster, New Jersey 07921;
•: by contacting Investor Relations by telephone at (908) 450-5300;
•: by calling Broadridge toll-free at (800) 542-1061; or
•: by writing to Broadridge, Householding Department, 51 Mercedes Way, Edgewood, New York 11717.

If you revoke your consent, you will be removed from the householding program within thirty days of receipt of your revocation and each stockholder at your address will receive individual copies of our disclosure documents. Stockholders who currently receive multiple copies of the Proxy Statement at their address and would like to request "householding" of their communications should contact their broker.

Q: Who will bear the cost of soliciting votes for the Annual Meeting?

A:: We will bear the entire cost of solicitation of proxies including preparation, assembly, printing, and mailing of this Proxy Statement, the Proxy Card, and any additional information furnished to stockholders. Copies of solicitation materials will be furnished to banks, brokerage houses, fiduciaries, and custodians holding in their names shares of NPS common stock beneficially owned by others to forward to such beneficial owners. We may reimburse persons representing beneficial owners of common stock for their costs of forwarding solicitation materials to such beneficial owners.

To assist in soliciting proxies, we have retained The Proxy Advisory Group, a professional proxy solicitation firm, at an approximate cost of $15,000 plus reimbursement of certain out-of-pocket expenses. Original solicitation of proxies by mail may be supplemented by telephone or personal solicitation by directors, officers, or other regular employees of NPS. No additional compensation will be paid to directors, officers, or other regular employees for such services.

We intend to mail this Proxy Statement and accompanying Proxy Card on or about April 15, 2009 to all stockholders entitled to vote at the Annual Meeting. In addition, this Proxy Statement and our Annual Report to Stockholders will be available on our web site atwww.npsp.com beginning on or about April 15, 2009.

Q: How may I obtain a copy of NPS's 2008 Annual Report to Stockholders and Annual Report on Form 10-K for the year-ended December 31, 2008?

A:: Our 2008 Annual Report to Stockholders, including financial statements for the year-ended December 31, 2008, is being distributed to all of our stockholders, together with this Proxy Statement, in satisfaction of the requirements of the SEC. A copy of our Annual Report on Form 10-K for the year-ended December 31, 2008 and the other periodic and current reports we file with the Securities and Exchange Commission are available on our website atwww.npsp.com. Although the Annual Report and Proxy Statement are being delivered together, the Annual Report should not be deemed to be a part of the Proxy Statement.

You may request additional copies of the 2008 Annual Report to Stockholders and Form 10-K, at no charge, from our Investor Relations Department at (908) 450-5300 or by electronic mail at

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invest@npsp.com. You may also write to our Investor Relations Department at 550 Hills Drive, 3^rd Floor, Bedminster, New Jersey 07921.

Q: What is the deadline to propose actions for consideration at next year's Annual Meeting of stockholders?

A:: For a stockholder proposal to be considered for inclusion in our Proxy Statement and presented at the 2010 Annual Meeting of Stockholders, our Corporate Secretary must receive a written proposal at the address below no later than December 26, 2009. Proposals should be addressed to: NPS Pharmaceuticals, Attn: Corporate Secretary, 550 Hills Drive, 3^rd Floor, Bedminster, New Jersey 07921.

For a stockholder proposal that is intended to be presented at the 2010 Annual Meeting of Stockholders, but not included in our Proxy Statement, the proposal must be received by our Corporate Secretary at the same address no earlier than the close of business on February 15, 2010 and no later than the close of business on March 15, 2010. Please review our Bylaws, which contain additional requirements regarding advance notice of stockholder proposals. You may contact the NPS Corporate Secretary at the above address for a copy of the relevant Bylaw provisions regarding the requirements of making stockholder proposals and nominating director candidates.

No stockholder proposals were submitted and none are included for consideration at the 2009 Annual Meeting of Stockholders.

Q: Where can I find the voting results of the Annual Meeting?

A:: We intend to announce preliminary voting results at the Annual Meeting and publish final results in our quarterly report on Form 10-Q for the second quarter ending June 30, 2009.

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PROPOSALS TO BE VOTED ON

PROPOSAL NO. 1

ELECTION OF DIRECTORS

General Information

Our Board of Directors currently consists of six members. Each member of the Board is a nominee for re-election at the 2009 Annual Meeting of Stockholders. Proxies may not be voted for a greater number of persons than the number of named nominees. Each nominee has agreed to serve if elected at the Annual Meeting. If and when elected at the Annual Meeting, each of the nominees is expected to serve until the Annual Meeting of Stockholders to occur in 2010 and until such elected nominee's successor is duly elected and qualified, or until such elected nominee's earlier death, resignation, or removal. The Board has no reason to believe that any nominee will be unable to serve.

Pursuant to our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws, the number of directors which constitute the whole Board of Directors is to be fixed by one or more resolutions adopted by the Board of Directors. Our Board, by resolution effective May 14, 2009, has set the number of directors which constitute the whole Board of Directors at six. Our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws also provide that directors are to be elected at the Annual Meeting to serve for a term of one year and until their respective successors are duly elected and qualified or until their respective death, resignation, or removal. Vacancies on the Board resulting from death, resignation, disqualification, removal, or other causes and any newly created directorships resulting from any increase in the number of directors may be filled by the affirmative vote of a majority of the directors then in office, unless the Board of Directors determines by resolution that any such vacancy shall be filled by the stockholders. A director elected by the Board to fill a vacancy (including a vacancy created by an increase in the Board of Directors) will serve for the remainder of the full term of the director for which the vacancy was created or occurred and until such director's successor is elected and qualified.

Directors are elected by a plurality of the votes of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote on the election of directors. The six nominees receiving the most votes will be elected. Shares represented by executed proxies will be voted, if authority to do so is not withheld, for the election of the six nominees below. In the event that any nominee should be unavailable for election as a result of an unexpected occurrence, such shares will be voted for the election of such substitute nominee as the Board may propose.

Set forth below, in alphabetical order, is biographical information for each person nominated to serve on our Board of Directors.

OUR BOARD RECOMMENDS A VOTE FOR THE ELECTION TO THE BOARD OF EACH OF THE FOLLOWING NOMINEES

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Nominees For Election


Michael W. Bonney, B.A. Director since 2005 Age 50		Mr. Bonney has served as a director since January 2005. Mr. Bonney has served since June 2003 as the president and chief executive officer and as a member of the Board of Directors of Cubist Pharmaceuticals, Inc., a public biopharmaceutical company. From January 2002 to June 2003, he served as its president and chief operating officer. From 1995 to 2001, he held various positions at Biogen, Inc., a public biopharmaceutical company, including vice president, sales and marketing from 1999 to 2001. Prior to that, Mr. Bonney held various positions in sales, marketing and strategic planning at Zeneca Pharmaceuticals, ending his eleven-year career there serving as National Business Director. Mr. Bonney has a B.A. in Economics from Bates College. Mr. Bonney is a trustee of Beth Israel Deaconess Medical Center and Bates College, and a member of the Board of Directors of BIO (Biotechnology Industry Organization).
James G. Groninger, M.B.A. Director since 1988 Age 65		Mr. Groninger has served as a director since 1988. In February 2002, Mr. Groninger was appointed chief executive officer of LBS Technologies, Inc., a private biotechnology company focusing on RNA amplification and cellular therapy. Mr. Groninger founded in January 1995 and is president of The Bay South Company, a Richmond, Virginia-based provider of financial advisory and investment banking services. From 1988 through 1994, he served as a managing director, investment banking division, of PaineWebber Incorporated. Mr. Groninger is a member of the board of directors of Cygne Designs, Inc., a publicly held company and Layton BioScience, Inc., LBS Technologies, Inc., and Expression Pathology, Inc., private biotechnology companies. Mr. Groninger received a B.S. from Yale University and an M.B.A. degree from Harvard Business School, and has been certified with CPA and CFA designations.
Donald E. Kuhla, Ph.D. Director since 1991 Age 66		Dr. Kuhla has served as a director since 1991. From 1998 through January 2004, Dr. Kuhla was president and chief operating officer of Albany Molecular Research, Inc., a chemical contract research organization, which Dr. Kuhla continues to serve as a director. From 1994 through 1998 Dr. Kuhla was vice president of Plexus Ventures, Inc., a business consulting firm. From 1990 to 1994, Dr. Kuhla held senior management positions with two venture capital-backed, biotechnology startup companies. His early career was spent in research and development and operations management positions with Pfizer Inc. and Rorer Group, Inc., his last position at Rorer being senior vice president of operations. Dr. Kuhla is a director of Synthetech Inc., a pharmaceutical fine chemical company. Dr. Kuhla received a Ph.D. degree in Organic Chemistry from Ohio State University.

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Francois Nader, M.D., M.B.A. Director Since 2008 Age 52		Francois Nader has been our President and Chief Executive Officer, or CEO, of NPS since March 2008. Dr. Nader joined NPS in June 2006 and served as Executive Vice President and Chief Operating Officer until March 2008. In that capacity, he was responsible for managing the Company's worldwide research and development, commercial operations, manufacturing and regulatory affairs. Before joining NPS, Dr. Nader was a venture partner at Care Capital, LLC and Chief Medical Officer of its Clinical Development Capital unit from July 2005, to June 2006. From 2000 to July 2005, he served as Senior Vice President, Integrated Healthcare Markets and Senior Vice-President, North America Medical and Regulatory Affairs with Aventis Pharmaceuticals. He also held similar positions at Hoechst Marion Roussel and served as Head of Global Commercial Operations at the Pasteur Vaccines division of Rhone-Poulenc. Francois Nader received a French State Doctorate in Medicine from St. Joseph University and a Physician Executive M.B.A. from the University of Tennessee.
Rachel R. Selisker, C.P.A. Director since 2005 Age 53		Ms. Selisker has served as a director since January 2005. Ms. Selisker is president of Seamark Advisors LLC and has provided financial consulting and appraisal services in the healthcare sector since June 2007. She served from March 2006 to June 2007 as chief financial officer of AAIPharma Inc., a privately held contract research organization. From January 2001 to March 2006 she served as a managing director in the Raleigh, North Carolina office of Thompson Clive & Partners Inc., a venture capital firm based in London, where she focused on the life sciences sector. She served from July 1987 to February 2000 as the chief financial officer, and from February 2000 to January 2001 as senior vice president, global shared services, of Quintiles Transnational Corp., a publicly held global contract research organization. Ms. Selisker also served as director of Quintiles Transnational Corp. from November 1995 to February 2000. Ms. Selisker was a supervisor and staff accountant with the national accounting firm of Oppenheim, Appel, Dixon & Co. in Raleigh, North Carolina, from 1981 to 1987. She is a certified public accountant with extensive public accounting experience from 1976, when she graduated with her accounting degree from Wake Technical College in Raleigh, North Carolina until 1987, when she joined Quintiles. She also has served as a director of Labopharm, Inc., since November 2008.

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Peter G. Tombros, M.S., M.B.A. Director since 1998 Age 66		Mr. Tombros has served as a director since 1998 and in January 2008 was appointed Chair of the Board. Since 2005, Mr. Tombros has served as professor and executive in residence in the Eberly College of Science BS/MBA Program at Pennsylvania State University. Prior to that he was chair of the board and chief executive officer of VivoQuest, a private biopharmaceutical company. From 1994 until June of 2001, Mr. Tombros served as president, chief executive officer and director of Enzon Pharmaceuticals, a publicly held biopharmaceutical company. Prior to joining Enzon, Mr. Tombros spent 25 years with Pfizer Inc., a global healthcare company in a variety of senior management positions including vice president of marketing, senior vice president and general manager of the Roerig Pharmaceuticals Division, executive vice president of Pfizer Pharmaceuticals Division, director of Pfizer Pharmaceuticals Division, vice president of corporate strategic planning, and vice president, corporate officer, Pfizer Inc. Mr. Tombros serves as a director and non-executive Chair of the Board of PharmaNet Development Group, Inc. Mr. Tombros also serves on the board of directors of Cambrex and Protalex, Inc. Mr. Tombros received B.S. and M.S. degrees from Pennsylvania State University and an M.B.A. degree from the University of Pennsylvania Wharton Graduate School of Business.

Responsibilities of the Board

Our Board of Directors is responsible for monitoring our overall performance. Among other things, the Board, directly and through its committees, establishes corporate policies; oversees compliance and ethics; reviews the performance of the Chief Executive Officer and other executives; establishes our executive compensation policies and objectives; reviews and approves total compensation paid to our named executive officers; reviews and approves certain transactions; and reviews our long-term strategic plans. In accordance with general corporate legal principles applicable to corporations organized under the laws of the State of Delaware, the Board of Directors does not control the day-to-day management of NPS. Members of the Board keep informed about our business by participating in Board and committee meetings, by reviewing analyses and reports and through discussions with the Chief Executive Officer and other officers.

The Board has adopted Corporate Governance Guidelines that govern its operation and that of its committees. From time to time, our Board may revise the Corporate Governance Guidelines in response to changing regulatory requirements and evolving best practices. The Corporate Governance Guidelines may be viewed in the corporate governance section of our website atwww.npsp.com.

The Board meets throughout the year on a set schedule and also holds special meetings and acts by written consent from time to time as appropriate. Directors are responsible for attending Board meetings and meetings of the committees on which they serve, and for devoting the time needed and meeting as frequently as necessary to discharge their responsibilities properly. During the fiscal year ended December 31, 2008, the Board of Directors held 16 meetings. At certain meetings for limited periods of time and for limited considerations, the Board met in executive session where only the independent directors were present. Each Board member standing for re-election attended 75% or more of the aggregate of the meetings held by the Board and by the respective committees on which such Board member served during the period for which he or she was a director or a member of such

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committee. Directors are invited to attend the Annual Meeting of Stockholders. Five of our six Board members were present at the Annual Meeting of Stockholders held in 2008.

Independence of the Board

Our Board of Directors, with the assistance of the Nominating and Corporate Governance Committee, determines, on a regular basis, the independence of each Board member and committee member. The Board primarily utilizes NASDAQ's categorical independence standards for determining whether members of the Board and the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee are independent. The Board also evaluates director independence by utilizing the definition of "non-employee directors" under applicable federal securities laws and "outside directors" under Section 162(m) of the U.S. Internal Revenue Code. The Board has also adopted Corporate Governance Guidelines which are, among other things, intended to ensure that the Board and its committees are composed of independent directors. The Corporate Governance Guidelines provide that "an independent director is one who has no relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director." The Board and the Nominating and Corporate Governance Committee also regularly consult with our legal counsel to ensure that the Board's independence determinations are consistent with the foregoing criteria. This consultation includes an analysis of each director's response to a questionnaire inquiring about, among other things, his or her relationship, and those of his or her immediate family members, with the Company, our senior management, our independent registered public accounting firm and other companies with whom we do business.

Consistent with these considerations, after a review of all relevant transactions and relationships involving our directors, our Board has affirmatively determined that each current member of our Board of Directors is independent under the foregoing criteria, except for Dr. Nader and Mr. Groninger. Dr. Nader is not considered an independent director because of his employment as our Chief Executive Officer and President. Mr. Groninger is not considered an independent director at this time because he is a brother-in-law to Dr. Hunter Jackson, our former chief executive officer. In addition, our Board has affirmatively determined that each current member of the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee is independent under the foregoing criteria.

During the fiscal year ended December 31, 2008, Dr. Anthony Coles, our former Chief Executive Officer and President, and Dr. Calvin Stiller also served as directors of NPS. Dr. Coles resigned from the Board in March 2008, and Dr. Stiller resigned from the Board in May 2008. The Board determined that Dr. Stiller was independent under the foregoing independence criteria.

Committees of the Board

The Board has elected to use Board committees in furtherance of the discharge of its duties and for the conduct of its work. All major decisions of such committees are reviewed and, where appropriate, ratified by the Board. In furtherance of its decision to employ committees and consistent with applicable laws, regulations and stock exchange listing requirements, currently, the Board has established three separately designated, standing committees: Audit, Compensation, and Nominating and Corporate Governance. Information regarding each committee is provided below.

Audit Committee

The Board has a separately-designated standing Audit Committee, the purpose of which includes (i) overseeing our accounting and financial reporting processes and audits of our financial statements; (ii) reviewing evaluations of our system of internal controls; (iii) engaging and monitoring the independence and performance of our independent registered public accounting firm; (iv) providing a

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forum for communication among the independent registered public accounting firm, management, and the Board; and (v) providing such additional information and materials the Audit Committee may deem necessary to make the Board aware of significant financial matters that require the Board's attention. The Audit Committee also prepares and submits theAudit Committee Report set out on page 21.

The Audit Committee is presently composed of three directors, Ms. Selisker, Mr. Bonney and Mr. Tombros. Ms. Selisker serves as the chair of the Audit Committee.

Our Board has determined that each member of the Audit Committee is independent under the independence criteria described above. Our Board has also determined that Ms. Selisker qualifies as an Audit Committee Financial Expert as defined in the applicable SEC rules. Our Board has also determined that the Audit Committee meets the NASDAQ composition requirements, including the requirements regarding the financial literacy and financial sophistication of its members. The Board has adopted a written charter for the Audit Committee, which is available on the corporate governance section of our web site atwww.npsp.com. The Audit Committee met nine times during the fiscal year ended December 31, 2008.

Compensation Committee

The Board has delegated to the Compensation Committee the responsibility for implementing, reviewing and continually monitoring adherence with our compensation policies and objectives. The Compensation Committee is responsible for establishing, approving and recommending to the Board for final approval each of our compensation programs. The Compensation Committee's functions include (i) establishing, reviewing, and overseeing base salaries, incentive compensation, equity compensation, retention compensation and other forms of compensation paid to our executive officers; (ii) administering our incentive compensation and equity plans; and (iii) performing such other functions regarding compensation as the Board may delegate. The Compensation Committee reviews and discusses with management theCompensation Discussion and Analysis beginning on page 22 of this Proxy Statement and prepares and submits to the Board theCompensation Committee Report set out on page 33 of this Proxy Statement.

In making its determinations, the Compensation Committee has the authority to act independently of management and to hire its own consultants. During 2008, the Compensation Committee engaged Radford Consulting, or Radford, a business unit of AON Consulting, to work for the Committee in its review of executive and director compensation practices, including the competitiveness of pay levels, executive compensation design issues, market trends, and technical considerations. In addition, our CEO and Senior Director of Human Resources work with Radford to develop total compensation recommendations for our executive officers other than our CEO. The recommendations are submitted to the Compensation Committee for its review. The Compensation Committee works directly with Radford to develop a recommendation for CEO compensation. While Radford and our CEO, our Senior Director of Human Resources, our General Counsel and our Chief Financial Officer offer ideas, opinions, and proposals to the Compensation Committee, the final decision with respect to any course of action rests solely with the Compensation Committee. The Compensation Committee has delegated to our CEO the limited authority to make option grants to new employees and other eligible persons who are not subject to Section 16 of the Exchange Act, in each case, within grant guidelines established by the Compensation Committee.

The Compensation Committee is currently composed of three directors, Dr. Kuhla, Ms. Selisker and Mr. Tombros. Dr. Kuhla serves as the chair of the Compensation Committee.

Our Board has determined that each member of the Compensation Committee is independent under the independence criteria previously described. In addition, all members of the Compensation Committee are outside directors as defined by Rule 162(m) of the Internal Revenue Code and are

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non-employee directors as defined by Rule 16b-3 promulgated by the SEC under the Securities Exchange Act of 1934, as amended, which we refer to as the Exchange Act. The Board has adopted a written charter for the Compensation Committee which is available in the corporate governance section of our web site atwww.npsp.com. The Compensation Committee met ten times during the fiscal year ended December 31, 2008.

Compensation Committee Interlocks and Insider Participation

Dr. Kuhla, Ms. Selisker and Dr. Stiller served as members of the Compensation Committee through May 22, 2008. Dr. Kuhla, Ms. Selisker and Mr. Tombros have served as members of the Compensation Committee from May 22, 2008 through the date of this Proxy Statement. No member of the Compensation Committee during 2008 was or has been an officer or employee of NPS. None of our directors has interlocking or other relationships with other boards, compensation committees or our executive officers that require disclosure under Item 407(e)(4)(iii) of Regulation S-K.

Nominating and Corporate Governance Committee

The Nominating and Corporate Governance Committee's functions include (i) evaluating director performance on at least an annual basis; (ii) providing advice, information and materials relating to the nomination of directors; (iii) interviewing, nominating, and recommending individuals for membership on the Board and its committees; (iv) developing and overseeing the Board's corporate governance principles and a code of conduct applicable to members of the Board, officers and employees of NPS; and (v) assessing and monitoring the independence of the Board. The committee considers, on at least an annual basis, the mix of skills and experience that the then-current directors bring to the Board to assess whether the Board has the necessary membership and resources to perform its oversight function effectively. The qualifications of any non-incumbent director candidates brought to the attention of the committee by directors, management, stockholders or third parties will be evaluated from time to time in light of the committee's determination of the Board's needs, and under the same criteria as set forth below.

The committee will consider nominees for directors nominated by stockholders upon submission in writing to the Secretary of NPS of the names of such nominees, together with their qualifications for service as a director of NPS. The committee will consider nominations for director made by stockholders of the Company in accordance with the procedures for submission of proposals at annual or special meetings of stockholders set forth in the Company's by-laws. Such procedures require that notice by any stockholder be delivered to the Secretary of the Company not less than 60 nor more than 90 days prior to the date of the annual meeting, which notice shall set forth (i) as to each person, if any, whom the stockholder proposes to nominate for election or re-election as a director: (A) the name, age, business address and residence address of such person, (B) the principal occupation or employment of such person, (C) the class and number of shares of the corporation which are beneficially owned by such person, (D) a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nominations are to be made by the stockholder, and (E) any other information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended, which we refer to as the Exchange Act, (including without limitation such person's written consent to being named in the proxy statement, if any, as a nominee and to serving as a director if elected) as well as certain information relating to the stockholder making the nomination. If the date of the meeting is first publicly announced or disclosed (in a public filing or otherwise) less than 70 days prior to the date of the meeting, such advance notice shall be given not more than ten days after such date is first announced or disclosed. The Nominating and Corporate Governance Committee does not have different standards for evaluating nominees based on whether

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they have been suggested by our stockholders or by our directors. To date, the committee has not received a director nominee from a stockholder or stockholders holding more than five percent of our common stock.

In evaluating the suitability of candidates for Board membership, the committee takes into account many factors, including whether the potential nominee meets requirements for independence; the individual's personal qualities and characteristics, accomplishments and reputation in the business community; the potential candidate's current knowledge and contacts in the communities in which we do business and in our industry or other industries relevant to our business; the individual's ability and willingness to commit adequate time to Board and committee matters; the fit of the individual's skills and personality with those of other directors and potential directors in building a Board that is effective and responsive to our needs; and the need for the Board to have a diversity of viewpoints, background, experience and other factors. The committee has not established any specific minimum qualification standards for nominees to the Board.

The Nominating and Corporate Governance Committee is currently composed of three directors, Dr. Kuhla, Mr. Bonney and Mr. Tombros. Mr. Bonney serves as the chair of the Nominating and Corporate Governance Committee.

Our Board has determined that each member of the Nominating and Corporate Governance Committee is independent under the independence criteria described above. The Board has adopted a written charter for the Nominating and Corporate Governance Committee, which is available on the corporate governance section of our web site atwww.npsp.com. The Nominating and Corporate Governance Committee met five times during the fiscal year ended December 31, 2008.

Code of Ethics

We have adopted a corporate Code of Business Conduct and Ethics that applies to all of our directors, officers (including our chief executive officer and chief financial and accounting officers), employees and agents. We require that all of our directors, officers, employees and agents certify on an annual basis that they are in compliance with the code. A copy of the Code of Business Conduct and Ethics is available on the corporate governance section of our web site atwww.npsp.com. We intend to disclose on our website, in accordance with all applicable laws and regulations, any amendments to, or waivers from, our Code of Business Conduct and Ethics.

Non-employee Director Stock Ownership Guidelines

We have adopted stock ownership guidelines for non-employee directors of NPS to better align the interests of non-employee directors with the interests of our stockholders. Under the stock ownership guidelines, each non-employee director is required to hold a minimum of 25,000 shares of common stock or deferred stock units of NPS. Each non-employee director had three years from the effective date of the guidelines, March 28, 2005, to acquire a sufficient number of shares or units so as to be in compliance with the guidelines. As of the date of this Proxy Statement, each non-employee director was in compliance with the guidelines. New members of the Board also have three years from the date they join the Board to meet the guidelines. If a non-employee director is found not in compliance with the guidelines after three years of service to the Board, then such director will not be permitted to take any board compensation in cash until such time as the director is in compliance with the stock ownership guidelines. We also encourage directors to accumulate additional stock ownership in the Company by providing directors with the option of receiving non-employee director compensation in deferred stock units.

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Communication from Stockholders

Written communications to the Board may be submitted by electronic mail atBoD@npsp.com, by accessing our web site atwww.npsp.com and clicking on the "Contact" link at the top of the page, or by writing to the General Counsel at NPS. Under procedures approved by a majority of the independent directors, the General Counsel will review such communications and will forward them to the Board if they relate to important substantive matters and include suggestions or comments considered to be important for the directors to know. In general, the General Counsel will forward communications to the Board if they are relevant to our governance, ethics and policies. At each Board meeting, the General Counsel presents a summary of all communications received since the last meeting that were not forwarded to the Board, if any, and makes those communications available to the Directors upon request.

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PROPOSAL NO. 2

INCREASE IN SHARES RESERVED FOR ISSUANCE UNDER
2005 OMNIBUS INCENTIVE PLAN

The Board of Directors has adopted, subject to stockholder approval, an amendment to our 2005 Omnibus Incentive Plan, which we refer to as the 2005 Omnibus Plan or the Plan, to increase by 1,800,000 the shares reserved for issuance under the Plan. Stockholders are requested in this Proposal No. 2 to approve the amendment to the 2005 Omnibus Plan. The affirmative vote of a majority of the votes cast on this Proposal No. 2, excluding abstentions and broker non-votes, whether present in person or represented by proxy and entitled to vote at the meeting, will be required to approve this Proposal No. 2.

A summary of the principal features of the 2005 Omnibus Plan is provided below, but is qualified in its entirety by reference to the full text of the Plan as proposed to be amended and restated, which is attached asAnnex A to this Proxy Statement.

On April 1, 2009, the aggregate number of shares of our common stock available for future grants to participants under the 2005 Omnibus Plan was 264,844 shares. If Proposal No. 2 is approved, the number of shares available for future grants under the 2005 Omnibus Plan will increase by 1,800,000.

The Board believes that the proposed amendment to the 2005 Omnibus Plan is in the best interest of the Company. With the growing worldwide demand for talent, the appropriate use of equity awards remains an essential component of our overall compensation philosophy. Consequently, the Board believes that the proposed amendment is necessary for us to continue to attract and retain well-qualified employees and directors who will contribute to our success, and to provide incentives to motivate such employees and directors that are directly linked to increases in stockholder value and will therefore benefit all of our stockholders.

Summary of the 2005 Omnibus Plan

Purpose.

The 2005 Omnibus Plan was adopted to provide a means by which employees (including officers), directors, and consultants of the Company and its subsidiaries and affiliates may be given the opportunity to benefit from increases in value of the Company's stock; to retain the services of present employees, directors and consultants; to secure and retain the services of new employees, directors and consultants; and to provide incentives for employees, directors and consultants to exert maximum efforts for the success of the Company and thereby promote the long-term interests of the Company, including growth in the value of the Company's equity and enhancement of long-term stockholder value.

History

The Board adopted the 2005 Omnibus Plan in March 2005 and our stockholders approved the Board's adoption of the Plan in May 2005. On December 28, 2007, the Board adopted and approved an amendment to the Plan to provide for the withholding of shares by the Company to satisfy a participant's tax liabilities.

Administration.

The 2005 Omnibus Plan is administered by the Compensation Committee of our Board of Directors, which currently consists of three outside, non-employee directors. The Compensation Committee has full power and authority to interpret and construe the provisions of the 2005 Omnibus Plan and, subject to the provisions of the Plan, to determine the persons to whom awards will be

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granted, the type of awards to be granted, the dates on which awards will be granted, the type, amount, and form of consideration in connection with awards to be granted, and the other terms and conditions of each award granted under the Plan.

Eligibility.

Employees, officers, directors and consultants of the Company and its subsidiaries and affiliates are eligible to receive awards under the 2005 Omnibus Plan. The Board has full power and authority to determine the persons to whom awards will be granted. As of the date of this Proxy Statement, approximately 45 employees and 6 non-employee directors were eligible to be selected by the Compensation Committee to receive awards under the 2005 Omnibus Plan.

Shares Available for Awards.

The aggregate number of shares of our common stock that were authorized and reserved for issuance under the 2005 Omnibus Plan is 2,700,000 shares. As of April 1, 2009, 1,080,963 shares had been issued upon the exercise of stock options and the vesting of restricted stock and restricted stock units awarded under the 2005 Omnibus Plan. In addition, unvested or unexercised awards representing an additional 1,354,193 shares were outstanding as of April 1, 2009. As a result, only 264,844 shares remained available for issuance under the 2005 Omnibus Plan as of such date. If Proposal No. 2 is passed, the number of shares authorized and reserved for issuance under the 2005 Omnibus Plan will increase by 1,800,000. If any shares subject to an outstanding award are not issued for any reason, including by virtue of the termination, forfeiture or cancellation of an award, those shares will be available for future grant under the 2005 Omnibus Plan

Certain awards under the Plan are subject to limitations as follows:

•: The maximum aggregate number of shares subject to stock options granted in any one fiscal year to any one participant is 150,000, plus the amount of the participant's unused award limit from the previous fiscal year.
•: The maximum aggregate number of shares subject to stock appreciation rights granted in any one fiscal year to any one participant is 150,000, plus the amount of the participant's unused award limit from the previous fiscal year.
•: The maximum aggregate number of shares with respect to awards of restricted stock or restricted stock units in any one fiscal year to any one participant is 80,000, plus the amount of the participant's unused award limit from the previous fiscal year.
•: The maximum aggregate number of shares with respect to awards of performance shares or performance units in any one fiscal year to any one participant is 80,000, plus the amount of the participant's unused award limit from the previous fiscal year.
•: The maximum aggregate amount awarded with respect to cash-based awards and other stock-based awards in any one fiscal year to any one participant may not exceed $1,000,000 with respect to cash-based awards and 80,000 shares with respect to other stock-based awards, plus the amount of the participant's unused award limits (in each case) from the previous fiscal year.

The Compensation Committee may adjust the number of shares and share limits described above in the case of a stock dividend, stock split (or other distribution), merger, consolidation (or other similar corporate transaction or event), in order to prevent dilution or the enlargement of the benefits or potential benefits intended to be provided under the 2005 Omnibus Plan.

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Types of Awards.

The 2005 Omnibus Plans permits grants of stock options (including both incentive and non-qualified stock options), stock appreciation rights, or SARs, restricted stock and restricted stock units, stock units, performance shares and performance units, cash-based awards, other stock-based awards or dividend equivalents. Awards may be granted alone, in addition to, in combination with or in substitution for any other award granted under the 2005 Omnibus Plan or any other compensation plan.

Stock Options. The holder of a stock option will be entitled to purchase a number of shares of our common stock at a specified exercise price during a specified time period, all as determined by the Compensation Committee in an individual award agreement with the participant. Stock options may be granted as incentive stock options, or ISOs, or non-qualified stock options, or NQSOs; provided, however, that only employees of the Company and its subsidiaries may receive a grant of an ISO. The stock option exercise price may be payable in cash, by tendering previously acquired shares of the Company's common stock (with a fair market value on the exercise date equal to the exercise price), or by any other method approved by the Compensation Committee. The exercise price of stock options under the Plan must be at least equal to 100% of the fair market value of the Company's common stock as determined on the grant date (110% of the fair market value in the case of an ISO if the grant is to an employee who owns more than 10% of the total combined voting power of all classes of our capital stock). The closing price of a share of our Common Stock as reported on the NASDAQ Global Market on April 1, 2009, was $4.12. The maximum term of a stock option under the 2005 Omnibus Plan is ten years (five years if the grant is an ISO to an employee who owns more than 10% of the total combined voting power of all classes of our capital stock).

Stock Appreciation Rights. The holder of a stock appreciation right, or SAR, is entitled to receive the excess of the fair market value (calculated as of the exercise date) of a specified number of shares of the Company's common stock over the grant price of the SAR. The grant price for a SAR must be at least equal to 100% of the fair market value of the Company's common stock as determined on the grant date. The SAR exercise price may be in cash, shares of the Company's common stock (with a fair market value on the exercise date equal to the exercise price) or by any other method approved by the Compensation Committee. SARs become exercisable at such times and are subject to such conditions as determined by the Compensation Committee in an individual award agreement with the participant. The maximum term of a SAR under the 2005 Omnibus Plan is ten years.

Restricted Stock and Restricted Stock Units. The holder of restricted stock will own shares of the Company's common stock subject to restrictions (including restrictions on vesting and/or transferability) imposed by the Board for a specified time period as set out in the terms of an individual award agreement with the participant. Shares of restricted stock become freely transferable after all restrictions applicable to the shares have lapsed or been satisfied. The holder of restricted stock units will, at such time as set forth in the award agreement, have the right to receive shares of the Company's common stock, a cash payment equal to the fair market value of those shares, or a combination of cash and stock, as determined by the Compensation Committee in its sole discretion.

Performance Awards. The Compensation Committee may grant performance awards as either performance shares or performance units. Performance awards give participants the right to receive payments in cash or common stock, as determined by the Compensation Committee, upon the achievement of certain performance goals established by the committee for a specified performance period. Each performance unit will have an initial value that is established by the Compensation Committee as of the grant date. Each performance share will have an initial value equal to 100% of the fair market value of a share of our common stock as of the grant date. Performance goals are

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based on one or more of the following business criteria and may be specific to NPS internally or may be used as a comparison to an index or select peer group companies:

•: Net earnings or net income (before or after taxes);
•: Earnings per share;
•: Net sales or revenue growth;
•: Net operating profit;
•: Return measures;
•: Cash flow;
•: Earnings before or after taxes, interest, depreciation, and/or amortization;
•: Gross or operating margins;
•: Productivity ratios;
•: Share price (including growth measures and total shareholder return);
•: Expense targets;
•: Margins;
•: Operating efficiency;
•: Market share;
•: Customer satisfaction;
•: Working capital targets;
•: Economic value added (net operating profit after tax minus the sum of capital multiplied by the cost of capital); and
•: Product development.

Cash-Based Awards. The Compensation Committee may grant cash-based awards to participants in such amounts and upon such terms as the committee may determine under the 2005 Omnibus Plan. Each cash-based award will specify a payment amount or payment range and may, upon designation by the Compensation Committee, be paid out to a participant only to the extent that the foregoing performance goals are met.

Other Stock-Based Awards. The Compensation Committee may grant other types of equity-based or related awards under the 2005 Omnibus Plan (including grants of unrestricted shares) in such amounts and subject to such terms and conditions, including the achievement of the foregoing performance goals, as the committee may determine. Such awards may involve the transfer of actual shares to participants or payment in cash or otherwise of amounts based on the value of our common stock.

Dividend Equivalents. The Compensation Committee may grant dividend equivalents based on any dividends declared by the Company on shares of its common stock that are subject to any award under the 2005 Omnibus Plan. Such dividend equivalents may be converted to cash or additional shares for the participant as determined by the Compensation Committee. Dividend equivalents may be subject to other terms and conditions as determined by the committee.

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Duration.

Unless terminated or discontinued by the Board, the 2005 Omnibus Plan will expire on May 12, 2015. No awards may be made after that date. However, awards granted prior to the expiration of the 2005 Omnibus Plan will remain outstanding in accordance with their applicable terms and conditions.

Termination and Amendment.

The Board may amend, alter, or discontinue the 2005 Omnibus Plan at any time, although no amendment, alteration or termination of the plan may, in a material way, adversely affect any award previously granted without the written consent of the participant holding the award. Additionally, no material amendment of the 2005 Omnibus Plan may be made without stockholder approval if stockholder approval is required by law, regulation or stock exchange rule.

Prohibition on Repricing Awards.

Without the approval of our stockholders, no stock option or SAR issued under the 2005 Omnibus Plan may be amended to reduce the exercise or grant price, and no stock option or SAR may be canceled or replaced with an option or SAR having a lower exercise or grant price, except in connection with a stock dividend, stock split (or other distribution), merger, consolidation (or similar corporate transaction or event), in order to prevent a dilution or the enlargement of the benefits, or potential benefits, intended to be provided under the 2005 Omnibus Plan.

Effect of Certain Corporate Transactions.

The 2005 Omnibus Plan provides that, in the event of a specified type of merger or other corporate reorganization, the time during which awards outstanding under the plan become vested shall be accelerated and all outstanding awards shall become immediately exercisable upon such event. The acceleration of an award in the event of an acquisition or similar corporate event may be viewed as an anti-takeover provision, which may have the effect of discouraging a proposal to acquire or otherwise obtain control of the Company.

Transferability of Awards.

Unless otherwise provided by the Compensation Committee, awards under the 2005 Omnibus Plan are not transferable other than as designated by a participant by will or by the laws of descent and distribution.

Termination of Participant's Employment/ Services.

The Compensation Committee determines, in its sole discretion through an individual award agreement with the participant, the extent to which a participant shall have the right to retain any award under the 2005 Omnibus Plan following the termination of the participant's employment with or provision of services to the Company.

Federal Income Tax Consequences.

The following is a general summary as of the date of this Proxy Statement of the material United States federal income tax consequences to NPS and our employees, directors and contractors participating in the 2005 Omnibus Plan. Federal tax laws may change and the federal tax consequences for any participating employee, director or contractor will depend on his or her particular circumstances. The following discussion does not purport to describe all aspects of federal tax consequences, nor any state, local or foreign tax consequences. Each participating employee, director and contractor has been and is encouraged to seek the advice of a qualified tax adviser regarding the

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tax consequences of participation in the 2005 Omnibus Plan. The following discussion does not purport to describe state or local income tax consequences in the United States, nor tax consequences for participants in other countries.

Gant of Options and SARs. The grant of a stock option or SAR is not expected to result in any taxable income for the recipient at the time of the grant.

Exercise of Options and SARs. Upon exercising a NQSO, the holder of the award will recognize ordinary income equal to the excess of the fair market value of the shares of our common stock acquired on the date of exercise over the exercise price, and we will generally be entitled at that time to an income tax deduction for the same amount. The holder of an ISO generally will have no taxable income upon exercising the stock option (except that an alternative minimum tax liability may arise), and we will not be entitled to an income tax deduction. Upon exercising a SAR, the amount of any cash received and the fair market value on the exercise date of any shares of our common stock received are taxable to the recipient as ordinary income and are generally deductible by us.

Disposition of Shares Acquired Upon Exercise of Stock Options and SARs. The tax consequence upon a disposition of shares acquired through the exercise of an option or SAR will depend on how long the shares have been held and whether the shares were acquired by exercising an ISO, NQSO or SAR. Generally, there will be no capital gain or loss to the holder and no tax consequence to us in connection with the disposition of shares acquired under a stock option or SAR, except that there will be ordinary income to the holder and we may be entitled to an income tax deduction in the case of the disposition of shares acquired under an ISO before the applicable ISO holding periods set forth in the Internal Revenue Code of 1986, as amended, or the Code, have been satisfied.

Awards Other than Options and SARs. As to other awards granted under the 2005 Omnibus Plan that are payable either in cash or shares of our common stock that are either transferable or not subject to substantial risk of forfeiture, the holder of the award will recognize ordinary income equal to (a) the amount of any cash received and, (b) the excess of (i) the fair market value of any shares received (determined as of the date of receipt) over (ii) the amount (if any) paid for the shares by the holder of the award. We will generally be entitled at that time to an income tax deduction for the same amount.

As to an award that is payable in shares of our common stock that is restricted from transfer and subject to substantial risk of forfeiture, unless a special election is made by the holder of the award under Section 83 of the Code to recognize ordinary income upon receipt in the amount described in clause (b) in the immediately preceding paragraph, the holder will recognize ordinary income at the time the shares become transferable or not subject to substantial risk of forfeiture, whichever occurs earlier, equal to the excess of (i) the fair market value of the shares received (determined as of such time) over (ii) the amount (if any) paid for the shares by the holder of the award. We will generally be entitled at that time to an income tax deduction for the same amount.

Income Tax Deduction. Subject to a number of exceptions under the Code, including the usual rules concerning reasonable compensation, and assuming that, as expected, performance awards paid under the 2005 Omnibus Plan to our Chief Executive Officer and our other four most highly compensated executive officers are "qualified performance-based compensation" within the meaning of Section 162(m) of the Code, we will generally be entitled to a corresponding income tax deduction at the time a participant recognizes ordinary income from awards made under the 2005 Omnibus Plan.

Delivery of Shares for Tax Obligation. Under the 2005 Omnibus Plan, when a participant is obligated to pay us the amount of taxes required to be withheld in connection with the vesting of any award, the Board will, subject to compliance with all applicable laws and regulations, allow the participant to satisfy the minimum withholding tax obligation by electing, in accordance with the

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requirements established by the Board and in writing in a form acceptable to the Board, to have us withhold from the shares to be issued upon vesting of the award that number of shares having a fair market value equal to the minimum amount required to be withheld, determined on the date that the amount of tax to be withheld is to be determined.

New Plan Benefits.

If the increase in the number of shares reserved for issuance under the 2005 Omnibus Plan under Proposal No. 2 is approved by our stockholders, the Compensation Committee in its sole discretion will determine the number and types of awards that will be granted under the Plan going forward and will also determine the persons to whom awards will be granted. Therefore, the number of shares to be issued under the 2005 Omnibus Plan to the individuals and groups listed below and the net values to be realized upon such issuances are discretionary, and therefore, not determinable:

•: Francois Nader, our Chief Executive Officer and President;
•: Luke Beshar, our Chief Financial Officer and Senior Vice President;
•: each of our other three most highly compensated executive officers serving as executive officers at the end of the 2008 fiscal year;
•: all current executive officers as a group;
•: all current directors who are not executive officers as a group; and
•: all employees, including all current officers who are not executive officers, as a group.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENTS TO THE 2005 OMNIBUS INCENTIVE PLAN.

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PROPOSAL NO. 3

RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS

The Audit Committee of our Board of Directors has appointed KPMG LLP, or KPMG, as our independent registered public accounting firm for the fiscal year ending December 31, 2009. Stockholder ratification of the appointment of our independent registered public accounting firm is not required by our Bylaws or otherwise; however, as a matter of good corporate governance, we are asking our stockholders to ratify such appointment. Even if the appointment is ratified, the Audit Committee, at its discretion, may direct the appointment of a new independent registered public accounting firm at any time during the year if the Audit Committee believes that such a change would be in the best interests of our company and our stockholders. KPMG has audited our financial statements since our inception in 1986.

KPMG has advised us that neither it nor any of its members has any direct or material indirect financial interest in the Company. Representatives of KPMG are expected to be present at the Annual Meeting, will have an opportunity to make a statement if they so desire, and will be available to respond to questions.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2009.

Principal Accountant Fees and Services

For the last two fiscal years, KPMG billed us the following fees for their services:

	Fiscal Year Ended December 31, 2008		Fiscal Year Ended December 31, 2007

Audit fees	$	819,000	$	689,000
Audit-related fees	$	542,000	$	72,000
Tax fees	$	143,000	$	136,000
All other fees	$	—	$	—

Audit fees consist of KPMG's fees for services related to their audits of NPS's annual financial statements and internal control over financial reporting, their review of financial statements included in our quarterly reports on SEC Form 10-Q, their review of SEC filed registration statements and fees for services that are normally incurred in connection with statutory and regulatory filings or engagements, such as the issuance of consents, and comfort letters.

Audit-related fees consist of fees for assurance and related services by KPMG that are reasonably related to the performance of the audit or review of our consolidated financial statements and not included in Audit Fees. In fiscal year 2008, these fees related primarily to services in connection with an audit of a subsidiary and an employee benefit plan.

Tax fees consist of fees rendered for services on tax compliance matters, including tax return preparation, claims for refund and assistance with tax audits of previously filed tax returns, tax consulting and advisory services consisting primarily of tax advice rendered by KPMG in connection with custom, duty and import taxes.

All audit, audit-related, tax, and any other services performed for us by our independent registered public accounting firm are subject to pre-approval by the Audit Committee of our Board of Directors and were pre-approved by the Audit Committee prior to such services being rendered. The Audit Committee determined that the services provided by and fees paid to KPMG were compatible with maintaining the independent registered public accounting firm's independence.

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AUDIT COMMITTEE REPORT(1)

The Audit Committee of the Board of Directors oversees our accounting and financial reporting processes and system of internal controls on behalf of the Board. Management has the primary responsibility for the financial statements and the reporting process, including the system of internal controls. The Audit Committee also is responsible for engaging and monitoring the independence and performance of our independent registered public accounting firm. The Audit Committee operates under a written charter, a copy of which is available on the corporate governance section of our website atwww.npsp.com. The current members of the committee are Rachel R. Selisker, Michael W. Bonney and Peter G. Tombros, each of whom is an independent director.

Our management supervises our system of internal controls and the financial reporting process. Our independent registered public accounting firm performs an independent audit of our consolidated financial statements in accordance with generally accepted accounting standards and expresses opinions on these consolidated financial statements. In addition, our independent registered public accounting firm expresses its own opinion on the effectiveness of our internal control over financial reporting. The Audit Committee monitors these processes.

The Audit Committee has reviewed and discussed with management and KPMG the Company's audited consolidated financial statements as of and for the year ended December 31, 2008, as well as management's assessment and KPMG's evaluation of the effectiveness of our internal control over financial reporting. Our management represented to the Audit Committee that our audited consolidated financial statements were prepared in accordance with the U.S. generally accepted accounting principals.

The Audit Committee also discussed with KPMG the matters required to be discussed by Statement on Auditing Standards No. 61 (Communication with Audit Committees), as amended by Statement on Auditing Standards No. 90 (Audit Committee Communications). The Audit Committee has received, reviewed, and discussed with KPMG the written disclosures and the letter from them required by the applicable requirements of the Public Company Accounting Oversight Board regarding KPMG's communications with the Audit Committee concerning independence and has discussed with KPMG their independence. The Audit Committee has also considered whether the provision of non-audit services provided by KPMG is compatible with maintaining the independence of the auditors. The Audit Committee's policy is to approve all audit and permissible non-audit services provided by KPMG. All audit and permissible non-audit services performed by KPMG during fiscal year 2008 and fiscal year 2007 were pre-approved by the Audit Committee in accordance with established procedures.

Based upon these reviews and discussions, the Audit Committee has recommended to the Board of Directors, and the Board of Directors has approved, that the audited financial statements be included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2008.


		Submitted by the Audit Committee of the Board,
		Rachel R. Selisker, Chair Michael W. Bonney Peter G. Tombros

(1): This Report of the Audit Committee does not constitute soliciting material and shall not be deemed to be "filed" with the Securities and Exchange Commission or deemed to be incorporated by reference in previous or future documents filed by NPS with the Securities and Exchange Commission under the Securities Act of 1933, as amended, or under the Exchange Act, or be subject to the liabilities of Section 18 of the Exchange Act, except to the extent we specifically incorporate this Report by reference into any such document.

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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

This Compensation Discussion and Analysis discusses the material elements of our compensation programs and policies, including the objectives of our compensation programs and the reasons why we pay each element of compensation to our named executive officers. Our named executive officers are those executive officers whose compensation is disclosed in the Summary Compensation Table on page 34 of this Proxy Statement.

Role of Board of Directors and Compensation Committee

Our compensation policy is set by the Board of Directors, with the advice and recommendation of the Compensation Committee. The Board has delegated to the Compensation Committee the responsibility for implementing, reviewing and continually monitoring adherence with our compensation policy. The Compensation Committee is responsible for establishing, reviewing, approving and recommending to the Board for final approval each of our compensation programs. In addition, the Compensation Committee is responsible to ensure that total compensation paid to our executive officers, including the named executive officers, is consistent with our compensation policy and objectives.

Compensation Policy and Objectives

Our compensation policy has two fundamental objectives: (1) to attract, retain and motivate highly talented and team oriented executives and employees, and (2) to align our executive's and employee's interests with those of our stockholders by rewarding short-term and long-term performance. To accomplish our fundamental objectives, the Compensation Committee establishes, approves and recommends to the Board for final approval compensation programs based on certain compensation philosophies. Among those are:

•: Compensation awarded should be fair, reasonable and competitive with the compensation paid by other companies that compete with us for executive talent.
•: Compensation programs must reward the accomplishment of individual and Company performance goals. Our programs should deliver higher compensation when individual and Company performance meets or exceeds the performance goals. Likewise, where individual or Company performance falls short of expectations, our compensation programs should deliver lower compensation.
•: Compensation programs should include the appropriate mix of cash and equity components to reward both short-term and long-term performance, each of which is necessary for success in the pharmaceutical industry.
•: Compensation programs should also ensure executive and employee retention. In light of the volatility of our business and the pharmaceutical industry in general, our compensation programs should be structured so that even in periods of downturns in Company performance, successful, high-achieving executives and employees will remain motivated and committed to NPS.
•: Perquisites should be rare and limited to those that are essential to the executive's ability to effectively perform.

Compensation Consultant

In 2008, the Compensation Committee retained the services of an external compensation consultant, Radford Consulting, or Radford, a business unit of AON Consulting. The mandate of the consultant was to assist the Compensation Committee in its review of executive and director

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compensation practices, including the competitiveness of pay levels, retention programs, executive compensation design issues, market trends, and technical considerations. The Compensation Committee regularly evaluated Radford's performance and has the final authority to engage and terminate Radford.

During 2008, Radford advised the Compensation Committee in determining base salaries for executive officers, establishing the range of potential awards for executive officers under our short-term incentive program and determining individual equity grant levels for executive officers. Radford also advises the Compensation Committee on non-employee director compensation, which is discussed in more detail later in this Proxy Statement under the caption "2008 Director Compensation." Radford provides no services to the Company aside from assisting the Compensation Committee on executive and director compensation.

Role of Executives in Compensation Decisions

Our CEO, Senior Director of Human Resources, General Counsel, and Chief Financial Officer generally attend Compensation Committee meetings. Generally all Compensation Committee meetings include an executive session which is conducted without the CEO, Chief Financial Officer and Senior Director of Human Resources being present. The Compensation Committee typically requests that the General Counsel remain present during executive sessions, though the General Counsel is also excused from executive sessions when appropriate. Our CEO and Senior Director of Human Resources work with Radford to develop total compensation recommendations for our executive officers other than the CEO. The recommendations are submitted to the Compensation Committee for review. The Compensation Committee works directly with Radford to develop a recommendation for CEO compensation. While Radford and the officers mentioned above offer ideas, opinions, and proposals to the Compensation Committee, the Compensation Committee functions and votes independently.

Setting Executive Compensation

The Compensation Committee has established a number of practices to assist it in setting executive compensation in accordance with our compensation policy and objectives. Among the procedures are:

•: Engaging Compensation Consultant. The Compensation Committee has retained Radford to advise it on matters related to executive compensation and our compensation programs.
•: Market Review. With the assistance of Radford and management, the Compensation Committee reviews on an annual basis each component of NPS executive compensation against compensation at a peer group of publicly-traded biotechnology and pharmaceutical companies. For years in which both Company and individual performance goals are met, our overall compensation program is designed to provide our named executive officers with total compensation at the mid-range, or 50^th percentile, of the total compensation paid for comparable positions within the surveyed companies. However, our compensation program is structured to provide total compensation above the market 50th percentile for superior or extraordinary performance. For 2008, the total cash compensation paid to our named executive officers was, on average, in the 50^th percentile of that paid for comparable positions within the surveyed companies. However, equity compensation delivered under our long term incentive compensation program in 2008 was below this threshold. All elements of compensation were compared to the entire group of surveyed companies based on available market information. The peer group used for the comparison, which is regularly reviewed, consists of companies which we believe have executive positions similar in breadth and scope to ours and businesses that compete with us for talent and stockholder investment. The peer group used by the Compensation Committee in late 2007 to make 2008 compensation decisions is represented in

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the first table. In May 2008, the Compensation Committee adopted a new peer group, which contains companies that are more comparable to NPS's current business. The following methodology was employed to evaluate and select comparator companies: (1) we identified all publicly traded U.S. headquartered companies in the biotechnology/pharmaceutical marketplace; (2) we refined the comparator pool to reflect companies exhibiting a financial profile that includes: (i) an employee size of 15 to 150 employees (¹/3 to 3x NPS), (ii) revenues greater than $0, (iii) a market value of $70M to $600M (¹/3 to 3x NPS), and (iv) a market value per employee to take account of our outsourcing business model, which allows us to pursue our business strategy with fewer employees than peers that outsource less heavily; (3) we qualitatively evaluated the refined comparator pool to identify each company's development stage, leading product focus and business strategy; (4) we examined our historical peer group, as disclosed in last year's proxy statement, and included 9 of 37 historical peer companies in our proposed peer group; (5) we selected 14 additional companies with "best fit" similarities to us, considering: (w) financial profile, (x) stage of development programs, (y) product focus / development processes, and (z) location in New Jersey or a geographic region characterized by a similarly competitive biotechnology environment. Our new peer group was used for 2009 compensation decisions made by the Compensation Committee and is represented in the second table.

Peer Group for 2008 Decisions


Acadia Pharmaceuticals	Encysive Pharmaceuticals	Poniard Pharmaceuticals
Advancis Pharmaceutical	Genaera	Pozen
Akros Pharma	Genelabs Technologies	Rigel
Alnylam Pharmaceuticals	Icagen	Sangamo Biosciences
Arena Pharmaceuticals, Inc.	Idera Pharmaceuticals, Inc.	Sciclone Pharmaceuticals, Inc.
Avanir Pharmaceuticals	Incyte Corporation	Tapestry Pharmaceuticals, Inc.
Avigen, Inc.	Kosan Biosciences Incorporated	Theravance, Inc.
Celsion Corporation	Metabasis Therapeutics, Inc.	Trimeris, Inc.
CV Therapeutics, Inc.	Neurogen Corporation	Vical Inc.
Cytokinetics, Inc.	Novavax, Inc.	Vivus, Inc.
Dusa Pharmaceuticals, Inc.	Palatin Technologies, Inc.	Xenoport, Inc.
Dynavax Technologies Corporation	Pharmacopeia Inc.

Peer Group for 2009 Decisions


Acadia Pharmaceuticals, Inc.	Barrier Therapeutics, Inc.	Pharmacopeia Inc.
Adolor Corporation	Biodel, Inc.	Pharmasset, Inc.
Affymax, Inc.	Geron Corporation	Poniard Pharmaceuticals, Inc.
Amicus Therapeutics, Inc.	Immunomedics, Inc.	Pozen, Inc.
Antares Pharma, Inc.	Middlebrook Pharmaceuticals, Inc.	Titan Pharmaceuticals, Inc.
Ariad Pharmaceuticals, Inc.	NexMed, Inc.	Vical Inc.
Avanir Pharmaceuticals	Optimer Pharmaceuticals, Inc.	Vivus, Inc.
Avigen, Inc.	Pain Therapeutics, Inc.

•: Total Compensation Review. The Compensation Committee reviews each named executive officer's total compensation annually with the assistance of management and Radford. To facilitate this review, the Compensation Committee utilizes tally sheets, which are provided by the Senior Director of Human Resources. Tally sheets are prepared for each named executive officer and present the dollar value of each component of the executive's total compensation, including cash compensation (which includes base salary and payments under our short-term

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incentive compensation program), outstanding equity awards (including awards under our long-term incentive compensation program) and other compensation due upon termination of employment. These tally sheets reflect the range of potential payments that may be made to the executive, including payments based upon the achievement of specified performance criteria, a termination of employment and a change-in-control of the Company. The purpose of these tally sheets is to provide the Compensation Committee with a comprehensive view of all of the elements of compensation that could be paid to our named executive officers in various scenarios, as well as to provide information about wealth accumulation. The Compensation Committee then uses this information as part of its analysis of the appropriate compensation mix and level of total compensation to be paid to each named executive officer and to help it determine internal pay equity among all of our named executive officers.

•: Evaluating Individual Performance. Individual performance is a key component of the compensation of all executives and employees at NPS. At the beginning of each year, each of our executive officers and employees establishes annual performance goals with advice and input from their immediate supervisor of the Board, in the case of our CEO. At the end of the year, each executive and employee participates in a performance review to assess to what extent the executive or employee has achieved his or her performance goals and otherwise contributed to our results for the year. The Board conducts the annual individual performance review of our CEO. Our CEO, with the assistance of our Senior Director of Human Resources, conducts the annual performance review of each of our executive officers. Typically, the Compensation Committee considers individual performance in connection with establishing base salary and granting both short-term and long-term incentive awards.
•: Evaluating Company Performance. Company performance is also a key component of compensation at NPS. The Board, at the beginning of the year and with the recommendation of the Compensation Committee and management, adopts the Company's performance goals for the respective year. At the end of the year, the Board reviews our performance to assess to what extent we have achieved each performance goal. While Company performance indirectly affects all components of executive compensation at NPS, it is utilized primarily in connection with our short-term incentive program.

2008 Executive Compensation Components

For 2008, the principal elements of compensation for named executive officers were:

•: base salary;
•: short-term incentive compensation; and
•: long-term incentive compensation.

The level of compensation paid to our chief executive officer and the other named executive officers reflects the Compensation Committee's assessment of the relative experience and level of responsibility of each such officer and their potential contribution to our performance and the accomplishment of our goals, and is supported by the Compensation Committee's benchmarking of the compensation paid to similar officers of comparable companies. As a result of these factors, the total compensation paid to our named executive officers during 2008 varied.

Base Salary

Base salary represents the fixed component of executive compensation. It is designed to deliver a limited portion of compensation at a guaranteed level to provide our named executive officers with some security for performing their executive responsibilities. Base salary ranges are determined for each named executive officer based on a number of factors, including the officer's position, specific

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responsibilities, level of experience, individual performance, Company performance, and also on market data from the peer group companies.

The Compensation Committee receives the recommendation of the CEO and Senior Director of Human Resources for the base salary of each named executive officer, other than the CEO, as part of a general Company-wide salary assessment performed annually by management. The Compensation Committee develops a recommendation for the CEO's base salary with the assistance of Radford. The Compensation Committee recommends the base salary for each named executive officer to the Board for final approval.

2008 Base Salary Determinations

In December 2007, the Compensation Committee reviewed the performance of our then chief executive officer, Dr. Anthony Coles, in connection with setting his base salary for 2008. As part of that review, the Compensation Committee considered the compensation paid by the peer group companies and the recommendation of the committee's compensation consultant at the time, Hewitt and Associates. After considering the above criteria, the Compensation Committee recommended, and the Board approved, an increase to Dr. Coles' base salary of approximately 4.5% to $548,625 annually. Dr. Coles received this increased base salary from January 1, 2008 until he resigned as Chief Executive Officer and President in March 2008.

In December 2007, the Compensation Committee also reviewed the performance of each of the other named executive officers as well as the recommendations of Hewitt and Associates. The Compensation Committee determined that the performance of each executive during 2007 warranted an increase in base salary. Accordingly, the Compensation Committee recommended, and the Board approved, a 4.5% increase in base salary for each named executive officer who did not separate from the Company in 2007. Dr. Nader and Messrs. Beshar and Rackear are the only current named executive officers who received this increase, which was adjusted proportionately to reflect the fact that Dr. Nader and Messrs. Beshar and Rackear were only employed for a portion of 2007. These salary increases reflected a positive performance review for the named executive officers in 2007 and were also intended to ensure their base salaries remained in the targeted median percentile range for their positions in the peer group.

In March 2008, Dr. Francois Nader was appointed as our Chief Executive Officer and President. In connection with his appointment, the Compensation Committee recommended, and the Board approved, an annual base salary of $475,000 for Dr. Nader, which fell within the 50^th and 75^th percentile of base salary compensation paid to similarly situated officers within the peer group. The Committee believed that this level of base salary was appropriate in light of Dr. Nader's level of experience and responsibilities and consistent with the Company's objective of providing a base salary that is comparable to the level of guaranteed compensation paid by other companies with which it competes for executive talent.

2009 Base Salary Determinations

In reviewing Dr. Nader's base salary for 2009, the Compensation Committee considered: (i) the information and recommendations provided by Radford, including base salary information from the 2009 peer group companies; and (ii) the overall performance and leadership of Dr. Nader during 2008. After considering the above criteria, the Compensation Committee concluded that, although Dr. Nader's performance during 2008 was exceptional and warranted a merit increase, his base salary, at its 2008 amount, was in line with the Company's compensation policy and objectives. The Committee noted, specifically, that Dr. Nader's base salary was fair, reasonable and competitive with the salaries paid by the 2009 peer group companies. Accordingly, the Compensation Committee and the Board determined not to increase Dr. Nader's base salary for 2009.

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The Compensation Committee, with the assistance of the CEO and its Senior Director of Human Resources also reviewed the base salaries of Messrs. Beshar and Rackear for 2009. The Committee, again, considered the information and recommendations provided by Radford, which included base salary information from the 2009 peer group companies, as well as each executive's performance during 2008. After considering the above criteria, the Compensation Committee recommended, and the Board approved, a 2% increase in base salary for Mr. Beshar and a 4% increase in base salary for Mr. Rackear for 2009. Mr. O'Callaghan and Dr. Harris each separated from the Company in 2008 and, therefore, were not considered for salary increases. Dr. Roger Garceau joined the Company in December 2008 and also was not considered for a salary increase.

Short-Term Incentive Compensation

Overview of STI Program and Target Awards

Our short-term incentive compensation program, or STI, is an annual cash incentive program that is intended to reward significant Company and individual executive performance over the course of the fiscal year. At the beginning of each year, the Board, with the recommendation of management, adopts the Company's performance goals for the current year. Each goal typically contains a minimum, target, and maximum achievement level and a significance weighting relative to the other goals. Also, at the beginning of each year, each named executive officer establishes individual performance goals, which contain various achievement levels and significance weighting. Whether a named executive officer receives an STI award for a particular year depends upon the extent to which the Company performance goals and the executive's individual performance goals have been achieved.

Each named executive officer's STI target award is based on a percentage of the officer's base salary and is paid only on the portion of the salary that is actually earned. The target awards are determined based on the Compensation Committee's review of the particular officer's total compensation and also on the compensation paid by the peer group companies. For 2008, (i) Dr. Nader's STI target award was 60% of base salary, (ii) Mr. Beshar's STI target award was 35% of base salary, and (iii) Mr. Rackear's STI target award was 35% of base salary. Dr. Coles, Mr. O'Callaghan and Dr. Harris did not participate in the 2008 STI program because they separated from the Company in 2008. Dr. Garceau did not participate in the 2008 STI program because he joined the Company in December 2008.

Company and Individual Performance

The maximum STI award earned by each named executive can represent up to 143% of the STI target award and is calculated based 75% on achievement of our Company performance goals and 25% on the executive's individual performance. Together, the Company and individual performance components comprise the STI award. The required performance level and corresponding STI payment for the Company component and individual component of the STI award are provided below.

Company Performance Component. The Company performance component was calculated based upon the performance goals, which are listed on page 28. The Compensation Committee reviewed the Company's performance against each goal and determined that the Company (i) did not meet the goal and therefore received 0% for the goal, (ii) met the minimum performance criteria and therefore received 50% for the goal, (iii) met the target performance criteria and therefore received 100% for the goal, or (iv) met the maximum performance criteria and therefore received 150% for the goal. The Compensation Committee then calculated an aggregate percentage for all of the goals based upon their weighting, as set forth on page 28, and the level of achievement. No STI award for Company performance would have been awarded if the aggregate total had fallen below 50% for the corporate

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goals. Therefore, in 2008, our named executive officers were eligible to receive the following payments under the Company component of the STI award:

•: No payment for the Company component unless the Company achieved the minimum performance level for the corporate goals;
•: A payment of 50% of the Company component (at the discretion of the Committee) if the Company achieved or exceeded the minimum performance level but did not achieve the target performance level;
•: A payment of 100% but less than 150% of the Company component (at the discretion of the Committee) if the Company achieved the target performance level but did not achieve the maximum performance level; or
•: A payment of 150% of the Company component if the Company achieved the maximum performance level.

Individual Performance Component. Achievement of individual performance goals for the named executive officers was calculated based upon each officer's goals. For each named executive officer other than himself, the CEO made a recommendation to the Compensation Committee for performance against each goal. For the CEO, the Compensation Committee reviewed the CEO's performance against each goal. For the named executive officers, including the CEO, a determination was made that such officer (i) did not meet the goal and therefore received 0% for the goal, (ii) met the minimum performance criteria and therefore received 80% for the goal, (iii) met the target performance criteria and therefore received 100% for the goal, or (iv) met the maximum performance criteria and therefore received 120% for the goal. The CEO then recommended to the Compensation Committee for each named executive other than himself, and the Compensation Committee made a recommendation for the CEO, for an overall performance rating. Based upon the overall rating, the Compensation Committee calculated an aggregate percentage for all of the goals based upon their weighting and the level of achievement. No STI award for individual performance would have been awarded if the aggregate total had fallen below 80% for the individual goals. Therefore, in 2008, our named executive officers were eligible to receive the following payments under the individual component of the STI award:

•: No payment for the individual component unless the executive achieved the minimum individual performance level;
•: A payment of at least 80% but less than 100% of the individual component (at the discretion of the Committee) if the executive achieved or exceeded the minimum performance level but did not achieve the target performance level;
•: A payment of at least 100% but less than 120% of the individual component (at the discretion of the Committee) if the individual achieved the target performance level but did not achieve the maximum performance level; or
•: A payment of 120% of the individual component if the individual achieved the maximum performance level.

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2008 Company Performance Goals

In 2008, the Compensation Committee recommended and the Board approved the following performance goals, including each goal's relative weighting, and the minimum, target and maximum achievement levels for each goal:

						Achievement Metrics

Performance Objective			Weight			Minimum			Target			Maximum
	Finance
	•	Manage cash operating expenses and net interest expense (EbitdaR)(1)		15	%	$	42 million		$	40 million		$	38 million
	•	Manage year-end cash and short / long term investments(2)		15	%	$	90 million		$	93 million		$	96 million
	Pipeline
	•	Deliver topline results for Gattex SBS Extension Study		15	%		April			March			February
	•	Achieve First Person First Visit ("FPFV") for Gattex SBS Confirmatory Study		20	%		October			September			August
	•	Initiate Gattex in a new indication		10	%		December			November			October
	•	Achieve FPFV for NPSP558 HypoPTH pivotal study		15	%		September			August			July
	Employees and Organization
	•	Fill key vacancies and achieve voluntary turnover under the metric figures		5	%		20	%		15	%		10	%
	•	Implement streamlined critical, predefined operational processes outlined in 2007 restructuring		5	%		September			August			July

(1): The achievement metric for this objective excludes the impact of (i) changes in the carrying value of the Company's investments in auction rate securities and (ii) certain non-budgeted expenses which were approved in advance by the Company's board of directors. EbitdaR and net interest expense is defined as GAAP net income plus or minus certain adjustments that represent non-cash benefit or expense to NPS in the current period. Examples of such non-cash adjustments are royalty revenues recognized in the current year that are required to pay interest and principal on non-recourse notes secured by the respective royalty rights; milestone and license fee revenue received in prior years but recognized in the current year; interest expense on non-recourse notes secured by certain of the Company's royalty rights that is required to be paid by the respective royalties; FASB 123R expenses; depreciation and amortization expenses; etc.
(2): The achievement metric for this objective was adjusted by the reduction in carrying value of auction rate securities during 2008, which amounted to $20.9 million. The original goals prior to the adjustment were $111 million minimum, $114 million target and $117 million maximum.

The Compensation Committee chose these performance goals, and the relative weighting assigned to such goals, because it believed they are the key metrics used by management to formulate long-term business objectives, evaluate the Company's performance and ensure the Company's future success.

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2008 Short Term Incentive Award

Company Performance. During its 2008 year-end meeting, the Board, with the assistance of the Compensation Committee, assessed the Company's performance under each of the 2008 performance goals to determine whether and to what extent to award the Company component of the STI award. The evaluation consisted of a review of each respective performance goal, its weighting and the actual performance delivered by the Company. As a result of its evaluation, the Board reached the following conclusions:

Finance Objectives

•: The Company reached the maximum achievement metric for each finance objective because: (i) the Company's EbitdaR and net interest expense(1) for 2008 was approximately $30 million, and (ii) the Company's year-end cash balance and investments was $106 million.

Pipeline Objectives

•: The Company reached the maximum achievement metric for the first pipeline objective by delivering the required results in February 2008.
•: The Company did not achieve the minimum achievement metric for the second and fourth pipeline objectives. Consequently, no achievement percentage was awarded for these objectives.
•: For the third pipeline objective, the Company had taken steps to initiate Gattex in a new indication by the target date, but the Board and management ultimately made the strategic decision during the year to defer initiation of Gattex in a new indication. Notwithstanding this decision, and based on efforts made during the year in furtherance of this objective, the Compensation Committee concluded that the Company reached the target achievement metric for this pipeline objective.

Employee and Organization Objectives

•: The Company (i) reached the maximum achievement metric for the first objective because the employee voluntary turnover rate for 2008 was under 8.5%; and (ii) reached the target achievement metric for the second objective as a result of the timing of the implementation of the processes outlined in the 2007 restructuring.

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After considering the foregoing performance by the Company, the Compensation Committee determined that the Company component of the STI award had been achieved at the level of 90%. The Compensation Committee acknowledged, however, that the 2008 year presented a number of significant challenges for the Company, including the general condition of the economy, that were not foreseen with the goals were approved, and that the Company had delivered exceptional performance in light of these challenges. Given these circumstances, the Compensation Committee determined that an award of 100% of the Company component of the STI award was warranted. Accordingly, in December 2008, the Compensation Committee recommended, and the Board approved, payment of the Company component of the STI award at the target performance level, or 100% of the target award.

Individual Performance. The Compensation Committee, with the assistance of the CEO and Senior Director of Human Resources, evaluated each currently-employed named executive officer's individual performance to determine to what extent the individual component of the STI award should be awarded to each executive. The Compensation Committee alone considered Dr. Nader's performance. After reviewing each executive's individual performance, the Compensation Committee determined that: (i) for achievement of his 2008 individual performance goals, Dr. Nader should receive 100% in cash and 20,000 RSUs for his STI; (ii) for achievement of his 2008 individual performance goals, Mr. Beshar should receive 120% in cash for his STI; and (iii) for achievement of his 2008 individual performance goals, Mr. Rackear should receive 100% in cash for his STI. Accordingly, the Compensation Committee recommended, and the Board approved, an award of the individual portion of the STI to each named executive officer based on the foregoing individual performance achievement amounts.

The actual cash incentive awards earned and paid to our named executive officers are reflected in column (g) of the Summary Compensation Table.

2008 Discretionary Bonus

As a result of the Company's performance under the 2008 performance goals and Dr. Nader's individual leadership and performance during 2008, the Board awarded an extraordinary performance bonus of 20,000 shares of restricted stock to Dr. Nader, which was deemed to be part of his STI award. The restricted stock, which was granted to Dr. Nader in January 2009 and fully vest on the one year anniversary of the date of grant, are reflected in column (e) of the Summary Compensation Table. The Board chose to award restricted stock rather than stock options because (i) it believed the immediate benefit conferred by restricted stock made it a better choice for rewarding Dr. Nader's past performance than stock options, which it more often uses to provide an incentive for future performance, and (ii) an award of restricted stock would provide more balance to the total mix of equity compensation awarded to Dr. Nader, who to date had predominately received options.

2009 Modifications to STI Program

Each executive can earn a bonus through the Company's STI program. The amount of the bonus is calculated as a percentage of the executive's base earnings. The actual percentage of base earnings varies by executive. For instance, the targeted bonus for our CEO is 60% of his salary. However, earning the full amount of the targeted bonus is contingent upon achieving corporate and personal goals. Therefore, an executive will earn the targeted bonus upon achievement of 100% of the corporate goals and 100% of his personal goals. The executive can also earn more or less than the targeted bonus depending upon whether and to what extent corporate and/or personal goals have been achieved. After

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evaluating recommendations proposed by Radford regarding the Company's STI program, the Compensation Committee approved the following modifications to the Company's 2009 STI program:

•: 50% of amounts paid as STI up to the targeted bonus will be paid in cash and the remaining amount, up to 100% of the targeted bonus, will be paid in either all cash or all Company common stock, at the Compensation Committee's discretion;
•: In order to encourage executive ownership of NPS shares, amounts paid as STI over the targeted bonus will be paid in Company common stock at a 10% premium to the cash earned and ownership of such common stock will vest one year from the date of the award;
•: The maximum achievement level for the individual performance component of the STI award shall be increased from 120% to 150%;
•: The minimum achievement level for the individual performance component of the STI award shall be adjusted from 80% to 50%; and
•: Cash on hand must be within the guidelines as determined by the Board in order for any STI payout to take place.

Long-Term Incentive Compensation

Our long-term incentive compensation program, or LTI, is an integral part of our compensation policy. We believe that equity grants that vest over a period of years tie a portion of our executives' compensation to our long-term performance and, thereby, align the interests of our executives with the interests of our shareholders. Our equity compensation program delivers compensation to executives only when NPS performs and the value of NPS common stock increases. We provide LTI awards primarily through the issuance of stock options. Our executives realize value on these options only if our stock price increases (which benefits all stockholders) and only if the executives remain employed with us beyond the date their options vest. The Board has also utilized grants of restricted stock and restricted stock units, or RSUs, for the purpose of recruiting, retaining and rewarding our executive officers. Grants of restricted stock and restricted stock units encourage executive ownership of NPS shares and align the incentives of executives with those of our shareholders. These awards also provide executives with some certainty regarding the value of the compensation they are receiving during periods of extreme stock market volatility, which furthers the Company's fundamental goal of awarding compensation that helps attract and retain highly skilled employees. When awarding restricted stock and restricted stock units, the Compensation Committee considers the extent to which including full-value shares in the long-term portion of total compensation is consistent with the compensation practices of our peer group.

General LTI Award Practices. Prior to the end of each year, the Compensation Committee, with the assistance of management, considers the LTI award that should be given to each named executive officer by assessing their individual performance and total compensation, including the value of outstanding options, RSUs and restricted stock held by that executive. The Compensation Committee also considers the type and amount of equity awards granted by the peer group companies. After such consideration, the Committee determines the appropriate LTI award for each named executive officer and presents its recommendation to the Board for approval.

Equity awards for named executive officers are granted under our 2005 Omnibus Incentive Plan and 1998 Stock Option Plan and generally vest over four years. Historically, options have been granted on a quarterly basis rather than annually to mitigate the impact of fluctuating market prices on option exercise prices and option expense. The Compensation Committee's practice has been to determine and approve the quarterly grant dates for the following fiscal year at its year-end meeting for the current fiscal year, which is typically held in December. At its year-end meeting, the Compensation Committee has historically set the grant dates as the 15^th day after the applicable quarter-end (or if a holiday or

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weekend, the first business day thereafter). Although the quarterly grant dates are determined in advance of the actual grant, the exercise price of stock options granted on those dates is the closing price of our common stock on the NASDAQ Global Market on the actual date of grant.

2008 LTI Awards. During 2008, the Compensation Committee, in consultation with Hewitt and Associates, the committee's compensation consultant at the time, reviewed the Company's LTI program and granted the following LTI awards to the named executive officers:

Name

Luke Beshar	12,310	(1)
Anthony Coles	90,000	(2)
Alan Harris	—	(3)
Roger Garceau	—	(4)
Francois Nader	90,000	(5)
Brian O'Callahan	—	(3)
Andrew Rackear	49,240

(1): In light of the one-time, sign-on equity awards granted to Mr. Beshar upon joining the Company in 2007, the options awarded to Mr. Beshar in 2008 represent only one-quarter of the 49,210 stock options he would have otherwise been entitled to receive as an LTI award in 2008.
(2): Dr. Coles was entitled to receive 90,000 options each year pursuant to the terms of his employment agreement, of which 12,500 vested prior to his departure in March 2008. The remaining options vested upon Dr. Coles' termination, as described under the description of his employment agreement below.
(3): Messrs. Harris and O'Callaghan did not receive an LTI award during 2008 in light of the one-time, sign-on equity awards they received upon joining the Company.
(4): Dr. Garceau did not receive a 2008 LTI award because he joined the Company in December 2008.
(5): Upon his appointment as CEO in March 2008, Dr. Nader became entitled to receive 90,000 options each year pursuant to the terms of his employment agreement. Prior to his appointment as CEO, Dr. Nader's annual LTI award for 2008 was 75,000 stock options.

The number of shares and market value of 2008 LTI awards granted to Dr. Nader and Mr. Beshar fell within the bottom 25% of the long-term incentive awards granted to similarly situated officers at our peer group companies. The 2008 LTI award granted to Mr. Rackear fell within the range of 25% to 50% of the long-term incentive awards granted to similarly situated officers at our peer group companies.

2009 LTI Awards. At its year-end meeting in 2008, the Compensation Committee received and considered Radford's recommendations with respect to the Company's LTI program. As part of this process, the Committee considered the effect of current economic conditions on the value of long-term incentive awards previously awarded to the named executive officers. In addition, the Committee reviewed the history of its LTI grant practices and concluded that the levels of long-term equity compensation previously awarded to the named executive officers under the Company's LTI program

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had been below the mid-range of similar awards granted by the 2009 peer group companies. Based on these factors, the Committee decided:

•: To grant a "true-up" award of stock options to the named executive officers in 2009 to bring their long-term equity compensation within the mid-range of similar awards granted by the peer group;
•: To provide that a meaningful proportion of such awards would be comprised of performance-based options with vesting tied to pre-determined performance metrics; and
•: That 2009 LTI awards would be granted on an annual basis as opposed to quarterly.

After reaching the foregoing conclusions, the Compensation Committee approved the following one-time grants of service-based and performance-based options to the following named executive officers on January 20, 2009:

Named Executive Officer

Francois Nader	142,500	(1)	231,563	374,063
Luke Beshar	45,000		73,125	118,125
Andrew Rackear	45,000		73,125	118,125

(1): Dr. Nader's grant of service based options includes the 90,000 service-based options he is entitled to in 2009 pursuant to the terms of his employment agreement.

The "true-up" component of the 2009 grants was based on market competitive practice and intended to compensate the named executive officers for the shortfall of LTI compensation previously awarded by the Company through a grant of predominantly performance-based options that will vest upon the achievement of designated performance goals. The service-based portion of the options will vest and become exercisable 25% on the first anniversary of the date of grant and 6.25% every three months thereafter.

The performance-based options vest at a target rate of 50% on the second anniversary of the date of grant and 50% on the third anniversary of the date of grant, with the actual number of options vesting on such dates determined based on the performance of NPS's common stock price relative to the performance of the NASDAQ Biotechnology Index as follows:

Performance of Company Stock Price Relative to the NASDAQ Biotechnology Index

Top Quartile	125	%
Second Quartile	115	%
Third Quartile	50	%
Bottom Quartile	0	%

Stock options that are tied to the performance target and do not vest are forfeited by the executive.

Employment Agreements

We have entered into employment agreements with Dr. Francois Nader, our Chief Executive Officer and President and Dr. Roger Garceau, our Chief Medical Officer. We also entered into an employment agreement with our former CEO and President, Dr. Anthony Coles. Dr. Coles' employment agreement terminated in March 2008 in connection with his separation from the Company. A summary of these employment agreements is provided later in the Proxy Statement under the caption "Employment Agreements." Although we generally do not enter into employment agreements

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with our executive officers, we believe that the benefits and protections offered by a formal employment agreement allows us to attract a more qualified pool of candidates for certain senior positions in our Company. The employment agreements we entered into with Dr. Nader, Dr. Garceau and Dr. Coles were the product of arms'-length negotiations and incorporated the employment terms that the Compensation Committee determined were consistent with terms being offered in the marketplace for executives with similar qualifications.

Post-Termination Compensation

In light of the volatility of our business and industry, we provide post-termination compensation to our named executive officers under certain circumstances. Our executives may be entitled to payments and other benefits upon separation from the Company under certain contractual arrangements, including employment agreements, employment offer letters, or our Change in Control Severance Pay Plan. A summary of each of these contractual arrangements is provided later in this Proxy Statement under the caption "Potential Payments upon Termination or Change in Control." In determining the severance payments or benefits to be paid to our named executive officers upon a termination of employment, whether or not resulting from a change in control of NPS, the Compensation Committee considers the executive's total compensation, including the value of historical equity compensation that has been accumulated by each executive. Based on an analysis of the severance benefits paid to executives by companies within the peer group, the Compensation Committee believes that the severance payments provided to our named executive officers are competitive and reasonable.

Perquisites

It is our general practice not to provide significant perquisites or personal benefits to our named executive officers. The Compensation Committee, however, retains the discretion to consider and award reasonable perquisites or personal benefits to named executive officers as necessary for recruiting purposes, retention purposes, or otherwise. There were no perquisites awarded during 2008 that are required to be disclosed in this Proxy Statement. Named executive officers, however, are eligible to participate in our 401(k) retirement plan and receive the same Company match that is available to all employees.

Policy Regarding Tax Gross-Ups

The Compensation Committee has, over the past few years, utilized tax gross-ups as one of many tools to attract and recruit highly-talented chief executive officers. Of the named executive officers, the Committee has only provided these tax gross-ups to the Company's current chief executive officer and former chief executive officer, Dr. Anthony Coles. The Compensation Committee determined, in connection with negotiating and approving each of Dr. Nader's and Dr. Coles' employment agreements, that the tax gross ups were necessary to retain each executive. Going forward, however, the Compensation Committee has determined that it will not provide these tax gross-ups in any future compensation arrangements offered or agreed to by the Company.

Policy Regarding Deductibility

Our general approach is to seek to qualify the compensation paid to our named executive officers as deductible under Section 162(m) of the Internal Revenue Code but to preserve flexibility in allowing the Compensation Committee to make compensation awards consistent with the philosophy and policies described in this Compensation Discussion and Analysis. The Compensation Committee will continue to evaluate the advisability of qualifying the deductibility of such compensation in the future.

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COMPENSATION COMMITTEE REPORT(2)

(2): This Report of the Compensation Committee does not constitute soliciting material and shall not be deemed to be "filed" with the Securities and Exchange Commission or deemed to be incorporated by reference in previous or future documents filed by NPS with the Securities and Exchange Commission under the Securities Act of 1933, as amended, or under the Exchange Act, or be subject to the liabilities of Section 18 of the Exchange Act, except to the extent we specifically incorporate this Report by reference into any such document.

The Compensation Committee of the Board of Directors has reviewed and discussed with management the Compensation Discussion and Analysis that precedes this Report and, based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.



		Submitted by the Compensation Committee of the Board,
		Donald Kuhla, Chair Rachel R. Selisker Peter Tombros

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SUMMARY COMPENSATION TABLE

The table below summarizes the total compensation paid to or earned by each of the following named executive officers for the fiscal year-ended December 31, 2008:

•: our Chief Executive Officer and President;
•: our Chief Financial Officer and Senior Vice President;
•: our three other most highly compensated executive officers serving as executive officers as of December 31, 2008;
•: our former Chief Executive Officer and President; and
•: two individuals who would have been one of the three most highly compensated executive officers but for the fact that they were not serving as executive officers as of December 31, 2008.

Dr. Coles, Mr. O'Callaghan, and Dr. Harris each separated from the Company in 2008. Dr. Garceau joined the Company in December 2008.

Name and Principal Position (a)

Francois Nader		2008	468,634	—	119,264		316,502		260,531	10,350	(4)	1,175,281
	CEO and President	2007	421,077	—	73,283		149,059		226,932	10,125		880,476
Luke Beshar		2008	337,504	—	—		104,147		124,033	10,350	(4)	576,034
	CFO and Senior VP	2007	30,923	15,000	—		11,363		—	—		57,286
Andrew Rackear		2008	288,199	—	—		77,666		100,871	10,350	(4)	477,086
	Senior VP Legal	2007	119,308	—	—		24,550		51,004	—		194,862
	Affairs and General Counsel
Roger Garceau		2008	8,750	—	—		7,251		—	—		16,001
	Chief Medical Officer
N. Anthony Coles		2008	128,171	—	1,022,234	(5)	1,035,801	(6)	—	1,030,966	(7)	3,217,172
	Former CEO and	2007	520,385	—	762,760		642,882		450,000	—		2,376,027
	President	2006	480,962	—	360,789		336,407		245,291	1,213,159		2,636,608
Brian O'Callaghan		2008	144,019	—	—		69,313		—	503,334	(8)	716,666
	Former Senior VP and	2007	62,500	50,000	—		14,582		31,172	5,507		163,761
	CCO
Alan G. Harris		2008	302,769	—	—		86,293		—	164,702	(9)	553,764
	Former Senior VP and CMO

(1): The amounts in this column do not reflect compensation actually received by the named executive officers nor do they reflect the actual value that will be recognized by the named executive officers. Instead, the amounts reflect the dollar amount recognized for financial statement reporting purposes for the respective fiscal years ended December 31 (exclusive of any assumptions for forfeitures related to service-based vesting conditions), in accordance with FAS 123(R), of stock awards and may include expense for awards granted in and prior to that fiscal year. The full grant-date fair value of awards granted in 2008 is reflected below in the 2008 Grants of Plan-Based Awards table. Assumptions used in the calculation of these amounts for awards granted in 2006, 2007 and 2008 are included in footnote 13 to our audited financial statements for the fiscal year ended December 31, 2008 included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 16, 2009. For information regarding assumptions made in calculating the amounts

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reflected in this column for awards granted prior to 2006, see footnote 13 to our audited financial statements, included in our Annual Report on Form 10-K for the respective fiscal years.

(2): The amounts in this column do not reflect compensation actually received by the named executive officers nor do they reflect the actual value that will be recognized by the named executive officers. Instead, the amounts reflect the dollar amount recognized for financial statement reporting purposes for the respective fiscal years ended December 31 (exclusive of any assumptions for forfeitures related to service-based vesting conditions), in accordance with FAS 123(R), of stock option awards and stock appreciation rights and includes expense for awards granted in and prior to that fiscal year. Assumptions used in the calculation of these amounts for awards granted in 2006, 2007 and 2008 are included in footnote 13 to our audited financial statements for the fiscal year ended December 31, 2008 included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 16, 2009. For information regarding assumptions made in calculating the amounts reflected in this column for awards granted prior to 2006, see footnote 13 to our audited financial statements, included in our Annual Report on Form 10-K for the respective fiscal years.
(3): Reflects the amount earned by each named executive officer under our short-term incentive compensation program for the applicable fiscal year. For additional information on our short-term incentive compensation program, see the section entitled "Short-Term Incentive Compensation" in the Compensation Discussion and Analysis on page 26 of this Proxy Statement.
(4): Reflects Company matching contributions to the 401(k) plan for the named executive officer.
(5): Reflects the dollar amount recognized for the fiscal year ended December 31, 2008 under FAS 123(R) (exclusive of any assumptions for forfeitures related to service-based vesting conditions) for accelerated vesting of 135,000 restricted stock units upon Dr. Coles' separation from the Company pursuant to his Employment Agreement.
(6): Reflects the dollar amount recognized for the fiscal year ended December 31, 2008 under FAS 123(R) (exclusive of any assumptions for forfeitures related to service-based vesting conditions) for accelerated vesting of 502,858 stock options and 150,000 stock appreciation rights upon Dr. Coles' separation from the Company pursuant to his Employment Agreement.
(7): Reflects the following cash remuneration paid to Dr. Coles pursuant to his Employment Agreement in connection with his separation from the Company in March 2008: (i) severance pay equal to 24 months of base salary, which amounts to $1,000,000; and (ii) a one-time cash payment of $30,966 for accrued and unused personal-time-off days.
(8): Reflects the following cash remuneration paid to Mr. O'Callaghan in connection with his separation from the Company in May 2008: (i) severance pay equal to 18 months of base salary, which amounts to $492,984. Also reflects $10,350 in Company matching contributions to the 401(k) plan for Mr. O'Callaghan.
(9): Reflects the following cash remuneration paid to Dr. Harris in connection with his separation from the Company in December 2008: (i) severance pay of $150,153; and (ii) a one-time cash payment of $4,199 in lieu of medical and dental benefits continuation. Also reflects $10,350 in Company matching contributions to the 401(k) plan for Dr. Harris.

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2008 GRANTS OF PLAN BASED AWARDS TABLE

The following table shows the stock options and stock awards granted to our named executive officers in fiscal year 2008 (in respect of performance in fiscal years 2007 and 2008) and the estimated future payouts under our short term incentive compensation program for fiscal year 2008.



					Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1)										Exercise Price or Base Price of Option Awards ($/sh) (k)		Grant Date Fair Value of Stock and Option Awards ($) (l)(3)
Name (a)	Grant Date (b)		Approval Date		Threshold ($) (c)		Target ($) (d)		Maximum ($) (e)						Exercise Price or Base Price of Option Awards ($/sh) (k)		Grant Date Fair Value of Stock and Option Awards ($) (l)(3)
Francois Nader		1/15/08		12/5/07		—		—		—	—		18,750			3.93		44,576
		3/17/08		2/22/08		—		—		—	—		100,000			3.85		232,900
		3/17/08		2/22/08		—		—		—	50,000	(4)						192,500
		4/15/08		12/5/07		—		—		—	—		22,500			3.60		50,135
		7/15/08		12/5/07		—		—		—	—		22,500			5.05		68,605
		10/15/08		12/5/07		—		—		—	—		22,500			5.85		77,726
		n/a		n/a		142,500		285,000		427,500	—		—			—		—
Luke Beshar		10/15/08		12/5/07		—		—		—	—		12,310			5.85		42,525
		n/a		n/a		60,255		120,510		180,765	—		—			—		—
Andrew Rackear		1/15/08		12/5/07		—		—		—	—		12,310			3.93		28,600
		4/15/08		12/5/07		—		—		—	—		12,310			3.60		24,680
		7/15/08		12/5/07		—		—		—	—		12,310			5.05		34,798
		10/15/08		12/5/07									12,310			5.85		39,568
		n/a		n/a		52,479		104,958		157,436	—		—			—		—
Roger Garceau		12/11/08		11/17/08		—		—		—	—		150,000	(5)		5.98		529,695
		n/a		n/a		56,875		113,750		170,625	—		—			—		—
N. Anthony Coles		1/15/08		12/5/07		—		—		—			22,500			3.93		53,592
		1/11/08		1/11/08		—		—		—	25,839	(6)	—			—		100,000
		3/14/08		3/14/08		—		—		—	76,336	(7)	—			—		300,000
Brian O'Callaghan		—		—		—		—		—	—		—			—		—
Alan G. Harris		1/2/08		12/5/07		—		—		—	—		150,000	(5)		3.78		343,005

(1): Reflects the threshold, target and maximum payment levels under our short term incentive compensation program for awards made in the fiscal year ended December 31, 2008. These amounts vary based on the individual's current salary and position. For additional information, see the section entitled "Compensation Discussion and Analysis—2008 Executive Compensation Components—Short Term Incentive Compensation" beginning on page 26 of this Proxy Statement.
(2): Reflects stock options granted in 2008 to each named executive officer under our long term incentive compensation program. Grants were made under our 2005 Omnibus Incentive Plan and 1998 Stock Option Plan. Options granted in 2008 generally vest and become exercisable over four years as follows: 28% of the shares subject to the option vest at the end of the first year after grant, and 2% of the shares subject to the option vest monthly thereafter for three years. Options granted have a ten-year term, subject to earlier termination upon death, disability, or termination of employment. For additional information, see the section entitled "Compensation Discussion and Analysis—2008 Executive Compensation Components—Long Term Incentive Compensation" beginning on page 30 of this Proxy Statement.
(3): The amounts in this column do not reflect compensation actually received by the named executive officers nor do they reflect the actual value that will be recognized by the named executive officers. Instead, the amounts represent the full grant date fair value of awards calculated in accordance with FAS 123(R). The grant date fair value is the amount that we will expense in our financial statements over the award's vesting schedule. For stock awards, fair value is the closing price of a share of our common stock as quoted on the Nasdaq Global Market on the day of

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grant. The fair values for stock options are accounted for in accordance with FAS 123(R). For additional information on the valuation assumptions, see footnote 13 to our audited financial statements, included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2008.

(4): Reflects a one time grant to Dr. Nader upon his appointment as Chief Executive Officer in March 2008.
(5): Reflects a one-time sign-on stock option grant to the named executive officer pursuant to the executive's employment offer letter.
(6): Reflects a gross stock award to Dr. Coles of 25,839 shares for an extraordinary performance bonus for 2007 performance. 9,302 shares were withheld by the Company for payment of applicable taxes.
(7): Reflects a stock award of 76,336 shares as a retention bonus to Dr. Coles that vested in March 2008 upon his separation from the Company.

Employment Agreements

We have entered into employment agreements with Dr. Francois Nader, our Chief Executive Officer and President, and Dr. Roger Garceau, our Chief Medical Officer. We also entered into an employment agreement with Dr. Anthony Coles, our former Chief Executive Officer and President. Dr. Coles' agreement terminated in March 2008 upon his separation from the Company.

Dr. Francois Nader. On March 17, 2008 we entered into an Employment Agreement with Dr. Nader in connection with his appointment as Chief Executive Officer and President of the Company. The agreement has a three year initial term and will automatically renew for successive one-year periods unless written notice of non-renewal is provided by either party at least 90 days prior to the expiration of the then current term.

Under the agreement, Dr. Nader is entitled to: (i) receive an annual base salary of $475,000, subject to annual adjustment by the Compensation Committee; (ii) participate in our short term incentive plan, with an annual target bonus opportunity of 60% of his base salary, which is effective March 17, 2008; and (iii) receive an annual long-term incentive target award of 90,000 stock options, commencing April 1, 2008 and subject to the same four-year vesting schedule for equity awards granted to our other executives and employees. Pursuant to the agreement, we also made the following one-time awards to Dr. Nader upon the commencement date of the agreement: (i) 50,000 restricted stock units, or RSUs, which vest in one-third increments on each anniversary of the grant date, and (ii) 100,000 non-qualified stock options, or NQSOs, which vest according to our standard four-year vesting schedule. Under the agreement, Dr. Nader is also entitled to receive all other benefits generally available to our other employees, such as medical and dental insurance benefits, long-term care insurance, short-term and long-term disability, life insurance, 401(k) plan contribution matching, 125 Cafeteria Plan, annual paid time off and holidays.

Dr. Nader is also entitled to participate in our Change in Control Severance Pay Plan in the event that his employment is terminated or materially altered as a result of a change in control of NPS. The provisions of this plan are discussed in detail later in this Proxy Statement under the caption "Potential Payments upon Termination or Change in Control." In the event that Dr. Nader's employment is terminated by NPS without cause, as defined in his employment agreement, or if Dr. Nader terminates his employment for good reason, as defined in his employment agreement, Dr. Nader would be entitled to the following severance benefits: (i) payment of any previously earned but unpaid base salary; (ii) payment of any unpaid bonus for the calendar year prior to the year in which the termination occurred; (iii) severance in an amount equal to two (2) times Dr. Nader's base salary at the time of termination; and (iv) immediate vesting of all options that would have vested within the two years following the date of his termination. Except as described in (iv) above, the treatment of Dr. Nader's outstanding equity awards upon a change in control or any termination of his employment is governed by the terms of the equity plans under which those awards were made and the terms of the respective award agreements. We also agreed to gross-up any payments to Dr. Nader under his employment

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agreement if such payments would be subject to the excise tax imposed by section 4999 of the Internal Revenue Code such that the net amount retained by Dr. Nader after deduction of any such excise tax would be equal to the amount Dr. Nader would have received had there been no excise tax imposed on the payments. Going forward, the Compensation Committee has determined that it will not provide such tax gross-ups in any future compensation arrangements offered or agreed to by the Company. For additional information on the Compensation Committee's policy on tax gross-ups, see the section entitled "Compensation Discussion and Analysis—Policy on Tax Gross-ups" on page 33 of this Proxy Statement.

Dr. Nader's employment agreement was amended in January 2009 to (i) provide that Dr. Nader's annual award of 90,000 options would be granted on an annual basis rather than quarterly, and (ii) ensure that the agreement complies with Section 409A of the Internal Revenue Code of 1986, as amended, or qualifies for an exemption thereunder.

Dr. Roger Garceau. On December 1, 2008 we entered into an Employment Agreement with Dr. Garceau in connection with his appointment as Chief Medical Officer of the Company. Under the agreement, Dr. Garceau is entitled to: (i) receive an annual base salary of $325,000, subject to annual adjustment by the Compensation Committee; (ii) participate in our short term incentive plan with a target bonus opportunity of 35% of his base salary; and (iii) receive an annual long-term incentive award of stock options or other equity awards permitted under our equity plans, subject to the same four-year vesting schedule for equity awards granted to our other executives and employees. Pursuant to the agreement, we made a one-time award of 150,000 NQSOs to Dr. Garceau, which vest according to our standard four-year vesting schedule. Under the agreement, Dr. Garceau is also entitled to receive all other benefits generally available to our other employees, such as medical and dental insurance benefits, long-term care insurance, short-term and long-term disability, life insurance, 401(k) plan contribution matching, 125 Cafeteria Plan, annual paid time off, and holidays.

Dr. Garceau is also entitled to participate in our Change in Control Severance Pay Plan in the event that his employment is terminated or materially altered as a result of a change in control of NPS. The provisions of this plan are discussed in detail later in this Proxy Statement under the caption "Potential Payments upon Termination or Change in Control." In the event that Dr. Garceau's employment is terminated by NPS without cause, as defined in the agreement, or if Dr. Garceau terminates his employment for good reason, as defined in the agreement, he would be entitled to the following severance benefits: (i) payment of any previously earned but unpaid base salary; (ii) payment of any unpaid bonus for the calendar year prior to the year in which the termination occurred; (iii) severance in an amount equal to one-and-one-half (1.5) times his base salary at the time of termination; and (iv) Dr. Garceau's vested options will remain exercisable according to the provisions of the plan under which the options were granted.

Dr. N. Anthony Coles. On October 31, 2005, we entered into an Employment Agreement with Dr. Coles upon his commencement of employment with the Company. This agreement terminated in March 2008 in connection with Dr. Coles' separation from the Company.

Under the agreement, Dr. Coles was entitled to: (i) receive an initial annual base salary of $450,000 subject to annual adjustment by the Compensation Committee, (ii) participate in our short-term incentive plan, and (iii) receive annual long-term incentive awards with an annual value, based on the fair value of the equity award, of $600,000 to be granted as stock options, restricted stock units, or other equity awards as permitted under the our 2005 Omnibus Incentive Plan. Under the agreement, we also committed to consider the advancement of Dr. Coles to CEO within six months of the date of the commencement of his employment with the Company. In May 2006, Dr. Coles was elected by the Board as CEO and President of the Company.

Pursuant to the agreement, we made the following one-time cash payments and awards on Dr. Coles' appointment date: (a) a one-time up-front cash payment of $200,000, which satisfied the

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payment of any bonus to Dr. Coles for his services during November and December 2005; (b) 180,000 RSUs, which had the following vesting schedule: 45,000 on the second year anniversary of hire, 90,000 on the fourth year anniversary of hire, and 45,000 on the fifth year anniversary of hire; (c) 150,000 stock settled stock appreciation rights, or SARs; and (d) 150,000 NQSOs. The agreement also required NPS to make an additional grant of 200,000 NQSOs to Dr. Coles, which were granted on May 11, 2006. The exercise price for the SARs and the NQSOs granted to Dr. Coles is equal to the fair market value of a share of NPS's common stock on the date of their respective grants. The SARs and the NQSOs were to vest over a four-year period, with 28% vesting at the end of the first year from the date of grant, and the remainder vesting at a rate of 2% per month thereafter during the duration of Dr. Coles' employment with NPS. However, as discussed in more detail below, the vesting of each of the RSUs, SARs and NQSOs granted to Dr. Coles was accelerated upon Dr. Coles' separation from the Company in March 2008.

Under the agreement, NPS also agreed to reimburse Dr. Coles for expenses incurred in connection with his relocation to New Jersey. Dr. Coles was also entitled to receive all other benefits available to employees of the Company, such as medical and dental insurance benefits, long-term care insurance, short-term and long-term disability, life insurance, 401(k) plan contribution matching, 125 Cafeteria Plan, annual paid time off, and holidays.

Although Dr. Coles was an employee-at-will under the agreement, he was entitled to severance benefits under certain circumstances upon the termination of his employment with NPS. Upon termination without cause, as defined in the agreement, Dr. Coles was entitled to receive: (i) his annual base salary for the longer of the remainder of the agreement term or 24 months; (ii) immediate vesting of all of the one-time equity awards granted upon his commencement of employment with NPS described above; (iii) immediate vesting of that portion of his stock awards that would have vested if he had remained employed for an additional 24 months after his termination date; and (iv) an extended exercise period for each stock option or SAR for the longer of (a) 24 months, or (b) such other period as he may be entitled under any NPS stock option plan, grant agreement, or retirement plan. Dr. Coles' separation from NPS in March 2008 was deemed a "termination without cause" under the agreement. Consequently, Dr. Coles received the foregoing severance benefits, which are also discussed later in this Proxy Statement under the caption "Potential Payments upon Termination or Change in Control." We also agreed to gross-up any payments to Dr. Coles under the agreement if such payments would be subject to the excise tax imposed by section 4999 of the Internal Revenue Code such that the net amount retained by Dr. Coles after deduction of any such excise tax would be equal to the amount Dr. Coles would have received had there been no excise tax imposed on the payments.

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OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2008

			Option Awards								Stock Awards

Name (a)	Grant Date		Number of Securities Underlying Unexercised Options (#) Exercisable (b)		Number of Securities Underlying Unexercised Options (#) Unexercisable(1) (c)		Option Exercise Price ($) (e)		Option Expiration Date (f)		Number of Shares or Units of Stock That Have Not Vested (#) (g)			Market Value of Shares or Units of Stock That Have Not Vested ($) (h)
Francois Nader		6/5/2006		64,000		36,000		5.73		6/15/2016		—			—
		7/17/2006		5,502		3,373		4.07		7/17/2016		—			—
		10/16/2006		4,970		3,905		4.50		10/16/2016		—			—
		1/16/2007		4,437		4,438		4.37		1/16/2017		—			—
		4/16/2007		3,905		4,970		4.31		4/16/2017		—			—
		7/2/2007		24,510		39,990		4.13		7/2/2017		—			—
		7/16/2007		7,125		11,625		4.42		7/16/2017		—			—
		9/10/2007		23,678		71,036		4.29		9/10/2017		—			—
		10/15/2007		6,000		12,750		4.10		10/15/2017		—			—
		1/15/2008		—		18,750		3.93		1/15/2018		—			—
		3/17/2008		—		100,000		3.85		3/17/2018		—			—
		4/15/2008		—		22,500		3.60		4/15/2018		—			—
		7/15/2008		—		22,500		5.05		7/15/2018		—			—
		10/15/2008		—		22,500		5.85		10/15/2018		—			—
		—		—		—		—		—		21,533	(2)		133,720
		—		—		—		—		—		50,000	(3)		310,500
Luke Beshar		11/20/2007		60,000		140,000		4.05		11/20/2017		—			—
		10/15/2008		—		12,310		5.85		10/15/2018		—			—
Andrew Rackear		7/23/2007		32,300		52,700		4.64		7/23/2017		—			—
		1/15/2008		—		12,310		3.93		1/15/2018		—			—
		4/15/2008		—		12,310		3.60		4/15/2018		—			—
		7/15/2008		—		12,310		5.05		7/15/2018		—			—
		10/15/2008		—		12,310		5.85		10/15/2018		—			—
Roger Garceau		12/11/2008		—		150,000		5.98		12/11/2018		—			—
N. Anthony Coles		11/2/2005		150,000		—		10.00		11/2/2015
		11/2/2005		150,000		—		10.00		11/2/2015		—			—
		1/17/2006		18,338		—		14.96		1/17/2016		—			—
		4/17/2006		17,971		—		8.75		4/17/2016		—			—
		5/11/2006		200,000		—		5.27		5/11/2016		—			—
		7/17/2006		20,700		—		4.07		7/16/2016		—			—
		10/16/2006		19,350		—		4.50		10/16/2016		—			—
		1/16/2007		18,000		—		4.37		1/16/2017		—			—
		4/16/2007		16,650		—		4.31		4/16/2017		—			—
		7/16/2007		15,299		—		4.42		7/16/2017		—			—
		10/15/2007		13,950		—		4.10		10/15/2017		—			—
		1/15/2008		12,600		—		3.93		1/15/2018		—			—
Brian O'Callaghan		—		—		—		—		—		—			—
Alan G. Harris		—		—		—		—		—		—			—

(1): Stock options granted through 2008 generally vest and become exercisable over four years as follows: 28% of the shares subject to the option vest at the end of the first year after grant, and 2% of the shares subject to the option vest monthly thereafter for three years. Options granted have a ten-year term, subject to earlier termination upon death, disability, or termination of employment.
(2): Reflects the remaining unvested portion of an award of RSUs, granted to Dr. Nader in 2006. The remaining RSUs vest on October 17, 2009.
(3): Reflects an award of 50,000 RSUs to Dr. Nader upon his appointment as CEO in March 2008. The RSUs vest in one-third increments on each anniversary of the grant date.

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OPTION EXERCISES AND STOCK VESTED IN 2008

	Stock Awards

Name (a)	Number of Shares Acquired on Vesting (#) (d)			Value Realized on Vesting ($) (e)
Francois Nader		21,534	(1)		77,738
Luke Beshar		—			—
Andrew Rackear		—			—
N. Anthony Coles		135,000	(2)		519,750
Roger Garceau		—			—
Brian O'Callaghan		—			—
Alan G. Harris		—			—

(1): In October 2006, Dr. Nader received an RSU award pursuant to our 2006 retention program. 50% of this award vested on April 17, 2008, with a market value of $3.61 per share based on the closing price of our common stock on the NASDAQ Global Market on that date.
(2): Reflects the accelerated vesting of the remainder of Dr. Coles' grant of 180,000 RSUs upon his separation from the Company on March 17, 2008 pursuant to his Employment Agreement. The portion vested reflects a market value of $3.85 per share, based on the closing price of our common stock on the NASDAQ Global Market on that date.

Pension Benefits and Nonqualified Deferred Compensation

Our named executive officers do not receive any compensation in the form of pension benefits or nonqualified deferred compensation.

Potential Payments upon Termination or Change in Control

The following narrative and table summarize the estimated payments to be made under each contract, agreement, plan or arrangement which provides for payments to a named executive officer at, following, or in connection with the termination of employment of the named executive officer, including a change in control of the Company. For purposes of the quantitative disclosure in the following table, we have assumed that the termination took place on December 31, 2008, the last business day of our last completed fiscal year, and that the price per share of our common stock is the closing market price on the NASDAQ stock market as of that date, or $6.21. However, for those named executive officers who separated from the Company during 2008, we have disclosed the actual amount paid out upon their separation from the Company.

Our named executive officers may be entitled to payments and other benefits upon separation from the Company under employment agreements, employment offer letters, our equity compensation plans, and our Change in Control Severance Pay Plan. A summary of each of our contractual severance arrangements is provided below.

Employment Agreements. We have entered into employment agreements with Dr. Francois Nader, our Chief Executive Officer and President and Dr. Roger Garceau, our Chief Medical Officer. We also entered into an employment agreement with our former Chief Executive Officer and President, Dr. Anthony Coles. Dr. Coles' agreement terminated in March 2008 upon his separation from the Company. A summary of the type of severance benefits provided under each of these employment agreements is provided on pages 37 through 39 of this Proxy Statement under the caption "Employment Agreements."

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Employment Offer Letters. We provide severance benefits to our other named executive officers as part of each executive's employment offer letter on a case-by-case basis. In light of the volatility of our business, we offered severance benefits through employment offer letters to Mr. Beshar, Mr. Rackear, Mr. O'Callaghan and Dr. Harris.

Mr. Beshar and Mr. Rackear. Our employment offer letters to Mr. Beshar and Mr. Rackear provides each executive with the following severance following (i) a termination without cause (as defined in the letter) by the Company, or (ii) a termination by the executive for good reason (as defined in the letter), in each case where a change in control of the Company has not occurred:

•: Severance pay equal to the executive's base salary at the time of termination for 18 months; and
•: Reimbursement for the total premium cost for medical and dental benefits under COBRA for a period of 18 months or until the executive secures other benefits, whichever occurs first.

In 2008, Mr. Beshar's and Mr. Rackear's employment offer letters were amended to ensure compliance with Section 409A of the Internal Revenue Code of 1986, as amended, or to qualify for an exemption thereunder.

Mr. O'Callaghan and Dr. Harris. Our employment offer letters to Mr. O'Callaghan and Dr. Harris provided each executive with the following severance benefits following a termination without cause (as defined in the letters) by the Company where a change in control of the Company had not occurred:

•: Severance pay equal to the executive's base salary at the time of termination for 18 months; and
•: Reimbursement for the total premium cost for medical and dental benefits under COBRA for a period of 18 months or until the executive secures other benefits, whichever occurs first.

In May 2008, Mr. O'Callaghan was terminated without cause and received the foregoing benefits under his employment offer letter. Dr. Harris' separation from the Company was such that he did not receive the express benefits under his employment offer letter. Instead, the Company and Dr. Harris agreed to the following severance arrangement upon Dr. Harris' separation from the Company: (i) severance in the amount of $150,153 for the period of December 11, 2008 through May 31, 2009, and (ii) a cash payment of $4,199, consisting of $3,999 in costs related to health insurance and $200 for fitness reimbursement.

Change in Control Severance Pay Plan. We have adopted a Change in Control Severance Pay Plan that provides severance benefits to named executive officers whose employment is terminated following a change in control of NPS. Under this plan, if at any time within 24 months following a change in control of NPS, the executive terminates his or her employment with the Company for good reason, such as a material reduction in the executive's title, authority, base pay, or relocation of the executive's job location or any other event which materially alters the executive's job prospects within the Company, or if NPS terminates the executive's employment for other than cause, death or permanent disability, the executive is entitled to receive the following severance benefits:

•: Severance pay in an amount equal to the sum of the executive's annual base salary and target short term incentive, divided by 12 and multiplied by the severance period. The severance period for the CEO is 24 months and is 18 months for all other named executive officers;
•: Reimbursement for the total premium cost for medical and dental benefits under COBRA for a period of up to 18 months or until such executive secures other benefits, whichever occurs first; and
•: Accelerated vesting and an extended exercise period for all vested options for the longer of the executive's severance period and such other period as the executive may be entitled under any Company equity plan or award agreement.

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A "Change-in-Control" under the plan includes: (i) a dissolution, liquation, or sale of all or substantially all of the assets of the Company, (ii) a merger or consolidation in which the Company is not the surviving entity, (iii) a reverse merger in which the Company is the surviving entity but the shares of the Company's common stock outstanding prior to the merger are converted by virtue of the merger into other property, (iv) an event such as a merger or acquisition where the Company is the surviving entity, but other elements of a change in control are present, (v) any other capital reorganization in which more than 50% of the shares of the Company entitled to vote are exchanged, or (vi) a transaction which the Board determines in its sole discretion constitutes a change in control.

In November 2008, the Company amended the Change-in-Control Severance Pay Plan to add a modified economic cut-back provision. Under this provision, the severance benefits paid to a participant under the plan may be reduced by the Company under certain circumstances if necessary to avoid the excise tax under Section 4999 of the Internal Revenue Code of 1986.

Paid Time Off Payment. Under each termination of employment scenario described above, each named executive officer would be entitled to a payment for his accrued but unused paid time off days in accordance with Company policy. Under our policy, an executive or employee whose employment is terminated prior to the first anniversary of employment is not paid for accrued but unused paid time off days. After the first anniversary of employment, executives and employees are paid a maximum of 160 hours of accrued but unused paid time off days.

Retirement Plan. Our matching contribution to our executives' and employees' 401(k) retirement plan vest based on a two year vesting schedule. As of December 31, 2008, our matching contributions to Dr. Nader were fully-vested and our contributions to Mr. Beshar and Mr. Rackear were partially vested. We did not make contributions on behalf of Dr. Garceau in 2008. Because the Company does not enhance the benefits payable under its retirement plans if the employment of one of the named executive officers terminates, we do not report any amount in respect of these plans in the table below.

Equity Plan Change in Control Provisions and Retirement Provisions. Each of our equity plans under which equity awards have been granted to our named executive officers and employees provides for the immediate acceleration of vesting for outstanding equity awards held by the executive or employee at the time of a significant corporate transaction involving a change in control of NPS. In addition, such plans provide for an extension of the option exercise period until the later of 24 months from the date of the corporate transaction or the time specified in the officer's or employee's option agreement with NPS, provided that no option can be exercised after the expiration of its term. Each of our equity plans also provides for accelerated vesting of all stock options that would vest within 2 years of the date of the retirement of the executive or employee and allows the executive or employee to exercise vested options for the remaining term of such options. None of our named executive officers is currently eligible for retirement as of December 31, 2008.

For the purposes of our equity compensation plans, a "corporate transaction involving a change in control" includes (a) a merger or consolidation in which the Company is not the surviving corporation, (b) a merger in which the Company is the surviving corporation but in which our common stock is converted to other property or securities, (c) a corporate event where the Company is technically the surviving entity, but where other elements of a change in control are present, such as a change in the management or directors of the Company, (d) a transaction designated as such by the board of directors and (e) any capital reorganization in which more than 50% of the Company's common stock is exchanged.

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Company Separation Agreements

Under each termination of employment scenario described above, other than for equity awards, each named executive officer would be required to enter into our standard separation agreement in order to receive the benefits described under the particular scenario. The agreement contains customary provisions with respect to separation and, among other things, would require each named executive officer to continue to abide by the covenants made by the executive in the executive's Invention Assignment, Non-Disclosure and Non-Competition Agreement and would also require the executive to waive and release all claims against the Company which arise out of the executive's employment with the Company. Our separation agreement also requires the Company and the executive to continue to abide by the indemnity obligations contained in the Indemnity Agreement signed by the Company and the executive upon commencement of the executive's employment.

Payments and Benefits (a)

Francois Nader
	Severance Pay		—	—	950,000		1,520,000
	Medical Benefits Continuation		—	—	19,069	(1)	19,069	(1)
	Payment for Accrued /Unused Paid Time Off		25,732	25,732	21,021		21,021
	RSU Acceleration		—	—	250,179		250,179
	Stock Option Acceleration(2)		—	—	759,001		759,001
	Tax Gross Up		—	—	—		—
		Total	25,732	25,732	1,999,270		2,569,270
Luke Beshar
	Severance Pay		—	—	506,344		683,565
	Medical Benefits Continuation		—	—	27,142	(1)	27,142	(1)
	Payment for Accrued /Unused Paid Time Off		19,361	19,361	19,361		19,361
	Stock Option Acceleration(2)		—	—	—		331,915
		Total	19,361	19,361	552,847		1,061,983
Andrew Rackear
	Severance Pay		—	—	432,518		583,899
	Medical Benefits Continuation		—	—	27,218	(1)	27,218	(1)
	Payment for Accrued /Unused Paid Time Off		15,097	15,097	15,097		15,097
	Stock Option Acceleration(2)		—	—	—		206,624
		Total	15,097	15,097	474,315		832,838
Roger Garceau			—	—
	Severance Pay		—	—	487,500		658,500
	Medical Benefits Continuation		—	—	27,218	(1)	27,218	(1)
	Payment for Accrued /Unused Paid Time Off		—	—	—		—
	Stock Option Acceleration(2)		—	—	—		522,444
		Total	—	—	514,718		1,208,162
N. Anthony Coles(3)
	Severance Pay		—	—	1,000,000		—
	Medical Benefits Continuation		—	—	—		—
	Payment for Accrued /Unused Paid Time Off		—	—	30,966		—
	Stock Option, SAR and RSU Acceleration(2)		—	—	—		—
	Tax Gross Up		—	—	—		—
		Total	—	—	1,030,966		—
Brian O'Callaghan(3)
	Severance Pay		—	—	492,984		—
	Medical Benefits Continuation		—	—	—		—
	Payment for Accrued /Unused Paid Time Off		—	—	—		—
	Stock Option Acceleration		—	—	—		—
		Total	—	—	492,984		—
Alan G. Harris(3)			—	—
	Severance Pay		—	—	154,352		—
	Medical Benefits Continuation		—	—	—		—
	Payment for Accrued /Unused Paid Time Off		—	—	—		—
	Stock Option Acceleration		—	—	—		—
		Total	—	—	154,352		—

(1): The amount shown assumes that the Company pays continued medical and dental benefits for the full 18 months.
(2): Reflects the dollar amount recognized for financial statement reporting purposes in accordance with FAS 123(R).
(3): The financial information included in the table represents the actual severance benefits paid to the executive upon separation from the Company in 2008.

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EQUITY COMPENSATION PLAN INFORMATION

The following table sets forth information regarding outstanding awards and shares reserved for future issuance under our equity compensation plans as of December 31, 2008.

Plan Category		Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted-average exercise price of outstanding options, warrants and rights			Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))

		(a)		(b)			(c)
Equity compensation plans approved by security holders(1)			5,017,396	$	10.79	(2)		2,240,541
Equity compensation plans not approved by security holders			None		N/A			None

	Total		5,017,396	$	10.79	(2)		2,240,541

(1): Primarily consists of shares of common stock issuable under our 2005 Omnibus Incentive Plan and 1998 Stock Option Plan. Shares available for issuance under the 2005 Omnibus Incentive Plan may become subject to stock options, stock appreciate rights, restricted stock, restricted stock units, performance shares, performance units, or other equity awards, with such terms and conditions, performance requirements, restrictions, forfeiture provisions, contingencies and other limitations as determined by the Compensation Committee.
(2): The weighted-average exercise price does not take into account shares of common stock issuable upon vesting of outstanding restricted stock or restricted stock units, which have no exercise price.

DIRECTOR COMPENSATION

2008 Director Compensation

In 2008, the Compensation Committee retained Radford to assist it in its review of director compensation practices, including the competitiveness of pay levels, compensation design issues, market trends, and technical considerations. The Compensation Committee evaluates Radford's performance and has the final authority to engage and terminate Radford. For 2008, the Compensation Committee did not recommend, and the Board did not implement, any changes to our non-employee director compensation program.

Directors who are also employees of the Company do not receive any compensation for their services on the Board.

•: Non-employee directors of NPS were compensated for their services as directors through the payment of annual retainer fees, meeting fees and non-retainer equity awards granted under our 2005 Omnibus Incentive Plan.
•: All of the annual retainer fees, nonretainer awards, and meeting fees were paid in equity awards of deferred stock units, which were made under our 2005 Omnibus Incentive Plan.

We also reimburse non-employee directors for out-of-pocket expenses incurred in connection with attendance at board and committee meetings.

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A detailed presentation of the fees a non-employee director may earn for service on the Board follows:

TYPE OF FEE	AMOUNT

Annual Retainer	$	19,000
Chair of the Board Additional Annual Retainer	$	10,000
Committee Chair Additional Annual Retainer	$	10,000
Board Meeting (per meeting attended in person)	$	1,500
Board Meeting (per meeting attended telephonically)	$	750
Audit Committee Meeting (per meeting attended in person)	$	2,000
Audit Committee Meeting (per meeting attended telephonically)	$	1,000
Non-audit Committee Meeting (per meeting attended in Person)	$	1,000
Non-audit Committee Meeting (per meeting attended telephonically)	$	500
Committee Meeting (attended by Chair in person)	$	1,000
Committee Meeting (attended by Chair telephonically)	$	500
Non-Retainer Annual Equity Award Value	$	62,500

Annual retainers are paid following our Annual Meeting of Stockholders, customarily held in May of each year. Annual nonretainer equity awards are made in four (4) equal quarterly installments. Meeting fees earned during the calendar quarter are payable in lump sum in the immediately succeeding calendar quarter. The shares of common stock represented by the deferred stock units will be distributed to directors no earlier than: (a) a director's separation from service from the Company, (b) a director's disability; (c) a director's death; or (d) the sale of substantially all the assets of NPS.

2009 Director Compensation

For 2009, the Compensation Committee, after considering Radford's recommendations, modified certain elements of director compensation to bring these elements more in-line with market practices. Effective January 1, 2009, the following elements of director compensation were modified:

•: The annual retainer fee was increased to $30,000 per director;
•: The Chair of the Board additional annual retainer was increased to $30,000;
•: The annual retainer will be paid as follows: 50% deferred stock units and 50% cash. A director may, however, elect to receive 100% of the annual retainer in deferred stock units; and
•: The fees for board and committee meetings will be paid in cash.

All other elements of director compensation remain unchanged from 2008.

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2008 DIRECTOR COMPENSATION TABLE

Name (a)

Michael W. Bonney	—	130,000	—	—	—	—	130,000
James G. Groninger	—	101,500	—	—	—	—	101,500
Donald E. Kuhla	—	121,000	—	—	—	—	121,000
Rachel R. Selisker	—	130,000	—	—	—	—	130,000
Calvin R. Stiller(3)	750	43,000	—	—	—	—	43,750
Peter G. Tombros	—	136,750	—	—	—	—	136,750

(1): The amounts in this column do not reflect compensation actually received by our non-employee directors nor do they reflect the actual value that will be recognized by the non-employee directors. Instead, the amounts reflect the dollar amount recognized for financial statement reporting purposes for the fiscal year ended December 31, 2008, in accordance with FAS 123(R), for the fair value of awards of deferred stock units to non-employee directors. In accordance with FAS 123(R), the fair value of awards of deferred stock units to non-employee directors is the closing price of our common stock on the date of grant.
(2): We did not grant stock options to non-employee directors during 2008. The amounts in column (d) reflect the dollar amount recognized for financial statement reporting purposes for the fiscal year ended December 31, 2008, in accordance with FAS 123(R), for stock options granted to non-employee directors prior to 2008. For information regarding the assumptions used in the calculation of these amounts for grants made in 2006, 2007 and 2008, see footnote 13 to our audited financial statements for the fiscal year ended December 31, 2008 included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 16, 2009. For information regarding the assumptions made in calculating the amounts reflected in this column for grants made prior to 2006, see footnote 13 to our consolidated financial statements for the respective fiscal years included in our Annual Report on Form 10-K for those fiscal years. Our non-employee directors have the following options outstanding as of December 31, 2008: Mr. Groninger (12,000), Dr. Kuhla (18,000), Dr. Stiller (31,296) and Mr. Tombros (18,000).
(3): Dr. Stiller resigned from the Board in May 2008.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding the ownership of our common stock as of February 27, 2009, except as otherwise indicated, by:

(a): all those known by us to be beneficial owners of more than five percent of our outstanding common stock;
(b): each current director and nominee for director;
(c): each of the named executive officers referenced in the Summary Compensation Table; and
(d): all of our named executive officers and directors as a group.

	Beneficial Ownership

Name and Address of Beneficial Owner	Number of Shares		Percent of Total(1)
Beneficial Owners of More Than 5%
OrbiMed Advisors LLC(2) 767 Third Avenue, 30^th Floor New York, NY 10017		4,631,500		9.82	%
Visium Asset Management, LP(3) 950 Third Avenue New York, NY 10022		4,337,054		9.13	%
Renaissance Technologies, LLC(4) 800 Third Avenue, 33^rd Floor New York, NY 10022		3,589,100		7.56	%
Barclays Global Investors, NA(5) 400 Howard Street San Francisco, CA 94105		3,400,530		7.16	%
GLG Partners L.P.(6) 390 Park Avenue, 20th Floor New York, New York 10022		3,122,688		6.57	%
Morgan Stanley, LLC(7) 1585 Broadway New York, NY 10036		2,449,773		5.16	%
Directors and Named Executive Officers
Francois Nader(8)		330,695		*
Luke Beshar(8)		75,999		*
Andrew Rackear(8)		46,732		*
Roger Garceau		0		*
N. Anthony Coles(9)		872,924		1.81
Brian O'Callaghan(10)		0		*
Alan Harris(10)		0		*
Donald E. Kuhla(11)		151,405		*
Peter G. Tombros(11)		150,868		*
Calvin R. Stiller(12)		84,788		*
James G. Groninger(13)		92,704		*
Michael W. Bonney(11)		101,759		*
Rachel R. Selisker(11)		100,015		*
Directors and Officers as a group (9 persons)		1,050,177		2.27	%

*: Means less than 1%.

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The above table is based upon information supplied by officers, directors, and principal stockholders and Schedules 13D and 13G filed with the Commission. Where information is based on Schedules 13D and 13G, the number of shares owned is as of the date for which information was provided on such schedules. Beneficial ownership is determined in accordance with SEC rules and generally includes shares over which a person has voting or investment power. Shares subject to stock options that are currently exercisable or exercisable within 60 days of February 27, 2009 and shares represented by deferred stock units are deemed to be outstanding and to be beneficially owned by the person holding such awards or securities for the purpose of computing the percentage ownership of such person.

Except as set forth herein, the address of the persons set forth above is 550 Hills Drive, 3^rd Floor, Bedminster, New Jersey 07921.

(1): The number of shares of common stock issued and outstanding on February 27, 2009 was 45,500,291 shares. The calculation of percentage ownership for each listed beneficial owner is based upon the number of shares of common stock issued and outstanding at February 27, 2009, plus any shares of common stock subject to deferred stock units outstanding at February 27, 2009 and any options held by such person at February 27, 2009, and exercisable within 60 days thereafter. The persons and entities named in the table have sole voting and investment power with respect to all shares shown as beneficially owned by them, except as otherwise indicated.
(2): Based on information contained in the Schedule 13G/A filed by OrbiMed Advisors LLC on February 13, 2009. OrbiMed Advisors LLC is deemed to have shared voting and dispositive power over 3,184,300 of these shares. OrbiMed Capital LLC is deemed to have shared voting and dispositive power over 1,447,200 of these shares. Samuel D. Isaly, is deemed to have shared voting and dispositive power over 4,631,500 of these shares. 3,149,500 of these shares are held on behalf of Eaton Vance Worldwide Health Sciences, 47,200 of these shares are held on behalf of Eaton Vance Emerald Worldwide Health Sciences, 34,800 of these shares are held on behalf of Eaton Vance Variable Trust and 1,400,000 of these shares are held on behalf of Finsbury Worldwide Pharmaceutical Trust.
(3): Based on information contained in the Schedule 13G/A filed by Visium Asset Management, LP on February 13, 2009. Each of Visium Asset Management, LP and Jacob Gottlieb may be deemed to have sole voting and dispositive power over all of these shares.
(4): Based on information contained in the Schedule 13G/A filed by Renaissance Technologies, LLC on February 13, 2009. Each of Renaissance Technologies, LLC and James H. Simons is deemed to have sold voting and dispositive power over all of these shares.
(5): Based on information contained in the Schedule 13G filed by Barclays Global Investors, NA on February 5, 2009. Barclays Global Investors, NA is deemed to have sole voting power over 1,621,160 of these shares and sole dispositive power over 1,838,258 of these shares. Barclays Global Fund Advisors is deemed to have sole voting and dispositive power over 1,562,272 of these shares.
(6): Based on information contained in the Schedule 13G/A filed by GLG Partners L.P. on February 9, 2009. GLG North American Opportunity Fund is deemed to have shared voting and dispositive power over 2,316,497 of these shares. Each of GLG Partners L.P., GLG Partners Limited and GLG Partners, Inc. is deemed to have shared voting and dispositive power over 3,122,688 of these shares.
(7): Based on information contained in the Schedule 13G/A filed by Morgan Stanley on February 17, 2009. Morgan Stanley is deemed to have sole voting power over 2,442,895 of these shares, shared voting power over 6,878 of these shares and sole dispositive power over 2,449,773 of these shares. Morgan Stanley Capital Services Inc. may be deemed to have sole voting and dispositive power over 2,375,390 of these shares.

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(8): These figures include shares that are issuable pursuant to options, which will become exercisable within 60 days of February 27, 2009 as follows: 205,801 for Dr. Nader, 75,999 for Mr. Beshar, and 46,732 for Mr. Rackear.
(9): These figures include 652,858 shares that are issuable pursuant to options that are presently exercisable. Dr. Coles ceased to be an executive officer in May 2008.
(10): Mr. O'Callaghan ceased to be an executive officer in May 2008 and Dr. Harris ceased to be an executive officer in December 2008.
(11): These figures include (i) shares that are issuable pursuant to options, which are or will become exercisable within 60 days of February 27, 2009 as follows: 18,000 for Dr. Kuhla, and 18,000 for Mr. Tombros; and (ii) shares that are issuable pursuant to deferred stock units outstanding at February 27, 2009 as follows: 92,605 for Dr. Kuhla, 106,368 for Mr. Tombros, 100,015 for Ms. Selisker and 97,759 for Mr. Bonney.
(12): Dr. Stiller resigned from the Board in May 2008.
(13): Includes 1,000 shares held by Mr. Groninger's spouse, of which he disclaims beneficial ownership. Also includes 12,000 shares that are issuable pursuant to options, which are or will become exercisable within 60 days of February 27, 2009 and 79,704 deferred stock units outstanding at February 27, 2009.

Rule 10b5-1 Plans

We have adopted a policy and implemented procedures that would allow directors, officers and employees to effect sales of our securities pursuant to Rule 10b5-1 of the Exchange Act. Under this rule, our directors, officers and employees may adopt a prearranged written trading plan that provides for the purchase or sale of our securities on specified conditions. A written trading plan meeting the requirements of Rule 10b5-1 has been approved by us and may be adopted by any of our officers, directors or employees from time to time.

Compliance with Section 16(a) of the Exchange Act

Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who own more than 10% of our common stock, to file with the Commission initial reports of ownership and changes in ownership of our common stock. Officers, directors, and greater than 10% stockholders are required by the Commission to furnish us with copies of all Section 16(a) forms they file.

To our knowledge, based solely on a review of the copies of such reports furnished to us and written representations that no other reports were required, during the fiscal year ended December 31, 2008, we believe that all of these filing requirements were timely satisfied by our directors, officers and 10% holders, except that two Form 4/A's were filed on behalf of Dr. Nader to report a partial amount of stock options previously granted to Dr. Nader that had been inadvertently omitted from the initial Form 4s that were timely filed to report the grant.

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REVIEW AND APPROVAL OF TRANSACTIONS WITH RELATED PERSONS

We maintain policies and procedures relating to the review, approval or ratification of transactions in which NPS is a participant and in which any of our directors, executive officers, 5% stockholders or their family members have a direct or indirect material interest. We refer to these individuals and entities in this Proxy Statement as related persons. Our Code of Business Conduct and Ethics, which is available on our website atwww.npsp.com, prohibits our directors, executive officers, and employees and in some cases, their family members, from engaging in specified activities without prior written consent from the General Counsel. These activities typically relate to situations where an NPS employee, and in some cases, an immediate family member, may have significant financial or business interests in another company competing with or doing business with NPS, or who stands to benefit in some way from such a relationship or activity. Members of our Board of Directors are also required to disclose potential conflicts of interest to us for evaluation.

Each year, we require our directors and executive officers to complete a questionnaire, among other things, to identify any transactions or potential transactions with us in which a director or an executive officer or one of their family members or associated entities has an interest. We also require that directors and executive officers notify us of any changes during the course of the year to the information provided in the annual questionnaire as soon as possible. In addition, the Board annually determines the independence of directors based on a review by the Board and the Nominating and Governance Committee as described under the section above captioned "Independence of Board". The Audit Committee of our Board of Directors, pursuant to its charter, has responsibility for reviewing and approving in advance any related person transactions as defined under Securities and Exchange Commission regulations.

Other than compensation arrangements and other arrangements described under the sections above captioned "Executive Compensation" and "Director Compensation", during fiscal year 2008, there was not, nor is there currently proposed, any transaction or series of similar transactions to which we are or will be a party and that are required to be disclosed in this Proxy Statement under applicable SEC regulations.

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OTHER MATTERS

We will provide to each stockholder, without charge and upon written request, a copy of our Annual Report on Form 10-K and any exhibit thereto. Any such written request should be directed to the office of our General Counsel at 550 Hills Drive, 3^rd Floor, Bedminster, New Jersey 07921.

The Board of Directors does not know of any matters that will be presented for consideration at the Annual Meeting other than those set forth herein and in the notice accompanying this Proxy Statement. If any other matters are properly brought before the Annual Meeting, it is the intention of the persons named in the accompanying proxy to vote on such matters in accordance with their best judgment.


		By Order of the Board of Directors

		Andrew Rackear Senior Vice President, General Counsel and Secretary

April 13, 2009

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ANNEX A

2005 Omnibus Incentive Plan
NPS Pharmaceuticals, Inc.
As amended, subject to shareholder approval

Article 1. Establishment, Purpose, and Duration

1.1 Establishment. NPS Pharmaceuticals, Inc., a Delaware corporation (hereinafter referred to as the "Company"), establishes an incentive compensation plan to be known as the NPS Pharmaceuticals, Inc. 2005 Omnibus Incentive Plan (hereinafter referred to as the "Plan"), as set forth in this document.

This Plan permits the grant of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units, Cash-Based Awards, and Other Stock-Based Awards.

This Plan shall become effective upon stockholder approval (the "Effective Date") and shall remain in effect as provided in Section 1.3 hereof.

1.2 Purpose of this Plan. This Plan has been established by the Company to provide a means by which Employees, Directors, and Third Party Service Providers of the Company and its Subsidiaries and Affiliates may be given the opportunity to benefit from increases in the value of Shares through the granting of Awards under this Plan. The Company seeks to (a) retain the services of present Employees, Directors, and Third Party Service Providers; (b) secure and retain the services of new Employees, Directors, and Third Party Service Providers; and, (c) provide incentives for such persons to exert maximum efforts for the success of the Company and thereby promote the long-term interests of the Company, including the growth in value of the Company's equity and enhancement of long-term stockholder return.

1.3 Duration of this Plan. Unless sooner terminated as provided herein, this Plan shall terminate ten (10) years from the Effective Date. After this Plan is terminated, no Awards may be granted but Awards previously granted shall remain outstanding in accordance with their applicable terms and conditions and this Plan's terms and conditions. Notwithstanding the foregoing, no Incentive Stock Options may be granted more than ten (10) years after the earlier of (a) adoption of this Plan by the Board, or (b) the Effective Date.

Article 2. Definitions

Whenever used in this Plan, the following terms shall have the meanings set forth below, and when the meaning is intended, the initial letter of the word shall be capitalized.

2.1 "Affiliate" shall mean any corporation or other entity (including, but not limited to, a partnership or a limited liability company), that is affiliated with the Company through stock or equity ownership or otherwise, and is designated as an Affiliate for purposes of this Plan by the Committee.

2.2 "Annual Award Limit" or"Annual Award Limits" have the meaning set forth in Section 4.3.

2.3 "Award" means, individually or collectively, a grant under this Plan of Nonqualified Stock Options, Incentive Stock Options, SARs, Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units, Cash-Based Awards, or Other Stock-Based Awards, in each case subject to the terms of this Plan.

2.4 "Award Agreement" means either (i) a written agreement entered into by the Company and a Participant setting forth the terms and provisions applicable to an Award granted under this Plan, or (ii) a written or electronic statement issued by the Company to a Participant describing the terms and provisions of such Award, including any amendment or modification thereof. The Committee may

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provide for the use of electronic, internet or other non-paper Award Agreements, and the use of electronic, internet or other non-paper means for the acceptance thereof and actions thereunder by a Participant.

2.5 "Beneficial Owner" or"Beneficial Ownership" shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Exchange Act.

2.6 "Board" or"Board of Directors" means the Board of Directors of the Company.

2.7 "Cash-Based Award" means an Award, denominated in cash, granted to a Participant as described in Article 10.

2.8 "Code" means the U.S. Internal Revenue Code of 1986, as amended from time to time. For purposes of this Plan, references to sections of the Code shall be deemed to include references to any applicable regulations thereunder and any successor or similar provision.

2.9 "Committee" means the Compensation Committee of the Board or a subcommittee thereof, or any other committee designated by the Board to administer this Plan. If the Committee does not exist or cannot function for any reason, the Board may take any action under the Plan that would otherwise be the responsibility of the Committee.

2.10 "Company" means NPS Pharmaceuticals, Inc., a Delaware corporation, and any successor thereto as provided in Article 19 herein.

2.11 "Covered Employee" means any salaried Employee who is or may become a "Covered Employee," as defined in Code Section 162(m), and who is designated, either as an individual Employee or class of Employees, by the Committee within the shorter of (i) ninety (90) days after the beginning of the Performance Period, or (ii) twenty-five percent (25%) of the Performance Period has elapsed, as a "Covered Employee" under this Plan for such applicable Performance Period.

2.12 "Director" means any individual who is a member of the Board of Directors of the Company.

2.13 "Effective Date" has the meaning set forth in Section 1.1.

2.14 "Employee" means any person designated as an employee of the Company, its Affiliates, and/or its Subsidiaries on the payroll records thereof. An Employee shall not include any individual during any period he or she is classified or treated by the Company, Affiliate, and/or Subsidiary as an independent contractor, a consultant, or any employee of an employment, consulting, or temporary agency or any other entity other than the Company, Affiliate, and/or Subsidiary, without regard to whether such individual is subsequently determined to have been, or is subsequently retroactively reclassified as a common-law employee of the Company, Affiliate, and/or Subsidiary during such period.

2.15 "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, or any successor act thereto.

2.16 "Fair Market Value" or"FMV" means a price that is based on the opening, closing, actual, high, low, or average selling prices of a Share reported on the National Market System of the National Association of Securities Dealers, Inc. Automated Quotation System ("Nasdaq") or other established stock exchange (or exchanges) on the applicable date, the preceding trading day, the next succeeding trading day, or an average of trading days, as determined by the Committee in its discretion. Unless the Committee determines otherwise, Fair Market Value shall be deemed to be equal to the closing price of a Share on the most recent date on which Shares were publicly traded. In the event Shares are not publicly traded at the time a determination of their value is required to be made hereunder, the determination of their Fair Market Value shall be made by the Committee in such manner as it deems appropriate. Such definition(s) of FMV shall be specified in each Award Agreement and may differ

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depending on whether FMV is in reference to the grant, exercise, vesting, settlement, or payout of an Award.

2.17 "Freestanding SAR" means an SAR that is granted independently of any Options, as described in Article 7.

2.18 "Full Value Award" means an Award other than in the form of an ISO, NQSO, or SAR, and which is settled by the issuance of Shares.

2.19 "Grant Price" means the price established at the time of grant of a SAR pursuant to Article 7, used to determine whether there is any payment due upon exercise of the SAR.

2.20 "Incentive Stock Option" or"ISO" means an Option to purchase Shares granted under Article 6 to an Employee and that is designated as an Incentive Stock Option and that is intended to meet the requirements of Code Section 422, or any successor provision.

2.21 "Insider" shall mean an individual who is, on the relevant date, an officer, or Director of the Company, or a more than ten percent (10%) Beneficial Owner of any class of the Company's equity securities that is registered pursuant to Section 12 of the Exchange Act, as determined by the Board in accordance with Section 16 of the Exchange Act.

2.22 "Nonemployee Director" means a Director who is not an Employee.

2.23 "Nonemployee Director Award" means any NQSO, SAR, or Full Value Award granted, whether singly, in combination, or in tandem, to a Participant who is a Nonemployee Director pursuant to such applicable terms, conditions, and limitations as the Board or Committee may establish in accordance with this Plan.

2.24 "Nonqualified Stock Option" or"NQSO" means an Option that is not intended to meet the requirements of Code Section 422, or that otherwise does not meet such requirements.

2.25 "Option" means an Incentive Stock Option or a Nonqualified Stock Option, as described in Article 6.

2.26 "Option Price" means the price at which a Share may be purchased by a Participant pursuant to an Option.

2.27 "Other Stock-Based Award" means an equity-based or equity-related Award not otherwise described by the terms of this Plan, granted pursuant to Article 10.

2.28 "Participant" means any eligible individual as set forth in Article 5 to whom an Award is granted.

2.29 "Performance-Based Compensation" means compensation under an Award that is intended to satisfy the requirements of Code Section 162(m) for certain performance-based compensation paid to Covered Employees. Notwithstanding the foregoing, nothing in this Plan shall be construed to mean that an Award which does not satisfy the requirements for performance-based compensation under Code Section 162(m) does not constitute performance-based compensation for other purposes, including Code Section 409A.

2.30 "Performance Measures" means measures as described in Article 11 on which the performance goals are based and which are approved by the Company's stockholders pursuant to this Plan in order to qualify Awards as Performance-Based Compensation.

2.31 "Performance Period" means the period of time during which the performance goals must be met in order to determine the degree of payout and/or vesting with respect to an Award.

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2.32 "Performance Share" means an Award under Article 9 herein and subject to the terms of this Plan, denominated in Shares, the value of which at the time it is payable is determined as a function of the extent to which corresponding performance criteria have been achieved.

2.33 "Performance Unit" means an Award under Article 9 herein and subject to the terms of this Plan, denominated in units, the value of which at the time it is payable is determined as a function of the extent to which corresponding performance criteria have been achieved.

2.34 "Period of Restriction" means the period when Restricted Stock or Restricted Stock Units are subject to a substantial risk of forfeiture (based on the passage of time, the achievement of performance goals, or upon the occurrence of other events as determined by the Committee, in its discretion), as provided in Article 8.

2.35 "Person" shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a "group" as defined in Section 13(d) thereof.

2.36 "Plan" means the NPS Pharmaceuticals, Inc. 2005 Omnibus Incentive Plan.

2.37 "Plan Year" means the Company's fiscal year.

2.38 "Restricted Stock" means an Award granted to a Participant pursuant to Article 8.

2.39 "Restricted Stock Unit" means an Award granted to a Participant pursuant to Article 8, except no Shares are actually awarded to the Participant on the date of grant.

2.40 "Share" means a share of common stock of the Company, par value of $.001 per share.

2.41 "Stock Appreciation Right" or"SAR" means an Award, designated as a SAR, pursuant to the terms of Article 7 herein.

2.42 "Subsidiary" means any corporation or other entity, whether domestic or foreign, in which the Company has or obtains, directly or indirectly, a proprietary interest of more than fifty percent (50%) by reason of stock ownership or otherwise.

2.43 "Tandem SAR" means an SAR that is granted in connection with a related Option pursuant to Article 7 herein, the exercise of which shall require forfeiture of the right to purchase a Share under the related Option (and when a Share is purchased under the Option, the Tandem SAR shall similarly be canceled).

2.44 "Third Party Service Provider" means any consultant, agent, advisor, or independent contractor who renders services to the Company, a Subsidiary, or an Affiliate that (a) are not in connection with the offer and sale of the Company's securities in a capital raising transaction, and (b) do not directly or indirectly promote or maintain a market for the Company's securities.

Article 3. Administration

3.1 General. The Plan shall be administered by or under the direction of the Board unless and until the Board delegates administration to a Committee. The Board may employ attorneys, consultants, accountants, agents, and other individuals, any of whom may be an Employee, and the Board, the Company, and its officers and Directors shall be entitled to rely upon the advice, opinions, or valuations of any such individuals. All actions taken and all interpretations and determinations made by the Board shall be final and binding upon the Participants, the Company, and all other interested individuals.

3.2 Authority of the Board. The Board shall have full and exclusive discretionary power to interpret the terms and the intent of this Plan and any Award Agreement or other agreement or document ancillary to or in connection with this Plan, to determine eligibility for Awards and to adopt such rules, regulations, forms, instruments, and guidelines for administering this Plan as the Board may

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deem necessary or proper. Such authority shall include, but not be limited to, selecting Award recipients, establishing all Award terms and conditions, including the terms and conditions set forth in Award Agreements, granting Awards as an alternative to or as the form of payment for grants or rights earned or due under compensation plans or arrangements of the Company, construing any ambiguous provision of the Plan or any Award Agreement, and, subject to Article 16, adopting modifications and amendments to this Plan or any Award Agreement, including without limitation, any that are necessary to comply with the laws of the countries and other jurisdictions in which the Company, its Affiliates, and/or its Subsidiaries operate.

3.3 Delegation.

(a) The Board may delegate administration of the Plan to a Board committee composed of not fewer than two members (the "Committee"). All members of the Committee shall be Nonemployee Directors, to the extent necessary to comply with the applicable provisions of Rule 16b-3, Section 162(m) and the listing requirements of the Nasdaq Stock Market. If administration is delegated to a Committee, the Committee shall have, in connection with the administration of the Plan, the powers theretofore possessed by the Board (and references in this Plan to the Board shall in such event, be to the Committee), subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. The Board may abolish the Committee at any time and revest in the Board the administration of the Plan.

(b) The Board may delegate to one or more of its members or to one or more officers of the Company, and/or its Subsidiaries and Affiliates or to one or more agents or advisors such administrative duties or powers as it may deem advisable, and the Board or any individuals to whom it has delegated duties or powers as aforesaid may employ one or more individuals to render advice with respect to any responsibility the Board or such individuals may have under this Plan. The Board may, by resolution, authorize one or more officers of the Company to do one or both of the following on the same basis as can the Board: (a) designate Employees to be recipients of Awards; and (b) determine the size of any such Awards; provided, however, (i) the Board shall not delegate such responsibilities to any such officer for Awards granted to an Employee who is considered an Insider; (ii) the resolution providing such authorization sets forth the total number of Awards such officer(s) may grant; and (iii) the officer(s) shall report periodically to the Board regarding the nature and scope of the Awards granted pursuant to the authority delegated.

Article 4. Shares Subject to this Plan and Maximum Awards

4.1 Number of Shares Available for Awards.

(a) Subject to adjustment as provided in Section 4.4 herein, the maximum number of Shares available for grant to Participants under this Plan shall be four million five hundred thousand (4,500,000) Shares (the "Share Authorization").

(b) The maximum number of Shares of the Share Authorization that may be issued pursuant to ISOs under this Plan shall be four million five hundred thousand (4,500,000) Shares.

4.2 Share Usage. Shares covered by an Award shall only be counted as used to the extent they are actually issued. Any Shares related to Awards which terminate by expiration, forfeiture, cancellation, or otherwise without the issuance of such Shares, are settled in cash in lieu of Shares, or are exchanged with the Board's permission, prior to the issuance of Shares, for Awards not involving Shares, shall be available again for grant under this Plan. Moreover, if the Option Price of any Option granted under this Plan or the tax withholding requirements with respect to any Award granted under this Plan are satisfied by tendering Shares to the Company (by either actual delivery or by attestation), or if an SAR is exercised, only the number of Shares issued, net of the Shares tendered, if any, will be

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deemed delivered for purposes of determining the maximum number of Shares available for delivery under this Plan. The Shares available for issuance under this Plan may be authorized and unissued Shares or treasury Shares.

4.3 Annual Award Limits. Unless and until the Board determines that an Award to a Covered Employee shall not be designed to qualify as Performance-Based Compensation, the following limits (each an "Annual Award Limit" and, collectively, "Annual Award Limits") shall apply to grants of such Awards under this Plan:

(a) Options: The maximum aggregate number of Shares subject to Options granted in any one Plan Year to any one Participant shall be one hundred fifty thousand (150,000) plus the amount of the Participant's unused applicable Annual Award Limit for Options as of the close of the previous Plan Year.

(b) SARs: The maximum number of Shares subject to Stock Appreciation Rights granted in any one Plan Year to any one Participant shall one hundred fifty thousand (150,000) plus the amount of the Participant's unused applicable Annual Award Limit for SARs as of the close of the previous Plan Year.

(c) Restricted Stock or Restricted Stock Units: The maximum aggregate grant with respect to Awards of Restricted Stock or Restricted Stock Units in any one Plan Year to any one Participant shall be eighty thousand (80,000) plus the amount of the Participant's unused applicable Annual Award Limit for Restricted Stock or Restricted Stock Units as of the close of the previous Plan Year.

(d) Performance Units or Performance Shares: The maximum aggregate Award of Performance Units or Performance Shares that a Participant may receive in any one Plan Year shall be eighty thousand (80,000) Shares, or equal to the value of eighty thousand (80,000) Shares determined as of the date of vesting or payout, as applicable plus the amount of the Participant's unused applicable Annual Award Limit for Performance Units or Performance Shares as of the close of the previous Plan Year.

(e) Cash-Based Awards: The maximum aggregate amount awarded or credited with respect to Cash-Based Awards to any one Participant in any one Plan Year may not exceed the value of one million dollars ($1,000,000), plus the amount of the Participant's unused applicable Annual Award Limit as of the close of the previous Plan Year.

(f) Other Stock-Based Awards. The maximum aggregate grant with respect to Other Stock-Based Awards pursuant to Section 10.2 in any one Plan Year to any one Participant shall be eighty thousand (80,000) plus the amount of the Participant's unused applicable Annual Award Limit for Other Stock-Based Awards as of the close of the previous Plan Year.

4.4 Adjustments in Authorized Shares. In the event of any corporate event or transaction (including, but not limited to, a change in the Shares of the Company or the capitalization of the Company) such as a merger, consolidation, reorganization, recapitalization, separation, partial or complete liquidation, stock dividend, stock split, reverse stock split, split up, spin-off, or other distribution of stock or property of the Company, combination of Shares, exchange of Shares, dividend in kind, or other like change in capital structure, number of outstanding Shares or distribution (other than normal cash dividends) to shareholders of the Company, or any similar corporate event or transaction, the Board, in its sole discretion, in order to prevent dilution or enlargement of Participants' rights under this Plan, shall substitute or adjust, as applicable, the number and kind of Shares that may be issued under this Plan or under particular forms of Awards, the number and kind of Shares subject to outstanding Awards, the Option Price or Grant Price applicable to outstanding Awards, the Annual Award Limits, and other value determinations applicable to outstanding Awards. The Board, in its sole discretion, may also make appropriate adjustments in the terms of any Awards under this Plan to

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reflect or related to such changes or distributions and to modify any other terms of outstanding Awards. The determination of the Board as to the foregoing adjustments, if any, shall be conclusive and binding on Participants under this Plan.

Subject to the provisions of Article 16 and notwithstanding anything else herein to the contrary, without affecting the number of Shares reserved or available hereunder, the Board may authorize the issuance or assumption of benefits under this Plan in connection with any merger, consolidation, acquisition of property or stock, or reorganization upon such terms and conditions as it may deem appropriate (including, but not limited to, a conversion of equity awards into Awards under this Plan in a manner consistent with paragraph 53 of FASB Interpretation No. 44), subject to compliance with the rules under Code Sections 422 and 424, as and where applicable.

Article 5. Eligibility and Participation

5.1 Eligibility. Individuals eligible to participate in this Plan include all Employees, Directors, and Third Party Service Providers.

5.2 Actual Participation. Subject to the provisions of this Plan, the Board may, from time to time, select from all eligible individuals, those individuals to whom Awards shall be granted and shall determine, in its sole discretion, the nature of, any and all terms permissible by law, and the amount of each Award.

Article 6. Stock Options

6.1 Grant of Options. Subject to the terms and provisions of this Plan, Options may be granted to Participants in such number, and upon such terms, and at any time and from time to time as shall be determined by the Board, in its sole discretion; provided that ISOs may be granted only to eligible Employees of the Company or of any parent or subsidiary corporation (as permitted under Code Sections 422 and 424). However, an Employee who is employed by an Affiliate and/or Subsidiary and is subject to Code Section 409A, may only be granted Options to the extent the Affiliate and/or Subsidiary is part of the Company's consolidated group for United States federal tax purposes.

6.2 Award Agreement. Each Option grant shall be evidenced by an Award Agreement that shall specify the Option Price, the maximum duration of the Option, the number of Shares to which the Option pertains, the conditions upon which an Option shall become vested and exercisable, and such other provisions as the Board shall determine which are not inconsistent with the terms of this Plan. The Award Agreement also shall specify whether the Option is intended to be an ISO or a NQSO.

6.3 Option Price. The Option Price for each grant of an Option under this Plan shall be determined by the Board in its sole discretion and shall be specified in the Award Agreement; provided, however, the Option Price on the date of grant must be at least equal to one hundred percent (100%) of the FMV of the Shares as determined on the date of grant.

6.4 Term of Options. Each Option granted to a Participant shall expire at such time as the Board shall determine at the time of grant; provided, however, no Option shall be exercisable later than the tenth (10^th) anniversary date of its grant. Notwithstanding the foregoing, for Nonqualified Stock Options granted to Participants outside the United States, the Board has the authority to grant Nonqualified Stock Options that have a term greater than ten (10) years.

6.5 Exercise of Options. Options granted under this Article 6 shall be exercisable at such times and be subject to such restrictions and conditions as the Board shall in each instance approve, which terms and restrictions need not be the same for each grant or for each Participant.

6.6 Payment. Options granted under this Article 6 shall be exercised by the delivery of a notice of exercise to the Company or an agent designated by the Company in a form specified or accepted by

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the Board, or by complying with any alternative procedures which may be authorized by the Board, setting forth the number of Shares with respect to which the Option is to be exercised, accompanied by full payment for the Shares.

A condition of the issuance of the Shares as to which an Option shall be exercised shall be the payment of the Option Price. The Option Price of any Option shall be payable to the Company in full either: (a) in cash or its equivalent; (b) by tendering (either by actual delivery or attestation) previously acquired Shares having an aggregate Fair Market Value at the time of exercise equal to the Option Price (provided that except as otherwise determined by the Board, the Shares that are tendered must have been held by the Participant for at least six (6) months (or such other period, if any, as the Board may permit) prior to their tender to satisfy the Option Price if acquired under this Plan or any other compensation plan maintained by the Company or have been purchased on the open market); (c) pursuant to a broker-assisted exercise same-day sales program; (d) by a combination of (a) (b), and (c); or (e) any other method approved or accepted by the Board in its sole discretion.

Subject to any governing rules or regulations, as soon as practicable after receipt of written notification of exercise and full payment (including satisfaction of any applicable tax withholding), the Company shall deliver to the Participant evidence of book entry Shares, or upon the Participant's request, Share certificates in an appropriate amount based upon the number of Shares purchased under the Option(s).

Unless otherwise determined by the Board, all payments under all of the methods indicated above shall be paid in United States dollars.

6.7 Restrictions on Share Transferability. The Board may impose such restrictions on any Shares acquired pursuant to the exercise of an Option granted under this Article 6 as it may deem advisable, including, without limitation, minimum holding period requirements, restrictions under applicable federal securities laws, under the requirements of any stock exchange or market upon which such Shares are then listed and/or traded, or under any blue sky or state securities laws applicable to such Shares.

6.8 Termination of Employment. Each Participant's Award Agreement shall set forth the extent to which the Participant shall have the right to exercise the Option following termination of the Participant's employment or provision of services to the Company, its Affiliates, and/or its Subsidiaries, as the case may be. Such provisions shall be determined in the sole discretion of the Board, shall be included in the Award Agreement entered into with each Participant, need not be uniform among all Options issued pursuant to this Article 6, and may reflect distinctions based on the reasons for termination.

6.9 Notification of Disqualifying Disposition. If any Participant shall make any disposition of Shares issued pursuant to the exercise of an ISO under the circumstances described in Code Section 421(b) (relating to certain disqualifying dispositions), such Participant shall notify the Company of such disposition prior to the end of the calendar year in which such disposition occurred.

6.10 Retirement of Participant. Notwithstanding any contrary provision in this Plan, in the event a Participant's employment as an Employee, or service as a Director or Third Party Service Provider terminates due to a Participant's Retirement, the Participant shall vest in that number of Shares subject to the Option that would have vested had the Participant remained an Employee, Director, or Third Party Service Provider for an additional two (2) years from the date of Retirement. In addition, the Option shall remain exercisable until the expiration of its term. For purposes of this paragraph, "Retirement" shall mean the termination of service of a Participant with the Company, a Subsidiary, or an Affiliate on or after the date on which the Participant's number of completed years of service with the Company, a Subsidiary, or Affiliate and age equal or exceed seventy (70) (including termination due to death or Disability after such time).

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Article 7. Stock Appreciation Rights

7.1 Grant of SARs. Subject to the terms and conditions of this Plan, SARs may be granted to Participants at any time and from time to time as shall be determined by the Board. The Board may grant Freestanding SARs, Tandem SARs, or any combination of these forms of SARs. However, an Employee who is employed by an Affiliate and/or Subsidiary and is subject to Code Section 409A, may only be granted SARs to the extent the Affiliate and/or Subsidiary is part of the Company's consolidated group for United States federal tax purposes.

Subject to the terms and conditions of this Plan, the Board shall have complete discretion in determining the number of SARs granted to each Participant and, consistent with the provisions of this Plan, in determining the terms and conditions pertaining to such SARs.

The Grant Price for each grant of a Freestanding SAR shall be determined by the Board and shall be specified in the Award Agreement; provided, however, the Grant Price on the date of grant must be at least equal to one hundred percent (100%) of the FMV of the Shares as determined on the date of grant. The Grant Price of Tandem SARs shall be equal to the Option Price of the related Option.

7.2 SAR Agreement. Each SAR Award shall be evidenced by an Award Agreement that shall specify the Grant Price, the term of the SAR, and such other provisions as the Board shall determine.

7.3 Term of SAR. The term of an SAR granted under this Plan shall be determined by the Board, in its sole discretion, and except as determined otherwise by the Board and specified in the SAR Award Agreement, no SAR shall be exercisable later than the tenth (10^th) anniversary date of its grant. Notwithstanding the foregoing, for SARs granted to Participants outside the United States, the Board has the authority to grant SARs that have a term greater than ten (10) years.

7.4 Exercise of Freestanding SARs. Freestanding SARs may be exercised upon whatever terms and conditions the Board, in its sole discretion, imposes.

7.5. Exercise of Tandem SARs. Tandem SARs may be exercised for all or part of the Shares subject to the related Option upon the surrender of the right to exercise the equivalent portion of the related Option. A Tandem SAR may be exercised only with respect to the Shares for which its related Option is then exercisable.

Notwithstanding any other provision of this Plan to the contrary, with respect to a Tandem SAR granted in connection with an ISO: (a) the Tandem SAR will expire no later than the expiration of the underlying ISO; (b) the value of the payout with respect to the Tandem SAR may be for no more than one hundred percent (100%) of the excess of the Fair Market Value of the Shares subject to the underlying ISO at the time the Tandem SAR is exercised over the Option Price of the underlying ISO; and (c) the Tandem SAR may be exercised only when the Fair Market Value of the Shares subject to the ISO exceeds the Option Price of the ISO.

7.6 Settlement of SAR Amount. Upon the exercise of an SAR, a Participant shall be entitled to receive payment from the Company in an amount determined by multiplying:

(a) The excess of the Fair Market Value of a Share on the date of exercise over the Grant Price; by

(b) The number of Shares with respect to which the SAR is exercised.

At the discretion of the Board, the payment upon SAR exercise may be in cash, Shares, or any combination thereof, or in any other manner approved by the Board in its sole discretion. The Board's determination regarding the form of SAR payout shall be set forth in the Award Agreement pertaining to the grant of the SAR.

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7.7 Termination of Employment. Each Award Agreement shall set forth the extent to which the Participant shall have the right to exercise the SAR following termination of the Participant's employment with or provision of services to the Company, its Affiliates, and/or its Subsidiaries, as the case may be. Such provisions shall be determined in the sole discretion of the Board, shall be included in the Award Agreement entered into with Participants, need not be uniform among all SARs issued pursuant to this Plan, and may reflect distinctions based on the reasons for termination.

7.8 Other Restrictions. The Board shall impose such other conditions and/or restrictions on any Shares received upon exercise of a SAR granted pursuant to this Plan as it may deem advisable or desirable. These restrictions may include, but shall not be limited to, a requirement that the Participant hold the Shares received upon exercise of a SAR for a specified period of time.

Article 8. Restricted Stock and Restricted Stock Units

8.1 Grant of Restricted Stock or Restricted Stock Units. Subject to the terms and provisions of this Plan, the Board, at any time and from time to time, may grant Shares of Restricted Stock and/or Restricted Stock Units to Participants in such amounts as the Board shall determine. Restricted Stock Units shall be similar to Restricted Stock except that no Shares are actually awarded to the Participant on the date of grant.

8.2 Restricted Stock or Restricted Stock Unit Agreement. Each Restricted Stock and/or Restricted Stock Unit grant shall be evidenced by an Award Agreement that shall specify the Period(s) of Restriction, if any, the number of Shares of Restricted Stock or the number of Restricted Stock Units granted, and such other provisions as the Board shall determine.

8.3 Other Restrictions. The Board shall impose such other conditions and/or restrictions, if any, on any Shares of Restricted Stock or Restricted Stock Units granted pursuant to this Plan as it may deem advisable including, without limitation, a requirement that Participants pay a stipulated purchase price for each Share of Restricted Stock or each Restricted Stock Unit, restrictions based upon the achievement of specific performance goals, time-based restrictions on vesting following the attainment of the performance goals, time-based restrictions, and/or restrictions under applicable laws or under the requirements of any stock exchange or market upon which such Shares are listed or traded, or holding requirements or sale restrictions placed on the Shares by the Company upon vesting of such Restricted Stock or Restricted Stock Units.

To the extent deemed appropriate by the Board, the Company may retain the certificates representing Shares of Restricted Stock in the Company's possession until such time as all conditions and/or restrictions applicable to such Shares have been satisfied or lapse.

Except as otherwise provided in this Article 8, Shares of Restricted Stock covered by each Restricted Stock Award shall become freely transferable by the Participant after all conditions and restrictions applicable to such Shares have been satisfied or lapse (including satisfaction of any applicable tax withholding obligations), and Restricted Stock Units shall be paid in cash, Shares, or a combination of cash and Shares as the Board, in its sole discretion shall determine.

8.4 Certificate Legend. In addition to any legends placed on certificates pursuant to Section 8.3, each certificate representing Shares of Restricted Stock granted pursuant to this Plan may bear a legend such as the following or as otherwise determined by the Board in its sole discretion:

THE SALE OR TRANSFER OF SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE, WHETHER VOLUNTARY, INVOLUNTARY, OR BY OPERATION OF LAW, IS SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AS SET FORTH IN THE NPS PHARMACEUTICALS, INC. 2005 OMNIBUS INCENTIVE PLAN, AND IN THE ASSOCIATED AWARD AGREEMENT. A COPY OF THIS PLAN AND SUCH AWARD AGREEMENT MAY BE OBTAINED FROM NPS PHARMACEUTICALS, INC.

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8.5 Voting Rights. Unless otherwise determined by the Board and set forth in a Participant's Award Agreement, to the extent permitted or required by law, as determined by the Board, Participants holding Shares of Restricted Stock granted hereunder may be granted the right to exercise full voting rights with respect to those Shares during the Period of Restriction. A Participant shall have no voting rights with respect to any Restricted Stock Units granted hereunder.

8.6 Termination of Employment. Each Award Agreement shall set forth the extent to which the Participant shall have the right to retain Restricted Stock and/or Restricted Stock Units following termination of the Participant's employment with or provision of services to the Company, its Affiliates, and/or its Subsidiaries, as the case may be. Such provisions shall be determined in the sole discretion of the Board, shall be included in the Award Agreement entered into with each Participant, need not be uniform among all Shares of Restricted Stock or Restricted Stock Units issued pursuant to this Plan, and may reflect distinctions based on the reasons for termination.

8.7 Section 83(b) Election. The Board may provide in an Award Agreement that the Award of Restricted Stock is conditioned upon the Participant making or refraining from making an election with respect to the Award under Code Section 83(b). If a Participant makes an election pursuant to Code Section 83(b) concerning a Restricted Stock Award, the Participant shall be required to file promptly a copy of such election with the Company.

Article 9. Performance Units/Performance Shares

9.1 Grant of Performance Units/Performance Shares. Subject to the terms and provisions of this Plan, the Board, at any time and from time to time, may grant Performance Units and/or Performance Shares to Participants in such amounts and upon such terms as the Board shall determine.

9.2 Value of Performance Units/Performance Shares. Each Performance Unit shall have an initial value that is established by the Board at the time of grant. Each Performance Share shall have an initial value equal to the Fair Market Value of a Share on the date of grant. The Board shall set performance goals in its discretion which, depending on the extent to which they are met, will determine the value and/or number of Performance Units/Performance Shares that will be paid out to the Participant.

9.3 Earning of Performance Units/Performance Shares. Subject to the terms of this Plan, after the applicable Performance Period has ended, the holder of Performance Units/Performance Shares shall be entitled to receive payout on the value and number of Performance Units/Performance Shares earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding performance goals have been achieved.

9.4 Form and Timing of Payment of Performance Units/Performance Shares. Payment of earned Performance Units/Performance Shares shall be as determined by the Board and as evidenced in the Award Agreement. Subject to the terms of this Plan, the Board, in its sole discretion, may pay earned Performance Units/Performance Shares in the form of cash or in Shares (or in a combination thereof) equal to the value of the earned Performance Units/Performance Shares at the close of the applicable Performance Period, or as soon as practicable after the end of the Performance Period. Any Shares may be granted subject to any restrictions deemed appropriate by the Board. The determination of the Board with respect to the form of payout of such Awards shall be set forth in the Award Agreement pertaining to the grant of the Award.

9.5 Termination of Employment. Each Award Agreement shall set forth the extent to which the Participant shall have the right to retain Performance Units and/or Performance Shares following termination of the Participant's employment with or provision of services to the Company, its Affiliates, and/or its Subsidiaries, as the case may be. Such provisions shall be determined in the sole discretion of the Board, shall be included in the Award Agreement entered into with each Participant, need not be

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uniform among all Awards of Performance Units or Performance Shares issued pursuant to this Plan, and may reflect distinctions based on the reasons for termination.

Article 10. Cash-Based Awards and Other Stock-Based Awards

10.1 Grant of Cash-Based Awards. Subject to the terms and provisions of the Plan, the Board, at any time and from time to time, may grant Cash-Based Awards to Participants in such amounts and upon such terms as the Board may determine.

10.2 Other Stock-Based Awards. The Board may grant other types of equity-based or equity-related Awards not otherwise described by the terms of this Plan (including the grant or offer for sale of unrestricted Shares) in such amounts and subject to such terms and conditions, as the Board shall determine. Such Awards may involve the transfer of actual Shares to Participants, or payment in cash or otherwise of amounts based on the value of Shares and may include, without limitation, Awards designed to comply with or take advantage of the applicable local laws of jurisdictions other than the United States.

10.3 Value of Cash-Based and Other Stock-Based Awards. Each Cash-Based Award shall specify a payment amount or payment range as determined by the Board. Each Other Stock-Based Award shall be expressed in terms of Shares or units based on Shares, as determined by the Board. The Board may establish performance goals in its discretion. If the Board exercises its discretion to establish performance goals, the number and/or value of Cash-Based Awards or Other Stock-Based Awards that will be paid out to the Participant will depend on the extent to which the performance goals are met.

10.4 Payment of Cash-Based Awards and Other Stock-Based Awards. Payment, if any, with respect to a Cash-Based Award or an Other Stock-Based Award shall be made in accordance with the terms of the Award, in cash or Shares as the Board determines.

10.5 Termination of Employment. The Board shall determine the extent to which the Participant shall have the right to receive Cash-Based Awards or Other Stock-Based Awards following termination of the Participant's employment with or provision of services to the Company, its Affiliates, and/or its Subsidiaries, as the case may be. Such provisions shall be determined in the sole discretion of the Board, such provisions may be included in an agreement entered into with each Participant, but need not be uniform among all Awards of Cash-Based Awards or Other Stock-Based Awards issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination.

Article 11. Transferability of Awards

11.1 Transferability. Except as provided in Section 11.2 below, during a Participant's lifetime, his or her Awards shall be exercisable only by the Participant. Awards shall not be transferable other than by will or the laws of descent and distribution; no Awards shall be subject, in whole or in part, to attachment, execution, or levy of any kind; and any purported transfer in violation hereof shall be null and void. The Board may establish such procedures as it deems appropriate for a Participant to designate a beneficiary to whom any amounts payable or Shares deliverable in the event of, or following, the Participant's death, may be provided.

11.2 Board Action. The Board may, in its discretion, determine that notwithstanding Section 11.1, any or all Awards (other than ISOs) shall be transferable to and exercisable by such transferees, and subject to such terms and conditions, as the Board may deem appropriate; provided, however, no Award may be transferred for value (as defined in the General Instructions to Form S-8 under the Securities Act of 1933, as amended).

11.3 Domestic Relations Orders. Without limiting the generality of Section 11.1, and notwithstanding Section 11.2, no domestic relations order purporting to authorize a transfer of an Award shall be recognized as valid.

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Article 12. Performance Measures

12.1 Performance Measures. The performance goals upon which the payment or vesting of an Award to a Covered Employee that is intended to qualify as Performance-Based Compensation shall be limited to the following Performance Measures:

(a) Net earnings or net income (before or after taxes);

(b) Earnings per share;

(d) Net operating profit;

(e) Return measures (including, but not limited to, return on assets, capital, invested capital, equity, sales, or revenue);

(f) Cash flow (including, but not limited to, operating cash flow, free cash flow, cash flow return on equity, and cash flow return on investment);

(g) Earnings before or after taxes, interest, depreciation, and/or amortization;

(h) Gross or operating margins;

(i) Productivity ratios;

(j) Share price (including, but not limited to, growth measures and total shareholder return);

(k) Expense targets;

(l) Margins;

(m) Operating efficiency;

(n) Market share;

(o) Customer satisfaction;

(p) Working capital targets;

(q) Economic value added or EVA® (net operating profit after tax minus the sum of capital multiplied by the cost of capital); and

(r) Product development.

Any Performance Measure(s) may be used to measure the performance of the Company, Subsidiary, and/or Affiliate as a whole or any business unit of the Company, Subsidiary, and/or Affiliate or any combination thereof, as the Board may deem appropriate, or any of the above Performance Measures as compared to the performance of a group of comparator companies, or published or special index that the Board, in its sole discretion, deems appropriate, or the Company may select Performance Measure (j) above as compared to various stock market indices. The Board also has the authority to provide for accelerated vesting of any Award based on the achievement of performance goals pursuant to the Performance Measures specified in this Article 12.

12.2 Evaluation of Performance. The Board may provide in any such Award that any evaluation of performance may include or exclude any of the following events that occurs during a Performance Period: (a) asset write-downs, (b) litigation or claim judgments or settlements, (c) the effect of changes in tax laws, accounting principles, or other laws or provisions affecting reported results, (d) any reorganization and restructuring programs, (e) extraordinary nonrecurring items as described in Accounting Principles Board Opinion No. 30 and/or in management's discussion and analysis of financial condition and results of operations appearing in the Company's annual report to shareholders

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for the applicable year, (f) acquisitions or divestitures, and (g) foreign exchange gains and losses. To the extent such inclusions or exclusions affect Awards to Covered Employees, they shall be prescribed in a form that meets the requirements of Code Section 162(m) for deductibility.

12.3 Adjustment of Performance-Based Compensation. Awards that are intended to qualify as Performance-Based Compensation may not be adjusted upward. The Board shall retain the discretion to adjust such Awards downward, either on a formula or discretionary basis or any combination, as the Board determines.

12.4 Board Discretion. In the event that applicable tax and/or securities laws change to permit Board discretion to alter the governing Performance Measures without obtaining shareholder approval of such changes, the Board shall have sole discretion to make such changes without obtaining shareholder approval. In addition, in the event that the Board determines that it is advisable to grant Awards that shall not qualify as Performance-Based Compensation, the Board may make such grants without satisfying the requirements of Code Section 162(m) and base vesting on Performance Measures other than those set forth in Section 12.1.

Article 13. Dividend Equivalents

Any Participant selected by the Board may be granted dividend equivalents based on the dividends declared on Shares that are subject to any Award, to be credited as of dividend payment dates, during the period between the date the Award is granted and the date the Award is exercised, vests or expires, as determined by the Board. Such dividend equivalents shall be converted to cash or additional Shares by such formula and at such time and subject to such limitations as may be determined by the Board.

Article 14. Beneficiary Designation

Each Participant under this Plan may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under this Plan is to be paid in case of his death before he receives any or all of such benefit. Each such designation shall revoke all prior designations by the same Participant, shall be in a form prescribed by the Board, and will be effective only when filed by the Participant in writing with the Company during the Participant's lifetime. In the absence of any such beneficiary designation, benefits remaining unpaid or rights remaining unexercised at the Participant's death shall be paid or exercised by the Participant's executor, administrator, or legal representative.

Article 15. Rights of Participants

15.1 Employment. Nothing in this Plan or an Award Agreement shall interfere with or limit in any way the right of the Company, its Affiliates, and/or its Subsidiaries, to terminate any Participant's employment or service on the Board or to the Company at any time or for any reason not prohibited by law, nor confer upon any Participant any right to continue his employment or service as a Director or Third Party Service Provider for any specified period of time.

Neither an Award nor any benefits arising under this Plan shall constitute an employment contract with the Company, its Affiliates, and/or its Subsidiaries and, accordingly, subject to Articles 3 and 16, this Plan and the benefits hereunder may be terminated at any time in the sole and exclusive discretion of the Board without giving rise to any liability on the part of the Company, its Affiliates, and/or its Subsidiaries.

15.2 Participation. No individual shall have the right to be selected to receive an Award under this Plan, or, having been so selected, to be selected to receive a future Award.

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15.3 Rights as a Stockholder. Except as otherwise provided herein, a Participant shall have none of the rights of a stockholder with respect to Shares covered by any Award until the Participant becomes the record holder of such Shares.

Article 16. Amendment, Modification, Suspension, and Termination

16.1 Amendment, Modification, Suspension, and Termination. Subject to Section 16.3, the Board may, at any time and from time to time, alter, amend, modify, suspend, or terminate this Plan and any Award Agreement in whole or in part; provided, however, that, without the prior approval of the Company's stockholders and except as provided in Section 4.4, Options or SARs issued under this Plan will not be repriced, replaced, or regranted through cancellation, or by lowering the Option Price of a previously granted Option or the Grant Price of a previously granted SAR, and no material amendment of this Plan shall be made without stockholder approval if shareholder approval is required by law, regulation, or stock exchange rule.

16.2 Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events. The Board may make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events (including, without limitation, the events described in Section 4.4 hereof) affecting the Company or the financial statements of the Company or of changes in applicable laws, regulations, or accounting principles, whenever the Board determines that such adjustments are appropriate in order to prevent unintended dilution or enlargement of the benefits or potential benefits intended to be made available under this Plan. The determination of the Board as to the foregoing adjustments, if any, shall be conclusive and binding on Participants under this Plan.

16.3 Awards Previously Granted. Notwithstanding any other provision of this Plan to the contrary (other than Section 16.4), no termination, amendment, suspension, or modification of this Plan or an Award Agreement shall adversely affect in any material way any Award previously granted under this Plan, without the written consent of the Participant holding such Award.

16.4 Amendment to Conform to Law. Notwithstanding any other provision of this Plan to the contrary, the Board of Directors may amend the Plan or an Award Agreement, to take effect retroactively or otherwise, as deemed necessary or advisable for the purpose of conforming the Plan or an Award Agreement to any present or future law relating to plans of this or similar nature (including, but not limited to, Code Section 409A), and to the administrative regulations and rulings promulgated thereunder.

Article 17. Withholding

17.1 Withholding Generally. The Company shall have the power and the right to deduct or withhold, or require a Participant to remit to the Company, the minimum statutory amount to satisfy federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of this Plan.

17.2 Stock Withholding. When, under applicable tax laws, a Participant incurs tax liability in connection with the vesting of any Award that is subject to tax withholding and the Participant is obligated to pay the Company the amount required to be withheld, the Board shall, subject to compliance with all applicable laws and regulations, allow the Participant to satisfy the minimum withholding tax obligation by electing to have the Company withhold from the Shares to be issued upon vesting of the Award that number of Shares having a Fair Market Value equal to the minimum amount required to be withheld, determined on the date that the amount of tax to be withheld is to be determined. All elections by a Participant to have Shares withheld for this purpose will be made in accordance with the requirements established by the Board and be in writing in a form acceptable to the Board.

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Article 18. Corporate Transactions

In the event of (a) a merger or consolidation in which the Company is not the surviving corporation; (b) a reverse merger in which the Company is the surviving corporation but the shares of the Company's common stock outstanding immediately preceding the merger are converted by virtue of the merger into other property, whether in the form of securities, cash, or otherwise; (c) a strategic corporate event, such as a merger or acquisition, where the Company is technically the surviving entity, but where other elements of a change of control are present, i.e., change in management team or Board composition; (d) a transaction which the Board determines in its sole discretion to constitute a change in control of the Company; or (e) any capital reorganization in which fifty percent (50%) of the Shares of the Company entitled to vote are exchanged, then, the time during which Awards outstanding under the Plan become vested shall be accelerated and all outstanding Awards shall become immediately exercisable upon such event and such Awards shall continue to be exercisable until the later of (i) twenty-four (24) months from the effective date of such event, or (ii) the time specified in the Award Agreement during which the Award is exercisable following a Participant's termination of service; provided, however, that in no event shall the Award be exercisable after the expiration of its term.

Article 19. Successors

All obligations of the Company under this Plan with respect to Awards granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.

Article 20. General Provisions

20.1 Forfeiture Events.

(a) The Board may specify in an Award Agreement that the Participant's rights, payments, and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture, or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award. Such events may include, but shall not be limited to, termination of employment for cause, termination of the Participant's provision of services to the Company, Affiliate, and/or Subsidiary, violation of material Company, Affiliate, and/or Subsidiary policies, breach of noncompetition, confidentiality, or other restrictive covenants that may apply to the Participant, or other conduct by the Participant that is detrimental to the business or reputation of the Company, its Affiliates, and/or its Subsidiaries.

(b) If the Company is required to prepare an accounting restatement due to the material noncompliance of the Company, as a result of misconduct, with any financial reporting requirement under the securities laws, if the Participant knowingly or grossly negligently engaged in the misconduct, or knowingly or grossly negligently failed to prevent the misconduct, or if the Participant is one of the individuals subject to automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002, the Participant shall reimburse the Company the amount of any payment in settlement of an Award earned or accrued during the twelve (12) month period following the first public issuance or filing with the United States Securities and Exchange Commission (whichever just occurred) of the financial document embodying such financial reporting requirement.

20.2 Legend. The certificates for Shares may include any legend which the Board deems appropriate to reflect any restrictions on transfer of such Shares.

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20.3 Gender and Number. Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine, the plural shall include the singular, and the singular shall include the plural.

20.4 Severability. In the event any provision of this Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of this Plan, and this Plan shall be construed and enforced as if the illegal or invalid provision had not been included.

20.5 Requirements of Law. The granting of Awards and the issuance of Shares under this Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.

20.6 Delivery of Title. The Company shall have no obligation to issue or deliver evidence of title for Shares issued under this Plan prior to:

(a) Obtaining any approvals from governmental agencies that the Company determines are necessary or advisable; and

(b) Completion of any registration or other qualification of the Shares under any applicable national or foreign law or ruling of any governmental body that the Company determines to be necessary or advisable.

20.7 Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company's counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.

20.8 Investment Representations. The Board may require any individual receiving Shares pursuant to an Award under this Plan to represent and warrant in writing that the individual is acquiring the Shares for investment and without any present intention to sell or distribute such Shares.

20.9 Employees Based Outside of the United States. Notwithstanding any provision of this Plan to the contrary, in order to comply with the laws in other countries in which the Company, its Affiliates, and/or its Subsidiaries operate or have Employees, Directors, or Third Party Service Providers, the Board, in its sole discretion, shall have the power and authority to:

(a) Determine which Affiliates and Subsidiaries shall be covered by this Plan;

(b) Determine which Employees and/or Directors or Third Party Service Providers outside the United States are eligible to participate in this Plan;

(c) Modify the terms and conditions of any Award granted to Employees \and/or Directors or Third Party Service Providers outside the United States to comply with applicable foreign laws;

(d) Establish subplans and modify exercise procedures and other terms and procedures, to the extent such actions may be necessary or advisable. Any subplans and modifications to Plan terms and procedures established under this Section 20.9 by the Board shall be attached to this Plan document as appendices; and

(e) Take any action, before or after an Award is made, that it deems advisable to obtain approval or comply with any necessary local government regulatory exemptions or approvals.

Notwithstanding the above, the Board may not take any actions hereunder, and no Awards shall be granted, that would violate applicable law.

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20.10 Uncertificated Shares. To the extent that this Plan provides for issuance of certificates to reflect the transfer of Shares, the transfer of such Shares may be effected on a noncertificated basis, to the extent not prohibited by applicable law or the rules of any stock exchange.

20.11 Unfunded Plan. Participants shall have no right, title, or interest whatsoever in or to any investments that the Company, and/or its Subsidiaries, and/or its Affiliates may make to aid it in meeting its obligations under this Plan. Nothing contained in this Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Company and any Participant, beneficiary, legal representative, or any other individual. To the extent that any person acquires a right to receive payments from the Company, its Subsidiaries, and/or its Affiliates under this Plan, such right shall be no greater than the right of an unsecured general creditor of the Company, a Subsidiary, or an Affiliate, as the case may be. All payments to be made hereunder shall be paid from the general funds of the Company, a Subsidiary, or an Affiliate, as the case may be and no special or separate fund shall be established and no segregation of assets shall be made to assure payment of such amounts except as expressly set forth in this Plan.

20.12 No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to this Plan or any Award. The Board shall determine whether cash, Awards, or other property shall be issued or paid in lieu of fractional Shares or whether such fractional Shares or any rights thereto shall be forfeited or otherwise eliminated.

20.13 Retirement and Welfare Plans. Neither Awards made under this Plan nor Shares or cash paid pursuant to such Awards, except pursuant to Covered Employee Annual Incentive Awards, may be included as "compensation" for purposes of computing the benefits payable to any Participant under the Company's or any Subsidiary's or Affiliate's retirement plans (both qualified and non-qualified) or welfare benefit plans unless such other plan expressly provides that such compensation shall be taken into account in computing a Participant's benefit.

20.14 Deferred Compensation. No deferral of compensation (as defined under Code Section 409A or guidance thereto) is intended under this Plan. Notwithstanding this intent, if any Award would be considered deferred compensation as defined under Code Section 409A and if the Plan fails to meet the requirements of Code Section 409A with respect to such Award, then such Award shall be null and void. However, the Board may permit deferrals of compensation pursuant to the terms of a Participant's Award Agreement, a separate plan or a subplan which meets the requirements of Code Section 409A and any related guidance. Additionally, to the extent any Award is subject to Code Section 409A, notwithstanding any provision herein to the contrary, the Plan does not permit the acceleration of the time or schedule of any distribution related to such Award, except as permitted by Code Section 409A, the regulations thereunder, and/or the Secretary of the United States Treasury.

20.15 Nonexclusivity of this Plan. The adoption of this Plan shall not be construed as creating any limitations on the power of the Board or Board to adopt such other compensation arrangements as it may deem desirable for any Participant.

20.16 No Constraint on Corporate Action. Nothing in this Plan shall be construed to: (i) limit, impair, or otherwise affect the Company's or a Subsidiary's or an Affiliate's right or power to make adjustments, reclassifications, reorganizations, or changes of its capital or business structure, or to merge or consolidate, or dissolve, liquidate, sell, or transfer all or any part of its business or assets; or, (ii) limit the right or power of the Company or a Subsidiary or an Affiliate to take any action which such entity deems to be necessary or appropriate.

20.17 Governing Law. The Plan and each Award Agreement shall be governed by the laws of the State of Delaware, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Plan to the substantive law of another jurisdiction. Unless otherwise provided in the Award Agreement, recipients of an Award under this Plan are deemed to submit to the exclusive jurisdiction and venue of the federal or state courts of Delaware, to resolve any and all issues that may arise out of or relate to this Plan or any related Award Agreement.

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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: Signature (Joint Owners) Signature [PLEASE SIGN WITHIN BOX] Date Date NPSPA1 To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. For Against Abstain For All Withhold All For All Except 0 0 0 Yes No 0 0 0 0 0 0 NPS PHARMACEUTICALS, INC. 550 HILLS DRIVE, 3RD FLOOR BEDMINSTER, NJ 07921 Please indicate if you plan to attend this meeting. NPS PHARMACEUTICALS, INC. 3. To ratify the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2009; and 1. To elect six members to the Board of Directors, each for a term of one year; 01) Michael W. Bonney 02) James G. Groninger 03) Donald E. Kuhla 04) Francois Nader 05) Rachel R. Selisker 06) Peter G. Tombros Vote on Directors 2. To amend the Company’s 2005 Omnibus Incentive Plan to increase by 1,800,000 shares the aggregate number of shares of common stock reserved for issuance thereunder; Vote on Proposals VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. Please date this Proxy and sign your name exactly as it appears hereon. Joint owners should each sign. When signing as an agent, attorney, administrator, executor, guardian, or trustee, please indicate your title as such. If executed by a corporation, the Proxy should be signed in the corporate name by a duly authorized officer who should indicate his title. Please date, sign, and mail this proxy card in the enclosed envelope. 0 0 HOUSEHOLDING ELECTION - Please indicate if you consent to receive certain future investor communications in a single package per household. 0 0 Yes No

ANNUAL MEETING OF STOCKHOLDERS MAY 14, 2009 PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned constitutes and appoints Francois Nader and Andrew Rackear (with full power to act alone), the lawful proxies of the undersigned, with power of substitution to each, to vote all shares of common stock of NPS Pharmaceuticals, Inc., registered in the name provided herein which the undersigned is entitled to vote at the 2009 Annual Meeting of Stockholders, or any adjournment or postponement thereof. This meeting will be held at the Newark Marriott, located at the Newark Liberty International Airport, New Jersey 07114, on May 14, 2009 at 2:00 p.m., local time. This Proxy is given in accordance with the instructions indicated, and carries discretionary authority related to any and all other matters that may come before the meeting and any adjournments thereof. TO THE STOCKHOLDERS OF NPS PHARMACEUTICALS, INC.: NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of NPS Pharmaceuticals, Inc., a Delaware corporation (the “Company”), will be held on Thursday, May 14, 2009, at 2:00 p.m. (ET) at the Newark Marriott, located at the Newark Liberty International Airport, New Jersey 07114 for the purposes of considering and acting on the following: 1. To elect six members to the Board of Directors, each for a term of one year; 2. To amend the Company’s 2005 Omnibus Incentive Plan to increase by 1,800,000 shares the aggregate number of shares of common stock reserved for issuance thereunder; 3. To ratify the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2009; and 4. To transact such other business as may properly come before the meeting or any adjournment thereof. Important Notice Regarding the Availability of Proxy Materials for the Company’s Annual Meeting of Stockholders: The Company’s Notice and Proxy Statement & Annual Report are available at www.proxyvote.com. This Proxy when properly executed will be voted as directed on the reverse side. If no direction is made, this Proxy will be voted FOR the election of the six (6) directors, FOR the amendment to the Company’s 2005 Omnibus Incentive Plan, and FOR the ratification of the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the 2009 fiscal year.

NPS Pharmaceuticals (NPSP) Inactive DEF 14ADefinitive proxy