SCHEDULE 14A
(RULE 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ] Preliminary Proxy Statement

[X] Definitive Proxy Statement

[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))

[ ] Definitive Additional Materials

[ ] Soliciting material under Rule 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):

[X] No fee required

[ ] Fee computed on table below per Exchange Act Rules 14a6(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

[ ] Fee paid previously with preliminary materials.

[ ] 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

[NPS PHARMACEUTICALS, INC. LOGO]

NPS PHARMACEUTICALS, INC.
420 Chipeta Way
Salt Lake City, Utah 84108-1256

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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

May 23, 2002 at 3:00 p.m. (Mountain time)
at the
University Park Hotel
500 S. Wakara Way
Salt Lake City, Utah 84108

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
23, 2002, at 3:00 p.m., local time, at the University Park Hotel, 500 S.
Wakara Way, Salt Lake City, Utah for the following purposes:

1. To elect ten members to the Board of Directors.

2. To consider and act upon a proposal to increase by 2,000,000 shares the
aggregate number of common stock for which options may be granted under
two of the Company's equity incentive plans as follows: (a) an
additional 1,900,000 shares under the 1998 Stock Option Plan; and (b) an
additional 100,000 shares under the 1994 Non-Employee Directors' Stock
Option Plan.

3. To consider and act upon a proposal to ratify the selection of KPMG LLP
as independent auditors of the Company for its fiscal year ending
December 31, 2002.

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 April 9, 2002, 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.

By Order of the Board of Directors

/s/ James U. Jensen

James U. Jensen
Secretary

Salt Lake City, Utah
April 19, 2002

ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE,
SIGN, AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE IN ORDER
TO ENSURE YOUR REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS
POSTAGE PREPAID IF MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT
PURPOSE. YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING. PLEASE
NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK,
OR OTHER NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN
FROM THE RECORD HOLDER A PROXY ISSUED IN YOUR NAME.

[NPS PHARMACEUTICALS, INC. LOGO]

NPS PHARMACEUTICALS, INC.
420 Chipeta Way
Salt Lake City, Utah 84108-1256

----------------

PROXY STATEMENT
for the
Annual Meeting of Stockholders
(May 23, 2002)

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INFORMATION CONCERNING SOLICITATION AND VOTING

General

The enclosed proxy is solicited on behalf of the Board of Directors (the
"Board of Directors" or the "Board") of NPS Pharmaceuticals, Inc., a Delaware
corporation ("NPS", "us", "we", or the "Company"), for use at the Annual
Meeting of Stockholders to be held on May 23, 2002, at 3:00 p.m., Mountain
Daylight Time and at any adjournment thereof (the "Annual Meeting"), for the
purposes set forth herein and in the accompanying Notice of Annual Meeting.
The Annual Meeting will be held at the University Park Hotel, 500 S. Wakara
Way, Salt Lake City, Utah 84108.

Solicitation

The Company 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. The Company
may reimburse persons representing beneficial owners of common stock for their
costs of forwarding solicitation materials to such beneficial owners. Original
solicitation of proxies by mail may be supplemented by telephone, telegram, or
personal solicitation by directors, officers, or other regular employees of
the Company. No additional compensation will be paid to directors, officers,
or other regular employees for such services.

The Company intends to mail this Proxy Statement and accompanying proxy
card on or about April 19, 2002, to all stockholders entitled to vote at the
Annual Meeting.

Voting Rights and Outstanding Shares

April 9, 2002 is the record date for determining those holders of NPS
common stock and exchangeable shares of NPS Allelix Inc., a subsidiary of the
Company ("Exchangeable Shares"), entitled to notice of and to vote at the
Annual Meeting. On the record date, the Company had outstanding and entitled
to vote 30,277,131 shares of common stock which includes 422,146 Exchangeable
Shares. Each holder of the Company's common stock is entitled to one vote for
each share held as of the record date on all matters to be voted upon at the
Annual Meeting. CIBC Mellon Trust Company (the "Trustee"), the holder of the
Company's Special Voting Share, is entitled to one vote for each Exchangeable
Share outstanding as of the record date, other than Exchangeable Shares owned
by the Company and its affiliates. Holders of common stock and the Special
Voting Share are collectively referred to as "Stockholders." Votes cast with
respect to Exchangeable Shares will be voted through the Special Voting Share
by the Trustee as directed by the holders of Exchangeable Shares, except votes
cast at the Annual Meeting with respect to Exchangeable Shares whose holders
request to vote directly in person as proxy for the Trustee, or who request
that a proxy be given by the Trustee to a designated agent or other
representative of the management of the company to exercise such votes.

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 will not be counted for any
purpose in determining whether a matter has been approved. Broker non-votes
are counted toward a quorum, but are not counted for any purpose in
determining whether a matter has been approved.

Revocability of Proxies

Any stockholder giving a proxy pursuant to this solicitation has the power
to revoke it at any time before it is voted. It may be revoked by filing
timely with the Secretary of the Company, at the Company's headquarters,
420 Chipeta Way, Salt Lake City, Utah 84108-1256, a written notice of
revocation or a duly executed proxy bearing a later date, or it may be revoked
by attending the Annual Meeting and voting in person. Attendance at the Annual
Meeting will not, by itself, revoke a proxy. Holders of Exchangeable Shares
who wish to direct the Trustee to cast the votes attached to the Special
Voting Share on their behalf should follow carefully the instructions provided
by the Trustee, which accompany this Proxy Statement. The procedure for
instructing the Trustee differs in certain respects from the procedure for
delivering a proxy, including the place for depositing the instructions and
manner for revoking the proxy.

Stockholder Proposals

No stockholder proposals were submitted and none are included for
consideration at this Annual Meeting of Stockholders. Stockholder proposals to
be presented at the Company's 2003 annual meeting of stockholders and
considered for inclusion in the proxy statement relating to such meeting must
be received by the Company not later than December 25, 2002. In order to be
timely, stockholder proposals and director nominations intended to be
presented at the Company's 2003 annual meeting, but not included in the proxy
statement for the meeting, must be received by the Company no earlier than
February 22, 2003 and no later than March 24, 2003.

PROPOSAL 1
ELECTION OF DIRECTORS

The Company's Amended and Restated Certificate of Incorporation and the
Amended and Restated Bylaws 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 shall 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)
shall 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 present in person or
represented by proxy and entitled to vote at the Annual Meeting. Shares
represented by executed proxies will be voted, if authority to do so is not
withheld, for the election of the ten 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.

Pursuant to the Company's Amended and Restated Certificate of Incorporation
and the 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. Each of the ten nominees is currently a director of
the Company, and each nominee has agreed to serve if elected. The Board has no
reason to believe that any nominee will be unable to serve. If and when
elected at the Annual Meeting, each of the nominees is expected to serve until
the 2003 Annual Meeting of Stockholders and until such elected nominee's
successor is duly elected and qualified, or until such elected nominee's
earlier death, resignation, or removal.

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

NOMINEES FOR ELECTION

Santo J. Costa, J.D. has served as a director since 1995. Since January
2002, Mr. Costa has served as a consultant to Quintiles Transnational
Corporation. From June 2001 through December 2001, Mr. Costa was a senior
advisor to the Chairman of Quintiles. Mr. Costa served as a director of
Quintiles Transnational Corporation, a publicly held global contract research
organization, from April 1994 through June 2001 and served as its Vice
Chairman from November 1999 through June 2001. From April 1994 to November
1999 he served as President and Chief Operating Officer for Quintiles. From
1986 to 1993, he was employed by Glaxo, Inc., a worldwide pharmaceutical
company, where he served as Senior Vice President, Administration and General
Counsel and was a member of that company's board of directors. He is a
director of two other publicly held companies, CV Therapeutics and Pilot
Therapeutics, as well as several private companies. He is a member of the
board of advisors of AM Pappas & Associates and of counsel to the law firm of
Maupin Taylor & Ellis. Mr. Costa received his J.D. from St. John's University.

John R. Evans, M.D. has served as a director and Vice-Chairman of our board
since the closing of our acquisition of Allelix in December 1999. Previously,
Dr. Evans was Chairman of the Board of Allelix since 1983. From 1979 to 1983,
Dr. Evans served as a Director of the Population, Health and Nutrition
Department of the World Bank in Washington. From 1972 to 1978 he served as
President of the University of Toronto. Currently, Dr. Evans is Chairman of
the Canada Foundation for Innovation and serves as Chairman of the Board for
both Alcan Aluminum Limited in Montreal and Torstar Corporation in Toronto. He
is a member of the board of directors of MDS Inc., a publicly held health and
life sciences company listed on the New York Stock Exchange and the Toronto
Stock Exchange, and of GlycoDesign, Inc. Dr. Evans received an M.D. degree
from the University of Toronto and engaged in specialty training in internal
medicine and cardiology in London, Boston and Toronto.

James G. Groninger has served as a director since 1988. 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. and LBS Technologies, both private biotechnology companies.
Mr. Groninger received an M.B.A. degree from Harvard Business School.

Hunter Jackson, Ph.D. has been Chief Executive Officer and Chairman of our
board since founding NPS in 1986. He was appointed to the additional position
of President in January 1994. Before founding NPS, he was an Associate
Professor in the Department of Anatomy at the University of Utah School of
Medicine. Dr. Jackson received a Ph.D. degree in Psychobiology from Yale
University. He received postdoctoral training in the Department of
Neurosurgery, University of Virginia Medical School.

Joseph Klein, III has served as a director since 1998. Currently, Mr. Klein
is Venture Partner of MPM Capital, a global venture capital and public equity
investment manager focused exclusively on healthcare, and is also Managing
Director of Gauss Capital Advisors, LLC, a financial and investment advisory
firm. From 1999 to 2000, Mr. Klein was Vice President, Strategy for Medical
Manager Corporation, a physician office management information systems vendor.
From 1998 to 1999, Mr. Klein was a Health Care Investment Analyst with the
Kaufmann Fund, Inc. From 1995 to 1998, Mr. Klein was a Portfolio Manager and
Chairman of the Investment Advisory Committee of T. Rowe Price Health Sciences
Fund, Inc. From 1990 to 1998, Mr. Klein served as Vice President and Health
Care Investment Analyst for T. Rowe Price Associates, Inc., an investment
management firm. Mr. Klein serves as a director of Guilford Pharmaceuticals, a
publicly held biotechnology company, and Synbiotics Corporation, a publicly
held veterinary diagnostic products company. Mr. Klein received an M.B.A.
degree from Stanford Graduate School of Business.

Donald E. Kuhla, Ph.D. has served as a director since 1991. Since 1998, Dr.
Kuhla has been President and Chief Operating Officer of Albany Molecular
Research, Inc., a chemical contract research organization, where he has also
been a director since 1995. 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 received a Ph.D. degree in Organic Chemistry from
Ohio State University.

Thomas N. Parks, Ph.D. has served as a director since our founding in 1986.
Dr. Parks also serves as a scientific consultant to us. He is currently the
George and Lorna Winder Professor of Neuroscience and Chairman of the
Department of Neurobiology and Anatomy at the University of Utah Medical
School. Dr. Parks joined the faculty at the University of Utah Medical School
in 1978 as an Assistant Professor. Dr. Parks received a Ph.D. degree in
Psychobiology from Yale University. He was a postdoctoral fellow in
Development Neurology at the University of Virginia Medical School.

Edward K. Rygiel has served as a director since the closing of our
acquisition of Allelix in December 1999. Mr. Rygiel served on the board of
Allelix since 1995. Since January 2000, Mr. Rygiel has been Executive Vice
President of MDS Inc., a publicly held health and life sciences company, and
since 1988 he has been President and Chief Executive Officer of MDS Capital
Corp., a subsidiary of MDS Inc. From 1988 to 2000, Mr. Rygiel was Senior Vice
President, Strategic Investments, of MDS Inc. Mr. Rygiel currently is a
director and Chairman of Hemosol, Inc., a publicly held biotechnology company.
Mr. Rygiel earned a B.A.Sc. from the University of Toronto, School of Chemical
Engineering.

Calvin R. Stiller, C.M., O.Ont., M.D. has served as a director since the
closing of our acquisition of Allelix in December 1999. Dr. Stiller served on
the board of Allelix since April 1999. Since 1996, Dr. Stiller has served as
Chairman and Chief Executive Officer of Canadian Medical Discoveries Fund, an
affiliate entity of MDS, Inc. Dr. Stiller served as the Chief of the Multi-
Organ Transplant Service at the University Hospital in London, Ontario from
1984 through 1996. He is a full professor of medicine at the University of
Western Ontario. Dr. Stiller is the Chairman of the Ontario Research and
Development Challenge Fund and serves as a director of Drug Royalty Corp.
Inc., and CPL Trust, a publicly held company. Dr. Stiller received an M.D.
degree from the University of Saskatchewan.

Peter G. Tombros has served as a director since 1998. From 1994 until June
of 2001, Mr. Tombros served as President, Chief Executive Officer and Director
of Enzon Inc., a publicly held biopharmaceutical company. Since June, Mr.
Tombros has been serving in a transition role at Enzon. Prior to joining
Enzon, Mr. Tombros spent 25 years with Pfizer Inc., a global healthcare
company. Mr. Tombros served as a Corporate Officer and Vice president of
Pfizer Inc. from 1986 in positions including Senior Vice President and General
Manager of the Roerig Division, Executive Vice President of Pfizer
Pharmaceuticals and Vice President, Corporate Strategic Planning. Recently, he
was named Chairman of the Board and Chief Executive Officer of VivoQuest, a
private biopharmaceutical company. Mr. Tombros also serves on the Board of
Directors of Alpharma Inc., a publicly held pharmaceutical company, and
Cambrex, a supplier of human health and bioscience products to the life
sciences industry. Mr. Tombros received B.S. and M.S. degrees from the
Pennsylvania State University and an M.B.A. degree from the University of
Pennsylvania Wharton Graduate School of Business.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF EACH NAMED NOMINEE

Board Committees and Meetings

The Board has three standing committees of the Board: Audit, Compensation,
and Nominating Committees each with a formal, written charter.

The purpose of the Audit Committee is to monitor the integrity of the
Company's financial reporting process and systems of internal control, to
monitor the independence and performance of the Company's independent
auditors, to provide an avenue of communication among the independent
auditors, management, and the Board,

and to provide such additional information and materials the Audit Committee
may deem necessary to make the Board aware of significant financial matters
which require the Board's attention. The Audit committee also submits the
Report of the Audit Committee set out below. During 2001, the Audit Committee
was composed of three independent directors, Mr. Klein, Dr. Parks and Mr.
Rygiel. The Audit Committee met three times during the fiscal year ended
December 31, 2001.

The Compensation Committee's functions include: establishing, reviewing,
and overseeing salaries, incentive compensation, and other forms of
compensation paid to officers and employees of the Company; administering the
Company's incentive compensation and benefit plans; and performing such other
functions regarding compensation as the Board of Directors may delegate. The
Compensation Committee reviews the performance of the Company's officers,
particularly the CEO and submits the Report of the Compensation Committee set
out below. During 2001, the Compensation Committee was composed of non-
employee directors, Mr. Tombros, Mr. Costa, Dr. Evans and Mr. Groninger. The
Compensation Committee met three times during the fiscal year ended December
31, 2001.

The Nominating Committee's functions include: evaluating Director
performance on at least an annual basis; providing information and materials
relating to the nomination of directors; interviewing, nominating, and
recommending individuals for membership on the Company's Board of Directors
and its committees; and performing such other functions as the Board of
Directors may delegate. The Nominating Committee will consider nominees for
directors nominated by stockholders upon submission in writing to the
Secretary of the Company of the names of such nominees, together with their
qualifications for service as a director of the Company. In order for any
nominees for directors nominated by stockholders to be considered by the
Nominating Committee, such nominations must be submitted no later than
December 1st of the year preceding the Annual Meeting. During 2001, the
members of the Nominating Committee were Dr. Kuhla, Dr. Jackson, and Dr.
Stiller. The Nominating Committee did not meet during the fiscal year ended
December 31, 2001.

During the fiscal year ended December 31, 2001, the Board of Directors held
eight meetings. At certain meetings for limited periods of time and for
limited considerations, the Board met as an Executive Committee where only the
independent directors and the Chairman were represented on such Executive
Committee, and where only such committee members were present. Each Board
member standing for reelection 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 committee.

PROPOSAL 2
INCREASE IN SHARES ISSUABLE UNDER NPS EQUITY INCENTIVE PLANS

In March 2002, the Board of Directors adopted, subject to stockholder
approval, amendments to the Company's 1998 Stock Option Plan (1998 Plan) and
the 1994 Non-Employee Directors' Stock Option Plan (Directors' Plan). The
amendments increase by 1,900,000 the number of shares authorized for issuance
under the 1998 Plan from 3,000,000 shares to 4,900,000 shares, and by 100,000
the number of shares authorized for issuance under the Directors' Plan from
260,000 to 360,000 shares.

Stockholders are requested in this Proposal 2 to approve the amendments to
the 1998 Plan and the Directors' Plan. The affirmative vote of a majority of
the vote cast on this Proposal 2, whether present in person or represented by
proxy and entitled to vote at the meeting, will be required to approve this
Proposal 2. The vote concerning approval of the amendment of the respective
plans will be considered as one proposal.

Summaries of the principal features of each of the plans are provided
below, but are qualified in their entirety by reference to the full text of
each of the plans that were filed electronically with this Proxy Statement
with the Securities and Exchange Commission, such text is not included in the
printed version of this Proxy.

The Board believes the proposed increases in the number of shares reserved
for issuance under the 1998 Plan and the Directors' Plan are in the best
interests of the Company. The increases will provide additional reserves of
shares needed to attract, retain, and motivate employees, directors, and
consultants.

1994 Non-Employee Directors' Stock Option Plan

In January 1994, the Board adopted, and the stockholders subsequently
approved, the 1994 Non-Employee Directors' Stock Option Plan (Directors'
Plan). An amendment to increase from 90,000 to 160,000 the number of shares
available for grant under the Directors' Plan was approved by the stockholders
in July 1996. In May 1999 a subsequent amendment was approved by stockholders
to increase the number of shares available for issuance from 160,000 to
260,000. Under the Directors' Plan, non-employee directors of the Company are
eligible to receive options. As of the record date, nine directors were
eligible for rewards under the Directors' Plan. Options granted under the
Directors' Plan are automatic and non-discretionary and do not qualify as
ISOs. Pursuant to the terms of the Directors' Plan, each person who is elected
for the first time to be an outside director of the Company and who is not
otherwise employed by the Company or an affiliate of the Company (a "Non-
Employee Director") will automatically be granted an option to purchase 15,000
shares of common stock (subject to adjustment as provided in the Directors'
Plan) upon the date of his or her election to the Board. Originally, under the
Directors' Plan, on December 1 of each year, each person who was then a Non-
Employee Director and had been a Non-Employee Director for at least three
months was automatically granted an option to purchase 3,000 shares of common
stock. In May 2000, this date was amended to provide that the grant date would
be the same date as the grant date for employee options, which date was
historically in December and was changed to May as part of arrangements made
by the Company incident to the Company's acquisition of Allelix
Biopharmaceuticals Inc., effective December 29, 1999.

No option granted under the Directors' Plan may be exercised after the
expiration of ten years from the date such option was granted. Options granted
under the Directors' Plan vest at a rate of 28% of the shares subject to the
option one year after date of grant and 3% of the shares become exercisable
each month thereafter, so long as the optionee has, during the entire period
prior to such vesting date, continuously served as a non-employee director or
in other continuous affiliation as provided under the Directors' Plan. If the
optionee's service as a non-employee director terminates for any reason other
than death, the option will remain exercisable for twelve months after the
date of termination of such directorship or later if other affiliations with
the Company continue thereafter, or until the option's expiration date, if
earlier. If the optionee dies, the option will remain exercisable for eighteen
months following the date of death or until the expiration date of the option,
whichever is earlier. In the event of a change in control transaction in which
the Company is not the surviving corporation, or in which more than 50% of the
shares of the Company's common stock entitled to vote are exchanged, the time
during which options outstanding under the Directors' Plan vest shall be
accelerated. The exercise price of options granted under the Directors' Plan
is 100% of the fair market value of the common stock on the date of grant.
Options granted under the Directors' Plan are generally non-transferable.
Unless otherwise terminated by the Board, the Directors' Plan automatically
terminates in January 2004.

As of December 31, 2001, options to purchase a total of 37,290 shares of
common stock had been exercised under the Directors' Plan at exercise prices
from $3.00 to $10.25 per share. As of that date, options to purchase 210,180
shares of common stock with exercise prices from $3.00 to $29.53 per share and
a weighted average exercise price per share of $11.46 were outstanding. As of
December 31, 2001, 12,530 shares remain available for future awards under the
Directors' Plan. Prior to the adoption of the Directors' Plan, the Company
granted options to directors under the 1987 Stock Option Plan.

1998 Stock Option Plan

The following summary of the principal features of the 1998 Plan is
qualified in its entirety by reference to the full text of the 1998 Plan, as
amended, that was filed electronically with this Proxy Statement with the
Securities and Exchange Commission, such text is not included in the printed
version of this Proxy. A copy of the 1998 Plan can be obtained from the
Company upon request.

Summary

On March 3, 1998, the Board adopted the 1998 Stock Option Plan, which was
subsequently approved by the stockholders on May 20, 1998. There were a total
of 1,000,000 shares were authorized for issuance under the 1998 Plan. Pursuant
to Board and stockholder approval, this amount was increased to 3,000,000
shares in June 2000. As of December 31, 2001, options to purchase a total of
290,664 shares of common stock had been exercised for cash and services under
the 1998 Plan at a weighted average exercise price of $7.55 per share. As of
December 31, 2001, options to purchase 1,608,456 shares of common stock were
outstanding with exercise prices ranging from $4.50 to $56.3125 per share, and
a weighted average exercise price per share of $17.52. As of December 31,
2001, 1,100,880 shares remain available for future option grants under the
1998 Plan.

Purpose

The 1998 Plan was adopted to provide a means by which employees (including
officers), directors, and consultants to the Company and its affiliates may be
given an opportunity to benefit from increases in the value of the stock of
the Company, to secure and retain the services of persons holding or capable
of filling such positions, and to provide incentives for such persons to exert
maximum efforts on behalf of the Company and thereby promote the long-term
interest of the Company, including the growth in value of the Company's equity
and enhancement of long-term stockholder value.

Administration

The 1998 Plan is administered by the Board. The Board has the power to
construe and interpret the 1998 Plan and, subject to the provisions of the
1998 Plan, to determine the persons to whom and the dates on which options
will be granted, what type of option will be granted, the number of shares to
be subject to each option, the time or times during the term of each option
within which all or a portion of such option may be exercised, the exercise
price, the type of consideration, and other terms of the option. The Board is
authorized to delegate administration of the 1998 Plan to a committee or
committees composed of one or more members of the Board and has delegated such
administration to the Compensation Committee (the "Committee"). The Committee
has the powers to administer the 1998 Plan subject to such limitations as the
Board provides. As used herein with respect to the 1998 Plan, where
appropriate, the term "Board" refers to the Compensation Committee.

In order to maximize the Company's ability to recognize a business expense
deduction under Section 162(m) of the Code in connection with compensation
recognized by "covered employees" (defined in Section 162(m) as the chief
executive officer and other four most highly compensated officers), the
regulations under Section 162(m) require that the directors who serve as
members of the Committee responsible for administering the 1998 Plan with
respect to these covered employees must be "outside directors." The 1998 Plan
provides that in the discretion of the Board, a committee may consist solely
of two or more "outside directors," in accordance with Code Section 162(m), or
solely of two or more "non-employee directors," in accordance with Rule 16b-3.
The Committee composition as described above currently consists of three
outside, non-employee directors.

Eligibility

Employees, officers, directors, and consultants of the Company and its
affiliates are eligible to receive stock option grants under the 1998 Plan. As
of the record date, approximately 150 employees and 10 directors were eligible
for awards under the 1998 Plan.

The 1998 Plan provides for the grant of incentive stock options ("ISOs")
and nonstatutory stock options ("NSOs"). ISOs granted under the 1998 Plan are
intended to qualify as "incentive stock options" within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"). NSOs
granted under the 1998 Plan are intended not to qualify as incentive stock
options under the Code. See "Federal Income Tax Information" for a discussion
of the tax treatment of the various awards included in the 1998 Plan.

ISOs may be granted under the 1998 Plan to employees (including officers)
of the Company and any affiliates. Employees (including officers), directors,
and consultants of the Company are all eligible to receive NSO awards under
the 1998 Plan.

ISOs granted to a 10% stockholder (i.e. an employee who, at the time of the
grant, owns or is deemed to own, stock possessing more than 10% of the total
combined voting power of the Company or any affiliate of the Company) must
have an exercise price at least 110% of the fair market value of the stock
subject to the option on the date of grant, and the term of the option does
not exceed five years from the date of grant. For ISOs granted under the 1998
Plan, the aggregate fair market value determined at the time of grant of the
shares of Common Stock with respect to which such options are exercisable for
the first time by an optionee during any calendar year (under all such plans
of the Company and its affiliates), may not exceed $100,000.

In order to ensure that the Company will be able to deduct for tax purposes
the compensation attributable to the exercise of options granted under the
1998 Plan, the Company has included in the 1998 Plan a provision limiting the
maximum number of shares of Common Stock that may be covered by stock options
issued under the 1998 Plan to one individual for any consecutive three
calendar years to 750,000.

Stock Subject to the Plan

The maximum number of shares of Common Stock that may be issued pursuant to
options granted under the 1998 Plan is 3,000,000 shares. Approval of Proposal
2 at the Annual Meeting of Stockholders on May 23, 2002 will increase this
amount to 4,900,000 shares. Any shares of stock granted under the 1998 Plan
that are forfeited because of the failure to meet an option grant contingency
or condition shall again be available for delivery pursuant to new grants. To
the extent any shares of stock covered by a grant are not delivered to an
optionee because the award is forfeited or canceled, or the shares of stock
are not delivered because the award is settled in cash, such shares shall not
be deemed to have been delivered for purposes of determining the maximum
number of shares of stock available for delivery under the 1998 Plan. If the
exercise price of any option granted under the 1998 Plan is satisfied by
tendering shares of stock of the Company, only the number of shares of stock
issued net of the shares of stock tendered shall be deemed delivered for
purposes of determining the maximum number of shares of stock available for
delivery under the 1998 Plan. Shares of stock delivered under the 1998 Plan in
settlement, assumption, or substitution of outstanding awards (or obligations
to grant future awards) under the plans or arrangements of another entity
shall not reduce the maximum number of shares of stock available for delivery
under the 1998 Plan, to the extent that such settlement, assumption, or
substitution is a result of the Company or an affiliate acquiring another
entity (or an interest in another entity).

Terms of the Options

The following is a description of the permissible terms of options under
the 1998 Plan. Individual option grants may be more restrictive as to any or
all of the permissible terms described below.

Exercise Price, Payment. The exercise price of option grants under the 1998
Plan may not be less than the fair market value of the Common Stock subject to
the option on the date of the option grant, and in some cases with respect to
ISOs (see "Eligibility" above) may not be less than 110% of such fair market
value.

The exercise price of options granted under the 1998 Plan may be paid
either:

(1) in cash at the time the option is exercised;

(2) by delivery of other Common Stock of the Company held by the Optionee
for at least six months or a combination of cash and already owned
Common Stock;

(3) pursuant to a deferred payment arrangement;

(4) pursuant to a broker-assisted exercise same-day sales program;

(5) in any other form of legal consideration acceptable to the Board; or

(6) any combination of the above.

Exercise Price, No Repricing. Except for certain adjustments due to
corporate transactions (see "Adjustment Provisions" and "Effect of Certain
Corporate Events" below), the exercise price for any stock option grant under

the 1998 Plan may not be decreased after the grant of such stock option, and a
stock option may not be surrendered as consideration in exchange for the grant
of a new stock option with a lower exercise price.

Option Exercise. Options granted under the 1998 Plan may become exercisable
("vest") in cumulative increments as determined by the Board. The Board has
the power to accelerate the time during which an option may be exercised, and
options granted may contain provisions for accelerated vesting upon specified
events or conditions. In addition, options granted under the 1998 Plan may
permit exercise prior to vesting, but in such event, the optionee may be
required to enter into an early exercise stock purchase agreement that allows
the Company to repurchase shares not yet vested at their exercise price should
the optionee leave the employ of the Company before vesting. To date, options
granted under the 1998 Plan generally become exercisable at the rate of 28% of
the shares subject to the option vest at the end of the first year and 2% of
the shares vest monthly thereafter.

Term. The maximum term of ISOs and NSOs under the 1998 Plan is ten years,
except that in certain cases (see "Eligibility") the maximum term of ISOs is
five years. ISO status terminates three months after termination of the
optionee's employment with the Company or association as director or affiliate
of the Company, unless (a) such termination is due to such person's permanent
and total disability (as defined in the Code), in which case the option may,
but need not, provide that it may be exercised at any time within one year of
such termination; (b) the optionee dies while serving, or within a three-month
period of having served the Company or any affiliate of the Company, in which
case the option may, but need not, be exercisable (to the extent that the
option was exercisable at the time of the optionee's death) within twelve
months of the optionee's death by the person or persons to whom the rights to
such option pass by will or by the laws of descent and distribution; or (c)
the option by its terms specifically provide otherwise. Individual options by
their terms may provide for exercise within a longer period of time following
termination of employment or the consulting relationship.

Adjustment Provisions. If there is any change in the Common Stock subject
to the 1998 Plan or subject to any award granted under the 1998 Plan (through
merger, consolidation, reorganization, recapitalization, stock dividend,
dividend in property other than cash, stock split, liquidating dividend,
combination of shares, exchange of shares, change in corporate structure or
otherwise), the 1998 Plan and awards outstanding thereunder will be
appropriately adjusted as to the type of security and the maximum number of
shares subject to such plan, the maximum number of shares which may be granted
to an employee during any calendar year, and the type of security, number of
shares and price per share of stock subject to such outstanding awards in
order to preserve (or prevent enlargement of) the benefits or potential
benefits intended at the time of the grant.

Effect of Certain Corporate Transactions. The 1998 Plan provides that, in
the event of a specified type of merger or other corporate reorganization, the
time during which options outstanding under the Plan become vested shall be
accelerated and all outstanding Options 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.

Duration, Amendment, and Termination. The Board may suspend or terminate
the 1998 Plan without stockholder approval or ratification at any time or from
time to time. The Board may also amend the 1998 Plan at any time or from time
to time. However, no such amendment will be effective unless necessary in
order for the 1998 Plan to satisfy or continue to satisfy Sections 422 and/or
162(m) of the Code, if applicable, Rule 16b-3, and/or Nasdaq or other
securities exchange listing requirements, or if such amendment would increase
the number of shares issuable under the 1998 Plan or decrease the minimum
stock option exercise price set forth in the 1998 Plan or permit repricing
outstanding options. The Board may submit any other amendment to the 1998 Plan
for stockholder approval, including, but not limited to, amendments intended
to satisfy the requirements of Section 162(m) of the Code regarding the
exclusion of performance-based compensation from the limitation on the
deductibility of compensation paid to certain employees.

Restriction on Transfer. Except as otherwise provided by the Board, awards
under the 1998 Plan are not transferable other than as designated by the
participant by will or by the laws of descent and distribution. In

general, ISOs may not be transferred by the optionee otherwise than by will or
by the laws of descent and distribution and, during the lifetime of the
optionee, may be exercised only by the optionee. NSOs may not be transferred
except when transfer to a family member or related trust or partnership is
authorized by express provision of the option grant agreement, by will or by
the laws of descent and distribution or pursuant to a domestic relations order
satisfying the requirements of Rule 16b-3 and, during the lifetime of the
optionee, may be exercised only by the optionee, a valid family member, or a
transferee pursuant to a domestic relations order.

Federal Income Tax Information

Incentive Stock Options. ISOs under the 1998 Plan are intended to be
eligible for the favorable federal income tax treatment accorded "incentive
stock options" under the Code.

There generally are no federal income tax consequences to the optionee or
the Company by reason of the grant or exercise of an ISO. However, the
exercise of an ISO may increase the optionee's alternative minimum tax
liability, if any.

If an optionee holds stock acquired through exercise of an ISO for at least
two years from the date on which the option is granted and at least one year
from the date of exercise of the option, any gain or loss on a disposition of
such stock will be long-term capital gain or loss. Generally, if the optionee
disposes of the stock before the expiration of either of these holding periods
(a "disqualifying disposition"), at the time of disposition, the optionee will
realize taxable ordinary income equal to the lesser of (a) the excess of the
stock's fair market value on the date of exercise over the exercise price, or
(b) the optionee's actual gain, if any, on the purchase and sale. The
optionee's additional gain or any loss upon the disqualifying disposition will
be a capital gain or loss which will be long-term or short-term depending on
whether the stock was held for more than one year. Long-term capital gains
currently are generally subject to lower tax rates than ordinary income. The
capital gains rate for capital assets held for eighteen months or more for
federal income tax purposes is currently 20% while the maximum rate for
capital assets held for one year and less than eighteen months is 28%. The
maximum ordinary income rate is effectively 39.1% at the present time.
Slightly different rules may apply to optionees who acquire stock subject to
certain repurchase options or who are subject to Section 16(b) of the Exchange
Act.

To the extent the optionee recognizes ordinary income by reason of a
disqualifying disposition, the Company will generally be entitled (subject to
the requirement of reasonableness, the provisions of Section 162(m) of the
Code and the satisfaction of a tax reporting obligation) to a corresponding
business expense deduction in the tax year in which the disqualifying
disposition occurs.

Nonstatutory Stock Options. NSOs granted under the 1998 Plan generally have
the following federal income tax consequences: There are no tax consequences
to the optionee or the Company by reason of the grant of an NSO. Upon exercise
of an NSO, the optionee normally will recognize taxable ordinary income equal
to the excess of the stock's fair market value on the date of exercise over
the option exercise price. Generally, with respect to employees, the Company
is required to withhold from regular wages or supplemental wages an amount
based on the ordinary income recognized. Subject to the requirement of
reasonableness, the provisions of Section 162(m) of the Code and the
satisfaction of a tax reporting obligation, the Company will generally be
entitled to a business expense deduction equal to the taxable ordinary income
realized by the optionee. Upon disposition of the stock, the optionee will
recognize a capital gain or loss equal to the difference between the selling
price and the sum of the amount paid for such stock plus any amount recognized
as ordinary income upon exercise of the option. Such gain or loss will be long
or short-term depending on whether the stock was held for more than one year.
Slightly different rules may apply to optionees who acquire stock subject to
certain repurchase options or who are subject to Section 16(b) of the Exchange
Act.

Potential Limitation on Company Deductions. Section 162(m) of the Code
denies a deduction to any publicly held corporation for compensation paid to
certain employees in a taxable year to the extent that compensation exceeds
$1,000,000 for a covered employee. It is possible that compensation
attributable to awards under the 1998 Plan, when combined with all other types
of compensation received by a covered employee from the Company, may cause
this limitation to be exceeded in any particular year.

Certain kinds of compensation, including qualified "performance-based
compensation," are disregarded for purposes of the deduction limitation. In
accordance with Treasury regulations issued under Section 162(m) of the Code,
compensation attributable to stock options will qualify as performance-based
compensation, provided that: (a) the stock award plan contains a per-employee
limitation on the number of shares for which stock options may be granted
during a specified period; (b) the per-employee limitation is approved by the
stockholders; (c) the award is granted by a compensation committee comprised
solely of "outside directors;" and (d) the exercise price of the award is no
less than the fair market value of the stock on the date of grant.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 2

PROPOSAL 3
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS

The Board of Directors has selected KPMG LLP as the Company's independent
auditors for the fiscal year ending December 31, 2002, and has further
directed that management submit the selection of KPMG as independent public
auditors for ratification by the stockholders at the Annual Meeting. KPMG has
audited the Company's financial statements since the Company's inception in
1986. 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 appropriate questions.

. Audit Fees. KPMG served as independent auditors to the Company for the
fiscal year ended December 31, 2001. Fees for the audit of the Company's
2001 annual financial statements and reviews of our quarterly financial
statements included in our reports on Form 10-Q for 2001 were $85,000.

. Financial Information Systems Design and Implementation Fees. No
services were performed by, and no fees were incurred to KPMG in
connection with financial information systems design and implementation
projects for 2001.

. All Other Fees. The aggregate fees invoiced to the Company by KPMG for
all other services for 2001 were $295,000. All other services consist of
audit-related fees of $66,000 and tax compliance and consulting fees of
$229,000. Audit-related fees consisted primarily of review of
registration statements and issuance of consents. Tax consulting fees
arose primarily from tax planning for operations in the U.S. and Canada.

Stockholder ratification of the selection of KPMG as the Company's
independent auditors is not required by the Company's Bylaws or otherwise.
However, the Board is submitting the selection of KPMG to the stockholders for
ratification as a matter of good corporate practice. If the stockholders fail
to ratify the selection, the Board will reconsider whether or not to retain
that firm. Even if the selection is ratified, the Board in its discretion may
direct the appointment of a different independent accounting firm at any time
if the Board determines that such a change would be in the best interests of
the Company and its stockholders.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 3

REPORT OF THE AUDIT COMMITTEE (1)
for 2001

The Audit Committee of the Board is responsible for, among other things,
considering the appointment of the independent auditors for the Company,
reviewing with the auditors the plan and scope of the audit and audit fees,
monitoring the adequacy of reporting and internal controls, and meeting
periodically with independent auditors. Under the rules of the National
Association of Securities Dealers, all of the members of the Audit Committee
are independent.

In connection with the December 31, 2001 audited financial statements, the
Audit Committee (1) reviewed and discussed the audited financial statements
with management; (2) discussed with the independent auditors the matters
required to be discussed by Statement on Auditing Standards No. 61; and (3)
received the written disclosures and the letter from the independent
accountants required by Independence Standards Board Statement No. 1 and
considered the compatibility of non-audit services with the auditor's
independence. The Committee also met with the Company's Chief Financial
Officer and the Company's Controller and utilized such services of the Company
as the Committee thought reasonably necessary. Based upon all these reviews
and discussions, the Audit Committee has recommended to the Board of
Directors, and the Board of Directors has approved, that the Company's audited
financial statements be included in the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 2001.

The Audit Committee

Joseph Klein, III, Chairman
Thomas N. Parks
Edward Rygiel
- --------

(1) This Report of the Audit Committee shall not be deemed incorporated by
reference in previous or future documents filed by the Company with the
Securities and Exchange Commission under the Securities Act of 1933 or
under the Securities Exchange Act of 1934, except to the extent the
Company specifically incorporates this Report by reference in any such
document.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding the ownership
of NPS common stock as of April 9, 2001 by: (a) all those known by the Company
to be beneficial owners of more than five percent of the Company's common
stock; (b) each current director and nominee for director; (c) each of the
executive officers named in the Summary Compensation Table; and (d) all
executive officers and directors of the Company as a group.

Amount of
Name and Address of Beneficial Owner (unless otherwise Beneficial Percent of
noted) Ownership Total (1)
------------------------------------------------------ ---------- ----------

T. Rowe Price Associates, Inc. (2)...................... 2,957,550 9.77%
100 East Pratt Street
Baltimore, MD 21202

Zurich Scudder Investments, Inc......................... 1,808,100 5.97%
345 Park Avenue
New York, NY 10154

Wellington Management Company, LLP...................... 1,662,809 5.49%
75 State Street
Boston, MA 02109

Morgan Stanley Dean Witter & Co......................... 1,535,956 5.07%
1585 Broadway
New York, NY 10036

Hunter Jackson, Ph.D. (3)............................... 602,088 1.97%

Thomas N. Parks, Ph.D. (4).............................. 338,498 1.12%

Calvin R. Stiller (5)................................... 259,149 *

Thomas B. Marriott, Ph.D. (6)........................... 170,674 *

John R. Evans (7)....................................... 148,990 *

N. Patricia Freston, Ph.D. (8).......................... 79,680 *

Donald E. Kuhla, Ph.D. (9).............................. 54,720 *

Robert K. Merrell (10).................................. 47,960 *

Peter Tombros (11)...................................... 30,620 *

Edward K. Rygiel (12)................................... 30,470 *

Joseph Klein, III (13).................................. 23,220 *

David L. Clark (14)..................................... 15,457 *

Santo J. Costa, J.D. (15)............................... 12,220 *

James G. Groninger (16)................................. 5,680 *

All directors and executive officers as a group (17).... 2,215,751 7.08%

- --------
* Means less than 1%.

The above table is based upon information supplied by officers, directors,
and principal stockholders and Schedules 13D and 13G filed with the
Commission. Beneficial ownership is determined in accordance with the rules
of the Commission and generally includes voting or investment power with
respect to securities.

Except as set forth herein, the address of the persons set forth above is
the address of the Company appearing elsewhere in this Proxy Statement.

(1) The number of shares of common stock issued and outstanding on April 9,
2002 was 30,277,131 shares, which amount includes 422,146 exchangeable
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 April 9, 2002, plus shares of common stock
subject to options held by such person at April 9, 2002 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 noted below.
(2) These securities are owned by various individual and institutional
investors which T. Rowe Price Associates, Inc. serves as investment
adviser with power to direct investments and/or sole power to vote the
securities. For purposes of the reporting requirements of the Securities
Exchange Act of 1934, T. Rowe Price Associates is deemed to be a
beneficial owner of such securities; however, T. Rowe Price Associates
expressly disclaims that it is, in fact, the beneficial owner of such
securities.
(3) Includes 239,286 shares held in a trust and 2 shares held by Dr.
Jackson's children, of which he disclaims beneficial ownership. Also
includes 362,800 shares subject to options exercisable within 60 days of
April 9, 2002.
(4) Includes 10,000 shares held in a trust of which Dr. Parks disclaims
beneficial ownership. Also includes 26,220 shares subject to options
exercisable within 60 days of April 9, 2002.
(5) Includes 240,443 shares held by Canadian Medical Discoveries Fund, of
which Dr. Stiller disclaims beneficial ownership. Also includes 15,906
shares subject to options exercisable within 60 days of April 9, 2002.
(6) Includes 5,041 shares held by spouse of which Mr. Marriott disclaims
beneficial ownership. Also includes 152,400 shares subject to options
exercisable within 60 days of April 9, 2002.
(7) Includes 19,791 shares subject to options exercisable within 60 days of
April 9, 2002.
(8) Includes 56,300 shares subject to options exercisable within 60 days of
April 9, 2002.
(9) Includes 17,220 shares subject to options exercisable within 60 days of
April 9, 2002.
(10) Includes 42,960 shares subject to options exercisable within 60 days of
April 9, 2002.
(11) Includes 19,020 shares subject to options exercisable within 60 days of
April 9, 2002.
(12) Includes 26,270 shares subject to options exercisable within 60 days of
April 9, 2002.
(13) Includes 23,220 shares subject to options exercisable within 60 days of
April 9, 2002.
(14) Includes 11,800 shares subject to options exercisable within 60 days of
April 9, 2002.
(15) Includes 11,220 shares subject to options exercisable within 60 days of
April 9, 2002.
(16) Includes 2,000 shares owned by spouse of which Mr. Groninger disclaims
beneficial ownership. Also includes 1,380 shares subject to options
exercisable within 60 days of April 9, 2002.
(17) Includes 18 people. An aggregate of 1,031,552 shares are subject to
options held by such 18 people and exercisable within 60 days of April 9,
2002.

Section 16(a) Beneficial Ownership Reporting Compliance

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

To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company or written representations that no other
reports were required, during the fiscal year ended December 31, 2001, the
Company believes that all reporting persons complied with all applicable
Section 16(a) filing requirements except that one report, covering three
transactions, was filed late by Mr. David L. Clark; and one transaction was
filed late by Mr. Donald E. Kuhla.

EXECUTIVE COMPENSATION

Compensation of Directors

The Company's directors do not currently receive any cash compensation for
service on the Board or any Committee thereof. Outside directors are
reimbursed for out-of-pocket expenses in connection with attendance at Board
and Committee meetings. Directors are eligible to receive stock options under
the Directors' Plan described under Proposal 2 and stock bonuses under the
Non-Employee Directors' Stock Bonus Program described below.

Non-Employee Directors' Stock Bonus Program

In December 1994, the Board adopted the Non-Employee Directors' Stock Bonus
Program under the 1994 Equity Incentive Plan (Stock Bonus Program). Under the
Stock Bonus Program, non-employee directors are eligible to receive grants of
shares of common stock for attendance at Board and Committee meetings. The
Stock Bonus Program provides each Non-Employee Director of the Company with a
non-discretionary award of 200 shares of common stock for each Board meeting
attended, and, through December 31, 2000, 200 shares of common stock per year
for serving on a Board Committee. Beginning in January 2001, this same formula
remains in effect except that each non-employee director will receive 200
shares of common stock for each committee meeting attended and no shares for
membership on such committee. A total of 18,400 shares were granted under the
Stock Bonus Program for meetings attended in 2001.

The right to receive awards under the Stock Bonus Program is generally non-
transferable. The stock awards are usually made during the first quarter of
each year for Board activities during the previous year. Non-employee
directors entitled to stock bonus awards shall not possess any rights of a
stockholder of the Company until such shares are delivered to the non-employee
director. Unless otherwise terminated by the Board, the Stock Bonus Program
terminates in January 2004.

Compensation of Executive Officers

The following table shows for the fiscal years ended December 31, 2001,
December 31, 2000, and December 31, 1999, certain compensation awarded, paid
to, or earned by, the Company's Chief Executive Officer and its other four
most highly compensated executive officers (the "Named Executive Officers"):

Summary Compensation Table

Long-Term
Compensation
Annual Compensation Stock
------------------------- Options
Name and Principal Position Year Salary ($) Other ($) Granted(#)
--------------------------- ---- ---------- --------- ------------

Hunter Jackson, Ph.D.................................... 2001 383,300 149,122(1) 40,000
Chief Executive Officer, President and 2000 309,642 152,620(2) 40,000
Chairman of the Board 1999 275,619 4,800(3) 40,000

David L. Clark.......................................... 2001 214,808 5,100(3) 20,000
Vice President, Operations 2000 169,703 5,100(3) 20,000
1999 119,654 3,590(3) 20,000

N. Patricia Freston, Ph.D............................... 2001 197,631 5,100(3) 20,000
Vice President, Human Resources 2000 158,242 5,100(3) 20,000
1999 151,793 4,584(3) 20,000

Thomas B. Marriott, Ph.D................................ 2001 218,181 5,100(3) 20,000
Vice President, Development Research 2000 197,404 5,100(3) 20,000
1999 189,757 4,800(3) 20,000

Robert K. Merrell....................................... 2001 214,631 5,100(3) 20,000
Vice President, Finance, Chief Financial 2000 161,538 5,100(3) 20,000
Officer, and Treasurer 1999 155,272 4,800(3) 24,000

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(1) Represents payments by the Company in 2001 for expenses incurred in
connection with Dr. Jackson's relocation to Salt Lake City, Utah,
including moving, transportation, legal, and tax services, and costs
incurred by Dr. Jackson in connection with selling his residence in
Toronto and purchasing a residence in Salt Lake City ($144,022); and
401(k) Company match ($5,100).
(2) Represents payments by the Company in 2000 for expenses incurred in
connection with Dr. Jackson's relocation to Toronto, Canada, including
moving, transportation, legal and tax services, and costs incurred by Dr.
Jackson in connection with selling his prior residence and purchasing a
residence in Toronto ($147,520); and 401(k) Company match ($5,100).
(3) 401(k) Company match

1987 Stock Option Plan

The 1987 Stock Option Plan (1987 Plan) was adopted in June 1987. The
purposes of the 1987 Plan were to attract and retain qualified personnel, to
provide additional incentives to employees, officers, advisors, directors, and
consultants of the Company, and to promote the success of the Company's
business. No options have been granted under the 1987 Plan since December
1993, and the Company will not make any future grants under the 1987 Plan. As
of December 31, 2001, options to purchase a total of 1,176,442 shares of
common stock had been exercised for cash and services under the 1987 Plan at a
weighted average exercise price of $0.92 per share. As of December 31, 2001,
options to purchase a total of 132,500 shares of common stock were
outstanding, with an exercise price of $2.00 per share.

Options granted under the 1987 Plan generally became exercisable at a rate
of one-third of the shares subject to the option vest on the first anniversary
of the option grant and one-third of the remaining shares subject to the
option vest on each of the second and third anniversary dates of the option
grant. In the event of a change in

control transaction, all outstanding, unvested options shall vest and become
immediately exercisable. The maximum term of a stock option under the 1987
Plan was ten years; however, if the optionee at the time of grant had voting
power over more than ten percent of the Company's outstanding capital stock (a
"10% Holder"), the maximum term of any ISO granted under the 1987 Plan was
five years. The aggregate fair market value of the stock with respect to which
ISOs are exercisable for the first time by an optionee in any calendar year
may not exceed $100,000. The exercise prices of ISOs granted under the 1987
Plan were at least equal to 100%, 110% with respect to 10% Holders, of the
fair market value of the stock subject to the option on the date of grant.
Although no minimum exercise price of NSOs was required under the 1987 Plan,
the exercise price of NSOs previously granted under the 1987 Plan generally
has been at least equal to the fair market value of the stock subject to the
option on the date of the grant. Any option that is exercisable at the time of
grant and which expires no sooner than three years from the grant date is
subject to an option exercise price equal to the fair market value of the
option on the grant date.

1994 Equity Incentive Plan

In January 1994, the Board adopted the 1994 Equity Incentive Plan (1994
Plan), which was subsequently approved by the stockholders in February 1994.
Under the 1994 Plan, 1,702,503 shares have been authorized for issuance. The
purposes of the 1994 Plan are to attract and retain qualified personnel, to
provide additional incentives to employees, officers, directors, and
consultants of the Company and its affiliates and to promote the success of
the Company's business. Under the 1994 Plan, the Company may grant NSOs to
employees, officers, directors, and consultants to the Company and its
affiliates, and may grant ISOs to employees of the Company and its affiliates.
As of December 31, 2001, options to purchase a total of 797,520 shares of
common stock had been exercised for cash and services under the 1994 Plan at a
weighted average exercise price of $8.77 per share. As of December 31, 2001
options to purchase 625,949 shares of common stock were outstanding with
exercise prices ranging from $3.00 to $32.13 per share, and a weighted average
exercise price per share of $8.48. As of December 31, 2001, 279,034 shares
remain available for future option grants under the 1994 Plan.

Options granted under the 1994 Plan prior to December 1, 1997, generally
become exercisable at a rate of 28% of the shares subject to the option at the
end of the first year and 3% of the shares subject to the option at the end of
each calendar month thereafter. Options granted under the 1994 Plan after
December 1, 1997 generally become exercisable at a rate of 28% of the shares
subject to the option at the end of the first year and 2% of the shares
subject to the options at the end of each calendar month thereafter. The
maximum term of a stock option under the 1994 Plan is ten years; however, if
the optionee who is granted an ISO at the time of grant is a 10% Holder, the
maximum term of any ISO granted under the 1994 Plan is five years. If an
optionee terminates his or her service to the Company, the optionee may
exercise only those option shares vested as of the date of termination and
must effect such exercise within three months of termination of service for
any reason other than death or disability, one year after termination due to
disability, and eighteen months after termination due to death. In the event
of a change in control transaction, all outstanding, unvested options shall
vest and become immediately exercisable. The aggregate fair market value with
respect to which ISOs are exercisable for the first time by an optionee in any
calendar year may not exceed $100,000. The exercise price of ISOs granted
under the 1994 Plan must be at least 100%, 110% with respect to 10% Holders,
of the fair market value of the common stock of the Company on the date of
grant. The exercise price of NSOs granted under the 1994 Plan is the fair
market value of the Company's common stock on the date of grant or such other
exercise price as is set by the Board at the date of grant. Payment of the
exercise price may be made in cash or by shares of NPS common stock valued at
the fair market value of such shares on the date of exercise or in any other
form acceptable to the Board. The 1994 Plan also allows the Company to grant
stock bonuses, reload options, rights to purchase restricted stock, and stock
appreciation rights. The 1994 Plan may be amended at any time by the Board,
although certain amendments require stockholder approval. The 1994 Plan will
terminate in January 2004, unless earlier terminated by the Board.

1998 Stock Option Plan

A summary of the 1998 Plan is set forth in Proposal 2.

1994 Employee Stock Purchase Plan

In January 1994, the Board adopted the 1994 Employee Stock Purchase Plan
(ESPP) which was subsequently approved by the stockholders in February 1994. A
total of 90,000 shares are reserved for issuance under the ESPP. Pursuant to
Board and stockholder approval this amount was increased to 160,000 shares in
1996 and to 260,000 in 1999. As of December 31, 2001, a total of 186,019
shares of common stock had been purchased under the ESPP at prices from $2.76
to $34.37 per share. During 2001, under the ESPP, executive officers as a
group purchased 3,182 shares at an average weighted purchase price of $13.33
per share and all employees (excluding executive officers) as a group
purchased 17,631 shares at an average exercise price of $16.89 per share. As
of December 31, 2001, 73,981 shares remain available for purchases under the
ESPP.

The purpose of the ESPP is to assist the Company in retaining the services
of its employees, to secure and retain the services of new employees, and to
provide incentives for such persons to exert maximum efforts for the success
of the Company. The ESPP provides a means by which employees of the Company
and its affiliates may purchase common stock of the company at a discount
through accumulated payroll deductions. The rights to purchase common stock
granted under the ESPP are intended to qualify as options issued under an
"employee stock purchase plan" as that term is defined in Section 423(b) of
the Code. The ESPP is implemented by offerings of rights to eligible
employees. Eligible participants in the ESPP include all employees, including
executive officers who work at least 20 hours per week and are customarily
employed by the Company or an affiliate of the Company for at least five
months per calendar year. Generally, each offering is of 24 months' duration
with purchases occurring every six months. Participants may authorize payroll
deductions of up to 15% of their base compensation for the purchase of common
stock under the ESPP. The ESPP will terminate in January 2004.

The following table sets forth each grant of options to purchase common
stock made during the year ended December 31, 2001 to each of the Named
Executive Officers. Grants of options to each of the Named Executive Officers
were made under the 1998 Plan:

OPTION GRANTS IN 2001

Potential
Realizable Value at
Assumed Annual
Rates of Stock
Securities % of Total Exercise Price Appreciation
Underlying Options or Base for Option Term (2)
Options Granted in Price Expiration -------------------
Name Granted Fiscal Year Per Share Date (1) 5% 10%
---- ---------- ----------- --------- ---------- -- ----------

Hunter Jackson.......... 40,000 5.77% $29.53 6/1/2011 $742,850 $1,882,529
David L. Clark.......... 20,000 2.88% $29.53 6/1/2011 $317,425 $ 941,264
N. Patricia Freston..... 20,000 2.88% $29.53 6/1/2011 $371,425 $ 941,264
Thomas B. Marriott...... 20,000 2.88% $29.53 6/1/2011 $371,425 $ 941,264
Robert K. Merrell....... 20,000 2.88% $29.53 6/1/2011 $371,425 $ 941,264

- --------
(1) These options have a ten-year term, subject to earlier termination upon
death, disability, or termination of employment.
(2) The potential realizable value is calculated based on the term of the
option at its time of grant (ten years). It is calculated by assuming that
the stock price on the date of grant appreciates at the indicated annual
rate compounded annually for the entire term of the option and that the
option is exercised and sold on the last day of its term for the
appreciated stock price. No gain to the optionee is possible unless the
stock price increases over the option term, which will benefit all
stockholders.

The following table sets forth information for fiscal year ended December
31, 2001 with respect to (a) the exercise of stock options by the Named
Executive Officers in 2001; (b) the number of unexercised options held by the
Named Executive Officers as of December 31, 2001; and (c) the value of
unexercised in-the-money options as of December 31, 2000.

AGGREGATED OPTION EXERCISES IN 2001 AND YEAR-END VALUE TABLE

Number of Unexercised Value of In-the-Money
Shares Value Options Options (2)
Acquired Realized ------------------------- -------------------------
Name On Exercise (1) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ---------- ----------- ------------- ----------- -------------

Hunter Jackson.......... 0 $ 0 338,400 91,600 $10,848,095 $1,930,330
David L. Clark.......... 42,297 $1,266,149 5,653 44,650 $ 156,359 $ 928,739
N. Patricia Freston..... 7,762 $ 156,399 59,688 46,950 $ 1,748,367 $1,001,591
Thomas B. Marriott...... 8,000 $ 192,000 144,200 45,800 $ 4,473,110 $ 965,165
Robert K. Merrell....... 32,000 $ 912,983 30,280 47,720 $ 863,202 $1,030,061

- --------
(1) Value realized is based on the fair market value of NPS common stock on
the date of exercise (the closing sales price reported on the Nasdaq
National Market on such date) minus the exercise price, and does not
necessarily indicate that the optionee sold such stock.
(2) Represents the difference between the option exercise price and the
closing price of NPS common stock as reported on the Nasdaq National
Market on December 31, 2001 ($38.30) times the corresponding number of
shares. On April 9, 2002 the closing price of the Company's common stock
was $30.35 as reported on the Nasdaq National Market.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Consulting Agreement with Plexus

Dr. Kuhla, one of our directors since 1991, was a Vice President of Plexus
Ventures from February 1994 through June 1998. We had a consulting agreement
with Plexus through December 31, 1995, under which Plexus assisted us with our
efforts to establish a collaboration for our hyperparathyroidism program. In
December 2001 Plexus earned $60,000 in fees as a result of a milestone payment
by Amgen to NPS for the commencement of a Phase III clinical trial with AMG
073. Plexus may earn an additional $340,000 in fees as we receive payments
from Amgen. We also granted Plexus an option to purchase 20,000 shares of our
common stock at $10.50 per share, with vesting contingent on milestone
payments from Amgen. All options are now vested as a result of the Amgen
milestone payment earned in December 2001. Dr. Kuhla holds a one-third
interest in Plexus.

Pharmaceutical Services Agreement with MDS

Dr. Evans, a director and vice-chairman of our board since December 1999,
is a director of MDS, Inc. In addition, Mr. Rygiel, a director since December
1999 is Executive Vice President of MDS, Inc. MDS is an international health
and life sciences company. By and through its subsidiaries, it provides drug
discovery and development services, including contract research services
related to preclinical studies and clinical trials. We have contracted with
MDS to provide such services for our clinical trials with ALX1-11. In 2001, we
paid MDS approximately $663,164 for such services.

Indemnification Agreements

The Company's policy is to enter into agreements with each of its directors
and executive officers providing for the indemnification of such persons to
the fullest extent permitted by law for any liability they may incur by reason
of their service as officers and/or directors to the Company. The Company has
entered into indemnity agreements with each of its directors and executive
officers.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Mr. Tombros, Mr. Costa, Dr. Evans, and Mr. Groninger served on the
Compensation Committee during the fiscal year 2001. No officer or employee of
the Company sits on the Compensation Committee. No member of the Compensation
Committee has at any time been an officer or employee of the Company. Mr.
Groninger is a brother-in-law of Dr. Jackson, the Company's Chief Executive
Officer, President and Chairman of the Board. Mr. Groninger abstains from
participating in the determination of the proper compensation package for Dr.
Jackson.

Pharmaceutical Services Agreement with MDS

REPORT OF THE COMPENSATION COMMITTEE(1)
for 2001

The Compensation Committee (the "Committee") evaluates the performance of
management and determines compensation policies and levels for the Company's
chief executive officer and the other executive officers of the Company. This
report describes the compensation policies and rationale applicable to the
Company's executive officers with respect to the compensation paid to such
executive officers for the year ended December 31, 2001. During 2001, the
Committee consisted of four directors, each of whom is an independent, non-
employee director.

Compensation Policy

The Committee believes that it is critical to the Company's success that
the Company utilizes programs designed to attract, retain, and motivate highly
talented and team oriented employees at all levels. Compensation programs are
also designed to encourage the attainment of corporate objectives on a
collective effort. In an effort to set appropriate levels of compensation for
the executive officers, the Committee utilizes the advice of compensation
consultants engaged by the Company and reviews the result of an annual
compensation survey of similarly situated biotechnology/biopharmaceutical
companies.

Executive compensation includes a combination of cash, in the form of a
fixed salary, and long-term incentive compensation, in the form of stock
options that vest over time. The Company has rarely granted individual cash
bonuses or options contingent on stated events for individual executives and
the Company does not have a formal bonus program in place.

Salaries

Base salaries represent the fixed component of the Company's executive
compensation package. They are designed to compensate executive officers
competitively at levels necessary to attract and retain qualified executives
in our industry. Salary compensation is determined by evaluating the
compensation of executives in similar positions in peer biotechnology and
pharmaceutical companies, the level of experience of the particular executive
officer, and the executive officer's specific responsibilities. The Committee
also evaluates individual performance and the achievement of Company
objectives in determining base salaries for the executive officers.

The Committee also receives the recommendation of the Company's CEO
concerning salary for each executive as part of a general company-wide salary
assessment performed by Company management.

Long-Term Incentives

The Company seeks to encourage the long-term retention of executive
officers by equity purchase programs and equity-based compensation. The
executive officers are eligible to participate in the Company's Employee Stock
Purchase Plan, and participating executives receive the price discount allowed
by applicable laws and regulations. Additionally, all executive officers are
eligible to participate in the Company's 401(k) retirement plan. Beginning in
1999, the Company contributed to each executive officer's 401(k) account at
the rate of 50% of the employee's direct contribution up to a maximum
contribution by the Company of the lesser of 3% of the employee's salary, or
$5,100 for the year 2001.

Potentially, the most valuable long-term incentive compensation is the
granting of stock options. The granting of stock options at all levels of the
Company is an integral part of the Company's compensation philosophy and
policy. The Committee believes that options vesting over a period of years
align the interests of the employees with the long-term interests of the
Company and its stockholders. Executives received grants vesting over four
years and generally in the same amounts as for prior years. Customarily, the
grants to all Vice Presidents have been in the same amounts with variations
based on subjective factors and upon the recommendation of the CEO.

CEO Evaluation and Compensation

The Chief Executive Officer was a founder of the Company in 1986 and has
served in that capacity since then. In order to determine the appropriate
salary increase and stock option grant for the Chief Executive Officer, the
Compensation Committee considered the salaries of other chief executive
officers in the biotechnology industry, the results of the formal evaluation
of the CEO and Company accomplishments in 2001. The following developments
also were considered: Dr. Jackson's overall leadership of the Company as
President, CEO, and Chairman of the Board; the overall status and progress of
the Company's strategic partnerships; the continued progress of NPS compounds
in discovery and in the clinic. In December 2001, the Committee recommended
that Dr. Jackson's salary remain constant for 2002. In lieu of a base salary
increase, additional stock options will be available, tied to the satisfactory
completion of goals that were set by the Committee.

Policy Regarding Deductibility

We are required to disclose our policy regarding qualifying executive
compensation for deductibility under Section 162(m) of the Code, which
provides that, for purposes of regular income tax and the alternative minimum
tax, the allowable deduction for compensation paid or accrued with respect to
a covered employee of a publicly-held corporation is limited to no more than
$1 million per year. We do not anticipate that compensation payable to any
executive officer will exceed $1 million for fiscal year 2002. The Committee
will continue to evaluate the advisability of qualifying the deductibility of
such compensation in the future.

Compensation Committee

Peter Tombros, Chairman
Santo J. Costa
John R. Evans
James G. Groninger

April 2002

PERFORMANCE MEASUREMENT COMPARISON (1)

COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
AMONG NPS PHARMACEUTICALS, INC., THE NASDAQ STOCK MARKET-US
INDEX AND THE NASDAQ PHARMACEUTICALS INDEX

[CHART]

Measurement Period NPS NASDAQ NASDAQ
(Fiscal Year Covered) Pharmaceuticals, Inc. Stock Market-US Pharmaceuticals Index
- --------------------- --------------------- --------------- ---------------------

Measurement Pt-
Dec-1996 $100 $100 $100
Jun-1997 88 112 102
Dec-1997 70 122 103
Jun-1998 65 147 104
Dec-1998 70 173 131
Jun-1999 60 212 146
Dec-1999 111 321 247
Jun-2000 257 313 336
Dec-2000 436 193 308
Jun-2001 365 170 283
Dec-2001 348 153 262

*$100 INVESTED ON 12/31/96 IN STOCK OR INDEX, INCLUDING REINVESTMENT OF
DIVIDENDS FISCAL YEAR ENDING DECEMBER 31.
- --------
(1) The "Compensation Committee Report" and the "Performance Measurement
Comparison" chart are not "soliciting material," are not deemed filed with
the Commission and are not incorporated by reference in any filing of the
Company under the Securities Act or the Exchange Act. Whether made before
or after the date hereof and irrespective of any general incorporation
language in such filing.

OTHER MATTERS

The Board of Directors knows of no other matters that will be presented for
consideration at the Annual Meeting. 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

/s/ James U. Jensen

James U. Jensen,
Secretary

April 19, 2002

A copy of the Company's Annual Report on Form
10-K for the fiscal year ended December 31,
2001 is available without charge upon written
request to:

NPS Pharmaceuticals, Inc.
Attn: Investor Relations
420 Chipeta Way
Salt Lake City, Utah 84108

NPS PHARMACEUTICALS, INC.
1994 Non-Employee Directors' Stock Option Plan
(as Amended by the Board of Directors on March 8, 2002)

1. Purpose

1.1 The purpose of the 1994 Non-Employee Directors' Stock Option Plan (the
"Plan") is to provide a means by which each director of NPS Pharmaceuticals,
Inc. (the "Company") who is not otherwise an employee of the Company or of any
Affiliate of the Company (each such person being hereafter referred to as a
"Non-Employee Director") will be given an opportunity to purchase stock of the
Company.

1.2 The word "Affiliate" as used in the Plan means any parent corporation
or subsidiary corporation of the Company as those terms are defined in
Sections 424(e) and (f), respectively, of the Internal Revenue Code of 1986,
as amended from time to time (the "Code").

1.3 The Company, by means of the Plan, seeks to retain the services of
persons now serving as Non-Employee Directors of the Company, to secure and
retain the services of persons capable of serving in such capacity, and to
provide incentives for such persons to exert maximum efforts for the success
of the Company.

2. Administration

2.1 The Plan shall be administered by the Board of Directors of the Company
(the "Board") unless and until the Board delegates administration to a
committee, as provided in subparagraph 2.2.

2.2 The Board may delegate administration of the Plan to a committee
composed of not fewer than two members of the Board (the "Committee"). 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, 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.

3. Shares Subject To The Plan

3.1 Subject to the provisions of paragraph 10 relating to adjustments upon
changes in stock, the stock that may be sold pursuant to options granted under
the Plan shall not exceed in the aggregate three hundred sixty thousand
(360,000) shares of the Company's common stock. If any option granted under
the Plan shall for any reason expire or otherwise terminate without having
been exercised in full, the stock not purchased under such option shall again
become available for the Plan.

3.2 The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.

4. Eligibility

4.1 Options shall be granted only to Non-Employee Directors of the Company.

5. Non-discretionary Grants

5.1 Each person who is, after the date of approval of the Plan by the Board
elected for the first time to be a Non-Employee Director shall, upon the date
of his initial election to be a Non-Employee Director by the Board or
stockholders of the Company, be granted an option to purchase 15,000 shares of
common stock of the Company on the terms and conditions set forth herein.

5.2 On December 1, of each year, commencing with December 1, 1994, each
person who is then a Non-Employee Director and has been a Non-Employee
Director for at least three months, shall be granted an option to purchase
3,000 shares of common stock of the Company on the terms and conditions set
forth herein.

6. Option Provisions

Each option shall contain the following terms and conditions:

6.1 The term of each option commences on the date it is granted and, unless
sooner terminated as set forth herein, expires on the date 10 years from the
date of grant ("Expiration Date"). If the optionee's service as a Non-Employee
Director of the Company or as an employee of or consultant to the Company or
any Affiliate of the Company, terminates for any reason or for no reason, the
option shall terminate on the earlier of the Expiration Date or the date 12
months following the date of termination of service; provided, however, that
if such termination of service is due to the optionee's death, the option
shall terminate on the earlier of the Expiration Date or 18 months following
the date of the optionee's death. In any and all circumstances, an option may
be exercised following termination of the optionee's service as a Non-Employee
Director of the Company only as to that number of shares as to which it was
exercisable on the date of termination of such service under the provisions of
subparagraph 6.5.

6.2 The exercise price of each option shall be 100% of the fair market
value of the stock subject to such option on the date such option is granted.

6.3 Payment of the exercise price of each option is due in full in cash
upon any exercise; the optionee may elect to make payment of the exercise
price under one of the following alternatives:

6.3.1 Payment of the exercise price per share in cash at the time of
exercise; or

6.3.2 Provided that at the time of the exercise the Company's common
stock is publicly traded and quoted regularly in the Wall Street Journal:
(a) payment by delivery of shares of common stock of the Company already
owned by the optionee and owned free and clear of any liens, claims,
encumbrances or security interests, which common stock shall be valued at
its fair market value on the date of exercise; or (b) through surrender of
shares of common stock available for exercise under the option, which
common stock shall be valued at its fair market value on the date of
exercise and owned free and clear of any liens, claims, encumbrances, or
security interests.

6.3.3 Payment by a combination of the methods of payment specified in
subparagraphs 6.3.1 and 6.3.2 above.

Notwithstanding the foregoing, this option may be exercised pursuant to a
program developed under Regulation T as promulgated by the Federal Reserve
Board which results in the receipt of cash (or check) by the Company prior to
the issuance of shares of the Company's common stock.

6.4 The Board or Committee may, in its discretion, authorize all or a
portion of the Nonstatutory Stock Options to be granted to an Optionee to be
on terms that permit transfer by such Optionee to (a) the spouse, children or
grandchildren of the Optionee ("Immediate Family Members"), (b) a trust or
trusts for the exclusive benefit of such Immediate Family members, or (c) a
partnership in which such Immediate Family Members are the only partners,
provided that (i) there may be no consideration or any such transfer, (ii) the
stock option agreement pursuant to which such Options are granted must
expressly provide for transferability in a manner consistent with this
Section, (iii) subsequent transfers of transferred options shall be prohibited
except those occurring by will or the laws of descent and distribution, and
(iv) the Options shall continue to be subject to all the terms and conditions
that applied prior to transfer in the same manner and to the same extent as
non-transferred options, including Sections 6.5 Vesting; 6.6 Securities Law
Compliance. The Options shall be exercisable by the transferee only to the
extent, and for the periods specified in such sections. The Company expressly
disclaims any obligation to provide notice to a transferee of the termination
of the Option.

Unless transfer by an Optionee is specifically provided for in the Option
Agreement, a Nonstatutory Stock Option shall not be transferable except by
will or by the laws of descent and distribution or pursuant to a qualified
domestic relations order as defined by the Code or Title I of the Employee
Retirement Income Security Act, or the rules thereunder (a "QDRO"), and shall
be exercisable during the lifetime of the person to whom the Statutory Stock
Option is granted only by such person or any transferee pursuant to a QDRO.

6.5 The option shall become exercisable in installments from the date of
grant at the rates set forth below. Twenty-eight percent of the shares shall
vest at 5:00 p.m., Mountain Standard Time ("MST"), on the first anniversary of
the date of grant and three percent of the remaining shares shall vest at 5:00
p.m. MST, on each monthly anniversary date thereafter (i.e., grant date
December 1, 1999, 28% vest at 5:00 p.m. MST on December 1, 2000 MST, and 3%
vest at 5:00 p.m. MST on the 1st day of each month thereafter), provided that
the optionee has, during the entire period prior to such vesting date,
continuously served as a Non-Employee Director or as an employee of or
consultant to the Company or any Affiliate of the Company, whereupon such
option shall become fully exercisable in accordance with its terms with
respect to that portion of the shares represented by that installment.

6.6 The Company may require any optionee, or any person to whom an option
is transferred under subparagraph 6.4, as a condition of exercising any such
option: (a) to give written assurances satisfactory to the Company as to the
optionee's knowledge and experience in financial and business matters; and (b)
to give written assurances satisfactory to the Company stating that such
person is acquiring the stock subject to the option for such person's own
account and not with any present intention of selling or otherwise
distributing the stock. These requirements, and any assurances given pursuant
to such requirements, shall be inoperative if (a) the issuance of the shares
upon the exercise of the option has been registered under a then-currently-
effective registration statement under the Securities Act of 1933, as amended
(the "Securities Act"), or (b), as to any particular requirement, a
determination is made by counsel for the Company that such requirement need
not be met in the circumstances under the then-applicable securities laws.

6.7 Notwithstanding anything to the contrary contained herein, an option
may not be exercised unless the shares issuable upon exercise of such option
are then registered under the Securities Act or, if such shares are not then
so registered, the Company has determined that such exercise and issuance
would be exempt from the registration requirements of the Securities Act.

7. Covenants Of The Company

7.1 During the terms of the options granted under the Plan, the Company
shall keep available at all times the number of shares of stock required to
satisfy such options.

7.2 The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of stock upon exercise of the options granted under the
Plan; provided, however, that this undertaking shall not require the Company
to register under the Securities Act either the Plan, any option granted under
the Plan, or any stock issued or issuable pursuant to any such option. If the
Company is unable to obtain from any such regulatory commission or agency the
authority which counsel for the Company deems necessary for the lawful
issuance and sale of stock under the Plan, the Company shall be relieved from
any liability for failure to issue and sell stock upon exercise of such
options.

8. Use Of Proceeds From Stock

Proceeds from the sale of stock pursuant to options granted under the Plan
shall constitute general funds of the Company.

9. Miscellaneous

9.1 Neither an optionee nor any person to whom an option is transferred
under subparagraph 6.4 shall be deemed to be the holder of, or to have any of
the rights of a holder with respect to, any shares subject to such option
unless and until such person has satisfied all requirements for exercise of
the option pursuant to its terms.

9.2 Nothing in the Plan or in any instrument executed pursuant thereto
shall confer upon any Non-Employee Director any right to continue in the
service of the Company or any Affiliate or shall affect any right of the
Company, its Board or stockholders or any Affiliate to terminate the service
of any Non-Employee Director with or without cause.

9.3 No Non-Employee Director, individually or as a member of a group, and
no beneficiary or other person claiming under or through him, shall have any
right, title or interest in or to any option reserved for the purposes of the
Plan except as to such shares of common stock, if any, as shall have been
reserved for him pursuant to an option granted to him.

9.4 In connection with each option made pursuant to the Plan, it shall be a
condition precedent to the Company's obligation to issue or transfer shares to
a Non-Employee Director, or to evidence the removal of any restrictions on
transfer, that such Non-Employee Director make arrangements satisfactory to
the Company to insure that the amount of any federal or other withholding tax
required to be withheld with respect to such sale or transfer, or such removal
or lapse, is made available to the Company for timely payment of such tax.

10. Adjustments Upon Changes In Stock

10.1 If any change is made in the stock subject to the Plan, or subject to
any option granted under the Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange
of shares, change in corporate structure or otherwise), the Plan and
outstanding options will be appropriately adjusted in the class(es) and
maximum number of shares subject to the Plan and the class(es) and number of
shares and price per share of stock subject to outstanding options.

10.2 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; or (c) any capital reorganization in which more than fifty percent
(50%) of the shares of the Company entitled to vote are exchanged, then, the
time during which Options outstanding under the Plan become vested shall be
accelerated and all outstanding Options shall become immediately exercisable
upon such event.

11. Amendment of The Plan

11.1 The Board at any time, and from time to time, may amend the Plan.
Except as provided in paragraph 10 relating to adjustments upon changes in
stock, no amendment shall be effective unless approved by the stockholders of
the Company within 12 months before or after the adoption of the amendment,
where the amendment will:

11.1.1 Increase the number of shares which may be issued under the Plan;

11.1.2 Modify the requirements as to eligibility for participation in the
Plan (to the extent such modification requires stockholder approval in order
for the Plan to comply with the requirements of Rule 16b-3); or

11.1.3 Modify the Plan in any other way if such modification requires
stockholder approval in order for the Plan to comply with the requirements of
Rule 16b-3.

11.2 Rights and obligations under any option granted before any amendment
of the Plan shall not be altered or impaired by such amendment unless (a) the
Company requests the consent of the person to whom the option was granted and
(b) such person consents in writing.

12. Termination Or Suspension Of The Plan

12.1 The Board may suspend or terminate the Plan at any time. Unless sooner
terminated, the Plan shall terminate on midnight, January 6, 2004. No options
may be granted under the Plan while the Plan is suspended or after it is
terminated.

12.2 Rights and obligations under any option granted while the Plan is in
effect shall not be altered or impaired by suspension or termination of the
Plan, except with the consent of the person to whom the option was granted.

12.3 The Plan shall terminate upon the occurrence of any of the events
described in Section 10.2 above.

13. Effective Date Of Plan; Conditions Of Exercise

13.1 The Plan shall become effective upon adoption by the Board of
Directors, subject to the condition subsequent that the Plan is approved by
the stockholders of the Company.

13.2 No option granted under the Plan shall be exercised or exercisable
unless and until the condition of subparagraph 13.1 above has been met.

NPS Pharmaceuticals, Inc.

1998 STOCK OPTION PLAN
(reflects all amendments by the Board of Directors through March 8, 2002)

1. General.

1.1 Purpose. The 1998 Stock Option Plan has been established by the Company
to provide a means by which employees, directors, and consultants of the
Company and its Affiliates may be given the opportunity to benefit from
increases in value of NPS stock through the granting of Options. NPS seeks to
(a) retain the services of present employees, directors, and consultants; (b)
secure and retain the services of new employees, directors, and consultants;
and (c) provide incentives for such persons to exert maximum efforts for the
success of the Company and thereby promote the long-term interest of the
Company, including the growth in value of the Company's equity and enhancement
of long-term stockholder return.

1.2 Types of Options. The Company intends that the Options issued under the
Plan shall, in the discretion of the Board or any Board Committee (see
paragraph 3.2), be either Incentive Stock Options or Nonstatutory Stock Options
(defined below).

1.3 Definitions. Unless otherwise defined, capitalized terms shall have the
meaning set forth in Section 2.

2. Definitions.

2.1 Affiliate means any parent corporation or subsidiary corporation of the
Company, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f) respectively, of the Code.

2.2 Board means the Board of Directors of the Company.

2.3 Code means the Internal Revenue Code of 1986, as amended.

2.4 Committee means a Committee appointed by the Board in accordance with
paragraph 3.2 herein.

2.5 Company means NPS Pharmaceuticals, Inc., a Delaware corporation.

2.6 Consultant means any person (including an advisor) engaged by the
Company or an Affiliate to render consulting services under arrangements
intended to compensate such person for such services. The term "Consultant"
shall not include a Director who is paid only a director's fee by the Company
or who is not compensated by the Company for services as a Director.

2.7 Continuous Status as an Employee, Director, or Consultant means the
employment or relationship as an Employee, Director, or Consultant is not
interrupted or terminated by the Company or any Affiliate. The Board, in its
sole discretion, may determine whether Continuous Status as an Employee,
Director, or Consultant shall be considered interrupted in the case of:

2.7.1 any leave of absence approved by the Board, including sick leave,
military leave, or any other personal leave; provided, however, that for
purposes of Incentive Stock Options, any such leave may not exceed 90 days
unless reemployment upon the expiration of such leave is guaranteed by
contract (including certain Company policies) or statute; or

2.7.2 transfers between locations of the Company or between the Company,
Affiliates or its successor.

2.8 Day of Determination means the date of the occurrence of an event that
requires the determination of the Fair Market Value of an award made hereunder.

2.9 Director means a member of the Board.

2.10 Disability means total and permanent disability as defined in Section
22(e)(3) of the Code.

2.11 Employee means any person, including Officers and Directors, employed
by the Company or any Affiliate. Neither service as a Director nor payment of
a director's fee by the Company shall be sufficient to constitute "employment"
by the Company.

2.12 Exchange Act means the Securities Exchange Act of 1934, as amended.

2.13 Fair Market Value means, as of any date, the value of the common stock
of the Company as determined as follows:

2.13.1 If the common stock is listed on any established stock exchange
or a national market system, including without limitation, the National
Market System of the National Association of Securities Dealers, Inc.
Automated Quotation ("Nasdaq") System, the Fair Market Value of a share of
common stock shall be the closing price for such stock on the Day of
Determination as quoted on such system as reported in the Wall Street
Journal or such other source as the Board deems reliable. In the event the
Day of Determination falls on a date that the Nasdaq system is closed, then
the Fair Market Value shall be the closing sales price for such stock on
the last market trading day prior to the Day of Determination as quoted on
such system as reported in the Wall Street Journal or such other source as
the Board deems reliable.

2.13.2 If the common stock is quoted on Nasdaq (but not on the National
Market System thereof) or is regularly quoted by a recognized securities
dealer but selling prices are not reported, the Fair Market Value of a
share of common stock shall be the mean between the bid and asked prices
for the common stock on the last market trading day prior to the day of
determination, as reported in the Wall Street Journal or such other source
as the Board deems reliable;

2.13.3 In the absence of an established market for the common stock, the
Fair Market Value shall be determined in good faith by the Board.

2.14 Incentive Stock Option (or "ISO") means an Option intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code and
the regulations promulgated thereunder.

2.15 Non-Employee Director means a Director who is considered to be a "Non-
Employee Director" in accordance with Rule 16b-3(b)(3), or any other
applicable rules, regulations or interpretations of the Securities and
Exchange Commission.

2.16 Nonstatutory Stock Option (or "NSO") means an Option not intended to
qualify or not eligible to qualify as an ISO or an ISO which, subsequent to
its date of grant, no longer qualifies as an ISO under Section 422 of the
Code.

2.17 Officer means a person who is an officer of the Company within the
meaning of Section 16a-1(f) of the Exchange Act and the rules and regulations
promulgated thereunder.

2.18 Option means a stock option granted pursuant to the Plan.

2.19 Option Agreement means a written agreement between the Company and an
Optionee evidencing the terms and conditions of an individual Option grant.

2.20 Optionee means an Employee, Director, or Consultant who holds an
outstanding Option.

2.21 Outside Director means a Director who is considered to be an "Outside
Director" in accordance with Section 162(m) of the Code, or any other
applicable Code sections, regulations, or interpretations of the IRS.

2.22 Plan means this 1998 Stock Option Plan.

2.23 Rule 16b-3 means Rule 16b-3 of the Exchange Act or any successor to
Rule 16b-3, as in effect when discretion is being exercised with respect to
the Plan.

2.24 Securities Act means the Securities Act of 1933, as amended.

3. Administration.

3.1 Powers and Authority. The Plan shall be administered by or under the
direction of the Board unless and until the Board delegates administration to
a Committee, as provided in paragraph 3.2. The Board shall have the power
subject to and within the limitations of the express provisions of the Plan:

3.1.1 To determine from time to time: (a) which of the persons eligible
under the Plan shall be granted Options; (b) when and how Options shall be
granted; (c) whether an Option shall be intended to qualify as an ISO; (d)
the provisions of each Option granted (which need not be identical)
including the time or times when a person shall be permitted to receive
stock pursuant to the exercise of such Option; (e) whether a person shall
be permitted to exercise such Option; and (f) the number of shares with
respect to which Options shall be granted to each such person.

3.1.2 To construe and interpret the Plan and Options granted under it,
and to establish, amend, and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission, or inconsistency in the Plan or in any Option Agreement,
in a manner and to the extent it shall deem necessary or expedient to make
the Plan fully effective.

3.1.3 To amend the Plan as provided in Section 12.

3.1.4 Generally, to exercise such powers and to perform such acts as the
Board deems necessary or expedient to promote the best interests of the
Company.

3.2 Delegation. 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 Outside Directors or Non-Employee Directors,
to the extent necessary to comply with the applicable provisions of Rule 16b-3
and Section 162(m). 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.

3.3 Director Status. Any requirement that an administrator of the Plan be a
Non-Employee Director or an Outside Director shall not apply if the Board or
the Committee expressly declares that such requirement shall not apply.

4. Shares Subject To The Plan.

4.1 Available Shares. Subject to the provisions of Section 11, the number
of shares that may be issued pursuant to Options granted hereunder shall not
exceed in the aggregate four million nine hundred thousand (4,900,000) shares
of the Company's common stock.

4.2 Forfeited or Canceled Shares. Any shares of stock for which an Option
has been granted under the Plan that are forfeited because of the failure to
meet an Option grant contingency or condition shall again be available for
delivery pursuant to new grants under the Plan. To the extent any shares of
stock covered by an Option are not delivered to an Optionee or beneficiary
because the award is forfeited or canceled, or the shares of stock are not
delivered because the award is settled in cash, such shares shall not be
deemed to have been delivered for purposes of determining the maximum number
of shares of stock available for delivery under the Plan.

4.3 Payment with Shares. If the exercise price of any Option granted under
the Plan is satisfied by tendering shares of stock to the Company (by either
actual delivery or by attestation), only the number of shares of stock issued
net of the shares of stock tendered shall be deemed delivered for purposes of
determining the maximum number of shares of stock available for delivery under
the Plan.

4.4 Plan Limits. Shares of stock delivered under the Plan in settlement,
assumption, or substitution of outstanding awards (or obligations to grant
future awards) under the plans or arrangements of another entity shall not
reduce the maximum number of shares of stock available for delivery under the
Plan, to the extent that such settlement, assumption, or substitution is a
result of the Company or Affiliate acquiring another entity (or an interest in
another entity). Subject to the provisions of Section 11, the maximum number
of shares that may be covered by grants to any one individual shall be 750,000
shares during any three consecutive calendar years.

5. Eligibility.

5.1 Option Type. ISOs may be granted only to Employees. NSOs may be granted
to Employees, Directors, or Consultants.

5.2 Section 16 Compliance. No Officer or Director shall be eligible for the
benefits of the Plan unless at the time discretion is exercised in the
selection of an Officer or Director as a person to whom Options may be
granted, or in the determination of the number of shares which may be covered
by Options granted to the Officer or Director, the Plan otherwise complies
with the requirements of Rule 16b-3. This paragraph 5.2 shall not apply if the
Board or Committee expressly declares that it shall not apply.

6. Option Provisions. Each Option shall be in such form and shall contain
such terms and conditions as the Board shall deem appropriate. The provisions
of separate Options need not be identical, but each Option shall include
(through incorporation of provisions hereof by reference in the Option or
otherwise) the substance of each of the following provisions:

6.1 Term. No Option shall be exercisable after the expiration of ten years
from the date it was granted.

6.2 Price. The exercise price of each Option shall be not less than 100% of
the Fair Market Value of the stock subject to the Option on the date the
Option is granted.

6.3 Consideration. The purchase price of stock acquired pursuant to an
Option shall be paid, to the extent permitted by applicable statutes and
regulations:

6.3.1 in cash; or

6.3.2 by delivery of already-owned shares of common stock of the
Company, held by the Optionee for at least six months, or a combination of
cash and already-owned shares of common stock of the Company; or

6.3.3 according to a deferred payment or other arrangement (which may
include, without limiting the generality of the foregoing, the use of other
common stock of the Company) with the person to whom the Option is granted
or to whom the Option is transferred pursuant to paragraph 6.4; or

6.3.4 pursuant to a broker assisted exercise same-day sales program; or

6.3.5 as required in the discretion of the Board or the Committee,
either at the time of the grant or exercise of the Option; or

6.3.6 any combination of 6.3.1 through 6.3.5 above.

In the case of any deferred payment arrangement, interest shall be payable
at least annually and shall be charged at the minimum rate of interest
necessary to avoid the treatment as interest, under any applicable
provisions of the Code, of any amounts other than amounts stated to be
interest under the deferred payment arrangement.

6.4 Transferability.

6.4.1 Incentive Stock Options. In order for an Option to qualify for
treatment as an ISO, it may not be transferable except by will or by the laws
of descent and distribution. In the event an Optionee transfers such

Option, such transfer shall constitute a disqualifying event and the Option
shall no longer qualify as an ISO but shall be considered a NSO under the
terms of this Plan.

6.4.2 Nonstatutory Stock Option. The Board or Committee may, in its
discretion, authorize all or a portion of the NSOs to be granted to an
Optionee to be on terms that permit transfer by such Optionee to (a) the
spouse, children, or grandchildren of the Optionee ("Immediate Family
Members"), (b) a trust or trusts for the exclusive benefit of such Immediate
Family Members, or (c) a partnership in which such Immediate Family Members
are the only partners, provided that (i) there may be no consideration for any
such transfer, (ii) the Option Agreement pursuant to which such Options are
granted must expressly provide for transferability in a manner consistent with
this Section, (iii) subsequent transfers of transferred Options shall be
prohibited except those occurring by will or the laws of descent and
distribution, and (iv) the Options shall continue to be subject to all the
terms and conditions that applied prior to transfer in the same manner and to
the same extent as non-transferred Options, including paragraphs 6.5 through
6.9. The Options shall be exercisable by the transferee only to the extent,
and for the periods specified in such sections. The Company expressly
disclaims any obligation to provide notice to a transferee of the termination
of the Option.

6.4.3 Unless transfer by an Optionee is specifically provided for in an
Option Agreement, a NSO shall not be transferable except by will or by the
laws of descent and distribution or pursuant to a qualified domestic relations
order as defined by the Code or Title I of the Employee Retirement Income
Security Act, or the rules thereunder (a "QDRO"), and shall be exercisable
during the lifetime of the person to whom the NSO is granted only by such
person or any transferee pursuant to a QDRO.

6.5 Vesting. The total number of shares of stock subject to an Option may,
but need not, be allotted in periodic installments (which may, but need not,
be equal). The Option Agreement may provide that from time to time during each
of such installment periods, the Option may become exercisable ("vest") with
respect to some or all of the shares allotted to that period, and may be
exercised with respect to some or all of the shares allotted to such period
and/or any prior period as to which the Option became vested but was not fully
exercised. The Option may be subject to such other terms and conditions on the
time or times when it may be exercised (which may be based on performance
criteria) as the Board may deem appropriate. The provisions of this paragraph
6.5 are subject to any Option provisions governing the minimum number of
shares as to which an Option may be exercised.

6.6 Securities Law Compliance. The Company may require any Optionee, or any
person to whom an Option is transferred under paragraph 6.4, as a condition of
exercising any such Option, (a) to give written assurances satisfactory to the
Company as to the Optionee's knowledge and experience in financial and
business matters and/or to employ a purchaser representative reasonably
satisfactory to the Company who is knowledgeable and experienced in financial
and business matters, and that he or she is capable of evaluating, alone or
together with the purchaser representative, the merits and risks of exercising
the Option; and (b) to give written assurances satisfactory to the Company
stating that such person is acquiring the stock subject to the Option for such
person's own account and not with any present intention of selling or
otherwise distributing the stock. These requirements, and any assurances given
pursuant to such requirements, shall be inoperative if (i) the issuance of the
shares upon the exercise of the Option has been registered under a then
currently effective registration statement under the Securities Act, or (ii)
as to any particular requirement, a determination is made by counsel for the
Company that such requirement need not be met in the circumstances under the
then applicable securities laws.

6.7 Termination of Employment or Relationship as an Employee, Director, or
Consultant. In the event an Optionee's Continuous Status as an Employee,
Director, or Consultant terminates (other than upon the Optionee's death or
Disability), the Optionee may exercise his or her Option, but only within such
period of time as is determined by the Board, and only to the extent that the
Optionee was entitled to exercise at the date of termination (but in no event
later than the expiration of the term of such Option as set forth in the
Option Agreement). In the case of an ISO, the Board shall determine such
period of time (in no event to exceed three months from the date of
termination) when the Option is granted. If, at the date of termination, the
Optionee is not entitled to exercise his or her entire Option, the shares
covered by the unexercisable portion of the Option

shall revert to the Plan. If, after termination, the Optionee does not
exercise his or her Option within the time specified in the Option Agreement,
the Option shall terminate, and the shares covered by such Option shall revert
to the Plan.

6.8 Disability of Optionee. In the event an Optionee's Continuous Status as
an Employee, Director, or Consultant terminates as a result of the Optionee's
Disability, the Optionee may exercise his or her Option, but only within
twelve months from the date of such termination (or such shorter period
specified in the Option Agreement), and only to the extent that the Optionee
was entitled to exercise at the date of such termination (but in no event
later than the expiration of the term of such Option as set forth in the
Option Agreement). If, at the date of termination, the Optionee is not
entitled to exercise his or her entire Option, the shares covered by the
unexercisable portion of the Option shall revert to the Plan. If, after
termination, the Optionee does not exercise his or her Option within the time
specified herein, the Option shall terminate, and the shares covered by such
Option shall revert to the Plan.

6.9 Death of Optionee. In the event of the death of an Optionee, the Option
may be exercised, at any time within eighteen months following the date of
death (or such shorter period specified in the Option Agreement, but in no
event later than the expiration of the term of such Option as set forth in the
Option Agreement), by the Optionee's estate or by a person who acquired the
right to exercise the Option by bequest or inheritance, but only to the extent
the Optionee was entitled to exercise the Option at the date of death. If, at
the time of death, the Optionee was not entitled to exercise his or her entire
Option, the shares covered by the unexercisable portion of the Option shall
revert to the Plan. If, after death, the Optionee's estate or a person who
acquired the right to exercise the Option by bequest or inheritance, or by
assignment as provided herein, does not exercise the Option within the time
specified herein, the Option shall terminate, and the shares covered by such
Option shall revert to the Plan.

6.10 Early Exercise. The Option Agreement may, but need not, include a
provision whereby the Optionee may elect at any time while an Employee,
Director, or Consultant to exercise the Option as to any part or all of the
shares subject to the Option prior to the full vesting of the Option. Any
nonvested shares so purchased may be subject to a repurchase right in favor of
the Company or to any other restriction the Board determines to be
appropriate.

6.11 Withholding. To the extent provided by the terms of an Option
Agreement, the Optionee may satisfy any federal, state, or local tax
withholding obligation relating to the exercise of such Option by any of the
following means or by a combination of such means:

6.11.1 cash payment; or

6.11.2 authorizing the Company to withhold shares from the shares of the
common stock otherwise issuable to the participant as a result of the
exercise of the Option; or

6.11.3 delivering to the Company owned and unencumbered shares of the
common stock of the Company.

7. No Repricing, Cancellation, or Re-grant Of Options. Except for certain
adjustments due to corporate transactions described in Section 11, the
exercise price for any outstanding Option granted under the Plan may not be
decreased after the Day of Determination for such Option grant nor may an
outstanding Option granted under the Plan be surrendered to the Company as
consideration in exchange for the grant of a new Option with a lower exercise
price.

8.Covenants Of The Company.

8.1 Stock Availability. During the terms of the Option granted under the
Plan, the Company shall keep available at all times the number of shares of
stock required to satisfy such grants up to the number of shares of stock
authorized under the Plan.

8.2 Authority. The Company shall seek to obtain from each regulatory
commission or agency having jurisdiction over the Plan such authority as may
be required to issue and sell shares of stock acquired under the grants,
provided, however, that this undertaking shall not require the Company to
register under the Securities Act either the Plan or any stock issued or
issuable pursuant to any such Option. If, after reasonable efforts, the
Company is unable to obtain from any such regulatory commission or agency, the
authority which counsel for the Company deems necessary for the lawful
issuance and sale of stock under the Plan, the Company shall be relieved from
any liability for failure to issue and sell stock under such Options unless
and until such authority is obtained.

9. Use Of Proceeds From Stock. Proceeds from the exercise of Options under the
Plan shall constitute general funds of the Company.

10.Miscellaneous.

10.1 Acceleration. The Board or the Committee shall have the power to
accelerate the time at which an Option may first be exercised or the time
during which an Option or any part thereof will vest, notwithstanding the
provisions in the Option Agreement stating the time at which it may first be
exercised or the time during which it will vest.

10.2 Ownership Rights. Neither an Optionee nor any person to whom an Option
is transferred under paragraph 6.4 shall be deemed to be the holder of, or to
have any of the rights of a holder with respect to any shares subject to such
Option unless and until such person has satisfied all requirements for
exercise of the Option pursuant to its terms.

10.3 Employment Rights. Nothing in the Plan or any instrument executed
pursuant thereto shall confer upon any Employee, Director, Consultant,
Optionee, or other holder of Options any right to continue in the employ of
the Company or any Affiliate (or to continue acting as a Director or
Consultant) or shall affect the right of the Company or any Affiliate to
terminate the employment or relationship as a Director or Consultant of any
Employee, Director, Consultant, or Optionee with or without cause.

10.4 ISO Value Limit. To the extent that the aggregate Fair Market Value
(determined at the time of grant) of stock with respect to which ISOs granted
after 1998 are exercisable for the first time by any Optionee during any
calendar year under all plans of the Company and its Affiliates exceeds
$100,000, the Options or portions thereof which exceed such limit (according
to the order in which they were granted) shall be treated as NSOs.

11.Adjustments Upon Changes In Stock and Corporate Transactions.

11.1 Stock Adjustments. If any change is made in the stock subject to the
Plan, or subject to any Option (through merger, consolidation, reorganization,
recapitalization, stock dividend, dividend in property other than cash, stock
split, liquidating dividend, combination of shares, exchange of shares, change
in corporate structure or otherwise), the Plan and outstanding Options will be
appropriately adjusted in the class(es) and maximum number of shares subject
to the Plan and the class(es) and number of shares and price per share of
stock subject to outstanding Options.

11.2 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; or (c) any capital reorganization in which more than fifty
percent (50%) of the shares of the Company entitled to vote are exchanged,
then, the time during which Options outstanding under the Plan become vested
shall be accelerated and all outstanding Options shall become immediately
exercisable upon such event.

12.Amendment Of The Plan.

12.1 Amendments. The Board at any time, and from time to time, may amend
the Plan. However, as provided in Section 11, no amendment shall be effective
unless approved by the stockholders of the Company within twelve months before
or after the adoption of the amendment, where the amendment will:

12.1.1 Increase the number of shares reserved for Options under the
Plan;

12.1.2 Modify the requirements as to eligibility for participation in
the Plan to the extent such modification requires stockholder approval in
order for the Plan to satisfy the requirements of Sections 162(m) and 422
of the Code;

12.1.3 Modify the Plan in any other way if such modification requires
stockholder approval in order for the Plan to satisfy the requirements of
Section 422 of the Code or to comply with the requirements of Rule 16b-3 or
Nasdaq or other applicable securities exchange listing requirements;

12.1.4 Decrease the minimum exercise price set forth in paragraph 6.2;
or

12.1.5 Remove the limitation provided in Section 7.

12.2 Compliance. It is expressly contemplated that the Board may amend the
Plan in any respect the Board deems necessary or advisable to provide under
the provisions of the Code and the regulations promulgated thereunder relating
to ISOs and/or to bring the Plan and/or ISOs granted under it into compliance
therewith.

12.3 Consent. Rights and obligations under any Option granted before
amendment of the Plan shall not be altered or impaired by any amendment of the
Plan unless (a) the Company requests the consent of the person to whom the
Option was granted and (b) such person consents in writing.

13.Termination Or Suspension Of The Plan.

13.1 Termination. The Board may suspend or terminate the Plan at any time.
Unless sooner terminated, the Plan shall terminate on midnight, May 31, 2008.
No Options may be granted under the Plan while the Plan is suspended or after
it is terminated.

13.2 Rights and Obligations. Any Options granted while the Plan is in
effect shall not be altered or impaired by suspension or termination of the
Plan, except with the consent of the holder of the Options.

14. Effective Date Of Plan. The Plan shall become effective as determined
by the Board, but no Options granted under the Plan shall be exercisable
unless and until the Plan has been approved by the stockholders of the
Company.

NPS PHARMACEUTICALS, INC.
ANNUAL MEETING OF STOCKHOLDERS MAY 23, 2002

The undersigned constitutes and appoints Hunter Jackson and James U. Jensen
(with full power to act alone), the attorneys and 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 2002 Annual Meeting of Stockholders or
any adjournment or postponement thereof. This meeting will be held at the
University Park Hotel located at 500 S. Wakara Way, Salt Lake City, Utah 84108
on May 23, 2002 at 3:00 p.m., local time. This Proxy is given in accordance with
the following instructions, and carries discretionary authority related to any
and all other matters that may come before the meeting and any adjournments
thereof.

This proxy when properly executed will be voted in the manner directed by
the undersigned stockholder. If no direction is made, this Proxy will be voted
FOR the election of the ten (10) directors; FOR the increase by 2,000,000 shares
in the Company's 1998 Stock Option Plan and 1994 Non-Employee Directors' Stock
Option Plan; and FOR the ratification of the Board's appointment of KPMG LLP and
NPS's independent auditors for the 2002 fiscal year.

ITEM 1
To elect ten (10) directors as set [_] FOR all Nominees listed below
forth in the Proxy Statement: (except as marked to the contrary)

[_]WITHHOLD authority to vote for all
01 Santa J. Costa nominees listed
02 John R. Evans
03 James G. Greninger
04 Hunter Jackson To withhold authority to vote for
05 Joseph Klein, III any individual nominee, write that
06 Donald E. Kuhia nominee's name in the following
07 Thomas N. Parks space.
08 Edward Rygiel
09 Calvin Stiller __________________________________
10 Peter G. Tombios

ITEM 2
To consider and act upon a proposal to [_] FOR [_] AGAINST [_] ABSTAIN
increase by 2,000,000 shares the aggregate
number of common stock for which options may
be granted under two of the Company's equity
incentive plans as follows; (a) an additional
1,900,000 shares under the 1998 Stock Option
Plan; and (b) an additional 100,000 shares
under the 1994 Non-Employee Directors' Stock
Option Plans:

ITEM 3
To ratify the appointment of KPMG LLP as [_] FOR [_] AGAINST [_] ABSTAIN
independent auditors for the Company for the
2002 fiscal year:

Dated:___________________________________, 2002

_______________________________________________
Signature

_______________________________________________
Signature if held jointly

Do you plan to attend the Annual Meeting?
[_] Yes [_] No

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 vote by telephone or internet
(see instructions below) or date, sign, and
mail this proxy card in the enclosed envelope.

TO VOTE USING THE TELEPHONE: Call toll free 1-800-816-8908 from a touch tone
telephone. There is NO CHARGE for this call. Enter your 14 digit CONTROL NUMBER
and 5 digit PIN NUMBER located at the bottom of this proxy and then listen for
voting instructions.

INTERNET VOTING INSTRUCTIONS: Go to the following web site
www.computershare.com/us/proxy - Enter your 14 digit CONTROL NUMBER and 5 digit
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PIN NUMBER located at the bottom of this proxy and then follow the voting
instructions on the screen. If you vote by telephone or the internet, please DO
NOT mail back this proxy card.

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CONTROL NUMBER PIN NUMBER

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