EXHIBIT 99.1
NPS PHARMACEUTICALS AND ALLELIX TO MERGE
SALT LAKE CITY, and TORONTO, Ontario, Sept. 28 /PRNewswire/ -- NPS
Pharmaceuticals, Inc. (Nasdaq: NPSP) and Allelix Biopharmaceuticals Inc.
(Toronto: AXB; Montreal) announced today that a definitive agreement has been
signed to merge the operations of the two companies. The combined company will
have a strong product orientation, with late-stage clinical candidates being
advanced both by the new organization and its corporate partners. Discovery
efforts will focus on a small group of proprietary concepts related to the core
competencies of the united research teams. The new company also will implement
significant cost-cutting measures to increase efficiency and preserve cash. The
merged company is expected to have a cash balance of U.S. $33 million and an
expected burn rate of approximately U.S. $10-12 million in its first full year
of operation. As part of the strategic restructuring required to achieve this,
NPS has implemented an immediate reduction of approximately 35% of its staff and
has reduced operating expenses connected with certain of its unpartnered
clinical programs.
The merger of NPS and Allelix is subject to approval by the shareholders of
both companies and is expected to close in the first quarter of 2000. Based on
the number of outstanding Allelix shares, NPS will issue approximately 6.5
million shares of common stock to Allelix common shareholders at an exchange
ratio of 0.3238 shares of NPS common stock for each outstanding share of Allelix
stock.
Commenting on the merger, Dr. Hunter Jackson, who currently serves as
President, CEO and Chairman of NPS, and who will hold similar posts in the
combined company, said, "This is an exciting opportunity for NPS to
significantly expand our product portfolio and to strengthen our drug research
and development capabilities. We have evaluated a number of potential merger
partners and none provided the synergies offered by the NPS/Allelix combination.
With appropriate cost-management and program focus, we can build a high-growth,
independent company with numerous product opportunities, some wholly-owned and
others partnered with leading pharmaceutical companies."
Dr. John R. Evans, current Chairman of Allelix, who will be appointed Vice
Chairman of the combined company, stated, "Joining forces with NPS is a very
positive strategic step for Allelix. The merger combines financial, scientific,
and market strengths so that our chances for success as a merged company are
greatly increased over those for either company alone. We believe that
investors in both companies and, ultimately, the patients who will use our drugs
will reap significant rewards as a result of this transaction."
Advanced Product Opportunities
Research and development efforts in the new organization will include
currently partnered programs such as calcimimetics (for hyperparathyroidism)
with Amgen and Kirin, calcilytics (for osteoporosis) with SmithKline Beecham,
excitatory amino acid receptor antagonists (for psychiatric disorders) with Eli
Lilly, glycine re-uptake inhibitors (for schizophrenia) with Janssen and ALE
26015 (for dementia) with Pharm-Eco. Proprietary clinical programs will be
advanced by the new entity or partnered. These include NPS 1776 for epilepsy
and bipolar disorder, NPS 1506 for stroke and other CNS disorders, ALX 1-11
(recombinant human parathyroid hormone) for osteoporosis, ALX 0600 for short
bowel/inflammatory bowel disorder, and ALX 0646 for migraine.
The new company's most advanced programs will include NPS's calcimimetics
that are partnered with Amgen and Kirin, and Allelix's ALX 1-11. These programs
involve compounds that are intended to control or use parathyroid hormone for
therapeutic benefit. Calcimimetics are small molecules that stimulate calcium
receptors on parathyroid cells to regulate the secretion of parathyroid hormone.
Amgen is currently conducting Phase II trials of a second-generation molecule in
patients with either primary or secondary hyperparathyroidism (HPT), the disease
targeted by calcimimetics. "Primary" HPT is an important endocrine disease with
nearly 75,000 new cases diagnosed each year in the U.S. alone, while "secondary"
HPT afflicts over 80% of all kidney dialysis patients -- a group very familiar
to
Amgen and Kirin. NPS believes that calcimimetics will be an important component
of the Amgen and Kirin product pipelines.
In osteoporosis, NPS believes that ALX 1-11, which has successfully
completed a Phase II trial, is especially attractive as a potential bone-growth
therapy. This product complements NPS's current collaboration with SmithKline
Beecham by adding a late-stage anabolic osteoporosis product candidate to on-
going research in calcilytics.
Merger Details
The combined company will operate as NPS Pharmaceuticals, Inc. in the U.S.,
and as NPS Allelix in Canada. Operations in Toronto, New Jersey, and Salt Lake
City will enable the combined entity to take advantage of the Canadian
biotechnology industry and its associated technical and financial resources,
while reaping the benefits of NPS's U.S. biomedical industry connections and its
presence on the Nasdaq stock exchange.
In addition to the 6.5 million shares initially issued, 1 million shares of
NPS stock will be reserved for issuance to the holders of Allelix options,
warrants, and preferred stock at the same exchange ratio. Under the arrangement,
Allelix shareholders that are U.S. residents will receive NPS common shares.
Allelix shareholders that are Canadian residents can elect to receive either NPS
common shares or shares of an NPS subsidiary that are exchangeable one for one
into NPS common shares. The merger takes the form of a Plan of Arrangement
under Canadian law and requires Canadian judicial review. NPS common shares
will continue to trade on Nasdaq, while Allelix will seek the listing of the
mirror exchangeable shares on The Toronto Stock Exchange.
Prudential Vector Healthcare Group, a unit of Prudential Securities
Incorporated, acted as financial advisor to NPS, and BancBoston Robertson
Stephens acted as financial advisor to Allelix.
Additional Transaction Details
Under the agreement, Allelix and its representatives are prohibited from
soliciting a competing acquisition or merger proposal, and NPS has the right to
match any such proposal made during the term of the agreement. Allelix has
agreed to pay a break fee to NPS in certain customary circumstances. Allelix has
also agreed to pay NPS costs in the event that Allelix shareholders otherwise
fail to approve the merger, except following a material adverse change effecting
NPS. NPS has agreed to pay a break fee to Allelix in certain customary
circumstances including if its shareholders fail to approve the merger. The
agreement is subject to termination by either party if the transaction is not
completed by January 31, 2000.
Additional Information
Additional information regarding the merger of NPS and Allelix, as well as
the programs of the combined companies may be obtained by contacting David
Clark, Director, Corporate Communications and Development at NPS
Pharmaceuticals, at 801-583-4939 or Paul Van Damme, Senior Vice President and
Chief Financial Officer at Allelix Biopharmaceuticals, at 905-677-0831. The NPS
web page (http://www.npsp.com) also contains additional information regarding
this transaction, this press release, and a link to the Allelix web page.
NOTE: Statements included within this press release, which are not historical in
nature, constitute forward-looking statements for purposes of the safe harbor
provided by the Private Securities Litigation
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Reform Act of 1995. Such statements involve risks and uncertainties that could
cause actual results to differ materially from those described herein. Risks and
uncertainties include: product candidates may fail in the clinic or may not be
successfully marketed; lack of financial resources to complete development of
clinical candidates; and competing products. For a more complete discussion of
these and additional risks and uncertainties, refer to cautionary statements
made in NPS documents filed with the SEC, in particular the Company's annual
report on Form 10-K.
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