NPS PHARMACEUTICALS INC. is engaged in the discovery and development of orally active small molecule drugs that target surface receptors and ion channels. Co. is also applying its calcium receptor technology to the development of orally active small molecule drugs which have neuroprotectant properties and target certain calcium channels in order to provide treatments for stoke head trauma chronic pain and epilepsy. NPS Pharmaceuticals Inc. has a market cap of $169.1 million; its shares were traded at around $3.56 with and P/S ratio of 1.7. NPS Pharmaceuticals Inc. had an annual average earning growth of 45.6% over the past 5 years.
Highlight of Business Operations:19 For the three months ended March 31, 2009 and 2008, our revenues related to our agreement with Nycomed for GATTEX were $1.9 million and $9.5 million, respectively. In September 2007, we entered into an agreement with Nycomed for the rights to develop and commercialize GATTEX in territories outside of North America for gastrointestinal disorders. In connection with this agreement, we received a $35.0 million up-front license fee under the Nycomed agreement. Due to our continuing involvement under the agreement we are recognizing revenue over the estimated performance period and at March 31, 2009 we had $624,000 of deferred revenue, which we expect to recognize as revenue during the second quarter of 2009.
Cost of License Fees. Our cost of license fees primarily relate to fees owed to a third party resulting from the licensing of GATTEX to Nycomed in September 2007. We recorded cost of license fees of $358,000 and $1.9 million during the three months ended March 31, 2009 and 2008, respectively. Under the third party licensing agreement, we have made cash payments of approximately $6.6 million to date, related to the Nycomed GATTEX agreement. $116,000 of the license fee payment costs have been deferred at March 31, 2009 and are estimated to be recognized as expense in the second quarter of 2009 in conjunction with the related deferred revenue.
General and Administrative. Our general and administrative expenses consist primarily of the costs of our management and administrative staff, business insurance, property taxes, professional fees, legal fees and product marketing activities. Our general and administrative expenses decreased to $4.6 million for the three months ended March 31, 2009 from $10.6 million for the comparative period in 2008. The reduction in general and administrative expenses primarily related to (i) a $3.4 million decrease in personnel costs (the Company recognized approximately $3.3 million of expenses during the three months ended March 31, 2008, associated with the departure of the former CEO, which included a cash payment and non-cash charges related to the acceleration of previously issued equity awards); (ii) a $2.3 million decrease in outside costs primarily related to legal activities for the three months ended March 31, 2008.
Interest Expense. Our interest expense decreased to $15.7 million for the three months ended March 31, 2009 from $16.9 million for the comparable period in 2008. The decrease is due primarily to lower interest expense ($1.6 million) resulting from a $24.5 million principal payment on the Class A Notes in March 2008 and lower interest expense related to DRI Capital's purchase of our Preotact royalty, accounted for as debt ($344,000 decrease) due to an increase in forecasted Preotact royalties. The decrease was partially offset by increased interest expense on the Class B notes ($701,000 increase) due to the issuance of paid-in-kind notes to service the debt until the Class A notes are paid in full.
In October 2008, we entered into a settlement agreement to sell certain of our ARS back to our investment advisor no later than June 2010 at par of $1.8 million, and we transferred these ARS from the available for sale category to the trading category. The fair values of these ARS are $1.4 million and $1.3 million at March 31, 2009 and December 31, 2008, respectively, which have been recorded as a long-term ARS, and we have recognized $365,000 and $351,000 as a put option in other long-term assets at March 31, 2009 and December 31, 2008, respectively, and a corresponding gain of $14,000 in other income for the three months ended March 31, 2009. Under SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities Including an amendment of FASB Statement No. 115, ("SFAS No. 159") entities are permitted to choose to measure many financial instruments and certain other items at fair value. We elected the fair value measurement option under SFAS No. 159 for our ARS put option. The fair value election was made to minimize the net volatility of earnings in future periods as the change in fair value of the put option will approximate the opposite change in fair value of the related ARS. In estimating the fair value of this put option, we have used the fair values which were determined based on valuations performed by Pluris Valuation Advisors LLC. The fair values were determined using proprietary valuation models.
Net cash used in financing activities was $12.5 million during three months ended March 31, 2009 compared to $102,000 provided by financing activities during the three months ended March 31, 2008. Cash used in financing activities during the three months ended March 31, 2009 primarily relates to a $12.5 million increase in restricted cash due to the payment, on April 1, 2009, of the 2009 annual principal payment on the Class A Notes. The 2008 22 principal payment was made on March 30, 2008. During the three months ended March 31, 2008 our restricted cash balances related to our Class A Notes decreased by $24.6 million, this was offset by a principal payment of $24.5 million on our Class A Notes. Additionally, we received cash from the exercise of employee stock options of approximately $85,000 and zero during the three months ended March 31, 2009 and 2008, respectively.
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