In an announcement that stunned biotechnology market watchers, the Salt Lake City company said delays in getting Food and Drug Administration approval led to the decision to stop all commercialization efforts for Preos.

NPS has spent more than $330 million over the past six years to study and develop the osteoporosis drug. The company said it feared the FDA would ask for a new round of testing - something it will not do without a new partner to help shoulder the cost - to resolve questions about elevated calcium levels in some test subjects.

The layoffs, amounting to a 53 percent cut, will leave the company with 230 employees. NPS barred interviews with or photos of its employees at work Monday, saying only that it would offer separated workers varying severance packages.

"I do regret these actions required the elimination of roles for many talented people who have made important contributions to NPS, and we wish them every success as they leave us," CEO N. Anthony Coles told a shareholders teleconference Monday.

Layoffs of 250 or so workers were immediate and across the board Monday, though a marketing and sales force NPS had built up in anticipation of Preos' approval was expected to be especially hard hit.

Shocked investors drove NPS stock to its lowest price since December 1999, ending trading at $4.54 per share Monday, down $1.04 and nearly 19 percent.

Charles Duncan, an analyst with JMP Securities, said Monday's news was a "total surprise."

"I am flabbergasted. [They decided they] need to conserve cash. [But] it is amazing that it came to this."

Although European regulators have cleared Preos for their markets, the FDA has delayed granting its approval. The agency is concerned about elevated calcium levels in some test subjects and wants more information - raising the specter of a potentially expanded, new and costly clinical trial in addition to preclinical testing and three rounds of human trials already completed.

NPS said its massive restructuring plan includes closing a facility in Ontario, Canada, and it plans to sublease 50 percent of its Salt Lake City campus. It was little more than a year ago that then-CEO Hunter Jackson celebrated the grand opening of a $14 million, 100,000-square-foot headquarters on Salt Lake City's northeast bench.

Jackson, who was both board chairman and CEO of the company since helping found it in 1986, stepped down a month ago. He did not return calls Monday seeking comment on his brainchild's troubles.

Coles, his successor, stressed that NPS was not giving up on Preos, and might still find a way to answer FDA concerns from existing test data. However, with the prospect - and timing - of the drug's potential entree to the U.S. market unknown, the company had to move decisively to staunch the outflow of dollars.

The restructuring plan is expected to reduce the company's spending for 2006 by about $135 million to $145 million. NPS expects to end the fiscal year with $114 million to $124 million in cash - or enough to run the company another two years.

"We are taking these measures to reduce operating expenses and preserve cash so we can pursue projects with the highest potential returns and build a stronger and healthier company," Coles said.

Although Preos' fate remains unsettled, Coles said in the teleconference that NPS will sharpen its focus on clinical development of teduglutide, its drug candidate for gastrointestinal disorders. Researchers also will speed up development of the drug for use against Crohn's disease, he said.

Brandi Simpson, NPS' senior director for corporate affairs, played down the rumored role in the restructuring of billionaire investor George Soros, whose Soros Fund Management LLC increased its holdings in NPS stock to about 7 percent a month ago.

In its Securities and Exchange Commission filing on the stock purchases, Soros indicated it was concerned about "past and current decision making and operations," and might use its stronger stock position to "suggest strategic changes."

In the past few weeks, Jackson resigned, Coles was elevated to CEO, and Francois Nader was added as chief medical and commercial officer. Co-founder Tom Parks and John Evans also surrendered long-time positions on the board.

"Soros has been a shareholder for some time, and we've had regular conversations [about company operations]," Simpson said. "But today's events really didn't have anything to do with Soros in particular . . . . Smart people can come to the same conclusions."

Soros spokesman Michael Vachon was even more taciturn: "We do not comment on our transactions actual or alleged," he said.

bmims@sltrib.com

Black day at NPS Pharmaceuticals:

* Stock tumbles 19 percent on announcement of 53 percent work force cut, halt to osteoporosis drug development.

* After NPS spent more than $330 million to develop Preos, government regulators want more information; NPS decides it can't afford more testing without new partner to cover costs.

* Company says restructuring should leave it with enough cash to run operations through 2008. NPS reported a $38.3 million loss for its last quarter.