<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
(Amendment No. 1)
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For The Quarterly Period Ended September 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Commission File Number: 0-19700
AMYLIN PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
Delaware 33-0266089
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9373 Towne Centre Drive, San Diego, California 92121
(Address of principal executive offices) (Zip code)
(619) 552-2200
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former
fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at September 30,1996
----- --------------------------------
Common Stock, $.001 par value 28,322,081
<PAGE> 2
AMYLIN PHARMACEUTICALS, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
<S> <C>
COVER PAGE ............................................................................ 1
TABLE OF CONTENTS ..................................................................... 2
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Condensed Consolidated Balance Sheets as of
September 30, 1996 and December 31, 1995 ......................................... 3
Condensed Consolidated Statements of Operations
for the three months and nine months ended
September 30, 1996 and 1995 ...................................................... 4
Condensed Consolidated Statements of Cash Flows
for the nine months ended September 30, 1996 and 1995 ............................ 5
Notes to Condensed Consolidated Financial Statements ............................. 6
ITEM 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations .................................... 8
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings ........................................................ *
ITEM 2. Changes in Securities .................................................... *
ITEM 3. Defaults upon Senior Securities .......................................... *
ITEM 4. Submission of Matters to a Vote of
Security Holders ......................................................... *
ITEM 5. Other Information ........................................................ *
ITEM 6. Exhibits and Reports on Form 8-K ......................................... 16
SIGNATURE ............................................................................. 17
</TABLE>
* No information provided due to inapplicability of item.
<PAGE> 3
AMYLIN PHARMACEUTICALS, INC.
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
(unaudited) (Note)
------------- -------------
Assets
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 19,852,454 $ 16,708,757
Short-term investments 18,472,171 36,812,237
Other current assets 1,493,025 1,495,418
------------- -------------
Total current assets 39,817,650 55,016,412
Property and equipment, at cost
Equipment 10,597,655 8,369,702
Leasehold Improvements 3,341,364 3,180,819
------------- -------------
13,939,019 11,550,521
Less accumulated depreciation and amortization (7,451,682) (5,797,917)
------------- -------------
6,487,337 5,752,604
Patents and other assets, net 1,389,750 1,180,266
------------- -------------
$ 47,694,737 $ 61,949,282
============= =============
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 1,055,209 $ 1,477,252
Accrued liabilities 3,628,649 2,886,152
Deferred revenue 7,952,917 4,618,100
Current portion of note payable 646,747 312,500
Current portion of obligation under capital leases 530,369 454,173
------------- -------------
Total current liabilities 13,813,891 9,748,177
Notes Payable 4,570,632 1,670,619
Obligation under capital lease 346,784 759,015
Deferred rent and other -- 16,743
Stockholders' equity:
Common stock, $.001 par value, 50,000,000 shares authorized,
28,322,081 and 28,017,839 issued and outstanding at
September 30, 1996 and December 31, 1995 respectively 28,321 28,018
Additional paid-in capital 168,331,916 166,994,485
Accumulated deficit (139,404,619) (117,318,121)
Unrealized gains on short-term investments 7,812 50,346
------------- -------------
Total stockholders' equity 28,963,430 49,754,728
------------- -------------
$ 47,694,737 $ 61,949,282
============= =============
</TABLE>
Note: The balance sheet at December 31, 1995 has been derived from audited
consolidated statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
See accompanying notes.
<PAGE> 4
AMYLIN PHARMACEUTICALS, INC.
Condensed Consolidated Statements of Operations
(unaudited)
<TABLE>
<CAPTION>
Three months ended
September 30,
------------------
1996 1995
------------ ------------
<S> <C> <C>
Revenues under collaborative agreements $ 13,192,132 $ 3,802,500
Expenses:
Research and development 14,354,535 9,304,260
General and administrative 2,915,353 1,755,265
------------ ------------
17,269,888 11,059,525
Interest and other income 449,256 384,360
Interest and other expense (121,476) (73,603)
------------ ------------
Net loss ($ 3,749,976) ($ 6,946,268)
============ ============
Net loss per share ($ 0.13) ($ 0.28)
============ ============
Shares used in computing net loss per share 28,260,647 24,430,432
============ ============
</TABLE>
See accompanying notes.
<PAGE> 5
AMYLIN PHARMACEUTICALS, INC.
Condensed Consolidated Statements of Operations
(unaudited)
<TABLE>
<CAPTION>
Nine months ended
September 30,
------------------
1996 1995
------------ ------------
<S> <C> <C>
Revenues under collaborative agreements $ 23,922,275 $ 12,868,500
Expenses:
Research and development 40,145,398 29,327,232
General and administrative 7,189,968 5,888,467
------------ ------------
47,335,366 35,215,699
Interest and other income 1,619,231 853,075
Interest and other expense (292,638) (229,354)
------------ ------------
Net loss ($22,086,498) ($21,723,478)
============ ============
Net loss per share ($ 0.78) ($ 0.97)
============ ============
Shares used in computing net loss per share 28,142,565 22,470,430
============ ============
</TABLE>
See accompanying notes.
<PAGE> 6
AMYLIN PHARMACEUTICALS, INC.
Condensed Consolidated Statements of Cash Flows
(unaudited)
<TABLE>
<CAPTION>
Nine months ended
September 30,
-----------------
1996 1995
------------ ------------
<S> <C> <C>
Operating Activities:
Net Loss ($22,086,498) ($21,723,478)
Adjustments to reconcile net loss to net
cash used for operating activities:
Depreciation and amortization 1,703,403 1,539,004
Deferred rent and other expense (18,842) (18,842)
Amortization of deferred compensation -- 424,889
Changes in assets and liabilities:
Other current assets 2,393 (54,124)
Accounts payable (422,043) (352,262)
Accrued liabilities 744,596 386,550
Deferred collaborative revenue 3,334,817 4,030,652
------------ ------------
Net cash flows used for operating activities (16,742,174) (15,767,611)
Investing activities:
Decrease in short-term investments 18,297,532 (7,471,561)
Purchase of equipment and leasehold improvements (2,388,498) (1,527,432)
Increase in deposits, patents and other assets (259,122) (155,326)
------------ ------------
Net cash flows provided by (used for) investing activities 15,649,912 (9,154,319)
Financing activities:
Issuance of notes payable 3,617,484 396,669
Principal payments on notes payable (383,224) (208,333)
Principal payments on capital leases (336,035) (500,684)
Issuance of common stock, net 1,337,734 46,278,810
------------ ------------
Cash flows provided by financing activities 4,235,959 45,966,462
------------ ------------
Increase in cash and cash equivalents 3,143,697 21,044,532
Cash and cash equivalents at beginning of period 16,708,757 7,360,681
------------ ------------
Cash and cash equivalents at end of period $ 19,852,454 $ 28,405,213
============ ============
Supplemental disclosure of cash flow information:
Interest paid $ 196,952 $ 228,554
</TABLE>
See accompanying notes.
<PAGE> 7
AMYLIN PHARMACEUTICALS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1996
(unaudited)
1. Summary of Significant Accounting Policies
Basis of Presentation
The information contained herein has been prepared in accordance with
instructions for Form 10-Q and Article 10 of Regulation S-X. The information at
September 30, 1996, and for the three months and nine months ended September 30,
1996 and 1995, is unaudited. In the opinion of management, the information
reflects all adjustments necessary to make the results of operations for the
interim periods a fair statement of such operations. All such adjustments are of
a normal recurring nature. Interim results are not necessarily indicative of
results for a full year. For a presentation including all disclosures required
by generally accepted accounting principles, these financial statements should
be read in conjunction with the audited financial statements included in the
Company's Annual Report to Shareholders for the year ended December 31, 1995.
Per Share Data
Net loss per share is computed using the weighted average number of shares
outstanding during the periods.
Consolidation
The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiary, Amylin Europe Limited. All significant intercompany
transactions and balances have been eliminated.
2. Subsequent Events
In November 1996, the Company completed concurrent stock offerings which raised
net proceeds of approximately $33.7 million. A public offering of 2.0 million
shares of its common stock provided net proceeds of approximately $18.7 million.
Concurrent with the closing of this offering, in a separate transaction, the
Company sold 1.5 million shares of its common stock directly to Johnson &
Johnson providing net proceeds of approximately $15.0 million. Johnson &
Johnson's purchase of such shares was the result of Amylin's achievement of the
first milestone in its collaboration with Johnson & Johnson in August 1996.
<PAGE> 8
3. Contingencies
The Company has received letters from a third party asserting that pramlintide
is covered by a patent which the Company has licensed from such third party. The
third party claims to be entitled to 50% of any sublicensing fees received from
Johnson & Johnson pursuant to the Collaboration Agreement, as well as a future
running royalty as specified in the license agreement. The Company believes that
these assertions are without merit and will vigorously defend against any claims
related to the foregoing, should any such claims be brought. The third party has
been informed that the Company does not agree with its assertions and that no
such sublicensing moneys have been received from Johnson & Johnson, which is not
a sublicensee under the third party's patent.
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Except for the historical information contained herein, the discussion
in this report contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
discussed in this report. Factors that could cause or contribute to such
differences include, without limitation, those discussed in the section entitled
"Liquidity and Capital Resources" herein as well as those discussed in the
Company's Annual Report on Form 10-K for the year ended December 31, 1995 under
the heading "Risk Factors".
Since its inception in September 1987, Amylin Pharmaceuticals, Inc.
("Amylin" or the "Company") has devoted substantially all of its resources to
its research and development programs. Substantially all of the Company's
revenues to date have been derived from fees and expense reimbursements under
collaborative agreements and from interest income. Amylin has not received any
revenues from the sale of products. The Company has been unprofitable since its
inception and expects to incur additional operating losses for the next several
years. As of September 30, 1996, the Company's accumulated deficit was
approximately $139.4 million.
RESULTS OF OPERATIONS
Revenue
The Company had $13.2 million and $23.9 million of revenue for the
three month and nine month periods ended September 30, 1996 as compared to $3.8
million and $12.9 million for the same periods in 1995. The revenues recognized
in 1996 and 1995 were related to the Company's Collaboration Agreement with
LifeScan, a wholly owned subsidiary of Johnson & Johnson, hereinafter referred
to as Johnson & Johnson. 1996 revenues were comprised of Johnson & Johnson's
one-half share of collaboration development expenses incurred by Amylin in the
first nine months of the year and $7.0 million in milestone and option fee
payments paid in the third quarter of the year. 1995 revenues were comprised of
Johnson & Johnson's one-half share of collaboration development expenses
incurred by Amylin in the second and third quarters of 1995 along with a license
fee which was paid at the signing of the agreements. (Please see the "Liquidity
and Capital Resources" section for further discussion of payments expected to be
received by the Company in the future.)
Operating Expenses
The Company's total operating expenses for the quarter ended September
30, 1996 increased to $17.3 million from $11.1 million for the third quarter in
1995. For the nine months ended September 30, 1996, operating expenses increased
to $47.3 million from $35.2 million for the same period in 1995.
<PAGE> 10
Research and development expenses increased to $14.4 million for the
three months ended September 30, 1996 as compared to $9.3 million for the same
period in 1995. Research and development expenses for the nine months ended
September 30, 1996 increased to $40.1 million from $29.3 million for the same
period in 1995. The increase in these expenditures was primarily due to the
costs of expanding pramlintide clinical development efforts. Several other
factors also contributed to this increase, including increased staffing,
expanded product development efforts and increased facilities expenditures.
General and administrative expenses increased to $2.9 million for the
three months ended September 30, 1996 as compared to $1.8 million for the same
period in 1995. General and administrative expenses for the nine months ended
September 30, 1996 increased to $7.2 million from $5.9 million for the same
period in 1995. The increase for the three and nine month periods was primarily
related to expanded pramlintide market development efforts in conjunction with
the Company's collaboration with Johnson & Johnson.
Other Income and Expense
Interest and other income is principally comprised of interest income
from investment of the Company's cash reserves. Interest and other income was
$0.4 million for the quarters ended September 30, 1996 and 1995. Interest and
other income increased to $1.6 million for the nine months ended September 30,
1996 from $0.9 million for the same period in 1995. The increase in interest and
other income was primarily due to higher average cash reserves available for
investment for the nine months ended September 30, 1996 as compared to the same
period in 1995.
Interest and other expense is principally comprised of interest expense
resulting from long-term debt obligations. Debt financing has been utilized by
the Company to acquire laboratory and other equipment and to fund tenant
improvements to the Company's facilities. In addition, in accordance with the
terms of the Company's Collaboration Agreement with Johnson & Johnson, Johnson &
Johnson has advanced Amylin's share of pramlintide pre-launch marketing expenses
incurred since the date of the collaboration, to be repaid with interest over
time out of Amylin's share of future pramlintide profits if any. Interest and
other expense increased to $121,000 for the three months ended September 30,
1996 from $74,000 for the same period in 1995. Interest and other expense
increased to $293,000 for the nine months ended September 30, 1996 from $229,000
for the same period in 1995. The increase in interest and other expense is
reflective of an overall higher long-term debt balance during the first nine
months of 1996 as compared to 1995.
Net Loss
The net loss for the quarter ended September 30, 1996 was $3.7
million compared to a net loss for the third quarter of 1995 of
<PAGE> 11
$6.9 million. The decrease in the net loss for the quarter was primarily the
result of the $7.0 million of milestone and option fee payments received in the
quarter in addition to Johnson & Johnson's one-half share of collaboration
development expenses incurred by Amylin. The increase in quarterly revenues was
partially offset by increased pramlintide clinical development efforts. The
Company incurred a net loss of $22.1 million for the nine months ended September
30, 1996 as compared to $21.7 million for the nine months ended September 30,
1995. The increase in the net loss for the nine month period was related to
increased operating expenditures primarily related to pramlintide development
efforts. The increase in expenditures was partially offset by increased
collaborative revenues and interest income.
Amylin expects to incur substantial operating losses over the next
several years due to continuing and increasing expenses associated with its
research and development programs, including preclinical and clinical testing of
multiple product candidates, and related general and administrative support.
Operating losses may fluctuate from quarter to quarter as a result of
differences in the timing of expenses incurred and revenues recognized.
LIQUIDITY AND CAPITAL RESOURCES
Since its inception, Amylin has financed its operations primarily
through private placements of preferred stock, sales of common stock, its
collaboration with Johnson & Johnson, and operating and capital lease
obligations.
In June 1995, the Company entered into a worldwide Collaboration
Agreement with LifeScan, Inc. for the development and commercialization of
pramlintide, a diabetes drug candidate currently in Phase III clinical trials.
In conjunction with the Collaboration Agreement, the Company also entered into a
Stock Purchase Agreement with Johnson & Johnson Development Corporation ("JJDC")
and a Loan Agreement with Johnson & Johnson. LifeScan, Inc. and JJDC, each of
which are wholly-owned subsidiaries of Johnson & Johnson, are referred to herein
as Johnson & Johnson.
In August, 1996, the Company achieved the first milestone in the
collaboration when, based upon an administrative review of three-month data from
the first two, one-year Phase III clinical trials, Johnson & Johnson decided to
continue the collaboration. As a result, Johnson & Johnson will be making
additional payments associated with the milestone to Amylin totaling $22.0
million, in addition to providing significant ongoing development support. The
additional payments associated with the milestone include $7.0 million in
milestone and option fee payments paid in the third quarter of 1996 and a
commitment to purchase $15.0 million of Amylin Common Stock. In compliance with
Food and Drug Administration guidelines, the data that was the subject of the
administrative interim review may not be disclosed. There can be no assurance
that such data will ultimately support the marketing approval of pramlintide as
a drug for the treatment of diabetes.
<PAGE> 12
In addition to the above mentioned milestone-related payments and
investment, Johnson & Johnson's financial commitment to Amylin now includes the
funding of 50% of development costs and 100% of pre-launch marketing costs
(Amylin's one-half share to be repaid over time from future profits), as well as
milestone payments, license fees, equity investments; and a loan facility for
use in certain circumstances. The Company will apply all of the license fees and
any cash milestone payments and 50% of the proceeds from Johnson & Johnson's
equity investments towards its share of development expenses. Although Johnson &
Johnson's various payments to Amylin should be sufficient to fund the
substantial portion of the Company's 50% share of pramlintide's development, the
Company may elect to raise additional funds to pay for its share of such
development and for other corporate purposes.
The Company is dependent on the future payments from Johnson & Johnson
to continue development and commercialization of pramlintide. Johnson & Johnson
may terminate the Collaboration Agreement subject to a notice period of six
months. Johnson & Johnson's financial and other obligations under the
Collaboration Agreement would continue during any such termination notice
period. In addition, Johnson & Johnson has the right to terminate the
Collaboration Agreement at any time based on material safety or tolerability
issues. Without Johnson & Johnson's continued collaborative support, the Company
might not be able to continue the pramlintide development program, and the
Company's financial condition would be materially adversely affected.
As of September 30, 1996, Johnson & Johnson entities have made various
financial payments to the Company totaling $65.2 million. These payments
primarily include a license fee, the purchase of $15 million of the Company's
common stock in 1995, a milestone and option fee payments and payment of one
half of the pramlintide development costs.
At September 30, 1996, the Company had $38.3 million in cash, cash
equivalents and short-term investments as compared to $53.5 million at December
31, 1995. The Company invests its cash in U.S. government and other highly rated
liquid debt instruments.
In November 1996, the Company completed concurrent stock offerings
which raised net proceeds of approximately $33.7 million. A public offering of
2.0 million shares of its common stock provided net proceeds of approximately
$18.7 million. Concurrent with the closing of this offering, in a separate
transaction, the Company sold 1.5 million shares of its common stock directly to
Johnson & Johnson providing net proceeds of approximately $15.0 million. Johnson
& Johnson's purchase of such shares was the result of Amylin's achievement of
the first milestone in its collaboration with Johnson & Johnson in August 1996.
The Company intends to use its financial resources for the ongoing
development of pramlintide, including the Phase III efficacy studies, and for
expansion of its other research, drug discovery and development programs and
other general corporate purposes. To the extent that clinical trials of the
Company's
<PAGE> 13
compounds progress as planned, research and development expenses will include
costs of supplying materials for and conducting pramlintide clinical trials, and
research activities to further explore amylin biology and other peptide
metabolic regulators. The amounts actually expended for each purpose may vary
significantly depending upon numerous factors, including the progress of the
Company's research and development programs, the results of preclinical and
clinical studies, the timing of regulatory submissions and approvals, if any,
technological advances, determinations as to commercial potential of the
Company's compounds, and the status of competitive products. Expenditures will
also depend upon the continued participation of Johnson & Johnson in the
collaboration, the availability of additional sources of funds, the
establishment of collaborative arrangements with other companies, and other
factors.
The Company currently leases or sub-leases approximately 72,000 square
feet of space. The Company is presently considering options to sub-lease an
additional 12,500 square feet of space for its product development efforts. In
addition, the Company is evaluating its options to lease additional laboratory
and office space in 1997. Should the Company lease this additional space, the
terms of the lease will be at competitive market rates. At this time, the
Company expects to incur approximately $1.3 million of capital expenditures in
the last three months of 1996. These expenditures will primarily be directed
toward the purchase of new equipment to support research and development
efforts. In addition, some capital expenditures will be directed toward the
purchase of equipment coming off of lease lines which will expire during the
year. The Company has entered into a $3.0 million loan agreement for the
financing of the majority of its equipment needs and intends to use this
financing source during 1996. As of September 30, 1996 approximately $1.9
million of this loan facility had been utilized. The terms of the loan agreement
call for amounts drawn down under the loan to be repaid monthly over a four year
period.
The Company does not expect to generate a positive internal cash flow
for several years due to substantial additional research and development costs,
including costs related to drug discovery, preclinical testing, clinical trials,
manufacturing costs, and general and administrative expenses necessary to
support such activities. Amylin anticipates that its existing cash including the
proceeds of its stock offerings completed in November, interest income from cash
investments, and financial payments and loan facilities from Johnson & Johnson,
will be adequate to satisfy the Company's capital requirements through 1998.
Assuming continued participation by Johnson & Johnson, the Company believes it
has reasonable alternatives to meet the financial needs of its programs.
However, there can be no assurance that additional financial resources will be
raised in the necessary time frame or on terms favorable to the Company.
The Company cannot assure that any of its drug candidates will
successfully meet all of their development goals. Important technical milestones
remain to be achieved before Amylin
<PAGE> 14
Pharmaceuticals can commercialize any of its products, and failure to achieve
these milestones could seriously jeopardize the Company's chances of success and
its financial condition would be adversely affected. The Company's future
capital requirements will depend on many factors, including continued scientific
progress in its research and development programs, the magnitude of these
programs, progress with preclinical and clinical trials, the time and costs
involved in preparing regulatory submissions and seeking regulatory approvals,
the costs involved in preparing, filing, prosecuting, maintaining, and enforcing
patents, competing technological and market developments, changes in the Johnson
& Johnson collaboration, the ability of the Company to establish collaborative
arrangements for its other research and development programs, and the cost of
manufacturing scale-up.
Prior to marketing, any drug developed by the Company must undergo
rigorous preclinical and clinical testing and an extensive regulatory approval
process mandated by the Food and Drug Administration (FDA) and equivalent
foreign authorities. Human clinical testing is now underway on the Company's
first product candidate, pramlintide. Subject to compliance with FDA
regulations, the Company plans to undertake extensive clinical testing to
demonstrate optimal dose, safety, and efficacy for its product candidates in
humans. Although preliminary clinical data about pramlintide's possible clinical
value warrants continuing Phase III trials, there can be no assurance that these
larger and longer studies will confirm the results of the Phase I and Phase II
studies to date. Further testing of pramlintide and the Company's other product
candidates in research or development may reveal undesirable and unintended side
effects or other characteristics that may prevent or limit their commercial use.
The Company or the FDA may suspend clinical trials at any time if the subjects
or patients participating in such trials are being exposed to unacceptable
health risks. There can be no assurance that the Company will not encounter
problems in clinical trials which will cause the Company or the FDA to delay or
suspend clinical trials. In addition, there can be no assurance that any of the
Company's products will obtain FDA approval for any indication. Products, if
any, resulting from Amylin Pharmaceuticals' research and development programs
are not expected to be commercially available for a number of years.
In addition, the Company believes that patent and other proprietary
rights are important to its business, and in this regard intends to file
applications as appropriate for patents covering both its products and
processes. Litigation, which could result in substantial cost to the Company,
may also be necessary to enforce any patents issued to the Company or to
determine the scope and validity of third-party proprietary rights. The Company
has received letters from a third party asserting that pramlintide is covered by
a patent which the Company has licensed from such third party. The third party
claims to be entitled to 50% of any sublicensing fees received from Johnson &
Johnson pursuant to the Collaboration Agreement, as well as a future running
royalty as specified in the license agreement. The Company believes that these
assertions are without merit and will vigorously defend
<PAGE> 15
against any claims related to the foregoing, should any such claims be brought.
The third party has been informed that the Company does not agree with its
assertions and that no such sublicensing moneys have been received from Johnson
& Johnson, which is not a sublicensee under the third party's patent. In
addition, should any of Amylin's competitors have prepared and filed patent
applications in the United States which claim technology also invented by the
Company, Amylin Pharmaceuticals may have to participate in interference
proceedings declared by the U.S. Patent and Trademark Office in order to
determine priority of invention and, thus, the right to a patent for the
technology, all of which could result in substantial cost to the Company to
determine its rights. It is uncertain whether any third-party patents will
require the Company to alter its products or processes, obtain licenses, or
cease certain activities. If any licenses are required, there can be no
assurances that the Company will be able to obtain any such license on
commercially favorable terms, if at all. Failure by the Company to obtain a
license to any technology that it may require to commercialize its products may
have a material adverse impact on the Company.
Material Agreements
In October 1996, the Company entered into a Patent and Technology License
Agreement (the "License Agreement") with Dr. John Eng, pursuant to
which the Company was granted an exclusive license to exendin, a newly
discovered compound derived from the venom of the Gila monster lizard. The
License Agreement provides for the payment of certain license fees and
milestone and royalty payments to Dr. Eng and reimbursement of certain costs
incurred by Dr. Eng. The license to the Company is perpetual in duration unless
terminated in accordance with the terms of the License Agreement.
In connection with the License Agreement, the Company also entered into a
Consulting Agreement with Dr. Eng, pursuant to which Dr. Eng will receive per
diem payments for consulting services rendered to the Company, and granted Dr.
Eng a Nonstatutory Stock Option to purchase shares of the Company's Common
Stock under the Company's 1991 Stock Option Plan.
In October 1996, the Company, London Health Sciences Centre ("LHSC") and
Dr. John Dupre, an LHSC affiliate, entered into a Collaborative Research and
Assignment Agreement (the "Research Agreement"), pursuant to which (1) LHSC and
Dr. Dupre assigned to the Company all right, title and interest in and to
certain patent applications relating to glucagon-like peptide (GLP-1) and (2)
LHSC and Dr. Dupre will conduct research for Amylin for up to two years to
evaluate the use of GLP-1 in the prevention and/or treatment of fuel metabolism
disorders. In consideration of the assignment and the research to be
performed, the Company paid to LHSC an assignment fee and will make certain
royalty and research funding payments to LHSC and/or Dupre.
<PAGE> 16
ITEM 6
Exhibits and Reports Submitted on Form 8-K
(a) EXHIBITS. The exhibits listed below are filed with this report.
10.28 Patent and Technology License Agreement, Consulting Agreement
and Nonstatutory Stock Option Agreement dated October 1, 1996,
between the registrant and Dr. John Eng. +
10.29 Collaborative Research and Assignment Agreement dated October
15, 1996, among the registrant, London Health Sciences Centre
and Dr. John Dupre. +
(b) REPORTS ON FORM 8-K. No reports on Form 8-K were filed during the quarter
for which this report is filed.
+ Confidential treatment has been requested with respect to certain portions
of this exhibit. Omitted portions have been filed separately with the
Securities and Exchange Commission.
<PAGE> 17
AMYLIN PHARMACEUTICALS, INC.
September 30, 1996
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed in its behalf by the
undersigned thereunto duly authorized.
Amylin Pharmaceuticals, Inc.
Date: December 16, 1996 By:/s/Marjorie T. Sennett
-------------------------------------
Marjorie T. Sennett
Vice President and Chief
Financial Officer
(on behalf of the registrant
and as the registrant's
principal financial officer)
