<PAGE> 1
This filing is made pursuant
to Rule 424(b)(4) under the
Securities Act of 1933 in
connection with Registration
No. 333-14143 and Registration
No. 333-15295 filed on
October 31, 1996
PROSPECTUS
1,750,000 SHARES
LOGO
COMMON STOCK
---------------------------
All of the 1,750,000 shares of Common Stock offered hereby are being sold
by Amylin Pharmaceuticals, Inc. ("AMYLIN" or the "Company"). The Company's
Common Stock is quoted on the Nasdaq National Market under the symbol "AMLN." On
October 31, 1996, the last reported sale price for the Company's Common Stock on
the Nasdaq National Market was $11.25. See "Price Range of Common Stock."
Johnson & Johnson Development Corporation, one of the Company's
collaborative partners and an existing stockholder, has committed to purchase
1,500,000 shares of Common Stock in a private placement at the public offering
price (the "Johnson & Johnson Shares"). The sale of the Johnson & Johnson Shares
by the Company will not be registered in this Offering, and such shares will be
purchased upon the closing of this Offering. See "Business -- Johnson & Johnson
Collaboration" and "Underwriting."
At the request of the Company, the Underwriters have reserved 90,000 shares
offered hereby for sale at the public offering price to directors and executive
officers of the Company. See "Underwriting."
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS," BEGINNING ON PAGE 6.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
Price to Underwriting Discounts Proceeds to
Public and Commissions(1) Company(2)
- ----------------------------------------------------------------------------------------------------------
Per Share................................ $10.00 $0.575 $9.425
- ----------------------------------------------------------------------------------------------------------
Total(3)................................. $17,500,000 $1,006,250 $16,493,750
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(1) For information regarding indemnification of the Underwriters, see
"Underwriting."
(2) Before deducting expenses of the Offering payable by the Company, estimated
at $250,000.
(3) The Company has granted the Underwriters an option, exercisable within 30
days from the date hereof, to purchase up to 262,500 additional shares of
Common Stock on the same terms as set forth above, solely to cover
over-allotments, if any. If such option is exercised in full, the total
Price to Public will be $20,125,000, the Underwriting Discounts and
Commissions will be $1,157,188 and the Proceeds to the Company will be
$18,967,812. Including the Johnson & Johnson Shares, the total Proceeds to
Company will be $31,493,750, or $33,967,812 if the Underwriters
over-allotment option is exercised in full. See "Underwriting."
---------------------------
The shares of Common Stock offered by the Underwriters are subject to prior
sale, receipt and acceptance by them and subject to the right of the
Underwriters to reject any order in whole or in part and to certain other
conditions. It is expected that delivery of such shares will be made through the
offices of UBS Securities LLC, 299 Park Avenue, New York, New York, on or about
November 6, 1996.
---------------------------
UBS SECURITIES
HAMBRECHT & QUIST
VECTOR SECURITIES INTERNATIONAL, INC.
November 1, 1996
<PAGE> 2
LOGO
PRODUCT DEVELOPMENT PIPELINE
PRAMLINTIDE AS AN ADJUNCT TO INSULIN
Injectable in vials
Injectable in vials, suitable for mixing
with insulin in syringes
Injectable in cartridges, single
cartridge pen injector
Injectable in cartridges, dual cartridge
pen injector (with insulin)
Buccal, in lozenge form
Pulmonary, for inhalation
Nasal, for inhalation
Jet injector, for injection without
needles
Transdermal, by iontophoresis patch
Oral, non-peptide
PRAMLINTIDE AS PRIMARY THERAPY
Improved glucose control in Type II
diabetic patients unresponsive
to oral hypoglycemic agents and who are
not using insulin therapy
NON-AMYLIN METABOLIC TARGETS
Exendin: for glucose control in diabetes
GLP-1: for glucose control in diabetes
Modulation of fat metabolism
DEFINITIONS:
- - DISCOVERY: Activities aimed at discovering novel ligands, receptors or
otherwise biologically active molecules that can be targeted to intervene in
disease processes.
- - SELECTION: Activities aimed at designing and screening for potential drug
candidates.
- - VALIDATION: Activities aimed at demonstrating in whole animal models relevant
therapeutic effects of potential drug candidates.
- - DELIVERY: Activities aimed at developing chemical and mechanical systems for
administering drug candidates to patients.
- - PRECLINICAL: Activities aimed at filing an Investigational New Drug
application to permit initiation of human clinical trials, including
pharmacokinetic studies and preclinical toxicology.
- - PHASE I: Activities aimed at demonstrating short-term safety and tolerability
of a drug candidate in human volunteers.
- - PHASE II: Activities aimed at demonstrating relevant therapeutic effects of a
drug candidate in patients with disease.
- - PHASE III: Activities aimed at establishing for a drug candidate statistical
proof of therapeutic efficacy, long-term safety, tolerability, compliance with
Good Manufacturing Practices, labeling and marketing claims, and contents of
regulatory filings.
- - REGISTRATION: Activities aimed at preparing for market launch while awaiting
regulatory approval to market a drug candidate.
- - MARKETING: Activities aimed at commercializing a drug following regulatory
approval.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS OR THEIR AFFILIATES
MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK ON THE
NASDAQ NATIONAL MARKET, IN THE OVER-THE-COUNTER MARKET OR OTHERWISE IN
ACCORDANCE WITH RULE 10B-6A UNDER THE SECURITIES EXCHANGE ACT OF 1934. SEE
"UNDERWRITING."
<PAGE> 3
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements including the notes thereto contained
elsewhere in this Prospectus or incorporated herein by reference. This
Prospectus contains forward-looking statements that involve risks and
uncertainties. The Company's actual results may differ materially from the
results discussed in the forward-looking statements. Factors that could cause or
contribute to such differences include, without limitation, those discussed in
the sections entitled "Risk Factors," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Business," as well as those
discussed elsewhere in this Prospectus or incorporated herein by reference.
Unless otherwise indicated, all information in this Prospectus assumes that the
Underwriters' over-allotment option is not exercised. As used in this
Prospectus, references to "Johnson & Johnson" include Johnson & Johnson and its
wholly-owned subsidiaries LifeScan, Inc. and Johnson & Johnson Development
Corporation, or any one of such entities.
THE COMPANY
Amylin Pharmaceuticals, Inc. ("AMYLIN" or the "Company") is focused on
developing novel therapeutics for treating people with diabetes and other
metabolic disorders. The Company is conducting a series of Phase III clinical
trials of its lead drug candidate, pramlintide, which is being developed to
improve glucose control in people with Type I (juvenile-onset) and Type II
(maturity-onset) diabetes who use insulin, a patient population estimated by the
Company to comprise 7 million people in major pharmaceutical markets. In June
1995, AMYLIN entered into a worldwide collaboration with Johnson & Johnson to
develop and commercialize pramlintide. In August 1996, the Company achieved the
first milestone in the collaboration when, based upon an administrative interim
review of three-month glycated hemoglobin ("HbA1c") data from the first two,
one-year Phase III clinical trials, Johnson & Johnson decided to continue the
collaboration. By the closing of this Offering, Johnson & Johnson will have made
payments to AMYLIN totaling $80.0 million. In addition, Johnson & Johnson has
committed to provide significant, additional financial support for the
development and commercialization of pramlintide, subject to the terms of its
agreement with the Company. Assuming successful Phase III clinical trials, the
Company plans to apply for marketing approval of pramlintide in North America
and Europe by the end of 1998. Any profits or losses from the collaboration will
be shared equally between AMYLIN and Johnson & Johnson. Since its inception, the
Company has spent almost $200 million building its integrated drug discovery and
development expertise, and, with its lead drug candidate now well advanced in
clinical development, AMYLIN is broadening its research to develop new drug
targets for treating metabolic disorders, including diabetes, obesity and
dyslipidemia.
Diabetes is a major global health problem which is inadequately treated by
available drugs. The hallmark of diabetes is excessively high blood glucose, and
the estimated seven million people with diabetes in the major pharmaceutical
markets rely on insulin therapy to help control their blood glucose. However,
most people with diabetes cannot maintain their blood glucose concentrations
near the normal range with insulin alone. Even modest improvements in glucose
control can result in significant reductions in the risk of degenerative
complications such as blindness, kidney failure and nerve damage. In addition,
many authorities believe that abnormally high blood glucose concentrations play
a role in the development of heart disease. Consequently, the Company believes
that a new drug which could safely help people with diabetes improve their
glucose control would be of great therapeutic benefit.
Pramlintide is an analog of human amylin, a hormone which in healthy
individuals is believed to work in concert with insulin in controlling glucose
metabolism. Amylin secretion is missing or deficient in many people with
diabetes, an abnormality which the Company believes contributes to poor glucose
control, especially after eating. To test whether replacing the actions of
amylin, along with insulin, could be beneficial compared to the use of insulin
alone, the Company has conducted extensive preclinical and clinical studies of
pramlintide, including 18 Phase I and II clinical trials involving over 1,000
people with diabetes who use insulin. The results to date are encouraging: in
seven-out-of-seven Phase II studies assessing glucose control, pramlintide
caused a statistically significant and clinically relevant reduction in blood
glucose. These studies evaluated a progression of different endpoint assessments
of glucose control including reduction in post-meal glucose concentrations,
24-hour average glucose concentrations and fructosamine concentrations.
Fructosamine is a surrogate marker
3
<PAGE> 4
which reflects average glucose concentrations over the two-to-three weeks prior
to testing. To date, pramlintide has been well tolerated at anticipated
therapeutic doses and there have been no clinically important safety concerns.
The principal endpoint for the Company's Phase III clinical trials of
pramlintide is a reduction in HbA1c. HbA1c is a widely accepted, chemically
measured index of glucose control which closely correlates with 24-hour average
blood glucose concentrations, according to several published medical studies.
Also, changes in fructosamine have been reported to mirror subsequent changes in
HbA1c when the improvement in glucose control is maintained over time.
Consequently, assuming the short-term glucose-lowering results demonstrated in
the Phase II studies translate into long-term efficacy as evidenced by a safe,
clinically relevant and statistically significant reduction in HbA1c in Phase
III trials, the Company believes pramlintide should be approvable as a drug to
improve glucose control in people with diabetes who need insulin therapy.
Johnson & Johnson's ongoing financial commitment to AMYLIN under the
pramlintide collaboration 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, any cash milestone payments and 50% of the
proceeds from Johnson & Johnson's equity investments towards its share of
pramlintide development expenses. AMYLIN continues to lead the global
development and registration of pramlintide and, if marketing approval is
obtained, Johnson & Johnson will take the lead in commercialization.
A continuing priority of the Company is to expand the potential use of
pramlintide by improving the convenience of drug administration and researching
potential additional indications. AMYLIN plans to launch pramlintide in
pre-filled cartridges for use in specially designed pen injectors. As part of
its Phase III trials, AMYLIN is conducting studies to confirm that the most
popular formulations of insulin can be mixed with pramlintide in the same
syringe just prior to injection. The Company is also researching the possibility
of dual cartridge injector pens (for injecting insulin and pramlintide
simultaneously) and non-needle routes of administration, including buccal (in
lozenge form), pulmonary (for inhalation), transdermal (by patch), nasal (for
inhalation) and jet injector (for injection without needles). The Company also
is examining whether pramlintide can safely and effectively control post-meal
blood glucose concentrations in people with Type II diabetes who are
unresponsive to oral hypoglycemic agents and who are not using insulin therapy.
In addition, AMYLIN is broadening its research base beyond the study of
amylin to include research of new drug targets for treating metabolic disorders,
including diabetes, obesity and dyslipidemia (a condition characterized by
unhealthy levels of cholesterol and triglycerides). The Company's experience and
expertise gained in exploring the biology and chemistry of amylin and several
amylin-related compounds in clinical testing is directly applicable in these
efforts. For example, AMYLIN has acquired exclusive rights to certain patents
and patent applications relating to exendin (a newly discovered compound derived
from the venom of the Gila monster lizard) and glucagon-like peptide (GLP-1),
which the Company plans to evaluate as potential new diabetes therapies. The
Company is also in discussions with other third parties to collaborate on new
technologies and/or in-license other metabolic compounds.
The Company was incorporated in Delaware in September 1987. Unless the
context otherwise requires, "AMYLIN" and the "Company" refer to Amylin
Pharmaceuticals, Inc., a Delaware corporation, and its European subsidiary,
Amylin Europe Limited. The Company's executive offices are located at 9373 Towne
Centre Drive, San Diego, California 92121, and its telephone number is (619)
552-2200.
4
<PAGE> 5
THE OFFERING
<TABLE>
<S> <C>
Common Stock Offered by the Company........... 1,750,000 shares
Johnson & Johnson Shares...................... 1,500,000 shares(1)
Common Stock Outstanding after this 31,447,352 shares(2)
Offering....................................
Use of Proceeds............................... To fund Phase III development of pramlintide,
research and development, and other general
corporate purposes.
Nasdaq National Market Symbol................. AMLN
</TABLE>
SUMMARY CONSOLIDATED FINANCIAL DATA
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
-------------------------------------------------------- --------------------
1991 1992 1993 1994 1995 1995 1996
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Revenues under collaborative
agreements.................... $ 167 $ 667 $ 667 $ 500 $ 17,045 $ 9,066 $ 10,730
Expenses:
Research and development...... 7,532 15,368 18,988 30,255 39,337 20,023 25,791
General and administrative.... 2,013 2,834 4,387 6,383 8,318 4,133 4,275
------- -------- -------- -------- -------- -------- --------
9,545 18,202 23,375 36,638 47,655 24,156 30,066
Net interest income............. 261 2,612 2,195 1,637 1,341 313 999
------- -------- -------- -------- -------- -------- --------
Net loss........................ $ (9,117) $(14,923) $(20,513) $(34,501) $(29,269) $(14,777) $(18,337)
======= ======== ======== ======== ======== ======== ========
Net loss per share.............. $ (0.76) $ (0.87) $ (1.15) $ (1.71) $ (1.23) $ (0.69) $ (0.65)
======= ======== ======== ======== ======== ======== ========
Shares used in computing net
loss per share................ 12,029 17,111 17,867 20,185 23,854 21,490 28,084
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 1996
--------------------------
ACTUAL AS ADJUSTED(3)
--------- --------------
<S> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash, cash equivalents and short-term investments............................. $ 39,552 $ 77,796
Working capital............................................................... 27,896 66,140
Total assets.................................................................. 48,501 86,745
Notes payable and obligation under capital leases, less current portion....... 3,702 3,702
Accumulated deficit........................................................... (135,655) (128,655)
Total stockholders' equity.................................................... 31,942 70,186
</TABLE>
- ---------------
(1) Concurrent with this Offering, the Company is selling 1,500,000 shares of
Common Stock to Johnson & Johnson at the public offering price. The sale of
the Johnson & Johnson Shares by the Company will not be registered in this
Offering.
(2) Based on shares of Common Stock outstanding as of June 30, 1996 and assuming
the issuance of the Johnson & Johnson Shares. Excludes 6,991,951 shares
reserved for issuance under the Company's stock option plans, of which
4,658,636 shares of Common Stock were subject to outstanding options as of
June 30, 1996 at a weighted average exercise price of $6.44 per share. See
"Capitalization."
(3) Adjusted to give effect to the receipt of the net proceeds from the sale of
the 1,750,000 shares of Common Stock offered hereby (after deduction of
underwriting discounts and commissions and estimated expenses payable by the
Company in connection with the Offering), and the sale of the Johnson &
Johnson Shares. Also adjusted to give effect to the receipt of a $7.0
million milestone-related payment from Johnson & Johnson in August 1996.
Does not include the receipt of a $7.4 million advance in development
funding from Johnson & Johnson in September 1996.
5
<PAGE> 6
RISK FACTORS
Prospective investors in the shares of Common Stock offered hereby should
carefully consider the following risk factors, in addition to the other
information appearing in this Prospectus.
The discussion in this Prospectus contains forward-looking statements that
involve risks and uncertainties. The Company's actual results could differ
materially from the results discussed in the forward-looking statements. Factors
that could cause or contribute to such differences include, without limitation,
those discussed in the sections entitled "Risk Factors," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Business," as well as those discussed elsewhere in this Prospectus or
incorporated herein by reference.
Technological Uncertainty; Reliance on Single Drug Candidate in Clinical
Development. All of the Company's products are in research or development, and
no revenues have been generated from product sales. To date, the Company's
resources have been dedicated primarily to the research and development of
potential pharmaceutical products relating to the amylin hormone to treat
metabolic disorders. The physiology of fuel metabolism is highly complex, and
the causes of metabolic disorders, such as diabetes, are not fully known.
Although preclinical and Phase II clinical data support the Company's belief
that amylin plays an important role in the regulation of metabolism, there can
be no assurance that the Company's theories are correct or that its product
candidates will be effective in the treatment of metabolic disorders. While the
Company has conducted Phase II dose ranging and preliminary efficacy studies of
pramlintide up to one month in duration, results obtained in preclinical and
early clinical studies are not necessarily indicative of results that will be
obtained during Phase III clinical testing.
Pramlintide is the only product candidate that the Company currently has in
human clinical studies. The Company's research and development programs other
than pramlintide are at an early stage. Any additional product candidates will
require significant research, development, preclinical and clinical testing,
regulatory approval and commitments of resources prior to commercialization.
There can be no assurance that the Company's research will lead to the discovery
of any additional product candidates or that pramlintide or any such potential
products will be successfully developed, prove to be safe and efficacious in
clinical trials, meet applicable regulatory standards, be produced in commercial
quantities at acceptable costs or be marketed successfully. If pramlintide does
not successfully complete clinical testing and meet applicable regulatory
requirements or is not successfully marketed, the Company may not have the
financial resources to continue research and development of other product
candidates. See "Business -- Pramlintide: The Drug Candidate" and "-- Other
Research and Development Activities."
Reliance on Johnson & Johnson. The Company is dependent on future payments
from Johnson & Johnson to continue the development and commercialization of
pramlintide. The Company will apply all of the license fees and cash milestone
payments and at least 50% of the proceeds from Johnson & Johnson's equity
investments towards the Company's share of pramlintide development expenses.
Under the collaboration agreement between Johnson & Johnson and the Company,
Johnson & Johnson has primary responsibility for commercializing pramlintide.
There can be no assurance that Johnson & Johnson will be able to establish
effective sales and distribution capabilities or be successful in gaining market
acceptance for pramlintide or that Johnson & Johnson will devote sufficient
resources to the commercialization of pramlintide. If Johnson & Johnson desires
to discontinue the collaboration, it can terminate the collaboration agreement
with the Company, subject to notice of six months. Johnson & Johnson's financial
and other obligations would continue during the six-month period following the
receipt of any such termination notice. In addition, Johnson & Johnson has the
right to terminate the collaboration agreement at any time based on material
safety or tolerability issues. If Johnson & Johnson were to discontinue its
financial support, the Company might not be able to continue the pramlintide
development program, and the Company's financial condition would be materially
adversely affected. If adequate funds were not available from other sources, the
Company would be required to implement a restructuring plan and to delay,
scale-back or eliminate one or more of its research or development programs. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources" and "Business -- Johnson &
Johnson Collaboration."
6
<PAGE> 7
Uncertainty Associated with Clinical Trials; Government Regulation. 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 United States Food and Drug Administration ("FDA") and
equivalent foreign authorities. Subject to compliance with applicable
regulations, the Company plans to undertake extensive clinical testing to
demonstrate optimal dose, safety and efficacy for its product candidates. The
Company has initiated adequate and well controlled Phase III efficacy studies on
the Company's first product candidate, pramlintide. In the Phase III studies,
the Company is testing whether treatment with pramlintide along with insulin can
lower glycated hemoglobin (HbA1c), a widely accepted, chemically measured index
of glucose control that is indicative of the risk of degenerative complications.
HbA1c reflects average blood-glucose concentrations over the previous three- to
four-month period and is a primary endpoint in the Company's Phase III studies.
Although medical studies show a correlation between reductions in 24-hour
average glucose concentrations, reductions in fructosamine, and lowering HbA1c
there can be no assurance that Phase II clinical results with pramlintide
showing reductions in 24-hour average glucose and fructosamine concentrations
will translate into sustainable improvements in HbA1c levels in the Phase III
efficacy studies. 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 applicable regulatory authorities 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
such regulatory authorities to delay or suspend clinical trials. In addition,
there can be no assurance that any of the Company's products will obtain
regulatory approval for any indication. In August 1996, AMYLIN and Johnson &
Johnson conducted an administrative interim review of three-month data from
AMYLIN'S first two, one-year Phase III clinical trials. Based on the
administrative interim review, Johnson & Johnson decided to continue its
collaboration with the Company. In compliance with FDA 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. Products, if
any, resulting from AMYLIN's research and development programs are not expected
to be commercially available for a number of years.
The time required for completing such clinical testing and obtaining such
regulatory approvals is uncertain and approval itself may not be obtained. In
addition, delays or rejections may be encountered based upon FDA regulatory
review of each submitted New Drug Application ("NDA") and changes in FDA
policies during the period of product development. Similar delays may also be
encountered in other countries. There can be no assurance that, even after such
time and expenditures, regulatory approval will be obtained for any products
developed by the Company. Moreover, prior to receiving regulatory approval to
market its products, the Company may have to demonstrate that its products
represent improved forms of treatment over existing therapies. If regulatory
approval of a product is granted, such approval may be subject to limitations on
the indicated uses for which the product may be marketed. Further, even if such
regulatory approval is obtained, a marketed product, its manufacturers and its
manufacturing facilities are subject to continual review and periodic
inspections and later discovery of previously unknown problems with a product,
manufacturer or facility may result in restrictions on such product or
manufacturer, including withdrawal of the product from the market. See
"Business -- Pramlintide: The Drug Candidate" and "-- Government Regulation."
History of Operating Losses. The Company has experienced significant
operating losses since its inception in 1987. As of June 30, 1996, the Company
had an accumulated deficit of approximately $135.7 million. The Company expects
to incur significant additional operating losses over the next several years.
Substantially all of the Company's revenues to date have been derived from
development funding, license fees and milestone payments under collaborative
agreements and from interest income. To date, the Company has not received any
revenues from product sales. To achieve profitable operations, the Company,
alone or with others such as Johnson & Johnson, must successfully develop,
manufacture, obtain required regulatory approvals and market its products.
Future Capital Needs; Uncertainty of Additional Funding. The Company's
future capital requirements will depend on many factors, including continuation
of the collaboration with Johnson & Johnson, scientific progress in its research
and development programs, the magnitude of these programs, progress with
preclinical and clinical
7
<PAGE> 8
trials, the time and costs involved in obtaining regulatory approvals, the costs
involved in preparing, filing, prosecuting, maintaining and enforcing patents,
competing technological and market developments, changes in collaborative
relationships, the ability of the Company to establish research, development and
commercialization arrangements pertaining to its non-pramlintide related
programs, and the costs of manufacturing scale-up. AMYLIN anticipates that its
existing available cash, interest income from cash investments, future payments
by and loan facilities from Johnson & Johnson, and the proceeds from this
Offering and the sale of the Johnson & Johnson Shares will be adequate to
satisfy the Company's capital requirements through 1998. Although Johnson &
Johnson's various payments to AMYLIN should be sufficient to fund the
substantial portion of the Company's 50% share of pramlintide development, the
Company may elect to raise additional funds to pay for its share of such
development and for other corporate purposes. There can be no assurance that
additional financing will be available on acceptable terms or at all.
Patents and Proprietary Rights. The Company's success will depend in part
on its ability to obtain patent protection for its products and technologies
both in the United States and other countries. The patent positions of
biotechnology and pharmaceutical companies can be highly uncertain and involve
complex legal and factual questions. As of September 30, 1996, the Company held
rights to 22 issued U.S. patents. Of these issued patents, 17 are owned by
AMYLIN and five are licensed exclusively to AMYLIN. In addition, AMYLIN owns or
has exclusive rights to 28 patent applications pending with the U.S. Patent and
Trademark Office (the "U.S. PTO"). The Company intends to file additional
applications as appropriate for patents covering both its products and
processes. Generally, it is the Company's policy to file foreign counterparts in
countries with significant pharmaceutical markets. The Company has filed foreign
counterparts of certain of its issued and pending applications in many
countries. There can be no assurance that patents will issue from any of these
applications or, if patents do issue, that claims allowed on issued patents will
be sufficient to protect the Company's technology. In addition, there can be no
assurance that patents issued to the Company will not be challenged, invalidated
or circumvented or that the rights granted thereunder will provide proprietary
protection or commercial advantage to the Company.
Since patent applications in the United States are maintained in secrecy
until patents issue and since publication of discoveries in the scientific or
patent literature often lag behind actual discoveries, the Company cannot be
certain that it was the first to make the inventions covered by each of its
pending patent applications or that it was the first to file patent applications
for such inventions. In the event that a third party has also filed a patent for
any of its inventions, the Company may have to participate in interference
proceedings declared by the U.S. PTO to determine priority of invention, which
could result in substantial cost to the Company, even if the eventual outcome is
favorable to the Company. There can be no assurance that the Company's patents,
if issued, would be held valid by a court of competent jurisdiction. There can
be no assurance that the Company will not be obliged to defend itself in court
against allegations of infringement of third-party patents. An adverse outcome
in such a suit could subject the Company to significant liabilities to third
parties, require disputed rights to be licensed from third parties or require
the Company to cease using such technology.
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
(defined elsewhere herein), 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.
If patents are issued to other companies that contain competitive or
conflicting claims and such claims are ultimately determined to be valid, there
can be no assurance that the Company would be able to obtain licenses to these
patents at a reasonable cost or be able to develop or obtain alternative
technology.
In order to protect its proprietary technology and processes, AMYLIN also
relies in part on confidentiality agreements with its corporate partners,
employees, consultants, outside scientific collaborators and sponsored
researchers and other advisors. There can be no assurance that these agreements
will not be breached, that the Company will have adequate remedies for any
breach or that the Company's trade secrets will not otherwise
8
<PAGE> 9
become known or be independently discovered by competitors. See
"Business -- Johnson & Johnson Collaboration" and "-- Patents, Proprietary
Rights, and Licenses."
Competition; Technological Change. Other products are currently in
development or exist in the market that may compete directly with the products
that the Company is seeking to develop and market. Various products are
available to treat Type II diabetes, including sulfonylureas, metformin,
acarbose and other compounds. In addition, several companies are researching
various approaches to improve treatments for Type I and Type II diabetes. There
can be no assurance that the Company's products, even if successfully tested and
developed, will have sufficient advantages over existing products to cause
health care professionals to adopt them over such other
products or that the Company's products will offer an economically feasible
alternative to such existing products.
The Company is engaged in a rapidly developing field. A number of companies
are pursuing the development of novel pharmaceuticals which target the same
diseases that AMYLIN is targeting. These companies include biotechnology and
pharmaceutical companies. It is expected that the number of companies seeking to
develop products and therapies for the treatment of diabetes and other metabolic
disorders will increase. There can be no assurance that other products and
therapies will not be developed that will either render the Company's proposed
products obsolete or that will have advantages that will significantly outweigh
the advantages of the products and therapies that the Company is seeking to
develop.
Many of the Company's competitors have substantially greater financial,
technical and human resources than the Company. In addition, many of these
competitors have significantly greater experience than the Company in
undertaking preclinical testing and human clinical trials of new pharmaceutical
products and in obtaining regulatory approvals of human therapeutic products.
Accordingly, the Company's competitors may succeed in obtaining FDA approval for
products more rapidly than the Company. Furthermore, if the Company is permitted
to commence commercial sales of products, it may also be competing with respect
to manufacturing efficiency and marketing capabilities, areas in which it has
limited or no experience. See "Business -- Competition."
Reliance on Third-Party Manufacturers; Manufacture of Pramlintide in
Commercial Quantities. The manufacturing of sufficient quantities of new drugs
is a time consuming and complex process. The Company currently has no facilities
for the manufacture of clinical trial or commercial supplies of pramlintide. The
Company currently relies on third parties to manufacture pramlintide for
preclinical testing and clinical trials. Pramlintide has not yet been
manufactured on a commercial scale. Under the terms of the collaboration
agreement with Johnson & Johnson, the Company is responsible for arranging for
the manufacture of pramlintide during the development phase, while Johnson &
Johnson is responsible for manufacturing during the commercialization phase. All
manufacturing facilities must comply with applicable regulations of the FDA. No
assurance can be given that the Company, together with Johnson & Johnson, will
be able to make the transition to commercial production. The Company has
established a quality control and quality assurance program, including a set of
standard operating procedures and specifications, designed to ensure that the
Company's products are manufactured in accordance with current good
manufacturing practices ("GMP") and other applicable domestic and foreign
regulations. However, the Company is dependent upon contract manufacturers and
Johnson & Johnson to comply reliably with such procedures and regulations. There
can be no assurance that these manufacturers will meet the Company's
requirements for quality, quantity or timeliness. See "Business --
Manufacturing."
Attraction and Retention of Key Employees and Consultants. The Company is
highly dependent on the principal members of its scientific and management
staff, the loss of whose services might impede the achievement of research and
development objectives. Recruiting and retaining qualified scientific personnel
to perform research and development work in the future will also be critical to
the Company's success. Although the Company believes it will be successful in
attracting and retaining skilled and experienced scientific personnel, there can
be no assurance that the Company will be able to attract and retain such
personnel on acceptable terms given the competition between numerous
pharmaceutical and biotechnology companies, universities and other research
institutions for experienced scientists and management personnel. In California,
an initiative referred to as Proposition 211 has been placed on the state ballot
for the November 5, 1996 election. Approval of Proposition 211 would result in
certain changes in California law that would, among other things, restrict a
company's ability to indemnify its directors and executive officers and would
effect other changes in the standard of liability,
9
<PAGE> 10
procedure and remedies in securities litigation. If Proposition 211 is approved,
the Company may not be able to indemnify its directors and executive officers in
all circumstances in which it currently provides indemnification and, as a
result, the ability of the Company to attract and retain directors and executive
officers may be materially adversely affected.
The Company does not maintain "key person" insurance on any of its
employees. In addition, the Company relies on consultants and advisors,
including its scientific and clinical advisors, to assist the Company in
formulating its research and development strategy. All of the Company's
consultants and advisors are employed by employers other than the Company and
have commitments to or consulting or advisory contracts with other entities that
may limit their availability to the Company.
Absence of Sales and Marketing Organization. The Company has limited
experience in market development and no experience in sales, marketing or
distribution. To market any of its products directly, the Company must obtain
access to marketing and sales forces with technical expertise and with
supporting distribution capability. To this end, the Company has entered into a
collaboration agreement with Johnson & Johnson which provides that Johnson &
Johnson will have primary responsibility for commercialization of pramlintide.
There can be no assurance that Johnson & Johnson or the Company will establish
adequate sales and distribution capabilities or be successful in gaining market
acceptance for products.
Uncertainty of Pharmaceutical Pricing and Reimbursement; Health Care
Reform. AMYLIN's ability to commercialize its products successfully will depend
in part on the extent to which reimbursement for the cost of such products and
related treatments will be available from government health administration
authorities, private health insurers and other organizations. The levels of
revenues and profitability of pharmaceutical companies may be affected by the
continuing efforts of governmental and third-party payors to contain or reduce
the costs of health care through various means. For example, in certain foreign
markets pricing or profitability of prescription pharmaceuticals is subject to
government control. In the United States, there have been, and the Company
expects that there will continue to be, a number of federal and state proposals
to implement similar government control. In addition, both in the United States
and elsewhere, sales of prescription pharmaceuticals are dependent in part on
the availability of reimbursement from third-party payors, such as government
and private insurance plans. Third-party payors are increasingly challenging the
prices charged for medical products and services. If the Company and Johnson &
Johnson succeed in bringing pramlintide to the market, there can be no assurance
that it will be considered cost effective and that reimbursement will be
available or will be sufficient to allow the Company and Johnson & Johnson to
sell pramlintide on a competitive basis. This could have a material adverse
effect on the Company's business.
Product Liability and Insurance. The Company's business exposes it to
potential product liability risks which are inherent in the testing,
manufacturing and marketing of human therapeutic products. Although the Company
currently has product liability insurance, there can be no assurance that it
will be able to maintain such insurance on acceptable terms or that insurance
will provide adequate coverage against potential liabilities.
Hazardous Materials. The Company's research and development involves the
controlled use of hazardous materials, chemicals and various radioactive
compounds. Although the Company believes that its safety procedures for handling
and disposing of such materials comply with the standards prescribed by state
and federal regulations, the risk of accidental contamination or injury from
these materials cannot be eliminated. In the event of such an accident, others
may seek to hold the Company liable for any damages that result and any such
liability could exceed the resources of the Company.
Volatility of Stock Price. The market prices for securities of
biopharmaceutical and biotechnology companies, including AMYLIN, have
historically been highly volatile, and the market from time to time has
experienced significant price and volume fluctuations that are unrelated to the
operating performance of such companies. Factors such as fluctuation in the
Company's operating results, announcements of technological innovations or new
commercial therapeutic products by the Company or its competitors, clinical
trial results, governmental policy or regulation, developments in patent or
other proprietary rights, developments in the Company's relationships with
Johnson & Johnson or future collaborative partners, public concern as to the
safety of drugs developed by the Company and general market conditions may have
a significant effect on the market price of the Common Stock.
10
<PAGE> 11
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 1,750,000 shares of
Common Stock offered by the Company hereby (the "Offering") are estimated to be
approximately $16.2 million ($18.7 million if the Underwriters' over-allotment
option is exercised in full), after deduction of underwriting discounts and
commissions and estimated expenses payable by the Company in connection with the
Offering. In addition, the net proceeds to the Company from the sale of the
Johnson & Johnson Shares will be $15.0 million. The combined net proceeds to the
Company from this Offering and the sale of the Johnson & Johnson Shares are
estimated to be $31.2 million ($33.7 million if the Underwriters' over-allotment
option is exercised in full), after deduction of underwriting discounts and
commissions and estimated expenses payable by the Company.
The Company intends to use the combined net proceeds of this Offering and
the sale of the Johnson & Johnson Shares for expanded development of
pramlintide, including the Phase III efficacy studies, and for the expansion of
its other research and development programs and other general corporate
purposes. To the extent that clinical trials progress as planned, the Company's
research and development expenses will include costs of supplying materials for
and conducting pramlintide clinical trials, expanding the potential use and
indications for pramlintide, further exploring amylin biology and continuing to
broaden its research base to investigate new drug targets for the treatment of
metabolic disorders, including diabetes (such as exendin and GLP-1), obesity and
dyslipidemia. The amounts actually expended for each purpose may vary
significantly depending on 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 agreement, the availability of additional sources of funds, the
establishment of collaborative arrangements with other companies, and other
factors. The Company anticipates that its existing available cash, interest
income from cash investments, financial payments by and loan facilities from
Johnson & Johnson, and the proceeds of this Offering and the sale of the Johnson
& Johnson Shares will be adequate to satisfy the Company's activities through
1998.
In addition, the Company may also use a portion of such proceeds to acquire
or invest in businesses, products and/or technologies that it considers
complementary to those of the Company. No portion of such proceeds has been
allocated for any specific acquisition.
Pending such uses, the Company will invest the net proceeds in
investment-grade, interest-bearing marketable securities.
11
<PAGE> 12
PRICE RANGE OF COMMON STOCK
The Company's Common Stock is traded on the Nasdaq National Market under
the symbol "AMLN." The following table sets forth, for the periods indicated,
the intra-day high and low sales prices per share of Common Stock on the Nasdaq
National Market:
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
1996
Fourth Quarter (through October 31, 1996)............................. $13.88 $10.88
Third Quarter......................................................... 14.50 7.00
Second Quarter........................................................ 13.00 9.00
First Quarter......................................................... 14.38 8.88
1995
Fourth Quarter........................................................ $ 9.63 $ 6.00
Third Quarter......................................................... 9.50 6.25
Second Quarter........................................................ 9.00 3.50
First Quarter......................................................... 6.50 4.25
1994
Fourth Quarter........................................................ $ 8.50 $ 4.75
Third Quarter......................................................... 8.75 5.75
Second Quarter........................................................ 12.50 5.75
First Quarter......................................................... 15.25 10.00
</TABLE>
The last reported sale price of the Common Stock on the Nasdaq National
Market on October 31, 1996 was $11.25. As of September 30, 1996, there were
approximately 904 stockholders of record of the Company's Common Stock.
DIVIDEND POLICY
The Company has never declared or paid any cash dividends on its capital
stock. The Company currently intends to retain any future earnings for funding
growth and, therefore, does not anticipate paying any cash dividends in the
foreseeable future.
12
<PAGE> 13
CAPITALIZATION
The following table sets forth at June 30, 1996 the actual capitalization
of the Company and the capitalization as adjusted to reflect (i) the receipt of
the net proceeds from the sale of the 1,750,000 shares of Common Stock being
offered by the Company hereby (after deduction of underwriting discounts and
commissions and estimated expenses payable by the Company in connection with the
Offering), (ii) the concurrent sale of the Johnson & Johnson Shares and (iii)
the receipt of a $7.0 million milestone-related payment from Johnson & Johnson
in August 1996.
<TABLE>
<CAPTION>
JUNE 30, 1996
-------------------------
ACTUAL AS ADJUSTED
--------- -----------
(IN THOUSANDS)
<S> <C> <C>
Note payable, less current portion................................... $ 3,168 $ 3,168
Obligation under capital lease, less current portion................. 534 534
Stockholders' equity:
Preferred stock, $.001 par value; 7,500,000 shares authorized; no
shares issued or outstanding.................................... -- --
Common stock, $.001 par value; 50,000,000 shares authorized;
28,197,352 shares issued and outstanding; and 31,447,352 shares
to be outstanding as adjusted (1)............................... 28 31
Additional paid-in capital......................................... 167,575 198,816
Accumulated deficit................................................ (135,655) (128,655)
Unrealized (gains) losses on short-term investments................ (6) (6)
------- ---------
Total stockholders' equity...................................... 31,942 70,186
------- ---------
Total capitalization.......................................... $ 35,644 $ 73,888
======= =========
</TABLE>
- ---------------
(1) Excludes 6,991,951 shares reserved for issuance under the Company's stock
option plans, of which 4,658,636 shares were subject to outstanding options
as of June 30, 1996 at a weighted average exercise price of $6.44 per share.
13
<PAGE> 14
DILUTION
The pro forma net tangible book value of the Company's Common Stock at June
30, 1996, after giving effect to the sale of the Johnson & Johnson Shares, was
$45.6 million or $1.53 per share of Common Stock. Pro forma net tangible book
value per share represents the amount of the Company's total tangible assets
after giving effect to the sale of the Johnson & Johnson Shares less total
liabilities divided by the number of shares of Common Stock outstanding plus the
Johnson & Johnson Shares. After giving effect to the sale by the Company of the
1,750,000 shares of Common Stock offered hereby (after deducting underwriting
discounts and commissions and estimated offering expenses), the adjusted pro
forma net tangible book value of the Company at June 30, 1996 would have been
$61.8 million or $1.96 per share, representing an immediate increase of $.43 per
share to existing stockholders and an immediate dilution of $8.04 per share to
new investors.
The following table illustrates this dilution to new investors:
<TABLE>
<S> <C> <C>
Public offering price per share(1)..................................... $10.00
Pro forma net tangible book value per share as of June 30, 1996... $1.53
Increase in pro forma net tangible book value per share
attributable to new investors.................................... .43
-----
Adjusted pro forma net tangible book value per share after this
Offering.............................................................. 1.96
------
Dilution per share to new investors.................................... $ 8.04
======
</TABLE>
- ---------------
(1) Before deduction of underwriting discounts and commissions and estimated
expenses payable by the Company in connection with the Offering.
The preceding table assumes no exercise of any outstanding options to
purchase Common Stock. At June 30, 1996, there were 4,658,636 shares of Common
Stock issuable upon exercise of outstanding options with a weighted average
exercise price of $6.44 per share. To the extent outstanding options are
exercised, there will be further dilution in net tangible book value per share
of Common Stock to new investors.
14
<PAGE> 15
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data set forth below with respect to
the Company's consolidated statements of operations for each of the years in the
three-year period ended December 31, 1995 and with respect to the consolidated
balance sheets at December 31, 1994 and 1995, are derived from the consolidated
financial statements that have been audited by Ernst & Young LLP, independent
auditors, which are incorporated by reference in this Prospectus and are
qualified by reference to such financial statements and the notes related
thereto. The consolidated balance sheet data at December 31, 1991, 1992 and
1993, and the consolidated statement of operations data for the years ended
December 31, 1991 and 1992 are derived from audited financial statements not
incorporated by reference in this Prospectus. The consolidated statement of
operations for the six months ended June 30, 1995 and 1996 and the consolidated
balance sheet data at June 30, 1996 are derived from unaudited consolidated
financial statements incorporated by reference in this Prospectus. The unaudited
financial statements include all adjustments, consisting only of normal
recurring adjustments, which the Company considers necessary for a fair
presentation of the financial position and the results of operations for these
periods. Operating results for the six months ended June 30, 1996 are not
necessarily indicative of the results that may be expected for the entire year
ending December 31, 1996. The data should be read in conjunction with the
consolidated financial statements, related notes and other financial information
incorporated by reference herein.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
------------------------------------------------------------ ---------------------
1991 1992 1993 1994 1995 1995 1996
-------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Revenues under
collaborative
agreements............... $ 167 $ 667 $ 667 $ 500 $ 17,045 $ 9,066 $ 10,730
Expenses:
Research and
development............ 7,532 15,368 18,988 30,255 39,337 20,023 25,791
General and
administrative......... 2,013 2,834 4,387 6,383 8,318 4,133 4,275
--------- --------- --------- --------- --------- --------- ---------
9,545 18,202 23,375 36,638 47,655 24,156 30,066
Net interest income........ 261 2,612 2,195 1,637 1,341 313 999
--------- --------- --------- --------- --------- --------- ---------
Net loss................... $ (9,117) $(14,923) $(20,513) $(34,501) $(29,269) $(14,777) $(18,337)
========= ========= ========= ========= ========= ========= =========
Net loss per share......... $ (0.76) $ (0.87) $ (1.15) $ (1.71) $ (1.23) $ (0.69) $ (0.65)
========= ========= ========= ========= ========= ========= =========
Shares used in computing
net loss per share....... 12,029 17,111 17,867 20,185 23,854 21,490 28,084
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------------------------- JUNE 30,
1991 1992 1993 1994 1995 1996
-------- -------- -------- -------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash, cash equivalents and short-term
investments............................ $ 9,142 $ 54,331 $ 56,250 $ 29,149 $ 53,521 $ 39,552
Working capital.......................... 8,325 52,773 54,435 26,209 45,268 27,896
Total assets............................. 13,028 57,823 62,029 37,306 61,949 48,501
Note payable, less current portion....... -- -- -- 964 1,671 3,168
Obligation under capital leases, less
current portion........................ 1,115 720 819 1,213 759 534
Accumulated deficit...................... (18,113) (33,035) (53,548) (88,049) (117,318) (135,655)
Total stockholders' equity............... 8,530 53,866 58,162 30,869 49,755 31,942
</TABLE>
15
<PAGE> 16
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of the financial condition and results of
operations of the Company should be read in conjunction with the consolidated
financial statements and the related notes thereto incorporated by reference
herein. The discussion in this Prospectus contains forward-looking statements
that involve risks and uncertainties. The Company's actual results could differ
materially from those discussed in the forward-looking statements. Factors that
could cause or contribute to such differences include, without limitation, those
discussed in the sections entitled "Risk Factors," "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Business," as
well as those discussed elsewhere in this Prospectus or incorporated herein by
reference.
OVERVIEW
Since its inception in September 1987, AMYLIN has devoted substantially all
of its resources to its research and development programs and has expended
almost $200 million to this end through September 30, 1996. 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 June 30, 1996, the Company's
accumulated deficit was approximately $135.7 million.
In June 1995, AMYLIN and Johnson & Johnson entered into a worldwide
collaboration to develop and commercialize pramlintide. By the closing of this
Offering, Johnson & Johnson will have made payments to AMYLIN totaling $80.0
million. These payments primarily included the payment of one-half of the
pramlintide development costs through the date of this Offering, the purchase of
$15.0 million of Common Stock in 1995 and $15.0 million of Common Stock in
conjunction with this Offering, a license fee and certain milestone and option
fee payments.
RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1996
Revenue
The Company had $10.7 million of revenue for the six month periods ended
June 30, 1996 as compared to $9.1 million for the same period in 1995. The
revenues recognized in 1996 and 1995 were related to the Company's collaboration
with Johnson & Johnson. 1996 revenues were comprised of Johnson & Johnson's one-
half share of collaboration development expenses incurred by AMYLIN in the first
half of the year. 1995 revenues were comprised of Johnson & Johnson's one-half
share of collaboration development expenses incurred by AMYLIN in the second
quarter of 1995 along with a license fee which was paid at the signing of the
agreements.
Operating Expenses
For the six months ended June 30, 1996, operating expenses increased to
$30.1 million from $24.2 million for the same period in 1995.
Research and development expenses for the six months ended June 30, 1996
increased to $25.8 million from $20.0 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 for the six months ended June 30, 1996
increased to $4.3 million from $4.1 million for the same period in 1995. The
increase for the six month period was primarily related to expanded pramlintide
market development efforts in conjunction with the Company's collaboration with
Johnson & Johnson.
16
<PAGE> 17
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 increased
to $1.2 million for the six months ended June 30, 1996 from $0.5 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 six months
ended June 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 collaborative 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 approximately $171,000 for the six months ended June
30, 1996 from approximately $161,000 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 half of 1996 as compared to 1995.
Net Loss
The Company incurred a net loss of $18.3 million for the six months ended
June 30, 1996 as compared to $14.8 million for the six months ended June 30,
1995. The 1996 increase in the net loss was primarily related to increased
pramlintide clinical development efforts.
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 and Johnson & Johnson entered into a worldwide
collaboration agreement 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 and a Loan Agreement with Johnson & Johnson.
As of June 30, 1996, Johnson & Johnson has made various financial payments
to the Company totaling $50.5 million. These payments primarily include a
license fee, the purchase of $15.0 million of the Company's Common Stock in
1995, and payment of one-half of the pramlintide development costs.
In August 1996, the Company achieved the first milestone in the
collaboration when, based upon an administrative interim 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 is 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 by Johnson & Johnson in the third quarter
of 1996 and a commitment to purchase $15.0 million of AMYLIN Common Stock
concurrently with this Offering. In compliance with FDA 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.
17
<PAGE> 18
In addition to the above mentioned milestone-related payments and
investment, Johnson & Johnson's ongoing 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, cash milestone payments and 50% of the proceeds from Johnson &
Johnson's equity investments towards its share of pramlintide development
expenses. In this regard, Johnson & Johnson paid AMYLIN $7.4 million in
September 1996 as an advance of quarterly development expenses. As a result, by
the closing of this Offering, Johnson & Johnson will have made payments to
AMYLIN totaling $80.0 million.
In addition, AMYLIN and Johnson & Johnson entered into a Loan Agreement
under which Johnson & Johnson agreed to provide to AMYLIN a $27.8 million credit
facility (as of June 30, 1996) for use in certain circumstances to cover the
Company's share of development expenses relating to the collaboration agreement.
This facility will be adjusted in certain circumstances. For example, the
facility will be increased by 50% of any increases in the pramlintide
development budget from the existing pre-approved budget and decreased by 50% of
the Company's net proceeds received from equity and debt offerings after
December 31, 1995 (including the proceeds from this Offering) to investors other
than Johnson & Johnson or other corporate partners.
The Company is dependent on future payments from Johnson & Johnson to
continue the development and commercialization of pramlintide. Johnson & Johnson
may terminate the collaboration agreement with the Company 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.
At June 30, 1996, the Company had $39.6 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.
The Company intends to use its financial resources for the ongoing
development of pramlintide, including the Phase III efficacy studies, and for
the expansion of its other research and development programs and other general
corporate purposes. To the extent that clinical trials of the Company's
compounds progress as planned, research and development expenses will include
costs of supplying materials for and conducting pramlintide clinical trials,
expanding the potential use and indications for pramlintide, further exploring
amylin biology and continuing to broaden its research base to investigate new
drug targets for the treatment of metabolic disorders, including diabetes (such
as exendin and GLP-1), obesity and dyslipidemia. 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 leasing additional laboratory and office
space in 1997. Should the Company lease this additional space, the terms of the
leases will be at competitive market rates. At this time, the Company expects to
incur approximately $2.0 million of capital expenditures in the second half 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 and to complete tenant
improvements to the Company's product development facility. 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
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<PAGE> 19
June 30, 1996 approximately $1.0 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, interest
income from cash investments, financial payments and loan facilities from
Johnson & Johnson and the proceeds of this Offering and the sale of the Johnson
& Johnson Shares will be adequate to satisfy the Company's capital requirements
through 1998. Although Johnson & Johnson's various payments to AMYLIN should be
sufficient to fund the substantial portion of the Company's 50% share of
pramlintide development, the Company may elect to raise additional funds to pay
for its share of such development and for other corporate purposes. 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.
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<PAGE> 20
BUSINESS
The discussion in this Prospectus contains forward-looking statements which
involve risks and uncertainties. The Company's actual results could differ
materially from those discussed in the forward-looking statements. Factors that
could cause or contribute to such differences include, without limitation, those
discussed in the sections entitled "Risk Factors," "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Business," as
well as those discussed elsewhere in this Prospectus or incorporated herein by
reference.
GENERAL
AMYLIN is focused on developing novel therapeutics for treating people with
diabetes and other metabolic disorders. The Company is conducting a series of
Phase III clinical trials of its lead drug candidate, pramlintide, which is
being developed to improve glucose control in people with Type I
(juvenile-onset) and Type II (maturity-onset) diabetes who use insulin, a
patient population estimated by the Company to comprise 7 million people in
major pharmaceutical markets. In June 1995, AMYLIN entered into a worldwide
collaboration with Johnson & Johnson to develop and commercialize pramlintide.
In August 1996, the Company achieved the first milestone in the collaboration
when, based upon an administrative interim review of three-month glycated
hemoglobin (HbA1c) data from the first two, one-year Phase III clinical trials,
Johnson & Johnson decided to continue the collaboration. By the closing of this
Offering, Johnson & Johnson will have made payments to AMYLIN totaling $80.0
million. In addition, Johnson & Johnson has committed to provide significant,
additional financial support for the development and commercialization of
pramlintide, subject to the terms of its agreement with the Company. Assuming
successful Phase III clinical trials, the Company plans to apply for marketing
approval of pramlintide in North America and Europe by the end of 1998. Any
profits or losses from the collaboration will be shared equally between AMYLIN
and Johnson & Johnson. Since its inception, the Company has spent almost $200
million building its integrated drug discovery and development expertise, and,
with its lead drug candidate now well advanced in clinical development, AMYLIN
wishes to broaden its research to develop new drug targets for treating
metabolic disorders, including diabetes, obesity and dyslipidemia.
BACKGROUND
Diabetes is a major global health problem which is inadequately treated by
available drugs. The International Diabetes Federation estimates that over 100
million people worldwide are afflicted with this disease. Diabetes costs the
American economy over $100 billion annually, according to a study reported in
the Journal of Clinical Endocrinology and Metabolism, which went on to say that
". . . health care expenditures for people with diabetes constituted about one
in seven health care dollars spent in 1992." Moreover, the American Medical
Association reports that the incidence of diagnosed diabetes as a percentage of
the American population has tripled since 1958, and that the total number of
diagnosed and undiagnosed cases has grown to about 16 million.
Diabetes occurs when the pancreas no longer produces enough insulin, a
hormone that regulates the metabolism of blood glucose. In Type I
(juvenile-onset) diabetes, which afflicts about 10% of all people with diagnosed
diabetes in developed countries, the pancreatic beta cells that make insulin
have been destroyed. In the more prevalent form of diabetes, Type II
(maturity-onset), the insulin-producing cells are unable to produce enough
insulin to compensate for the patient's poor sensitivity to the hormone in
glucose-using tissues such as skeletal muscle (a condition called insulin
resistance). In both Type I and Type II diabetes, the insulin deficiency results
in an abnormally high blood-glucose concentration (a condition called
hyperglycemia) which is an important cause of the degenerative complications
associated with diabetes, including blindness, kidney failure and nerve damage.
In addition, many authorities believe hyperglycemia plays a role in the
development of heart disease.
Since its discovery in 1921, insulin replacement therapy has played a
central role in treating diabetes. For people with Type I diabetes, insulin
injections are essential, since these patients would otherwise die. For people
with Type II diabetes, oral medications that either stimulate greater insulin
production or enhance insulin sensitivity may improve metabolic control.
However, as many as 20% of people with newly diagnosed Type II diabetes do not
respond to oral therapy. Moreover, patients who do respond to oral therapy
become progressively
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<PAGE> 21
resistant over time, with as many as 10% each year ceasing to derive a
therapeutic benefit. Thus, an estimated 40% of people diagnosed with Type II
diabetes are using insulin injections to manage their disease. The Company
estimates that in the major pharmaceutical markets as many as two million people
with Type I diabetes and five million people with Type II diabetes use insulin
to help control their blood-glucose concentrations.
Despite 75 years of efforts to improve insulin therapy, most people with
diabetes have great difficulty achieving optimal glucose control with insulin
alone. For superior glucose control, each insulin injection must be adjusted to
reflect the person's pre-meal blood-glucose concentration and the carbohydrate
content of the meal. These adjustments require multiple finger-pricks each day
for glucose monitoring. Aggressive efforts to bring blood-glucose concentration
down into the normal range using intensive insulin therapy increase the risk of
blood-glucose concentration falling too low (a condition called hypoglycemia),
which can cause unpleasant and dangerous effects including sweating,
disorientation, personality changes, coma, convulsions and even death. To avoid
hypoglycemia, many people with diabetes maintain high blood-glucose
concentrations but thereby increase their risk of degenerative complications
from the disease.
In June 1993, the National Institutes of Health announced the results of
the Diabetes Control and Complications Trial ("DCCT"). This decade-long,
prospective study of over 1,400 people with Type I diabetes established the
importance of glucose control as a determinant of long-term risk of degenerative
complications. The quality of glucose control for each DCCT participant was
determined by measuring the proportion of blood-hemoglobin which had chemically
combined with blood-glucose to form glycated hemoglobin (HbA1c). This
measurement is a recognized indicator of average blood-glucose concentration
over the three- to four-month period prior to testing, and lower glycated
hemoglobin values are indicative of better glucose control. In this regard, the
data from the DCCT showed definitively that the risk of degenerative
complications is greatly reduced if blood-glucose concentrations in people with
Type I diabetes can be brought closer to the concentrations measured in
non-diabetic individuals. However, the intensive insulin therapy used to achieve
this benefit had several side effects and disadvantages, including (1) a
three-fold increase in severe hypoglycemia compared with the control group, (2)
an average weight gain of 10 to 15 pounds per patient, (3) a highly burdensome
treatment regimen requiring strict patient compliance, and (4) intensive and
costly support from diabetes care-givers. As a result of these side effects and
disadvantages, most people using insulin currently are unable to achieve normal
blood-glucose concentrations. In view of the health problems and economic costs
associated with this failure to achieve optimal glucose control, the Company
believes that significant value would result from a new medicine that could
safely improve glucose control without imposing unacceptable treatment and cost
burdens.
Although the DCCT study involved people with Type I diabetes only, the
Company believes that the conclusions of that study concerning the benefits of
glucose control are also applicable to people with Type II diabetes. Additional
clinical studies addressing the issue in people with Type II diabetes are
underway in the United Kingdom under the sponsorship of various nationally
funded academic research institutes and pharmaceutical companies and are
expected to be concluded in 1997.
Amylin: The Partner Hormone in Glucose Control
In 1987, researchers at the University of Oxford discovered that the
pancreatic beta-cells which make insulin also produce a second peptide, amylin.
In the nine years since amylin's discovery, extensive research in animals and
humans has generated data consistent with the idea that amylin is a partner
hormone to insulin:
- Rises in blood-glucose concentrations after eating stimulate increases in
blood concentrations of amylin, so that both amylin and insulin
concentrations normally increase after meals.
- Amylin exerts biological effects on various tissues relevant to glucose
metabolism, including the gastrointestinal tract, pancreas and skeletal
muscle.
- In people with diabetes who need insulin therapy, both the endogenous
insulin and amylin responses are deficient.
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<PAGE> 22
Amylin has been shown to have at least two effects believed to be important
for normal glucose metabolism: it slows glucose inflow into the bloodstream from
the gastrointestinal tract, and it suppresses glucagon secretion and thereby
lowers glucose production by the liver.
Effect on Glucose Inflow. After a typical meal, over 75 grams of glucose
pass from the stomach and gastrointestinal tract, through the bloodstream, and
into muscle and liver tissue for storage as glycogen. This amount of glucose is
large relative to the five to six grams of glucose typically present at normal
concentrations in the blood pool of an average adult. In healthy people, the
rate of glucose inflow from the gastrointestinal tract is closely matched with
the rate of outflow into the storage tissues, allowing the body to maintain
normal blood glucose concentrations. The endocrine regulator of glucose outflow
rate is insulin, which is secreted by pancreatic beta-cells in response to
rising blood glucose concentrations. The endocrine regulator of glucose inflow
rate has, until recently, been unknown.
Now, preclinical and clinical data support the idea that amylin is a key
regulator of glucose inflow rate. In animals and humans, rising amylin blood
concentrations slow down the transfer of nutrients from the stomach to the
intestines. This transfer is the rate-limiting step in the appearance of
nutrient-derived glucose in the bloodstream. Thus, the simultaneous secretion of
both insulin and amylin by the pancreatic beta-cells acts to regulate both
inflow and outflow, thereby keeping post-meal blood glucose concentrations
within a narrow and healthy range.
Effect on Glucagon Secretion. Between meals, the liver produces glucose
which is carried by the bloodstream to the brain and other tissues that do not
store glucose. The endocrine regulator of liver glucose production is glucagon,
a peptide hormone secreted by pancreatic alpha-cells in response to falling
blood glucose concentrations. At mealtime, glucagon secretion must be suppressed
to avoid hyperglycemia induced by excess liver glucose production, and a known
regulator of glucagon suppression is insulin.
Now, preclinical and clinical data support the idea that amylin is also an
endocrine regulator of glucagon secretion. In animals and humans, increasing
amylin blood concentrations slows pancreatic alpha-cell secretion of glucagon,
an effect which amplifies the same regulatory effect of insulin. Thus, the
simultaneous secretion of both insulin and amylin by the pancreatic beta-cells
acts to suppress glucagon and curtail liver glucose production, thereby helping
to keep post-meal blood glucose concentrations within a narrow and healthy
range.
The following diagram illustrates what the Company believes are important
roles of amylin as a partner hormone to insulin in glucose control:
LOGO
Studies have shown that people with Type I diabetes have difficulty
avoiding hyperglycemia at mealtime with insulin alone, in part because they have
abnormally rapid glucose inflow from the gastrointestinal tract into the
bloodstream and abnormally high blood concentrations of glucagon associated with
excessive liver glucose production. These findings are consistent with the
predicted effects of their amylin deficiency, and they support the clinical
hypothesis that amylin replacement therapy could aid in achieving better glucose
control.
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<PAGE> 23
PRAMLINTIDE: THE DRUG CANDIDATE
The following table summarizes the completed, ongoing and planned clinical
trials for pramlintide:
PRAMLINTIDE CLINICAL DEVELOPMENT PROGRAM
<TABLE>
<CAPTION>
DISEASE PLACE PATIENTS DURATION ENDPOINT STATUS++
--------- ------- -------- ----------- ----------------------------------------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Phase I
Type I US 20 1 dose Safety Completed
Normal Europe 37 1 dose Safety (dose limiting) Completed
Type I Europe 17 1 dose Safety Completed
-----
74
Phase II
Type I US 25 2 doses Post-meal glucose profile Completed
Type I US 32 5 days Hypoglycemia challenge Completed
Type I US 48 5 days Hypoglycemia challenge Completed
Type I Europe 10* 1 day Glucose clamp Completed
Type I US 84* 2 weeks Post-meal glucose profile Completed
Type I US 13 24 hrs. Dose ranging Completed
Type I US 27* 5 hrs. Post-meal glucose profile Completed
Type I US 86* 2 weeks Clinical pharmacology Completed
Type I Europe 9* 5 hrs. Mechanism of action (gastric emptying) Completed
Type I US 168* 2 weeks 24-hr glucose profile Completed
Type I US 215* 1 month Fructosamine Completed
Type II US 24* 5 hrs. Post-meal glucose profile Completed
Type I Europe 14* 1 month Mechanism of action (glucagon) Completed
Type II US 203* 1 month Fructosamine Completed
Type I US 27* 1 dose Insulin mixing Completed
Type I Europe 18* 3 doses Mechanism of action (gastric emptying) Completed
Type I US 24* 1 month Mechanism of action (liver glycogen) Ongoing
Type I US 24* 1 month Insulin sparing Ongoing
Type I US 30* 5 doses Insulin mixing Ongoing
Type I US 30* 5 doses Insulin mixing Ongoing
Type I tbd+ 24 tbd Safety (gastroparesis) Planned
Type II tbd 24* tbd Mechanism of action (gastric emptying) Planned
Type I tbd 24* tbd Mechanism of action (gastric emptying) Planned
Type I&II tbd 36* tbd Mechanism of action (glucagon) Planned
Type I tbd 30 tbd Nocturnal hypoglycemia Planned
Type I&II tbd (a) tbd Insulin mixing Planned
Type I&II tbd 272* tbd Pharmacokinetics (3 to 6 studies) Planned
-----
1,521
Phase III
Type II US 440* 12 mos. HbA1c (pivotal) Ongoing
Type I US 400* 12 mos. HbA1c (pivotal) Ongoing
Type I Europe 100 12 mos. Long-term safety & HbA1c (open label) Ongoing
Type I US 350 12 mos. Long-term safety & HbA1c (open label) Ongoing
Type I Europe 400* 6 mos. HbA1c (pivotal) Planned
Type I US 400* 6 mos. HbA1c (pivotal) Planned
Type II US 600* 6 mos. HbA1c (pivotal) Planned
Type II Europe 400* 6 mos. HbA1c (pivotal) Planned
Type I&II Europe (a) 12 mos. Safety (pen injectors) Planned
Type I tbd 100 12 mos. Safety (pediatric) Planned
-----
3,190
-----
Total Patients 4,785
=====
</TABLE>
- ---------------
* Double blind, placebo controlled studies.
+ "tbd" means "to be decided."
++ "Planned" refers to the period from the fourth quarter 1996 through the end
of 1998.
(a) Patients already counted in other studies.
23
<PAGE> 24
A chemical analog of human amylin, pramlintide (previously referred to as
AC137), combines the desired biologic actions of the native hormone with
superior pharmaceutical characteristics which greatly facilitate the
manufacture, formulation, and stability of the finished drug product. In
preclinical testing, pramlintide has elicited similar biological responses in
vitro and in vivo to those observed with the natural hormone. Also, pramlintide
has shown no toxicology issues to date with doses that are many multiples
greater than the highest expected human dose. In Phase II clinical trials,
pramlintide has been well tolerated at the anticipated therapeutic doses, and
the patient drop-out rate because of adverse drug effects (nausea) at these
doses has been less than 5%. Based on these results, the Company is encouraged
about the prospects for a good clinical safety profile of a long-term
pramlintide dosing regimen.
The Company's pramlintide development program includes 18 completed Phase I
and Phase II clinical trials involving more than 1,000 insulin-using people with
diabetes. Over 750 people with diabetes have completed two- or four-week dosing
periods in double-blind, placebo-controlled Phase II studies. In addition, the
Phase II program included several mechanism-of-action studies. Important
findings from these clinical investigations include the following:
- Pramlintide produced statistically significant and clinically relevant
reductions in blood-glucose concentrations in seven-out-of-seven Phase II
clinical trials assessing glucose control as measured:
-- After meals in people with Type I and Type II diabetes who use
insulin;
-- Over a 24-hour period in people with Type I diabetes; and
-- By fructosamine, a surrogate marker which reflects average glucose
concentrations over the two-to-three weeks prior to testing, in
people with Type I and Type II diabetes who use insulin.
- Glucose lowering was achieved in people with Type I and Type II diabetes
who use insulin without an increase in the incidence of hypoglycemia
compared with the placebo group.
- Pramlintide was well tolerated at the anticipated therapeutic doses.
- No clinically important safety concerns have arisen to date in Phase II
and Phase III trials involving over 1,800 people.
- At least two important physiologic mechanisms of pramlintide.
Key clinical results supporting these findings and the Company's
development plans for Phase III trials are discussed below.
Key Clinical Results
In a 14-day, double-blind, placebo-controlled Phase II clinical study
completed in 1994, subjects with Type I diabetes had a statistically significant
reduction in blood-glucose concentrations after a test meal compared to placebo
when they self injected pramlintide three times per day in addition to their
usual insulin therapy. Results from this study were presented at the June 1994
annual meeting of the American Diabetes Association and were published in April
1996 in Diabetologia.
In January 1995, AMYLIN disclosed the results of a placebo-controlled,
double-blind, clinical pharmacology study in which an intravenous infusion of
pramlintide significantly reduced post-meal blood-glucose concentrations in
subjects with Type II diabetes who use insulin. This finding was similar to
previous observations in comparable studies in people with Type I diabetes.
Results from this study were presented at the June 1995 annual meeting of the
American Diabetes Association and the September 1995 annual meeting of the
European Association for the Study of Diabetes.
In February 1995, the Company reported the results of another 14-day,
double-blind, placebo-controlled Phase II study in subjects with Type I
diabetes, which showed that 30-microgram doses of pramlintide self-administered
four times per day resulted in a statistically significant reduction in
blood-glucose concentrations following a test meal and also significantly
reduced the average blood-glucose concentrations over a 24-hour observation
period (35 mg/dl, p = 0.003) during which patients ingested their usual meals,
compared to placebo.
24
<PAGE> 25
Results from this study were presented at the September 1995 annual meeting of
the European Association for the Study of Diabetes.
In August 1995, the Company reported the results of a 28-day, double-blind,
placebo-controlled Phase II trial in subjects with Type I diabetes. This study
showed that self-administered, 30-microgram doses of pramlintide four times per
day (one before each main meal and a late-night snack) significantly lowered the
excessive rise in post-meal blood-glucose concentration, compared to the placebo
control group. Using this dosing regimen, the study also confirmed that
pramlintide significantly lowered 24-hour average blood-glucose concentrations
(31 mg/dl, p = 0.009) and fructosamine (33 micromoles/liter, p = 0.003),
compared to placebo. As in previous studies, the 30-microgram dose of
pramlintide was well tolerated. The only adverse effects significantly different
from those reported by the placebo group were mild gastrointestinal symptoms in
a small number of patients, and those were substantially reduced after the first
two weeks of treatment. Results from this study were presented at the June 1996
annual meeting of the American Diabetes Association.
At the same meeting, the Company presented results which suggest that it is
feasible to mix pramlintide with insulin in the same syringe just prior to
administration. In this study involving people with Type I diabetes, plasma
glucose profiles were similar when identical doses of Humulin(R) 70/30 insulin
and pramlintide were administered, either as separate injections or mixed in the
same syringe immediately prior to injection. The Company is investigating
interactions with additional insulin preparations in studies which are presently
underway.
In August 1996, the Company reported the results of a 28-day, double-blind,
placebo-controlled Phase II trial in subjects with Type II diabetes who use
insulin. In all dose groups, self-administered pramlintide significantly lowered
fructosamine as follows: 30 micrograms four times a day (17.5 micromoles/liter,
p = 0.029), 60 micrograms four times a day (22.6 micromoles/liter, p = 0.001),
and 60 micrograms three times a day (24.1 micromoles/liter, p = 0.003). These
results are similar to the positive findings previously reported in patients
with Type I diabetes. The reduction in fructosamine in the 60 microgram dose
groups represents a 50 - 60% reduction in the excess of fructosamine above the
upper limits of the normal range. Therefore, this study demonstrated that
three-times-a-day dosing of pramlintide can achieve similar clinical benefits as
four-times-a-day dosing in people with Type II diabetes who use insulin. The
study also corroborated the excellent short-term safety profile that has been
observed to date in other clinical trials of pramlintide. The gastrointestinal
symptoms that occurred in a small percentage of people with the initiation of
therapy were generally mild in nature and decreased during the first two weeks
of therapy.
The Company has reviewed its clinical data and planned clinical trial
protocols with its collaborators at Johnson & Johnson, outside clinical
consultants, various regulatory authorities, and European regulatory
consultants. As a result of these reviews, the Company initiated a series of
Phase III trials as described below.
Phase III Clinical Trials
In June 1995, AMYLIN began its PARADIGM (Pramlintide for Amylin
Replacement: Adjunct for Diabetes in Glycemic Management) trials, a Phase III
program involving a series of six pivotal studies designed to assess the
long-term safety and efficacy of pramlintide. The PARADIGM studies will involve
approximately 2,600 people at multiple centers in North America and Europe and
are planned to be completed in 1998.
The primary endpoint of the Phase III studies is a reduction in HbA1c, a
measurement that is well accepted by regulatory authorities and the medical
community as the key indicator of long-term average blood-glucose concentrations
and a predictor of long-term degenerative complications. HbA1c is also the
primary endpoint for marketing approval of other diabetes drugs which are
designed to lower blood-glucose. Also, changes in fructosamine have been shown
to mirror subsequent changes in HbA1c when the improvement in glucose control is
maintained over time. Consequently, if the ability of pramlintide to lower
24-hour of average blood-glucose and fructosamine seen during Phase II studies
translates to long-term efficacy as evidenced by a safe, clinically relevant,
and statistically significant reduction in HbA1c in Phase III trials, the
Company believes pramlintide should be approvable as a drug to improve glucose
control in people with diabetes who use insulin therapy.
25
<PAGE> 26
In June 1995, the Company initiated a Phase III efficacy study in people
with Type II diabetes who use insulin, involving one-year dosing, to test
whether 30-, 75- and 150-microgram doses of pramlintide self-administered three
times daily can safely improve glucose control.
In September 1995, the Company initiated a separate Phase III study in
people with Type I diabetes involving one-year dosing. Dosing initially employed
a 30-microgram, four-times-per-day dosing regimen. After three months of dosing,
subjects receiving pramlintide who did not achieve a reduction in HbA1c of 1% or
more were re-randomized into one of two treatment arms receiving either
30-microgram or 60-microgram doses four times per day.
Enrollment in both Phase III studies was completed in June 1996. The
different dose-frequency regimens in studies of Type I and Type II diabetes were
designed to facilitate integration with different insulin regimens.
In August 1996, AMYLIN and Johnson & Johnson completed an administrative
interim review of data from these two, one-year Phase III trials. The review
included an analysis of HbA1c reductions after three months of dosing in
patients receiving pramlintide or placebo in the various arms and the safety
data set which had accrued to date. The administrative interim review, which was
planned and discussed with the FDA in advance of the initiation of the studies,
did not allow any protocol changes and will not result in any statistical
penalties at the end of the studies. Based on the administrative interim review,
Johnson & Johnson decided to continue its collaboration with the Company. In
compliance with FDA 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.
In addition to the ongoing one-year Phase III studies, AMYLIN also plans to
initiate four additional Phase III studies during the fourth quarter of 1996,
two each in people with Type I and Type II diabetes who use insulin. The studies
in people with Type I diabetes will employ dosing regimens involving two-,
three-, and four-times-a-day administration, while the studies in people with
Type II diabetes will employ dosing regimens involving two-and three-times-a-day
administration. The Company is also conducting open label safety studies, label
claims studies, mechanism-of-action studies and drug interaction studies.
The design, planning and execution of clinical trials for drug candidates
aimed at chronic therapy of important diseases require expertise in many areas.
Consequently, the Company has recruited management and technical personnel
experienced in the fields of medical affairs, product development, clinical
development, marketing, quality assurance and regulatory affairs. The Company
also relies upon additional guidance from its Clinical Advisory Board, which is
comprised of leading American and European experts in the treatment of diabetes,
and its collaborators at Johnson & Johnson. An outside Data Monitoring Board is
reviewing safety data in ongoing double-blind Phase III trials.
OTHER RESEARCH AND DEVELOPMENT ACTIVITIES
Additional Pramlintide Development Activities
A continuing priority of the Company is to expand the potential use of
pramlintide by improving the convenience of drug administration. AMYLIN plans to
launch pramlintide in pre-filled cartridges for use in specially designed pen
injectors. As part of its Phase III trials, AMYLIN is conducting studies to
confirm that the most popular formulations of insulin can be mixed with
pramlintide in the same syringe just prior to injection. The Company is also
researching the possibility of dual cartridge injector pens (for injecting
insulin and pramlintide simultaneously) and non-needle routes of administration,
including buccal (in lozenge form), pulmonary (for inhalation), transdermal (by
patch), nasal (for inhalation) and jet injector (for injection without needles).
Company scientists and physicians will also be researching additional
clinical indications for pramlintide. For instance, preliminary Phase II results
suggest that some people with Type II diabetes, who are unresponsive to oral
hypoglycemic agents but who are not yet using insulin, might benefit from
pramlintide's actions. The Company plans to conduct further Phase II studies in
this patient population in 1997. Also, amylin's reported actions on bone
metabolism and on inducing satiety could have therapeutic benefit for patients
with diabetes and/or other metabolic diseases. In addition, the Company is
conducting research to identify orally-active chemical analogs of amylin.
26
<PAGE> 27
Non-Amylin Metabolic Targets
In order to develop and commercialize pramlintide, AMYLIN has created an
integrated research and development team for discovering and developing
medicines focused on the control of glucose and lipid metabolism. AMYLIN is
leveraging these capabilities and is broadening its research base beyond the
study of amylin to include research of new drug targets for treating metabolic
disorders, including diabetes, obesity, and dyslipidemia (a condition
characterized by unhealthy levels of cholesterol and triglycerides). The
Company's experience and expertise gained in exploring the biology and chemistry
of amylin and several amylin-related compounds in clinical testing is directly
applicable in these efforts.
In addition to its internal discovery efforts, the Company is also in
discussions with other third parties to collaborate on new technologies and/or
in-license other metabolic compounds. To this end, in October 1996, the Company
acquired exclusive rights to certain patents and patent applications relating to
exendin, a newly discovered compound derived from the venom of the Gila monster
lizard, and glucagon-like peptide (GLP-1). The Company plans to evaluate both of
these compounds as potential drugs for treating diabetes. In particular, these
compounds have been shown in preclinical studies to have effects known to be
important for improving glucose control, including stimulation of secretion of
insulin and modulation of gastric emptying to slow the entry into the
bloodstream of glucose from ingested carbohydrates. Presumably as a result of
these actions, exendin and GLP-1 have exhibited glucose-lowering effects in an
animal model of diabetes. In addition, GLP-1 has been shown to suppress glucagon
secretion in animal studies. Because increases in blood glucose following meals
are a major cause of excessive blood glucose concentrations in people with
diabetes, the actions of exendin and GLP-1 observed in animals to suppress
meal-induced increases of blood glucose, coupled with their effects on insulin,
provide a further rationale for evaluating their use as medicines for treating
certain people with either Type I or II diabetes. AMYLIN's research team will
assess exendin, GLP-1 and their analogs in the treatment of diabetes, and
appropriately qualified product candidates will be evaluated further in clinical
trials. Assuming satisfactory progress in preclinical studies, the Company is
aiming to file an Investigational New Drug application ("IND") for exendin,
GLP-1 or an analog during 1998.
JOHNSON & JOHNSON COLLABORATION
In June 1995, AMYLIN and Johnson & Johnson entered into a worldwide
collaboration to develop and commercialize pramlintide. By the closing of this
Offering, Johnson & Johnson will have made payments to AMYLIN totaling $80.0
million. These payments primarily included payment of one half of the
pramlintide development costs through the date of this Offering, the purchase of
$15.0 million of Common Stock in 1995 and $15.0 million of Common Stock in
conjunction with this Offering, a license fee and certain milestone and option
fee payments.
Under the collaboration agreement with Johnson & Johnson (the
"Collaboration Agreement"), AMYLIN is the lead party in developing and
registering pramlintide and Johnson & Johnson is the lead party in
commercializing and marketing pramlintide. Both parties share equally in the
development and commercialization costs incurred for pramlintide as well as
sharing equally in any profits or losses recognized after commercial launch. In
addition, Johnson & Johnson has committed to provide AMYLIN with significant,
additional financial support in the form of funding for certain development and
commercialization costs, milestone payments and equity investments, subject to
the terms of its agreement with the Company. The Collaboration Agreement is part
of an overall strategy of Johnson & Johnson to establish a comprehensive disease
management approach to diabetes. In conjunction with the Collaboration
Agreement, the Company also entered into a Stock Purchase Agreement (the "Stock
Purchase Agreement") and a Loan and Security Agreement (the "Loan Agreement")
with Johnson & Johnson.
In August 1996, AMYLIN achieved the first milestone in the collaboration
when, following an administrative interim review of data from the first two,
one-year Phase III clinical trials, Johnson & Johnson decided to continue the
collaboration. The review included an analysis of HbA1c reductions after three
months of dosing in patients receiving pramlintide or placebo in the various
arms of these two trials, and the safety data set which had accrued from these
two studies. As a result, Johnson & Johnson made $7.0 million in milestone and
option fee payments in the third quarter of 1996 and committed to purchase $15.0
million of Common Stock concurrent
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<PAGE> 28
with this Offering and to provide significant ongoing development support. In
compliance with FDA 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.
In addition to the above mentioned milestone-related payments and
investments, Johnson & Johnson's financial commitment 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 future
milestone payments, license fees, equity investments, and a loan facility for
use in certain circumstances. The Company will apply all of the license fees,
cash milestone payments and 50% of the proceeds from Johnson & Johnson's equity
investments towards its share of pramlintide development expenses. If the
development of pramlintide is terminated or if a sufficient level of operating
profits of pramlintide has not been achieved within three years after commercial
launch, the Company will be required to repay loans provided by Johnson &
Johnson out of a percentage of the Company's net income.
In accordance with the terms of the Stock Purchase Agreement, Johnson &
Johnson purchased 1,955,407 shares of Common Stock in 1995 providing the Company
with net proceeds of approximately $15.0 million. Pursuant to the Stock Purchase
Agreement, AMYLIN is entitled to require Johnson & Johnson to purchase
additional shares of Common Stock upon the achievement of certain milestones.
With the achievement of the first milestone, AMYLIN earned and is now exercising
its right to sell additional shares of its Common Stock to Johnson & Johnson
resulting in net proceeds of $15.0 million concurrent with this Offering. After
completion of the Phase III clinical program, the Company also has the right to
sell additional shares of its Common Stock to Johnson & Johnson resulting in net
proceeds of up to $15.0 million. As part of the Stock Purchase Agreement, the
Company agreed to use at least 50% of the proceeds from the sale of Common Stock
to Johnson & Johnson to fund AMYLIN's share of pramlintide development expenses
under the Collaboration Agreement.
In addition, the parties have entered into a Loan Agreement under which
Johnson & Johnson has agreed to provide to AMYLIN a $27.8 million credit
facility (as of June 30, 1996) for use in certain circumstances to cover the
Company's share of development expenses related to the Collaboration Agreement.
This facility will be adjusted in certain circumstances. For example, the
facility will be increased by 50% of any increases in the pramlintide
development budget from the existing pre-approved budget and decreased by 50% of
the Company's net proceeds received from equity and debt offerings after
December 31, 1995 (including the proceeds from this Offering) to investors other
than Johnson & Johnson or other corporate partners.
The Company is dependent on the future payments from Johnson & Johnson to
continue the development and commercialization of pramlintide. Johnson & Johnson
may terminate the Collaboration Agreement with the Company 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.
COMMERCIALIZATION STRATEGY
The development of pramlintide is aimed at satisfying the medical needs of
approximately seven million people with diabetes who use insulin in the major
pharmaceutical markets. To address a market of this potential breadth and
magnitude in a timely and effective fashion, AMYLIN sought to leverage its
technology platform by entering into a collaboration with Johnson & Johnson.
AMYLIN selected Johnson & Johnson as a partner to commercialize pramlintide
based on its status as one of the world's largest pharmaceutical companies with
expertise in global manufacturing, marketing and selling peptide medicines and
hormone-replacement therapies. Pramlintide could represent an important
strategic opportunity for Johnson & Johnson to expand its leadership position in
the field of diabetes medicines.
AMYLIN believes that Johnson & Johnson brings unique characteristics to the
partnership, given its established relationship with people who use insulin and
its reputation for consumer marketing. Johnson &
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<PAGE> 29
Johnson's LifeScan subsidiary, a global leader in the sale of blood glucose
monitors and test strips, has a strong franchise in the diabetes market that
provides Johnson & Johnson with broad access to diabetes specialists and
millions of people with diabetes who use insulin. In addition, Johnson &
Johnson's established consumer relationships and pharmaceutical market access
will provide the necessary platform for the future commercialization of
pramlintide.
AMYLIN and Johnson & Johnson have invested approximately $1.2 million to
date in market research studies with physicians and consumers in North America
and Europe. These studies have allowed AMYLIN and Johnson & Johnson to develop a
commercialization plan designed to accelerate the adoption of pramlintide upon
commercial launch. This plan, developed jointly by AMYLIN and Johnson & Johnson,
is focused on building a solid foundation of opinion leader advocacy and
clinical support for the fundamental role of pramlintide in the regulation of
blood glucose levels. The plan also identifies key education initiatives and
communication strategies for maximizing the breadth and depth of physician
knowledge.
Johnson & Johnson will be the lead party in the commercialization and
marketing of pramlintide. To assist in executing the commercialization plan
referred to above, AMYLIN will employ medical affairs and strategic marketing
personnel in each major country. It will be their responsibility to implement
the plans discussed above and to work directly with the Johnson & Johnson
subsidiary in each country to assist in developing the pramlintide launch
marketing plan, to ensure broad sales force deployment, and to provide
appropriate medical/ marketing education on pramlintide. AMYLIN currently has
marketing staff in place in the U.S., United Kingdom and France and plans to add
additional marketing personnel in the U.S., Germany, United Kingdom, France and
Italy in 1997.
PATENTS, PROPRIETARY RIGHTS, AND LICENSES
The Company believes that patents and other proprietary rights are
important to its business. The Company's policy is to file patent applications
to protect technology, inventions and improvements that are important to the
development of its business. AMYLIN also relies upon trade secrets, know-how,
continuing technological innovations and licensing opportunities to develop and
maintain its competitive position. The Company plans to enforce its issued
patents and its rights to proprietary information and technology. The Company
reviews third-party patents and patent applications in its fields of endeavor,
both to shape its own patent strategy and to identify useful licensing
opportunities.
At September 30, 1996, the Company held rights to 22 issued U.S. patents.
Of these issued patents, 17 are owned by AMYLIN and five are licensed
exclusively to AMYLIN. In addition, AMYLIN owns or has exclusive rights to 28
patent applications pending with the U.S. PTO. The Company has 11 pending and
five issued U.S. patents relevant to the development and commercialization of
pramlintide. AMYLIN also has filed foreign counterparts of certain of these
issued patents and applications in many countries. Generally, it is the
Company's policy to file foreign counterparts in countries with significant
pharmaceutical markets. All commercial rights to these patents and patent
applications are held by the Company or, in some cases, jointly with Johnson &
Johnson. There can be no assurance that patents will issue from any of the
still-pending applications.
The patent positions of pharmaceutical and biotechnology firms, including
the Company, can be uncertain and involve complex legal and factual questions.
In addition, the coverage sought in a patent application can be significantly
reduced before the patent is issued. Consequently, the Company does not know
whether any of its pending applications will result in the issuance of patents
or, if any patents are issued, whether they will provide significant proprietary
protection or commercial advantage or will be circumvented by others. Since
patent applications in the United States are maintained in secrecy until patents
issue and since publication of discoveries in the scientific or patent
literature often lag behind actual discoveries, the Company cannot be certain
that it was the first to make the inventions covered by each of its pending
patent applications or that it was the first to file patent applications for
such inventions. In the event a third party has also filed a patent for any of
its inventions, the Company may have to participate in interference proceedings
declared by the U.S. PTO to determine priority of invention, which could result
in substantial cost to the Company, even if the eventual outcome is favorable to
the Company. There can be no assurance that the Company's patents, if issued,
would be held valid by a court of competent jurisdiction. There can be no
assurance that the Company will not be obliged to defend itself in court
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<PAGE> 30
against allegations of infringement of third-party patents. An adverse outcome
in such a suit could subject the Company to significant liabilities to third
parties, require disputed rights to be licensed from third parties or require
the Company to cease using such technology.
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 under its license 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.
If patents are issued to other companies that contain competitive or
conflicting claims and such claims are ultimately determined to be valid, there
can be no assurance that the Company would be able to obtain licenses to these
patents at a reasonable cost or be able to develop or obtain alternative
technology.
The Company also relies upon trade secret protection for its confidential
and proprietary information. There can be no assurance that others will not
independently develop substantially equivalent proprietary information or
techniques or otherwise gain access to the Company's trade secrets or disclose
such technology or that the Company can meaningfully protect its trade secrets.
It is the Company's policy to require its corporate partners, employees,
consultants, outside scientific collaborators and sponsored researchers and
other advisors to execute confidentiality agreements upon the commencement of
employment or consulting relationships with the Company. There can be no
assurance, however, that these agreements will provide meaningful protection or
adequate remedies for the Company's trade secrets in the event of unauthorized
use or disclosure of such information.
MANUFACTURING
The Company has internally developed and also has contracted for the
development of processes for manufacturing pramlintide bulk drug and dosage
form. Progress has been made in improving the purity of active drug substance,
in scaling up drug synthesis and dosage form manufacturing processes, and in
developing new approaches for drug synthesis. The Company plans to launch
pramlintide based upon solid phase synthesis of the bulk substance.
The Company currently has no facilities to manufacture clinical trial or
commercial supplies of pramlintide and currently relies on third parties to do
so. The Company has selected manufacturers which it believes comply with GMP and
other regulatory standards. Under the terms of the agreement with Johnson &
Johnson, AMYLIN is responsible for arranging for the manufacture of pramlintide
during the development phase, while Johnson & Johnson is responsible for
manufacturing during the commercialization phase. The Company currently uses two
external suppliers for synthetic chemical manufacture of pramlintide bulk drug
and two suppliers and Johnson & Johnson for fill-finish activities. The Company
has established a quality control and quality assurance program, including a set
of standard operating procedures and specifications, designed to ensure that the
Company's products are manufactured in accordance with GMP and other applicable
domestic and foreign regulations. However, the Company is dependent upon third
party manufacturers to comply reliably with such procedures and regulations.
There can be no assurance that these manufacturers will meet the Company's
requirements for quality, quantity or timeliness.
GOVERNMENT REGULATION
Regulation by governmental authorities in the United States and foreign
countries is a significant factor in the manufacture and marketing of
pramlintide and in the Company's ongoing research and development
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<PAGE> 31
activities. All of the Company's therapeutic products, including pramlintide,
will require regulatory approval by governmental agencies prior to
commercialization. In particular, human therapeutic products are subject to
rigorous preclinical testing and clinical trials and other pre-market approval
requirements by the FDA and regulatory authorities in foreign countries. Various
federal, and in some cases state, statutes and regulations also govern or
influence the manufacturing, safety, labeling, storage, record keeping and
marketing of such products. The lengthy process of seeking these approvals and
the subsequent compliance with applicable federal and state statutes and
regulations require the expenditure of substantial resources. Any failure by the
Company or its collaborators or licensees to obtain, or any delay in obtaining,
regulatory approvals could adversely affect the marketing of any products
developed by the Company and its ability to receive product revenue, royalty
revenue or profit sharing payments.
The activities required before a pharmaceutical agent may be marketed in
the United States begin with preclinical testing. Preclinical tests include
laboratory evaluation of product chemistry and animal studies to assess the
potential safety and efficacy of the product and its formulations. The results
of these studies must be submitted to the FDA as part of an IND application,
which must be reviewed by the FDA before proposed clinical trials can begin.
Typically, clinical trials involve a three-phase process. In Phase I, clinical
trials are conducted with a small number of subjects to determine the early
safety and tolerability profile and the pattern of drug distribution and
metabolism. In Phase II, clinical trials are conducted with groups of patients
afflicted with a specified disease in order to determine preliminary efficacy,
dosing regimes and expanded evidence of safety. In Phase III, large-scale,
multicenter, adequate and well-controlled, comparative clinical trials are
conducted with patients afflicted with a target disease in order to provide
enough data for the statistical proof of efficacy and safety required by the FDA
and others. In the case of pramlintide, the results of the preclinical testing
and clinical trials are then submitted to the FDA for a pharmaceutical product
in the form of a New Drug Application ("NDA") for approval to commence
commercial sales. In responding to an NDA, the FDA may grant marketing approval,
request additional information, or deny the application if it determines that
the application does not satisfy its regulatory approval criteria. There can be
no assurance that approvals will be granted on a timely basis, or at all.
Among the conditions for NDA approval is the requirement that the
prospective manufacturer's quality control and manufacturing procedures conform
with GMP guidelines. In complying with GMP, manufacturers must continue to
expend time, money and effort in the area of production and quality control and
quality assurance to ensure full technical compliance. Manufacturing facilities
are subject to periodic inspections by the FDA to ensure compliance. See
"-- Manufacturing."
The Company is also subject to various federal, state and local laws,
regulations and recommendations relating to safe working conditions, laboratory
and manufacturing practices, the experimental use of animals and the use and
disposal of hazardous or potentially hazardous substances, including radioactive
compounds and infectious disease agents, used in connection with the Company's
research. The extent of government regulation which might result from any
legislation or administrative action cannot be accurately predicted.
Clinical testing, manufacture and sale of the Company's products outside of
the United States will be subject to regulatory approval by other jurisdictions
which may be more or less rigorous than in the United States.
COMPETITION
Although competitive activity in the diabetes market is intense, the
Company believes that for many people with diabetes pramlintide, if approved,
will have advantages over alternative approaches to improving glucose control.
Pramlintide is aimed at restoring the actions of a human hormone that is missing
or deficient in people with diabetes who use insulin, and hormone replacement
therapy is a well established treatment concept. Subcutaneous injections of
pramlintide are relatively straightforward for patients who are already
self-injecting insulin. Moreover, assuming clinical utility is established,
alternative delivery routes and mechanisms may be feasible based on the current
dosing requirements and chemical characteristics of pramlintide. Based upon
published reports of alternative approaches to improving glucose control, the
Company believes that pramlintide could provide an attractive combination of
safety and efficacy and could become an important part of the drug armamentarium
directed at diabetes. Since diabetes is a heterogeneous disease with many
degenerative
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complications, it is likely that multiple pharmaceutical strategies will be
useful in arresting its relentless progression.
Nevertheless, pramlintide may compete with several established therapies
for market share. In addition, many companies are pursuing the development of
novel pharmaceuticals which target the same diseases to which pramlintide is
targeted, and several product candidates are in Phase III clinical trials or in
registration. These companies may develop and introduce products competitive
with or superior to pramlintide. Such competitive or potentially competitive
products may include troglitazone, and if indications for pramlintide's use are
expanded to people with diabetes who do not use insulin, may also include
metformin, acarbose, bromocriptine and other oral hypoglycemic agents such as
sulfonylureas.
The Company's competition will be determined in part by the indications for
which the Company's products are developed and ultimately approved by regulatory
authorities. An important factor in competition may be the timing of market
introduction of the Company's or competitors' products. Accordingly, the
relative speed with which AMYLIN and Johnson & Johnson or future corporate
partners can develop products, complete the clinical trials and approval
processes and supply commercial quantities of the products to the market are
expected to be important competitive factors. The Company expects that
competition among products approved for sale will be based, among other things,
on product efficacy, safety, convenience, reliability, availability, price and
patent position.
EMPLOYEES
As of September 30, 1996, AMYLIN had 206 full-time equivalent employees, of
whom 38 hold Ph.D. or Sc.D. degrees and seven hold M.D. degrees (five of whom
also hold Ph.D.s). A significant number of the Company's management and
professional employees have had prior experience with pharmaceutical,
biotechnology or medical product companies. AMYLIN believes that it has been
highly successful in attracting skilled and experienced scientific personnel.
None of the Company's employees is covered by collective bargaining agreements
and management considers relations with its employees to be good.
CLINICAL ADVISORY BOARD
To provide strategic guidance to AMYLIN's pramlintide clinical development
program, as well as to assist in reviewing clinical data, AMYLIN works with a
network of experts who serve as clinical advisors to the Company. Each advisor
has entered into a consulting agreement with the Company. All of the advisors
are employed by employers other than the Company and have commitments to or
consulting or advisory agreements with other entities that may limit their
availability to the Company. The advisors have agreed, however, not to provide
any services to any other entities that might conflict with the services that
they provide the Company. The Company has not issued stock or stock options to
any of its clinical advisors. The clinical advisory board is comprised of the
following individuals from the diabetes medical community in America and Europe:
<TABLE>
<S> <C>
CHARLES M. CLARK, JR., M.D. Professor of Medicine and Pharmacology,
Indiana University School of Medicine;
Co-Director of Regenstrief Institute;
Past President of American Diabetes Association
DANIEL W. FOSTER, M.D. Donald W. Seldin Distinguished Chair in Internal
Medicine,
Professor and Chairman, Department of Internal
Medicine,
University of Texas, Southwestern Medical Center
LEIF GROOP, M.D. Professor of Endocrinology,
Malmo General Hospital,
University of Lund, Sweden
HARRY KEEN, M.D., F.R.C.P. Emeritus Professor of Human Metabolism and Diabetes,
Guys and St. Thomas Hospitals, London;
Honorary President of International Diabetes
Foundation
</TABLE>
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<PAGE> 33
<TABLE>
<S> <C>
PIERRE LEFEBVRE, M.D., PH.D. Head of Diabetes, Nutrition and Metabolic Disorders
Division,
University of Liege Hospital, Belgium;
Past President of European Association for the Study
of Diabetes
GERARD SLAMA Chef de Service, Service de Diabetologie,
Hopital Hotel-Dieu de Paris
FRED W. WHITEHOUSE, M.D. Division Head, Endocrinology and Metabolism,
Henry Ford Hospital;
Past President of American Diabetes Association
</TABLE>
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<PAGE> 34
MANAGEMENT
EXECUTIVE OFFICERS, DIRECTORS AND KEY EMPLOYEES
The following table sets forth certain information with respect to the
executive officers, directors and key employees of the Company as of September
30, 1996:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------- --- ---------------------------------------------------------
<S> <C> <C>
Howard E. Greene, Jr.(1) 53 Chairman of the Board
Richard M. Haugen(1) 44 President, Chief Executive Officer and Member, Board of
Directors
Gareth W. Beynon, M.D., Ph.D. 46 Vice President of Amylin Europe Limited
Daniel M. Bradbury 35 Vice President of Marketing
Suzanne S. Burgess 39 Vice President of Administration
Maurizio Denaro, M.D. 45 Senior Vice President of Research
Bradford J. Duft 41 Vice President and General Counsel
Richard A. Kenley, Ph.D. 50 Vice President of Product Development
Orville G. Kolterman, M.D. 49 Vice President of Medical Affairs
Albert A. Lauritano 43 Vice President of Business Development
Marjorie T. Sennett 36 Vice President, Chief Financial Officer and Assistant
Secretary
Robert G. Thompson, M.D. 58 Vice President of Clinical Development
Mary W. Treuhaft, Ph.D. 53 Vice President of Regulatory Affairs and Quality
Assurance
Andrew A. Young, M.D., Ph.D. 44 Vice President of Physiology
James C. Blair, Ph.D.(1)(2) 57 Member, Board of Directors
Joseph C. Cook, Jr.(1)(3) 55 Member, Board of Directors
James C. Gaither 59 Member, Board of Directors
Ginger L. Howard 41 Member, Board of Directors
Vaughn M. Kailian 52 Member, Board of Directors
Timothy J. Wollaeger(2)(3) 53 Member, Board of Directors
</TABLE>
- ---------------
(1) Member of the Executive Committee.
(2) Member of the Compensation Committee.
(3) Member of the Audit Committee.
Mr. Greene has served as Chairman of the Board of Directors since he
co-founded the Company in 1987. He was a full-time employee from September 1989
until September 1996, at which time he became a half-time employee. Mr. Greene
served as Chief Executive Officer of the Company from Company inception until
July 1996, and he has served as Chairman of the Executive Committee since that
time. From October 1986 to September 1993, Mr. Greene was a general partner of
Biovest Partners, a venture capital firm, and in this capacity he was Chairman
of the Board of Pyxis Corporation from 1989 to 1993. He was Chief Executive
Officer of Hybritech Incorporated from 1979 to its acquisition by Eli Lilly &
Company in 1986, and he was co-inventor of Hybritech's monoclonal antibody
diagnostic technology. Prior to joining Hybritech, he was an executive with
Baxter Healthcare Corporation from 1974 to 1979 and a consultant with McKinsey &
Company from 1967 to 1974. He is Chairman of the Board of Cytel Corporation and
a director of Allergan, Inc., Neurex Corporation and The International
Biotechnology Trust Plc. Mr. Greene received an M.B.A. from Harvard University.
Mr. Haugen, an executive officer of the Company, has served as President,
Chief Executive Officer and a director since July 1996. Previously, Mr. Haugen
was Executive Vice President, Chief Operating Officer and a director of
Allergan, Inc., a leading eye care company that develops, manufactures and
markets ethical pharmaceuticals and over-the-counter products. As an employee of
Allergan since 1980, Mr. Haugen served in a variety of sales, manufacturing and
general management positions, including President Worldwide Sales & Marketing,
President Pharmaceuticals Division and President Optical Division. Prior to
joining Allergan, he was employed by American Hospital Supply. He serves on the
Dean's Advisory Board for the University of
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<PAGE> 35
California at Irvine Graduate School of Management. Mr. Haugen received an
M.B.A. from the University of Southern California.
Dr. Beynon, an executive officer of the Company, has served as Vice
President of Amylin Europe Limited, the Company's wholly owned European
subsidiary, since February 1992. Prior to joining the Company, Dr. Beynon had
been employed at G.D. Searle & Co. since 1984, where he held a number of
positions in Europe, including Director of Clinical Research, Director of
Strategic Planning and Regulatory Affairs and Marketing Director for France.
From 1979 to 1984, he practiced internal medicine with a particular interest in
endocrinology and diabetes. He held a number of clinical appointments at London
Teaching Hospitals, including Guys Hospital and the Postgraduate Medical School
at Hammersmith Hospital. Dr. Beynon has a Ph.D. in endocrine physiology from the
University of Cambridge and completed his training for his M.B.B.Chir. (M.D.) at
Guys Hospital, London. Dr. Beynon also earned an M.B.A. at Cranfield Management
Institute.
Mr. Bradbury has served as Vice President of Marketing since June 1995.
From July 1994 to May 1995, Mr. Bradbury held the position of Director,
Marketing -- AMYLIN Europe Limited. Prior to joining the Company, Mr. Bradbury
was employed by SmithKline Beecham Pharmaceuticals, where he held a number of
positions, most recently as Associate Director, Anti-Infectives in the Worldwide
Strategic Product Development Division. Prior to 1986, Mr. Bradbury worked as a
Pre-registration Pharmacist with Glaxo Group Research. Mr. Bradbury holds a
B.Pharm. from Nottingham University and a Diploma in Management Studies from
Harrow and Ealing Colleges of Higher Education.
Ms. Burgess has served as Vice President of Administration since May 1994.
Ms. Burgess joined the Company in March 1992 as Director of Human Resources and
most recently held the position of Senior Director of Human Resources and
Facilities Administration. Prior to joining the Company, Ms. Burgess worked for
seven years with Dole Food Company/Castle & Cooke, Inc. where she held a number
of positions including Director of Human Resources.
Dr. Denaro, an executive officer of the Company, has served as Senior Vice
President of Research since February 1996. Prior to joining the Company, he was
a Vice President of Research at Hoechst Marion Roussel, Inc., and he was Center
Director of the Marion Merrell Dow Research Institute in Cincinnati. From 1985
to 1994, Dr. Denaro held various positions at Marion Merrell Dow Research
Institute's Lepetit Research Center, Gerenzano, Italy, including Vice President
and Director from 1992 to 1994. Prior to 1985, Dr. Denaro held various senior
research and post-doctoral fellowship positions at Centro di Riferimento
Oncologico in Italy, Uppsala University in Sweden and Stanford Medical School.
Dr. Denaro earned an M.D. from Bologna University Medical School.
Mr. Duft, an executive officer of the Company, has served as Vice President
and General Counsel since July 1990. Prior to joining the Company, from 1983 to
July 1990, he was an attorney in private practice with the patent law firm of
Lyon & Lyon, most recently as managing partner of its San Diego office. From
1980 to 1983, he served as law clerk and technical advisor to Judge Giles S.
Rich of the U.S. Court of Appeals for the Federal Circuit and the U.S. Court of
Customs and Patent Appeals. Mr. Duft received a J.D. from California Western
School of Law and an LL.M. in Patent and Trade Regulation from George Washington
University.
Dr. Kenley has served as Vice President of Product Development since
January 1994. Prior to joining the Company, he was Director of Pharmaceutical
Sciences at Genetics Institute, Inc. From 1986 to 1990, Dr. Kenley was Associate
Director of Analytical Chemistry at Baxter Healthcare Corporation. From 1982 to
1986, he was Department Head of Analytical Chemistry Development at Syntex
Corporation. Dr. Kenley earned a Ph.D. in chemistry from the University of
California at San Diego.
Dr. Kolterman, an executive officer of the Company, has served as Vice
President, Medical Affairs since July 1993 and Director, Medical Affairs from
May 1992 to July 1993. From 1983 to May 1992, he was Program Director of the
General Clinical Research Center and Medical Director of the Diabetes Center,
both at the University of California, San Diego Medical Center. Since 1989 he
has been Adjunct Professor of Medicine at U.C.S.D. From 1978 to 1983, he was
Assistant Professor of Medicine in the Endocrinology and Metabolism Division at
the University of Colorado School of Medicine, Denver. He is a member of the
Diabetes Control and
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<PAGE> 36
Complications Trial Study Group and past-President of the California Affiliate
of the American Diabetes Association. Dr. Kolterman earned an M.D. from Stanford
University School of Medicine.
Mr. Lauritano has served as Vice President of Business Development since
December 1994. From February 1994 to December 1994, Mr. Lauritano held the
position of Vice President of Market Development. From 1982 to February 1994,
Mr. Lauritano was employed by Novo Nordisk Pharmaceuticals, where he held a
number of positions, most recently as Vice President New Product Marketing and
Business Development. In this position, he was responsible for strategic
planning and new product launches in the United States. From 1981 to 1982, he
was Assistant Vice President of the Pharmaceutical Division of Bauers-Krey
Associates, a consulting firm. Prior to 1981, he held various clinical research
positions at Lederle Laboratories and ICI Americas. Mr. Lauritano received an
M.S. in Pharmacology from Rutgers University.
Ms. Sennett, an executive officer of the Company, has served as Vice
President and Chief Financial Officer since January 1989 and has served as
Assistant Secretary since January 1993. From August 1982 to July 1986, Ms.
Sennett held several corporate finance positions at Bankers Trust Company, one
of which involved the structuring of leveraged acquisitions. From August 1986 to
June 1988, she attended the Stanford Graduate School of Business, from which she
received an M.B.A. She is a member of the Nasdaq Regional Advisory Board.
Dr. Thompson has served as Vice President of Clinical Development since May
1994. From 1986 to 1994, Dr. Thompson held a number of positions, including
Global Research Physician, at Eli Lilly and Co. Prior to 1986, he served as
Professor of Pediatrics, Chair of the Pediatric Endocrine Division, and Vice
Chairman of the Department of Pediatrics at the University of Iowa, College of
Medicine. Dr. Thompson received his M.D. from the University of Iowa, College of
Medicine.
Dr. Treuhaft has served as Vice President, Regulatory Affairs and Quality
Assurance since September 1996. From 1994 to September 1996, she was Vice
President, Regulatory Affairs of RGene Therapeutics. From 1993 to 1994, she was
Senior Director, Regulatory Affairs and Quality Assurance of Glycomed
Incorporated and from 1989 to 1993, Associate Director, Regulatory Affairs of
Schering Plough Research. Prior to 1989, Dr. Treuhaft was Senior Clinical
Research Coordinator for Hoffman-LaRoche, Inc. and Associate Director,
Biotechnology Assays for Schering Corporation. Dr. Treuhaft received her Ph.D.
in Microbiology from the University of Chicago.
Dr. Young has served as Vice President of Physiology since January 1994.
From 1989 to 1993 he held a number of positions in the Company's Physiology
department, most recently as Principal Scientist and Senior Director of
Physiology. Prior to joining the Company in 1989, Dr. Young was a lecturer in
the Department of Physiology at the University of Auckland, New Zealand and a
part-time general medical practitioner. From 1984 to 1987, Dr. Young was a
Clinical Research Scientist at the National Institutes of Health in Phoenix,
Arizona, where he studied insulin resistance and diabetes. He received his M.B.,
Ch.B. (M.D.) and his Ph.D. in Physiology from the University of Auckland, New
Zealand.
Dr. Blair has served as a director since December 1988 and serves on the
Compensation and Executive Committees. He has been a general partner of Domain
Associates, a venture capital investment firm, since 1985. Domain Associates
manages Domain Partners, L.P., Domain Partners II, L.P. and Domain Partners III,
L.P. and is the U.S. venture capital advisor to Biotechnology Investments, Ltd.
From 1969 to 1985, Dr. Blair was an officer of three investment banking and
venture capital firms. Dr. Blair is a director of CoCensys, Inc., Dura
Pharmaceuticals, Inc., Gensia, Inc. and Houghten Pharmaceuticals, Inc. Dr. Blair
received a B.S.E. from Princeton University and the M.S.E. and Ph.D degrees from
the University of Pennsylvania in electrical engineering.
Mr. Cook has served as a director since November 1994. Mr. Cook is a
founding partner of Life Science Advisors, Inc. and President of Cambrian
Associates, Inc. Mr. Cook retired as Group Vice-President, Global Manufacturing,
Engineering and Corporate Quality at Eli Lilly and Co. ("Lilly") in 1993. During
his 28 years with Lilly, Mr. Cook was a Vice-President of Sales and Marketing
and Chief Financial Officer for Elanco Products Company and General Manager of a
worldwide business unit of Lilly. He is also a director of Dura Pharmaceuticals,
Inc., NABI, Inc., and Personnel Management, Inc. He is a founder of Mountain
Ventures, Inc., a real estate development firm.
36
<PAGE> 37
Mr. Gaither has served as a director since November 1995. He has been a
partner of the law firm Cooley Godward LLP ("Cooley Godward") since 1971 where
he also served as managing partner from 1984 to 1990. Prior to joining Cooley
Godward in 1969, Mr. Gaither served as Staff Assistant to the President of the
United States from July 1966 to January 1969. He is a director of Basic
American, Inc., Levi Strauss & Co., Siebel Systems, Inc. and the Stanford
Management Company and serves on the executive committee of the Board of
Visitors at Stanford Law School. He previously served as President of the Board
of Trustees of Stanford University and as Chairman of its Investment Committee.
He is a trustee of the Carnegie Endowment for International Peace, The James
Irvine Foundation, RAND and The William and Flora Hewlett Foundation. Mr.
Gaither received his J.D. from Stanford University.
Ms. Howard has served as a director since November 1995. Ms. Howard has
served as Vice President of Guidant Corporation, a medical device company, since
July 1994. She also holds the position of president of the Vascular Intervention
Group, which includes Advanced Cardiovascular Systems (ACS) and Devices for
Vascular Intervention. She has served as President and Chief Executive Officer
of ACS since January 1993. Prior to joining ACS, she held various positions with
Eli Lilly and Co. from 1979 to 1992, including sales and strategic planning
positions. She serves on the Board of Directors and the Executive Committee for
the California Healthcare Institute and on the Advisory Board of the California
Institute for Federal Policy Research. Ms. Howard received an M.B.A. from
Harvard University.
Mr. Kailian has served as a director since November 1995. Mr. Kailian has
served as President, Chief Executive Officer and board member of COR
Therapeutics, Inc. since March 1990. From 1967 to 1990, Mr. Kailian was employed
by Marion Merrell Dow, Inc., a pharmaceutical company, and its predecessor
companies, in various general management, marketing and sales positions. Among
the positions held by Mr. Kailian were President and General Manager, Merrell
Dow USA and Corporate Vice President of Global Commercial Development, Marion
Merrell Dow, Inc. He is a director of COR Therapeutics, Inc., Arris
Pharmaceutical Corporation, the Biotechnology Organization and the California
Health Care Institute. Mr. Kailian holds a B.A. from Tufts University.
Mr. Wollaeger has served as a director since the Company's inception. He
has been the general partner of Kingsbury Associates and the general partner of
Kingsbury Capital Partners, L.P. I and II, venture capital investment
partnerships, since December 1993. Mr. Wollaeger was Senior Vice President of
Columbia Hospital Corporation ("CHC"), a hospital management company, and
President of Sutter Corporation, CHC's medical products subsidiary, from May
1990 until December 1993. Mr. Wollaeger was a general partner of Biovest
Associates from February 1987 until September 1993. From 1983 to 1986, Mr.
Wollaeger served as Senior Vice President and Chief Financial Officer of
Hybritech Incorporated. From 1972 to 1980, he was employed by Baxter Healthcare
Corporation. Mr. Wollaeger is a director of Celtrix Pharmaceuticals, Inc.,
Raytel Medical Corporation and Phamis, Inc. He received an M.B.A. from Stanford
University.
37
<PAGE> 38
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership
of the Company's Common Stock as of September 30, 1996 by: (i) each director;
(ii) each executive officer employed by the Company in that capacity on
September 30, 1996; (iii) all executive officers and directors of the Company as
a group; and (iv) all those known by the Company to be beneficial owners of more
than five percent of its Common Stock.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
-------------------------------------
BENEFICIAL OWNER(1) NUMBER OF SHARES PERCENT OF TOTAL
- -------------------------------------------------------------- ---------------- ----------------
<S> <C> <C>
Gareth W. Beynon, M.D.(2)..................................... 140,659 *
James C. Blair(2)(3).......................................... 698,259 2.46%
Joseph C. Cook, Jr.(2)........................................ 210,669 *
Maurizio Denaro, M.D.(2)...................................... 0 0
Bradford J. Duft(2)........................................... 313,132 1.10%
James C. Gaither(2)........................................... 12,838 *
Howard E. Greene, Jr.(2)...................................... 1,739,710 6.09%
Richard M. Haugen(2).......................................... 0 0
Ginger L. Howard(2)........................................... 10,314 *
Vaughn M. Kailian(2).......................................... 10,314 *
Orville G. Kolterman, M.D.(2)................................. 109,641 *
Marjorie T. Sennett(2)........................................ 315,854 1.11%
Timothy J. Wollaeger(2)(4).................................... 306,837 1.08%
Johnson & Johnson Development Corporation..................... 1,955,407 6.90%
One Johnson & Johnson Plaza
New Brunswick, NJ 08933
State of Wisconsin Investment Board........................... 2,391,500 8.44%
Lake Terrace
121 E. Wilson Street
P.O. Box 7842
Madison, WI 53707
Wellington Management Company(5).............................. 3,078,300 10.87%
75 State Street
Boston, MA 02109
All executive officers and directors as a group (13
persons)(2)................................................. 3,868,227 13.22%
</TABLE>
- ---------------
* Less than one percent.
(1) This table is based upon information supplied by officers, directors and
principal stockholders and Schedules 13D and 13G filed with the Securities
and Exchange Commission (the "Commission"). Unless otherwise indicated in
the footnotes to this table and subject to community property laws where
applicable, each of the stockholders named in this table has sole voting and
investment power with respect to the shares indicated as beneficially owned.
Applicable percentages are based on 28,322,081 shares outstanding on
September 30, 1996, adjusted as required by rules promulgated by the
Securities and Exchange Commission ("SEC"). Except as shown otherwise in the
table, the address of each stockholder listed is in care of the Company at
9373 Towne Centre Drive, San Diego, California 92121.
(2) Includes shares which certain executive officers, directors and principal
stockholders of the Company have the right to acquire within 60 days after
the date of this table pursuant to outstanding options and warrants, as
follows: Dr. Beynon, 138,159 shares; Dr. Blair, 13,044 shares; Mr. Cook,
156,669 shares; Mr. Duft, 87,402 shares; Mr. Gaither, 10,314 shares; Mr.
Greene, 264,142 shares; Ms. Howard, 10,314 shares; Mr. Kailian, 10,314
shares; Dr. Kolterman, 103,714 shares; Ms. Sennett, 128,633 shares; Mr.
Wollaeger, 17,506 shares; and all executive officers and directors as a
group, 940,201 shares. These figures do not include shares which certain
executive officers, directors and principal stockholders of the Company have
a right to acquire 60 days or more after the date of this table pursuant to
outstanding options and warrants as follows: Dr. Beynon, 59,348 shares; Dr.
Blair, 7,494 shares; Mr. Cook, 43,331 shares; Dr. Denaro, 125,000 shares;
Mr. Duft, 37,598 shares; Mr. Gaither, 29,686 shares; Mr. Greene, 75,858; Mr.
Haugen, 500,000 shares;
38
<PAGE> 39
Ms. Howard, 29,686 shares; Mr. Kailian, 29,686 shares; Dr. Kolterman, 61,440
shares; Ms. Sennett, 77,247 shares; Mr. Wollaeger, 7,494 shares; and all
executive officers and directors as a group, 1,083,868 shares.
(3) Dr. Blair may be deemed to be the beneficial owner of 653,847 shares held of
record by Domain Partners II, L.P. Dr. Blair is a general partner of One
Palmer Square Associates, L.P., the general partner of Domain Partners, and
One Palmer Square Associates II, L.P., the general partner of Domain
Partners II, and shares voting and investment power with respect to such
shares.
(4) Mr. Wollaeger may be deemed to be the beneficial owner of 160,000 shares
held of record by Kingsbury Capital Partners, L.P. Mr. Wollaeger is the
general partner of Kingsbury Associates and Kingsbury Capital Partners,
L.P., and shares voting and investment power with respect to such shares.
(5) Includes 1,411,500 shares as to which Wellington Management Company ("WMC")
has shared voting power and 3,078,300 shares as to which WMC has shared
dispositive power.
39
<PAGE> 40
DESCRIPTION OF CAPITAL STOCK
GENERAL
The authorized capital stock of the Company consists of 50,000,000 shares
of Common Stock, par value $.001, and 7,500,000 shares of Preferred Stock, par
value $.001. At the close of business on September 30, 1996, there were
28,322,081 shares of Common Stock outstanding and no shares of Preferred Stock
outstanding.
PREFERRED STOCK
The Board of Directors has the authority, without further action by the
stockholders, to issue up to 7,500,000 shares of Preferred Stock in one or more
series and to fix the rights, preferences, privileges and restrictions thereof,
including dividend rights, conversion rights, voting rights, terms of
redemption, liquidation preference, sinking fund terms and the number of shares
constituting any series or the designation of such series, without any further
vote or action by stockholders. The issuance of Preferred Stock could adversely
affect the voting power of holders of Common Stock and the likelihood that such
holders will receive dividend payments and payments upon liquidation and could
have the effect of delaying, deferring or preventing a change in control of the
Company.
COMMON STOCK
All issued and outstanding shares of Common Stock of the Company, including
the shares offered hereby, are fully paid and nonassessable. Holders of Common
Stock have no preemptive, subscription or conversion rights and are not liable
for further calls or assessments. There are no redemption or sinking fund
provisions in effect with respect to the Common Stock. Subject to the rights of
any holders of then-outstanding Preferred Stock, holders of Common Stock are
entitled to receive such dividends as may be declared by the Board of Directors
out of funds legally available therefor and to share ratably in the assets
available for distribution upon liquidation. Except as described below, each
share of Common Stock is entitled to one vote at all meetings of stockholders.
The holders of Common Stock are not entitled to cumulative voting rights in the
election of directors.
The Company has paid no cash dividends on its Common Stock since its
incorporation and anticipates that for the foreseeable future it will continue
to retain any earnings for use in its business. The Common Stock of the Company
is traded on the Nasdaq National Market under the symbol "AMLN." The transfer
agent for the Common Stock is First Interstate Bank of California.
DELAWARE LAW AND CERTAIN CHARTER PROVISIONS
The Company is subject to the provisions of Section 203 of the Delaware
General Corporation Law (the "Delaware Law"), an anti-takeover law. In general,
the statute prohibits a publicly held Delaware corporation from engaging in a
"business combination" with an "interested stockholder" for a period of three
years after the date of the transaction in which the person became an interested
stockholder, unless the business combination is approved in a prescribed manner.
For purposes of Section 203, a "business combination" includes a merger, asset
sale or other transaction resulting in a financial benefit to the interested
stockholder, and an "interested stockholder" is a person who, together with
affiliates and associates, owns (or within three years prior, did own) 15% or
more of the corporation's voting stock.
The Company's Certificate of Incorporation contains a provision (the "Fair
Price Provision") that requires the approval of holders of 66% of the Company's
voting stock as a condition to a merger or certain other business transactions
with, or proposed by, a holder of 15% or more of the Company's voting stock ( an
"Interested Stockholder"), except in cases where the Continuing Directors
approve the transaction or certain minimum price criteria and other procedural
requirements are met. A "Continuing Director" is a director originally elected
upon incorporation of the Company or a director who is not an Interested
Stockholder or affiliated with an Interested Stockholder or whose nomination or
election to the Board of Directors is recommended or approved by a majority of
the Continuing Directors. The minimum price criteria generally require that, in
a transaction in which stockholders are to receive payments, holders of Common
Stock must receive a value equal to the highest price paid by the Interested
Stockholder for Common Stock during the prior two years and that such payment be
made
40
<PAGE> 41
in cash or in the type of consideration paid by the Interested Stockholder for
the greatest portion of its shares. The Company's Board of Directors believes
that the Fair Price Provision will help assure that all of the Company's
stockholders will be treated similarly if certain kinds of business combinations
are effected. However, the Fair Price Provision may make it more difficult to
accomplish certain transactions that are opposed by the incumbent Board of
Directors and that could be beneficial to stockholders.
The Company's Certificate of Incorporation also requires that any action
required or permitted to be taken by stockholders of the Company must be
effected at a duly called annual or special meeting of stockholders and may not
be effected by a consent in writing. In addition, special meetings of the
stockholders of the Company may be called only by the Board of Directors, the
Chief Executive Officer of the Company or by any person or persons holding
shares representing at least 10% of the outstanding capital stock. The Company's
Certificate of Incorporation also provides that the authorized number of
directors may be changed only by resolution of the Board of Directors. These
provisions may have the effect of deterring hostile takeovers or delaying
changes in control or management of the Company.
41
<PAGE> 42
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, the
underwriters named below (the "Underwriters"), for whom UBS Securities LLC,
Hambrecht & Quist LLC and Vector Securities International, Inc. are acting as
representatives (the "Representatives"), have agreed to purchase from the
Company the following respective number of shares of Common Stock:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
------------------------------------------------------------------ ----------
<S> <C>
UBS Securities LLC................................................ 787,500
Hambrecht & Quist LLC............................................. 577,500
Vector Securities International, Inc.............................. 385,000
------
Total................................................... 1,750,000
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent, including the absence
of any material adverse change in the Company's business and the receipt of
certain certificates, opinions and letters from the Company and its counsel. The
nature of the Underwriters' obligation is such that they are committed to
purchase all shares of Common Stock offered hereby if any of such shares are
purchased. The Underwriting Agreement contains certain provisions whereby if any
Underwriter defaults in its obligation to purchase shares, and the aggregate
obligations of the Underwriters so defaulting do not exceed 10% of the shares of
Common Stock offered hereby, the remaining Underwriters, or some of them, must
assume such obligations.
The Representatives have advised the Company that the Underwriters propose
to offer the shares of Common Stock directly to the public initially at the
offering price set forth on the cover page of this Prospectus and to certain
dealers at such price less concession not in excess of $0.32 per share. The
Underwriters may allow and such dealers may reallow a concession not in excess
of $0.10 per share to certain other dealers. After the initial public offering
of the shares of Common Stock, the offering price and other selling terms may be
changed by the Underwriters.
The Company has granted to the Underwriters an option, exercisable no later
than 30 days after the date of this Prospectus, to purchase up to 262,500
additional shares of Common Stock to cover over-allotments, if any, at the
public offering price, set forth on the cover page of this Prospectus, less the
underwriting discounts and commissions. To the extent that the Underwriters
exercise such option, each of the Underwriters will have a firm commitment to
purchase approximately the same percentage thereof which the number of shares of
Common Stock to be purchased by it shown in the above table bears to the total
number of shares of Common Stock offered hereby. The Company will be obligated,
pursuant to the option, to sell such shares to the Underwriters to the extent
the option is exercised.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act, and to contribute
to payments the Underwriters may be required to make in respect thereof.
Johnson & Johnson has committed to purchase an aggregate of 1,500,000
shares of Common Stock in a private placement at the public offering price. The
sale of the Johnson & Johnson Shares by the Company will not be registered in
this Offering or covered by the Underwriting Agreement, and the Underwriters
will not receive any fee in connection with the sale of such shares. Johnson &
Johnson has agreed to purchase such shares upon the closing of this Offering.
At the request of the Company, the Underwriters have reserved approximately
90,000 of the shares offered hereby for sale at the public offering price to
directors and executive officers of the Company. The number of shares of Common
Stock available for sale to the public will be reduced to the extent such
persons purchase such reserved shares. Any reserved shares not so purchased will
be offered by the Underwriters to the general public on the same basis as the
other shares offered hereby.
42
<PAGE> 43
The Company's executive officers and directors, who will beneficially own
in the aggregate approximately 3,958,227 shares of Common Stock after the
Offering, and Johnson & Johnson, which after the Offering will own 3,455,407
shares of Common Stock have agreed that, except as noted below, they will not,
without the prior written consent of UBS Securities LLC, during the period
ending 90 days after the date of this Prospectus, (i) sell, offer, contract to
sell, make any short sale, pledge, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase or otherwise transfer or dispose of any shares of Common Stock or any
securities convertible into or exchangeable or exercisable for or any rights to
purchase or acquire Common Stock, or (ii) enter into any swap or other agreement
that transfers, in whole or in part, any of the economic consequences of
ownership of Common Stock, whether any such transaction described in clause (i)
or (ii) above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise. The foregoing agreement does not apply to an
aggregate of 50,000 shares held by the executive officers and directors of the
Company. In addition, in connection with the agreement by the Company and Glaxo-
Wellcome, Inc. ("Glaxo") to discontinue their research and development
collaboration regarding amylin blocker technology, Glaxo agreed not to sell or
otherwise transfer prior to December 30, 1996 any of the 362,319 shares of the
Company's Common Stock purchased by Glaxo pursuant to that agreement. The
Company has agreed that it will not, without the prior written consent of UBS
Securities LLC, offer, sell or otherwise dispose of any shares of Common Stock,
options or warrants to acquire shares of Common Stock or securities exchangeable
for or convertible into shares of Common Stock during the 90-day period
following the date of this Prospectus, except that the Company may issue stock
upon the exercise of options granted prior to the date hereof, and may issue
additional stock and grant additional options, under its stock option and stock
purchase plans in effect on the date hereof.
In general, the rules of the Commission will prohibit the Underwriters from
making a market in the Company's Common Stock during the "cooling off" period
immediately preceding the commencement of sales in the Offering. The Commission
has, however, adopted exemptions from these rules that permit passive market
making under certain conditions. These rules permit an underwriter to continue
to make a market subject to the conditions, among others, that its bid not
exceed the highest bid by a market maker not connected with the Offering and
that its net purchases on any one trading day not exceed prescribed limits.
Pursuant to these exemptions, the Underwriters, selling group members (if any)
or their respective affiliates may engage in passive market making in the
Company's Common Stock during the cooling off period.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for the
Company by Cooley Godward LLP, San Diego, California, and for the Underwriters
by Davis Polk & Wardwell, New York, New York. James C. Gaither, a partner of
Cooley Godward LLP, beneficially owns 12,838 shares of Common Stock.
EXPERTS
The consolidated financial statements of Amylin Pharmaceuticals, Inc.
incorporated by reference in the Company's Annual Report (Form 10-K) for the
year ended December 31, 1995, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon incorporated by
reference therein and incorporated herein by reference. Such consolidated
financial statements are incorporated herein by reference in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.
The statements in this Prospectus under the captions "Risk
Factors -- Patents and Proprietary Rights" and "Business -- Patents, Proprietary
Rights, and Licenses" have been reviewed and approved by Lyon & Lyon LLP, as
experts in such matters, and are included herein in reliance upon such review
and approval.
43
<PAGE> 44
AVAILABLE INFORMATION
The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company with the Commission in
accordance with the Exchange Act may be inspected without charge at the Public
Reference Section of the Commission at Room 1024, 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549, and at the Commission's following
Regional Offices: Chicago Regional Office, Suite 1400, Northwest Atrium Center,
500 West Madison Street, Chicago, Illinois 60661; and the New York Regional
Office, Seven World Trade Center, Suite 1300, New York, New York 10048. Copies
of such material can be obtained at prescribed rates from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549. The Commission also maintains a site on the World Wide
Web that contains reports, proxy and information statements and other
information regarding the Company. The address for such site is
http://www.sec.gov.
Additional information regarding the Company and the shares offered hereby
is contained in the Registration Statement on Form S-3 and the exhibits thereto
filed with the Commission under the Securities Act of 1933, as amended (the
"Securities Act"). For further information pertaining to the Company and the
shares, reference is made to the Registration Statement and the exhibits
thereto, which may be inspected without charge at, and copies thereof may be
obtained at prescribed rates from, the office of the Commission at 450 Fifth
Street, N.W., Judiciary Plaza, Washington, D.C. 20549.
The AMYLIN logo is a trademark of the Company. All other brand names or
trademarks appearing in this Prospectus are the property of their respective
holders.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1995, the Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31 and June 30, 1996, and the Company's Registration Statement on Form 8-A
dated November 27, 1991 filed by the Company with the Commission are hereby
incorporated by reference in this Prospectus except as superseded or modified
herein. All documents filed by the Company with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of the Offering of the shares offered
hereby shall be deemed to be incorporated by reference into this Prospectus and
to be a part hereof from the date of filing of such documents. Any statement
contained in any document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as modified or superseded, to
constitute a part of this Prospectus. The Company will provide without charge to
each person, including any beneficial owner to whom this Prospectus is
delivered, upon written or oral request of such person, a copy of any and all of
the documents that have been or may be incorporated by reference herein (other
than exhibits to such documents which are not specifically incorporated by
reference into such documents). Such requests should be directed to the Chief
Financial Officer at the Company's principal executive offices at 9373 Towne
Centre Drive, San Diego, California 92121 (telephone (619) 552-2200).
44
<PAGE> 45
No dealer, salesperson or any other person has been authorized to give any
information or make any representation not contained in this Prospectus in
connection with the offer made by this Prospectus and, if given or made, such
information or representation must not be relied upon as having been authorized
by the Company or the Underwriters. This Prospectus does not constitute an offer
to sell or a solicitation of an offer to buy any of the securities offered
hereby to anyone in any jurisdiction in which such offer or solicitation is not
authorized or in which the person making such offer or solicitation is not
qualified to do so or to anyone to whom it is unlawful to make such offer or
solicitation. Neither the delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, create any implication that the
information herein is correct as of any time subsequent to the date of this
Prospectus.
---------------------------
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 6
Use of Proceeds....................... 11
Price Range of Common Stock........... 12
Dividend Policy....................... 12
Capitalization........................ 13
Dilution.............................. 14
Selected Consolidated Financial
Data................................ 15
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 16
Business.............................. 20
Management............................ 34
Security Ownership of Certain
Beneficial Owners and Management.... 38
Description of Capital Stock.......... 40
Underwriting.......................... 42
Legal Matters......................... 43
Experts............................... 43
Available Information................. 44
Incorporation of Certain Documents by
Reference........................... 44
</TABLE>
1,750,000 SHARES
LOGO
COMMON STOCK
---------------------------------
PROSPECTUS
NOVEMBER 1, 1996
---------------------------------
UBS SECURITIES
HAMBRECHT & QUIST
VECTOR SECURITIES INTERNATIONAL, INC.
