<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
Amylin Pharmaceuticals, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
AMYLIN LOGO
9373 TOWNE CENTRE DRIVE
SAN DIEGO, CALIFORNIA 92121
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 29, 1997
TO THE STOCKHOLDERS OF AMYLIN PHARMACEUTICALS, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Amylin
Pharmaceuticals, Inc., a Delaware corporation (the "Company"), will be held on
May 29, 1997, at 3:30 p.m., local time, at the Hyatt Regency La Jolla, located
at 3777 La Jolla Village Drive, San Diego, California 92122, for the following
purposes:
1. To elect directors to serve for the ensuing year and until their
successors are elected;
2. To ratify the selection of Ernst & Young LLP as independent
auditors of the Company for its fiscal year ending December 31,
1997; and
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on March 31, 1997 as
the record date for the determination of stockholders entitled to notice of and
to vote at this Annual Meeting and at any adjournment or postponement thereof.
By Order of the Board of Directors
/S/ MAJORIE T. SENNETT
Marjorie T. Sennett
Assistant Secretary
San Diego, California
April 21, 1997
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR
REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE PREPAID IF
MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT PURPOSE. EVEN IF YOU HAVE
GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING. PLEASE
NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER
NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN FROM THE RECORD
HOLDER A PROXY ISSUED IN YOUR NAME.
<PAGE> 3
AMYLIN PHARMACEUTICALS, INC.
9373 TOWNE CENTRE DRIVE
SAN DIEGO, CALIFORNIA 92121
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 29, 1997
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of
Amylin Pharmaceuticals, Inc., a Delaware corporation (the "Company"), for use at
the Annual Meeting of Stockholders to be held on May 29, 1997, at 3:30 p.m.,
local time (the "Annual Meeting"), or at any adjournment or postponement
thereof, for the purposes set forth herein and in the accompanying Notice of
Annual Meeting. The Annual Meeting will be held at the Hyatt Regency La Jolla,
located at 3777 La Jolla Village Drive, San Diego, California 92122. The Company
intends to mail this proxy statement and accompanying proxy card on or about
April 18, 1997 to all stockholders entitled to vote at the Annual Meeting.
SOLICITATION
The Company will bear the entire cost of solicitation of proxies including
preparation, assembly, printing, and mailing of this proxy statement, the proxy
and any additional information furnished to stockholders. Copies of solicitation
materials will be furnished to banks, brokerage houses, fiduciaries and
custodians holding in their names shares of Common Stock beneficially owned by
others to forward to such beneficial owners. The Company may reimburse persons
representing beneficial owners of Common Stock for their costs of forwarding
solicitation materials to such beneficial owners. Original solicitation of
proxies by mail may be supplemented by telephone, telegram, or personal
solicitation by directors, officers or other regular employees of the Company
or, at the Company's request, Beacon Hill Partners, Inc., a professional proxy
solicitor. No additional compensation will be paid to directors, officers or
other regular employees for such services, but Beacon Hill Partners, Inc. will
be paid its customary fee, estimated to be $3,750, if it renders solicitation
services.
VOTING RIGHTS AND OUTSTANDING SHARES
Only holders of record of Common Stock at the close of business on March
31, 1997 will be entitled to notice of and to vote at the Annual Meeting. At the
close of business on March 31, 1997, the Company had outstanding and entitled to
vote 32,052,147 shares of Common Stock.
Each holder of record of Common Stock on such date will be entitled to one
vote for each share held on all matters to be voted upon at the Annual Meeting.
All votes will be tabulated by the inspector of election appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions will be counted towards the
tabulation of votes cast on proposals presented to the stockholders and will
have the same effect as negative votes. Broker non-votes are counted towards a
quorum, but are not counted for any purpose in determining whether a matter has
been approved.
REVOCABILITY OF PROXIES
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing with the
Secretary of the Company at the Company's principal executive office, 9373 Towne
Centre Drive, San Diego, California 92121, a written notice of revocation or a
duly
<PAGE> 4
executed proxy bearing a later date, or it may be revoked by attending the
meeting and voting in person. Attendance at the meeting will not, by itself,
revoke a proxy.
STOCKHOLDER PROPOSALS
Proposals of stockholders that are intended to be presented at the
Company's 1998 Annual Meeting of stockholders must be received by the Company
not later than December 19, 1997 in order to be included in the proxy statement
and proxy relating to that Annual Meeting.
PROPOSAL 1
ELECTION OF DIRECTORS
There are eight nominees for the eight Board positions that will be
available under the Company's Bylaws as of May 29, 1997. Each director to be
elected will hold office until the next annual meeting of stockholders and until
his or her successor is elected and has qualified, or until such director's
earlier death, resignation or removal. Each nominee listed below is currently a
director of the Company, seven directors having been elected by the stockholders
and one director, Mr. Haugen, having been elected by the Board.
Shares represented by executed proxies will be voted, if authority to do so
is not withheld, for the election of the eight nominees named below. In the
event that any nominee should be unavailable for election as a result of an
unexpected occurrence, such shares will be voted for the election of such
substitute nominee as management may propose. Each person nominated for election
has agreed to serve if elected, and management has no reason to believe that any
nominee will be unable to serve. Directors are elected by a plurality of the
votes present in person or represented by proxy and entitled to vote at the
meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
IN FAVOR OF EACH NAMED NOMINEE.
NOMINEES
The names of the nominees and certain information about them are set forth
below:
<TABLE>
<CAPTION>
NAME AGE POSITION HELD WITH THE COMPANY
- ----------------------------------------------- --- ------------------------------------
<S> <C> <C>
Howard E. Greene, Jr.(1)....................... 54 Chairman of the Board
Richard M. Haugen(1)........................... 44 President, Chief Executive Officer
and Member, Board of Directors
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 July
1996. From October 1986 until 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 ("Hybritech") from 1979 to its
acquisition by Eli Lilly & Company ("Eli
2
<PAGE> 5
Lilly") 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., Biosite Diagnostics, 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. Mr. Haugen is also a
member of the Company's Executive Committee. Previously, Mr. Haugen was
Executive Vice President, Chief Operating Officer and a director of Allergan,
Inc. ("Allergan"), 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 California at Irvine Graduate School
of Management. Mr. Haugen received an M.B.A. from the University of Southern
California.
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 Sicor, Inc., and Houghton 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 and is a member of
the Company's Audit and Executive Committees. 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 in 1993. During his 28 years with Eli 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 Eli
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.
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 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
3
<PAGE> 6
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. Mr. Kailian is also a director of Arris Pharmaceutical
Corporation, the Biotechnology Industry 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 and is
a member of the Company's Audit and Compensation Committees. 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, a hospital management company 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. From 1972 to 1980, he was
employed by Baxter Healthcare Corporation. Mr. Wollaeger is Chairman of the
Board of Biosite Diagnostics, Inc. and a director of Phamis, Inc. He received an
M.B.A. from Stanford University.
BACKGROUND OF EXECUTIVES NOT DESCRIBED ABOVE
The names of and certain information regarding the Company's executives are
set forth below:
<TABLE>
<CAPTION>
NAME AGE POSITION HELD WITH THE COMPANY
- ----------------------------------------------- --- --------------------------------------
<S> <C> <C>
Maurizio Denaro, M.D........................... 45 Executive Vice President and Chief
Technical Officer
Richard A. Kenley, Ph.D........................ 50 Senior Vice President of Product
Development
Orville G. Kolterman, M.D...................... 49 Senior Vice President of Medical
Affairs
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
Bradford J. Duft............................... 42 Vice President and General Counsel
Albert A. Lauritano............................ 44 Vice President of Business Development
Marjorie T. Sennett............................ 36 Vice President, Chief Financial
Officer and Assistant Secretary
Robert G. Thompson, M.D........................ 59 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
</TABLE>
DR. DENARO, an executive officer of the Company, has served as Executive
Vice President and Chief Technical Officer since February 1997. From February
1996 to February 1997, Dr. Denaro served as Senior Vice President of Research.
Prior to joining the Company, from 1992 to 1996, 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 1994 to 1996. 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.
DR. KENLEY, an executive officer of the Company, has served as Senior Vice
President of Product Development since February 1997. From January 1994 to
February 1997, Dr. Kenley served as Vice President of Product Development. Prior
to joining the Company, from 1990 to 1994, 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, and 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.
4
<PAGE> 7
DR. KOLTERMAN, an executive officer of the Company, has served as Senior
Vice President of Medical Affairs since February 1997. Dr. Kolterman previously
served as Vice President, Medical Affairs from July 1993 to February 1997 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 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.
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 of
Marketing, Amylin Europe Limited. Prior to joining the Company, Mr. Bradbury was
employed by SmithKline Beecham Pharmaceuticals from September 1984 to July 1994,
where he held a number of positions, most recently as Associate Director,
Anti-Infectives in the Worldwide Strategic Product Development Division. Prior
to 1984, 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. Prior to that time, she
worked in Human Resources with Industrial Indemnity, a division of Crum &
Forster. Ms. Burgess holds a B.A. from the University of California, Santa Cruz.
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.
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
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<PAGE> 8
July 1986, Ms. Sennett held several corporate finance positions at Bankers Trust
Company involving the structuring of leveraged acquisitions. From August 1986 to
June 1988, she attended the Stanford University 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 at Eli
Lilly, including Global Research Physician. 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 Hoffmann-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.
BOARD COMMITTEES AND MEETINGS
During the fiscal year ended December 31, 1996, the Board of Directors held
six meetings. The Board has an Audit Committee, a Compensation Committee, and an
Executive Committee. The Board does not have a Nominating Committee or any
committee performing a similar function.
The Audit Committee meets at least annually with the Company's independent
auditors to review, among other things, the results of the annual audit and
discuss the financial statements, recommend to the Board the independent
auditors to be retained and receive and consider the auditors' comments as to
controls, adequacy of staff and management performance and procedures in
connection with audit and financial controls. The Audit Committee, which during
1996 was composed of Messrs. Cook and Wollaeger, met two times during the fiscal
year ended December 31, 1996.
The Compensation Committee makes recommendations concerning salaries and
incentive compensation, administers and awards stock options to employees and
consultants under the Company's 1991 Stock Option Plan, as amended, administers
and approves stock offerings under the Company's Employee Stock Purchase Plan,
administers the Company's Non-Employee Directors' Stock Option Plan and
otherwise determines compensation levels and performs such other functions
regarding compensation as the Board may delegate. The Compensation Committee,
which during 1996 was composed of Dr. Blair and Mr. Wollaeger, met two times
during the fiscal year ended December 31, 1996.
The Executive Committee of the Board during 1996 was composed of Dr. Blair
and Messrs. Cook and Greene, and, beginning in July 1996, Mr. Haugen. Mr. Cook
served as Chairman until July 1996, when Mr. Greene was appointed Chairman.
Except as limited by law, the Executive Committee is empowered to take any and
all actions that may be taken by the Board of Directors, including declaring
dividends and authorizing the issuance of stock. The Executive Committee met one
time during the fiscal year ended December 31, 1996.
The Board of Directors has delegated to Mr. Haugen the authority to grant
stock options under the Company's 1991 Stock Option Plan, as amended, to
employees of the Company that are not executive officers,
6
<PAGE> 9
directors or 10% stockholders of the Company, so long as such grants are in
accordance with guidelines that have been pre-approved by the Board of
Directors.
During the fiscal year ended December 31, 1996, all directors, except Ms.
Howard, attended at least 75% of the aggregate of the meetings of the Board and
of the committees on which he or she served, held during the period for which he
or she was a director or committee member, respectively. Ms. Howard attended
four of the six meetings of the Board held during the fiscal year ended December
31, 1996.
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected Ernst & Young LLP as the Company's
independent auditors for the fiscal year ending December 31, 1997 and has
further directed that management submit the selection of independent auditors
for ratification by the stockholders at the Annual Meeting. Ernst & Young LLP
has audited the Company's financial statements since the Company's inception in
September 1987. In the event of a negative vote on such ratification, the Board
of Directors will reconsider its action. Representatives of Ernst & Young LLP
are expected to be present at the Annual Meeting, will have an opportunity to
make a statement if they so desire and will be available to respond to
appropriate questions. Even if the selection is ratified, the Audit Committee
and the Board at its discretion may direct the appointment of a different
independent accounting firm at any time during the year if they determine that
such a change would be in the best interests of the Company and its
stockholders.
The affirmative vote of the holders of a majority of the shares represented
and entitled to vote at the meeting will be required to ratify the selection of
Ernst & Young LLP.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
IN FAVOR OF PROPOSAL 2
7
<PAGE> 10
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 March 31, 1997 by: (i) each nominee for
director; (ii) each executive officer listed in the table entitled Summary of
Compensation under the heading "Executive Compensation" below employed by the
Company in that capacity on March 31, 1997; (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>
James C. Blair(2)(3)............................................ 702,718 2.19%
Joseph C. Cook, Jr.(2).......................................... 242,833 *
Maurizio Denaro(2).............................................. 40,239 *
Bradford J. Duft(2)............................................. 325,586 1.01%
James C. Gaither(2)............................................. 19,071 *
Howard E. Greene, Jr.(2)........................................ 1,788,144 5.53%
Richard M. Haugen............................................... 27,061 *
Ginger L. Howard(2)............................................. 16,547 *
Vaughn M. Kailian(2)............................................ 16,547 *
Orville G. Kolterman(2)......................................... 133,619 *
Marjorie T. Sennett(2).......................................... 342,464 1.06%
Timothy J. Wollaeger(2)......................................... 170,749 *
Johnson & Johnson Development Corporation(4).................... 3,455,407 10.78%
One Johnson & Johnson Plaza
New Brunswick, NJ 08933
Wellington Management Company(5)................................ 2,966,100 9.25%
75 State Street
Boston, MA 02109
State of Wisconsin Investment Board............................. 2,391,500 7.46%
Lake Terrace
121 E. Wilson Street
P.O. Box 7842
Madison, WI 53707
All executive officers and directors as a group(14 persons)(2)
</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 32,052,147 shares outstanding on March
31, 1997, 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. Blair, 5,000 shares; Mr. Cook, 183,833 shares; Dr. Denaro,
40,239 shares; Mr. Duft, 99,856 shares; Mr. Gaither, 16,547 shares; Mr.
Greene, 262,576 shares; Ms. Howard, 16,547 shares; Mr. Kailian, 16,547
shares; Dr. Kolterman, 127,499 shares; Ms. Sennett, 155,243 shares; Mr.
Wollaeger, 20,000 shares; and all executive officers and directors as a
group, 1,205,107 shares.
8
<PAGE> 11
(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) Includes 3,455,407 shares as to which Johnson & Johnson and Johnson &
Johnson Development Corporation have shared voting and dispositive
power.
(5) Includes 1,176,100 shares as to which Wellington Management Company
("WMC") has shared voting power and 2,966,100 shares as to which WMC
has shared dispositive power.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934.
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file with the Commission
initial reports of ownership and reports of changes in ownership of Common Stock
and other equity securities of the Company. Officers, directors and greater than
ten percent stockholders are required by Commission regulation to furnish the
Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 1996, its
officers, directors and greater than ten percent beneficial owners complied with
all Section 16(a) filing requirements applicable to them.
EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS
The members of the Board of Directors are eligible for reimbursement for
their expenses incurred in connection with attendance at Board meetings in
accordance with Company policy.
Each Non-Employee Director (defined below) of the Company is also eligible
to receive stock option grants under the Company's Non-Employee Directors' Stock
Option Plan, as amended (the "Directors' Plan"). Only directors of the Company
who are not otherwise employed by the Company or any parent or subsidiary of the
Company ("Non-Employee Directors") are eligible to receive options under the
Directors' Plan. Options granted under the Directors' Plan are nondiscretionary
and are intended by the Company not to qualify as incentive stock options under
the Code.
The Directors' Plan provides that, each person who is, immediately
following each Annual Meeting of Stockholders of the Company that occurs in an
even year (i.e. 1998, 2000, 2002, etc.) (hereinafter, an "Even Year Annual
Meeting"), a Non-Employee Director of the Company shall be granted, effective as
of the date of such Even Year Annual Meeting, an option to purchase 10,000
shares of Common Stock of the Company pursuant to the Directors' Plan
("Recurring Options"). The Directors' Plan also provides that each person who is
elected for the first time by the Board or stockholders of the Company to serve
as a Non-Employee Director and who has not previously served as a member of the
Board, shall be granted, upon election, an option to purchase 30,000 shares of
Common Stock ("Initial Election Options"). The exercise price of options granted
under the Directors' Plan is equal to the fair market value of the Common Stock
subject to the option on the date of the grant. Recurring Options vest at a
daily rate over two years following the date of grant. Initial Election Options
vest as to 25% of the total number of shares subject to such options on the date
that is one year from the date of grant and thereafter at a daily rate over the
remaining three years. The term of options under the Directors' Plan is ten
years. The Directors' Plan provides that in the event of a dissolution or
liquidation of the Company, a merger or consolidation in which the Company is
not the surviving corporation, a reverse merger in which the Company is the
surviving corporation but the shares of the Company's common stock outstanding
immediately preceding the merger are converted by virtue of the merger into
other property, whether in the form of securities, cash or otherwise or any
other capital reorganization in which more than 50% of the shares of the Company
entitled to vote are exchanged, then to the extent permitted by applicable
9
<PAGE> 12
law, the time during which such options may be exercised will be accelerated and
the options terminated if not exercised prior to such event.
In June 1995, the Company and Mr. Cook entered into a consulting agreement
(the "Consulting Agreement"), which became effective in September 1995. Pursuant
to the Consulting Agreement, Mr. Cook agreed to provide consulting services in
the areas of (i) helping to develop and implement the Company's business
strategy, (ii) developing and implementing a human resources plan for senior
management; (iii) recruiting individuals for management and Board of Directors
positions; and (iv) assisting in the decision making process of the
Amylin/Johnson & Johnson steering committee formed pursuant to the Company's
Collaboration Agreement with LifeScan, Inc., a wholly owned subsidiary of
Johnson & Johnson. In connection with the provision of these services, Mr. Cook
serves as a member of the Company's Executive Committee of the Board of
Directors and on the collaboration steering committee. As consideration for such
consulting services, Mr. Cook was to receive a payment of $6,000 per month
through June 1998, representing a commitment of $1,500 per day for four
eight-hour days per month. In addition, as provided for under the Consulting
Agreement, Mr. Cook was granted a non-qualified stock option under the Company's
1991 Stock Option Plan to purchase 40,000 shares of the Company's Common Stock
at an exercise price of $6.75 per share (the "First Stock Option"). Such option
vests at a rate of 450 shares for each eight-hour day Mr. Cook devotes to the
Company. If Mr. Cook devotes more than four eight-hour days in any given month
to the Company, he will receive an additional payment of $1,500 for each
additional day of service and accelerated vesting of 450 option shares for each
such additional day. However, if Mr. Cook devotes less than four eight-hour days
in any given month to the Company, the monthly payment of $6,000 will be reduced
by $1,500 for each day he does not provide service, and the vesting of options
for that month will be reduced by 450 shares for each day of consulting less
than four. Pursuant to the Consulting Agreement, as amended, Mr. Cook is also
reimbursed for any reasonable travel, living and business expenses incurred in
connection with the performance of his consulting services.
In November 1995, the Consulting Agreement was amended to increase the rate
at which the First Stock Option vests to 550 shares for each eight-hour day Mr.
Cook devotes to the Company. In consideration of such amendment, Mr. Cook agreed
to accept additional responsibilities under the Consulting Agreement.
In February 1996, Mr. Cook was granted an additional non-qualified stock
option under the Company's 1991 Stock Option Plan to purchase 50,000 shares of
Common Stock at an exercise price of $12.375 per share under the Consulting
Agreement (the "Second Stock Option"). The Second Stock Option began to vest in
April, 1996, upon the complete vesting of the First Stock Option, at the same
rate and under the same conditions then applicable to the First Stock Option, as
amended.
In January 1997, Mr. Cook's Consulting Agreement was amended a second time
to (i) decrease the rate at which stock options granted under the Consulting
Agreement will vest from 550 shares per eight-hour day to 250 shares per
eight-hour day Mr. Cook devotes to the Company, and (ii) increase the consulting
fee payable to Mr. Cook per eight-hour day of services to the Company from
$1,500 to $2,000. In connection with such amendment in January 1997 Mr. Cook was
granted an additional non-qualified stock option under the Company's 1991 Stock
Option Plan to purchase 15,000 shares of Common Stock at an exercise price of
$13.625 per share.
In 1996, the total compensation paid to Mr. Cook under his consulting
agreements was $196,417 in consulting fees, and options to purchase a total of
72,162 shares of Common Stock under his various stock option agreements vested
as a result of services he performed for the Company. In 1996, Mr. Cook and
Farview Management Co., L.P., a consulting firm of which Mr. Cook is a general
partner, were reimbursed a total of $9,163 in expenses.
In September 1996, Donald Rumsfeld resigned as a director of the Company.
In connection with his resignation, the Company entered into an agreement with
Mr. Rumsfeld pursuant to which Mr. Rumsfeld will continue to provide consulting
services to the Company. Under this agreement, Mr. Rumsfeld was granted a
non-qualified stock option to purchase 10,000 shares of the Company's Common
stock under the 1991 Stock Option Plan at an exercise price of $14.25 per share,
such options to vest at the rate of 625 shares for each day Mr. Rumsfeld
provides advisory services to the Company.
10
<PAGE> 13
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY OF COMPENSATION
The following table shows for the fiscal years ending December 31, 1994,
1995 and 1996, compensation awarded or paid to, or earned by the Company's Chief
Executive Officer, its other four most highly compensated executive officers at
December 31, 1996, Mr. Greene, the former Chief Executive Officer, and Dr.
Mullane, the former Executive Vice President of Development, who was not serving
as an executive officer at December 31, 1996 (collectively, the "Named Executive
Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ------------
---------------------------------------- SHARES
OTHER ANNUAL UNDERLYING
SALARY BONUS COMPENSATION OPTIONS (#)
PRINCIPAL POSITION YEAR ($) ($) (1)($) (2)
- ----------------------------------------- ---- -------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Howard E. Greene, Jr. ................... 1996 256,563 0 0 40,000
Chairman and Former CEO 1995 302,396 12,917 0 0
1994 271,496 0 0 100,000
Richard M. Haugen........................ 1996 168,068 (3) 50,000 0 500,000
President and CEO 1995 -- -- -- --
1994 -- -- -- --
Maurizio Denaro.......................... 1996 188,605 (4) 26,000 78,824 141,000
Executive Vice President and 1995 -- -- -- --
Chief Technical Officer 1994 -- -- -- --
Bradford J. Duft......................... 1996 215,946 0 0 20,000
Vice President and General Counsel 1995 202,500 20,938 13,542 115,000
1994 194,042 0 25,000 80,000
Orville G. Kolterman..................... 1996 195,567 0 0 35,000
Senior Vice President, Medical Affairs 1995 172,833 7,292 0 150,144
1994 163,867 0 0 55,144
John F. Mullane.......................... 1996 210,206 0 0 15,000
Former Executive Vice President, 1995 217,083 9,167 61,085 205,000
Development 1994 135,625 20,000 7,284 183,200
Marjorie T. Sennett...................... 1996 197,425 0 0 43,000
Vice President, CFO and 1995 182,175 7,708 0 90,000
Assistant Secretary 1994 162,816 0 0 87,880
</TABLE>
- ---------------
(1) Includes housing allowances paid to Mr. Duft of $13,542 and $25,000 in 1995
and 1994, respectively, relocation expenses and related tax gross-ups paid
to Dr. Denaro of $78,824 in 1996, and relocation expenses and related tax
gross-ups paid to Dr. Mullane of $61,085 and $7,284 in 1995 and 1994,
respectively. As permitted by rules promulgated by the SEC, no amounts are
shown with respect to certain "perquisites," where such perquisites do not
exceed the lesser of 10% of bonus plus salary or $50,000.
(2) Includes options repriced in 1995 of 115,000 shares for Mr. Duft, 135,144
shares for Dr. Kolterman, 180,000 shares for Dr. Mullane and 70,000 shares
for Ms. Sennett
(3) Reflects salary payments from date of employment with the Company, July
1996, through December 31, 1996.
(4) Reflects salary payments from date of employment with the Company, February
1996, through December 31, 1996.
11
<PAGE> 14
STOCK OPTION GRANTS AND EXERCISES
The Company grants options to its executive officers under its 1991 Stock
Option Plan (the "Plan"). As of March 31, 1997, options to purchase a total of
5,435,480 shares were outstanding under the Plan, and options to purchase
1,055,932 shares remained available for grant thereunder.
The following tables show for the fiscal year ended December 31, 1996,
certain information regarding options granted to, exercised by, and held at year
end by the Named Executive Officers:
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED ANNUAL
----------------- RATES OF STOCK PRICE
SHARES % OF TOTAL APPRECIATION FOR OPTION
UNDERLYING OPTIONS GRANTED TERM ($)(2)
OPTIONS TO EMPLOYEES IN EXERCISE EXPIRATION -------------------------
NAME GRANTED(#)(1) FISCAL YEAR(%) PRICE($/SH) DATE 5% 10%
- --------------------------------- ---------- ----------------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Howard E. Greene, Jr. ........... 40,000 2.34% $12.375 2/7/06 $ 311,195 $ 788,567
(Former CEO)
Richard M. Haugen................ 500,000 29.27% $ 8.500 7/12/06 $2,672,802 $6,773,405
(CEO)
Maurizio Denaro.................. 125,000 7.32% $ 6.250 2/13/06 $1,534,525 $2,905,765
16,000 0.94% $12.000 12/1/06 $ 120,748 $ 305,999
Bradford J. Duft................. 20,000 1.17% $12.000 12/1/06 $ 150,935 $ 382,498
Orville G. Kolterman............. 15,000 0.88% $12.375 2/7/06 $ 116,698 $ 295,713
20,000 1.17% $12.000 12/1/06 $ 150,935 $ 382,498
John F. Mullane.................. 15,000 0.88% $12.375 2/7/06 $ 116,698 $ 295,713
Marjorie T. Sennett.............. 23,000 1.35% $12.375 2/7/06 $ 178,937 $ 453,426
20,000 1.17% $12.000 12/1/06 $ 150,935 $ 382,498
</TABLE>
- ---------------
(1) Such options generally vest according to the following schedule: 25% vest
one year from the date of grant and the remainder vest daily over the
following three years.
(2) Calculated on the assumption that the market value of the underlying stock
increases at the stated values, compounded annually. The total appreciation
of the options over their 10-year terms at 5% and 10% is 63% and 159%,
respectively.
AGGREGATED OPTION EXERCISES IN 1996 FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF SECURITIES IN-
SHARES UNDERLYING OPTIONS AS OF THE-MONEY OPTIONS AS OF
ACQUIRED FY-END(#)(2) FY-END($)(3)
ON VALUE --------------------------- -----------------------
NAME EXERCISE(#) REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------- ---------- -------- ----------- ------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Howard E. Greene, Jr........ -- -- 258,386 81,614 $1,954,678 $ 120,322
Richard M. Haugen........... -- -- 0 500,000 $ 0 $2,250,000
Maurizio Denaro............. -- -- 0 141,000 $ 0 $ 859,750
Bradford J. Duft............ -- -- 89,592 55,408 $ 786,532 $ 320,968
Orville G. Kolterman........ -- -- 110,126 75,018 $ 926,433 $ 343,541
John F. Mullane............. 21,700 $179,875 101,556 98,944 $ 823,822 $ 701,178
Marjorie T. Sennett......... -- -- 136,451 89,429 $1,230,477 $ 360,839
</TABLE>
- ---------------
(1) Represents the fair market value of the underlying shares on the date of
exercise less the exercise or base price, and does not necessarily imply
that the shares were sold by the optionee.
(2) Includes both in-the-money and out-of-the-money options.
(3) The fair market value of the underlying shares on the last day of the fiscal
year ($13.00) less the exercise or base price. Excludes out-of-the-money
options.
12
<PAGE> 15
EMPLOYMENT AGREEMENTS
In July 1996, Mr. Richard Haugen accepted a position as President and Chief
Executive Officer of the Company. In connection with Mr. Haugen's hiring he
entered into an agreement with the Company pursuant to which his annual salary
was set at $350,000, subject to future adjustment due to possible merit
increases and annual merit bonuses. Mr. Haugen was also granted an option to
purchase an aggregate of 500,000 shares of the Company's common stock under the
Company's 1991 Stock Option Plan at an exercise price of $8.50 per share.
Portions of the option granted to Mr. Haugen vest at different rates.
400,000 shares of the Company's common stock subject to the option vest
according to the Company's standard vesting schedule, 25% vesting on the
one-year anniversary of the option and the remaining 75% vesting in equal daily
installments over the three years thereafter. The remaining 100,000 shares of
the Company's common stock subject to the option (the "Supplemental Shares")
vest according to the following alternative schedule: the shares will become
fully vested on the seven-year anniversary of the option; however, the
Supplemental Shares will immediately become fully vested on the earliest date
that the United States Food and Drug Administration or the European Medicines
Evaluation Agency formally accepts the Company's first new drug application for
regulatory review. In addition, in the event of a change in control of the
Company prior to the date that the Supplemental Shares are fully vested, then
the number of shares that would have otherwise vested as of the date of the
change in control if the Supplemental Shares were subject to vesting in equal
daily installments over a period of four years beginning on the grant date of
the option, will be deemed vested and exercisable as of such date. For purposes
of the Supplemental Shares a "change in control" is defined as any of the
following: (i) any merger, acquisition, consolidation, reorganization, or other
similar transaction pursuant to which the stockholders of the Company prior to
such merger, acquisition, consolidation, reorganization or other similar
transaction do not, immediately thereafter, own more than 50% of the outstanding
voting securities of the resulting entity or (ii) any liquidation or dissolution
of the Company or any sale of substantially all of the assets of the Company.
Concurrently with Mr. Haugen's hiring, Mr. Howard E. Greene, Jr. resigned
as Chief Executive Officer and President of the Company. From July 1996 to
September 1996, Mr. Greene was a full-time employee of the Company and served as
Chairman of the Company's Board of Directors. Effective in September 1996, Mr.
Greene entered into an agreement with the Company pursuant to which he would
continue to serve as Chairman of the Board and he would serve as a part-time
employee of the Company. Under his agreement with the Company, Mr. Greene will
receive an annual salary of $157,500 and his outstanding options to purchase
shares of the Company's stock under the Company's 1991 Stock Option Plan will
continue to vest at one-half of the rate at which such options vest for
full-time employees of the Company, subject to the terms and conditions of the
1991 Stock Option Plan.
In September 1996, Dr. John F. Mullane resigned as Executive Vice President
of Development of the Company. In connection with his resignation, Dr. Mullane
entered into an agreement with the Company pursuant to which Dr. Mullane will be
employed as a part-time employee of the Company for a period of one year
commencing as of September 17, 1996. Under his agreement with the Company, Dr.
Mullane will receive an annual salary of $117,500 during the one year period and
his outstanding options to purchase shares of the Company's stock under the
Company's 1991 Stock Option Plan will continue to vest at one-half of the rate
at which such options vest for full-time employees of the Company, subject to
the terms and conditions of the 1991 Stock Option Plan.
13
<PAGE> 16
REPORT OF COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION(1)
The Compensation Committee of the Board of Directors (the "Committee") is
composed of Directors who are not employees of the Company. The Committee is
responsible for establishing and administering the Company's executive
compensation arrangements.
COMPENSATION OBJECTIVES AND IMPLEMENTATION
The objectives of the Company's executive compensation arrangements are to
attract and retain the services of key management and to align the interests of
its executives with those of the Company's stockholders. The Committee endeavors
to accomplish these by:
- Establishing compensation arrangements that are adequate to attract and
retain the services of key management personnel and that deliver
compensation commensurate with the Company's performance, as measured
against the achievement of operating, financial and strategic objectives
and taking into account competitive compensation practices in the
industry.
- Providing significant equity-based incentives for executives to ensure
that they are motivated over the long term to respond to the Company's
business challenges and opportunities as owners rather than solely as
employees.
- Rewarding executives if stockholders receive an above-average return on
their investment over the long term.
The Committee at least annually, or as frequently as circumstances warrant,
evaluates the Company's corporate performance based on achievement of
established strategic, scientific and financial goals. For 1996, these goals
included the following:
- Progression of clinical trials on pramlintide.
- Expansion of the Company's product research and development pipeline.
- Achievement of the first milestone in the Johnson & Johnson
collaboration.
- Raising of additional corporate funds.
- Acquisition of essential management and technical skills.
- Meeting of other research and development milestones.
- Increased external validation of the scientific platform.
COMPENSATION MIX AND MEASUREMENT
A significant portion of the Company's annual executive compensation
program is determined on the basis of corporate performance. The Company's
executive compensation mix generally consists of a salary which in the
Committee's opinion is adequate under the circumstances to retain the services
of the executive, and stock options that are intended to provide long-term
incentives tied to increases in the value of the Company's Common Stock.
Salary. Salary is targeted at competitive levels within the biotechnology
industry. For the purpose of establishing these levels, the Company compares
itself to a self selected group of biotechnology companies in stages of
development similar to that of the Company. The companies included in the survey
are not necessarily the same as the companies included in the market indices
included in the performance graph in
- ---------------
(1) The material in this report is not "soliciting material," is not deemed
filed with the SEC and is not to be incorporated by reference in any filing of
the Company under the Securities Act of 1933, as amended (the "1933 Act") or the
Securities Exchange Act of 1934, as amended (the "1934 Act"), whether made
before or after the date hereof and irrespective of any general incorporation
language in any such filing.
14
<PAGE> 17
this Proxy Statement. Although the compensation (salary and bonus) surveys
referred to above and the market indices included in the performance graph are
broad and include companies in related industries, the surveys and indices were
created for different purposes and accordingly are not comparable.
Based on the data generated in the surveys, the Committee then sets target
salary levels applicable to each executive officer. For fiscal 1996, the
Committee established target salaries at levels approximating the median levels
determined based on the surveys. The Committee made its target salary
determinations subjectively after considering the competitive nature of the
biotechnology industry and the Company's need to attract and retain talented
executive officers.
The Committee then considers the level of responsibility, experience and
contributions of each executive officer and sets each officer's salary taking
into account the target compensation, recent corporate performance (based on the
factors discussed above) and the Committee's evaluation of individual
performance. For fiscal 1996, the salary of each executive officer was generally
at or near the median target compensation levels determined through the surveys.
Long-Term Incentives. Long-term incentives are provided to executives
through the Company's equity incentive program, which consists primarily of its
1991 Stock Option Plan. Grants under the 1991 Stock Option Plan have a term of
10 years and are generally tied to the market valuation of the Company's Common
Stock, thereby providing an additional incentive for executives to build
stockholder value. In addition, grants are generally subject to vesting over
four years, with vesting tied to continued employment. Executives receive value
from this plan only if strategic goals are achieved and the Company's Common
Stock appreciates accordingly. This component is intended to retain and motivate
executives to improve long-term stock market performance. Additional long-term
incentives are provided through the Company's Employee Stock Purchase Plan in
which all eligible employees may participate up to 15% of their annual
compensation.
Option grant levels to executive officers are subjectively determined by
the Committee after considering stock option grant data taken from the
compensation surveys referred to above, as well as the level of responsibility,
experience and contributions of each executive officer. Generally, the Committee
expects to grant options to executive officers annually as part of the
performance review process for each officer. In determining the size of
individual grants, the Committee also considers the number of shares subject to
options previously granted to each executive officer, including the number of
such shares that have vested and that remain unvested.
In response to stockholder feedback, the Company recently implemented
certain policies that are intended to (i) limit the number of options granted
under the 1991 Stock Option Plan to an annual average of approximately 2.5% of
the Company's outstanding shares of common stock; (ii) limit the Company's
ability to reprice stock options; and (iii) restrict the Company's ability to
grant non-qualified stock options at a price less than the fair market value on
the date of an option grant. The Committee believes that the implementation of
these policies will ensure the Company's long-term ability to attract and retain
highly qualified employees while promoting stockholder value.
Section 162(m) of the Code limits the Company to a deduction for federal
income tax purposes of no more than $1 million of compensation paid to certain
Named Executive Officers in a taxable year. Compensation above $1 million may be
deducted if it is "performance-based compensation" within the meaning of the
Code. The Compensation Committee has determined that stock options granted under
the Company's 1991 Stock Option Plan with an exercise price at least equal to
the fair market value of the Company's common stock on the date of grant shall
be treated as "performance-based compensation."
15
<PAGE> 18
CHIEF EXECUTIVE OFFICER COMPENSATION
Effective July 12, 1996, Mr. Richard Haugen was hired as President and
Chief Executive Officer of the Company. At that time the Committee reviewed
salary surveys to determine the level of total compensation at which Chief
Executive Officers of similar experience in the biotechnology industry were
compensated. Following such evaluation, the Company and Mr. Haugen entered into
an agreement pursuant to which his annual salary was set at $350,000, subject to
periodic increases as determined by the Committee. Mr. Haugen was also granted
an option to purchase an aggregate of 500,000 shares of the Company's common
stock under the Company's 1991 Stock Option Plan. Effective December 1, 1996,
Mr. Haugen's annual salary was increased to $365,000, equivalent to a 4%
increase. During the 1996 fiscal year Mr. Haugen also received a cash signing
bonus of $50,000. The salary increase was based on the Committee's evaluation of
Mr. Haugen's performance during 1996 against objectives specified at the time he
joined the Company.
Mr. Howard E. Greene, Jr. served as Chief Executive Officer, President and
Chairman of the Board of the Company until July 1996. From July 1996 to
September 1996, he continued to serve as a full-time employee of the Company and
as Chairman of the Company's Board of Directors. For the period from January
1996 through August 1996 Mr. Greene's annual salary was set at $315,000. In
addition, in February 1996 Mr. Greene was granted an option to purchase 40,000
shares of the Company's common stock under the Company's 1991 Stock Option Plan.
Effective in September 1996, Mr. Greene entered into an agreement with the
Company pursuant to which he would continue to serve as Chairman of the Board
and he would serve as a part-time employee of the Company. Under his agreement
with the Company, Mr. Greene will receive an annual salary of $157,500 and his
outstanding options to purchase shares of the Company's stock under the
Company's 1991 Stock Option Plan will continue to vest at one-half of the rate
at which such options vest for full-time employees of the Company, subject to
the terms and conditions of the 1991 Stock Option Plan. During the 1996 fiscal
year Mr. Greene did not receive a cash bonus, as compared to a cash bonus of
$12,917 in the prior year.
COMPENSATION COMMITTEE
James C. Blair
Timothy J. Wollaeger
April 21, 1997
16
<PAGE> 19
PERFORMANCE MEASUREMENT COMPARISON
The following graph compares total stockholder returns of the Company since
its initial public offering of Common Stock on January 17, 1992 to two indices:
the NASDAQ CRSP Total Return Index for the NASDAQ Stock Market (U.S. companies)
(the "NASDAQ-US") and the NASDAQ Pharmaceutical Index (the
"NASDAQ-Pharmaceutical"). The total return for the Company's stock and for each
index assumes the reinvestment of dividends, although dividends have never been
declared on the Company's stock, and is based on the returns of the component
companies weighted according to their capitalizations as of the end of each
monthly period. The NASDAQ-US tracks the aggregate price performance of equity
securities of U.S. companies traded on the NASDAQ National Market System (the
"NMS"). The NASDAQ-Pharmaceutical tracks the aggregate price performance of
equity securities of pharmaceutical companies traded on the NMS. The Company's
Common Stock is traded on the NMS and is a component of both the NASDAQ-US and
the NASDAQ-Pharmaceutical.(1)
COMPARISON OF CUMULATIVE TOTAL RETURN ON INVESTMENT
SINCE THE COMPANY'S INITIAL PUBLIC OFFERING ON JANUARY 17, 1992(2)
<TABLE>
<CAPTION>
Measurement Period NASDAQ-
(Fiscal Year Covered) AMLN NASDAQ-US Pharmaceutical
<S> <C> <C> <C>
1/17/92 100.0000 100.0000 100.0000
3/31/92 98.2143 96.3765 81.7886
6/30/92 51.7857 89.7894 66.6070
9/30/92 71.4286 93.4788 64.6065
12/31/92 80.3571 108.7520 78.6184
3/31/93 60.7143 110.7916 56.5924
6/30/93 64.2857 112.9186 59.6397
9/30/93 85.7143 122.4359 64.6577
12/31/93 92.8571 124.8399 70.0738
3/31/94 76.7857 119.5891 57.1537
6/30/94 42.8571 113.9988 49.8873
9/30/94 55.3571 123.4367 56.1875
12/30/94 42.8571 122.0285 52.7404
3/31/95 33.0357 133.0318 56.9368
6/30/95 56.2500 152.1652 66.2191
9/29/95 51.7857 170.4928 82.7410
12/29/95 67.8571 172.5729 96.4822
3/29/96 70.5357 180.6341 100.4015
6/28/96 76.7857 195.3796 97.5589
9/30/96 81.2500 202.3346 99.7575
12/31/96 92.8571 212.2722 96.7810
</TABLE>
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(1) The material in this report is not "soliciting material," is not deemed
filed with the SEC and is not to be incorporated by reference in any filing
of the Company under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, whether made before or after
the date hereof and irrespective of any general incorporation language in
any such filing.
(2) Shows the cumulative total return on investment assuming an investment of
$100 in each of the Company, the NASDAQ-US and the NASDAQ-Pharmaceutical on
January 17, 1992. The cumulative total return on the Company's stock has
been computed based on an initial price of $14.00 per share, the price at
which the Company's shares were sold in its initial public offering on
January 17, 1992.
17
<PAGE> 20
CERTAIN TRANSACTIONS
The Company has entered into certain transactions with its directors, as
described under the caption "Executive Compensation -- Compensation of
Directors."
The Company has also entered into certain agreements with its President and
Chief Executive Officer and two of its former executive officers, as described
under the caption "Executive Compensation -- Employment Agreements."
The Company's Bylaws provide that the Company will indemnify its directors
and executive officers and may indemnify its other officers, employees and other
agents to the fullest extent permitted by Delaware law. The Company is also
empowered under its Bylaws to enter into indemnification contracts with its
directors and officers and to purchase insurance on behalf of any person whom it
is required or permitted to indemnify. Pursuant to this provision, the Company
has entered into indemnity agreements with each of its directors and officers.
In addition, the Company's Certificate of Incorporation provides that to
the fullest extent permitted by Delaware law, the Company's directors will not
be liable for monetary damages for breach of the directors' fiduciary duty of
care to the Company and its stockholders. This provision in the Certificate of
Incorporation does not eliminate the duty of care, and in appropriate
circumstances equitable remedies such as an injunction or other forms of
non-monetary relief would remain available under Delaware law. Each director
will continue to be subject to liability for breach of the director's duty of
loyalty to the Company, for acts or omissions not in good faith or involving
intentional misconduct or knowing violations of law, for acts or omissions that
the director believes to be contrary to the best interests of the Company or its
stockholders, for any transaction from which the director derived an improper
personal benefit, for acts or omissions involving a reckless disregard for the
director's duty to the Company or its stockholders when the director was aware
or should have been aware of a risk of serious injury to the Company or its
stockholders, for acts or omissions that constitute an unexcused pattern of
inattention that amounts to an abdication of the director's duty to the Company
or its stockholders, for improper transactions between the director and the
Company, and for improper distributions to stockholders and loans to directors
and officers. This provision also does not affect a director's responsibilities
under any other laws, such as the federal securities laws or state or federal
environmental laws.
There is no pending litigation or proceeding involving a director, officer,
employee or other agent of the Company as to which indemnification is being
sought, nor is the Company aware of any pending or threatened
litigation that may result in claims for indemnification by any director,
officer, employee or other agent.
OTHER MATTERS
The Board of Directors knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters are properly brought
before the meeting, it is the intention of the persons named in the accompanying
proxy to vote on such matters in accordance with their best judgment.
By Order of the Board of Directors
/S/ MAJORIE T. SENNETT
Marjorie T. Sennett
Assistant Secretary
April 21, 1997
A COPY OF THE COMPANY'S ANNUAL REPORT TO THE SECURITIES AND EXCHANGE
COMMISSION ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996 IS AVAILABLE
WITHOUT CHARGE UPON WRITTEN REQUEST TO: INVESTOR RELATIONS, AMYLIN
PHARMACEUTICALS, INC., 9373 TOWNE CENTRE DRIVE, SAN DIEGO, CALIFORNIA 92121.
18
<PAGE> 21
AMYLIN PHARMACEUTICALS, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 29, 1997
The undersigned hereby appoints Richard M. Haugen, and Marjorie T.
Sennett, and each of them, as attorneys and proxies of the undersigned, with
full power of substitution, to vote all of the shares of stock of Amylin
Pharmaceuticals, Inc. (the "Company") which the undersigned may be entitled to
vote at the Annual Meeting of Stockholders of the Company to be held at the
Hyatt Regency La Jolla located at 3777 La Jolla Village Drive, San Diego,
California, 92121, on Thursday, May 29, 1997, at 3:30 p.m., local time, and at
any and all continuations, adjournments or postponements thereof, with all
powers that the undersigned would possess if personally present, upon and in
respect of the following matters and in accordance with the following
instructions, with discretionary authority as to any and all other matters that
may properly come before the meeting.
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR
ALL NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSAL 2, AS MORE SPECIFICALLY
DESCRIBED IN THE PROXY STATEMENT. IF SPECIFIC INSTRUCTIONS ARE INDICATED,
THIS PROXY WILL BE VOTED IN ACCORDANCE THEREWITH.
MANAGEMENT RECOMMENDS A VOTE FOR THE NOMINEES FOR DIRECTOR LISTED BELOW.
Proposal 1: To elect directors to hold office until the next Annual Meeting of
Stockholders and until their successors are elected.
[ ] FOR all nominees listed below (except as marked to
the contrary below).
[ ] WITHHOLD AUTHORITY to vote for all nominees listed
below.
Nominees: Howard E. Greene, Jr., Richard M. Haugen, James C. Blair, Joseph C.
Cook, James C. Gaither, Ginger L. Howard, Vaughn M. Kailian and Timothy J.
Wollaeger
TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE(S), WRITE SUCH NOMINEE(S)'
NAME(S) BELOW:
- --------------------------------------------------------------------------------
(Continued on other side)
<PAGE> 22
(Continued from other side)
MANAGEMENT RECOMMENDS A VOTE FOR PROPOSAL 2.
PROPOSAL 2: To ratify the selection of Ernst & Young LLP as independent auditors
of the Company for its fiscal year ending December 31, 1997.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
DATED_________________________, 1997
_______________________________________________
Signature(s)
Please sign exactly as your name appears hereon. If the
stock is registered in the names of two or more persons,
each should sign. Executors, administrators, trustees,
guardians and attorneys-in-fact should add their titles.
If signer is a corporation, please give full corporate
name and have a duly authorized officer sign, stating
title. If signer is a partnership, please sign in
partnership name by authorized person.
PLEASE VOTE, DATE AND PROMPTLY RETURN THIS PROXY
IN THE ENCLOSED RETURN ENVELOPE WHICH IS POSTAGE
PREPAID IF MAILED IN THE UNITED STATES.
