<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
For The Quarterly Period Ended March 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
Commission File Number: 0-19700
AMYLIN PHARMACEUTICALS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 33-0266089
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9373 Towne Centre Drive, San Diego, California 92121
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(Address of principal executive offices) (Zip code)
(619) 552-2200
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name, former address and former
fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at March 31,1998
----- ----------------------------
Common Stock, $.001 par value 32,492,478
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AMYLIN PHARMACEUTICALS, INC.
TABLE OF CONTENTS
<TABLE>
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PAGE NO.
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COVER PAGE..................................................................1
TABLE OF CONTENTS...........................................................2
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Condensed Consolidated Balance Sheets as of
March 31, 1998 and December 31, 1997...................................3
Condensed Consolidated Statements of Operations
for the three months March 31, 1998 and 1997...........................4
Condensed Consolidated Statements of Cash Flows
for the three months ended March 31, 1998 and 1997.....................5
Notes to Condensed Consolidated Financial Statements...................6
ITEM 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations..........................8
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings..............................................*
ITEM 2. Changes in Securities..........................................*
ITEM 3. Defaults upon Senior Securities................................*
ITEM 4. Submission of Matters to a Vote of
Security Holders...............................................*
ITEM 5. Other Information..............................................*
ITEM 6. Exhibits and Reports on Form 8-K..............................16
SIGNATURE..................................................................17
</TABLE>
* No information provided due to inapplicability of item.
<PAGE> 3
AMYLIN PHARMACEUTICALS, INC.
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
(unaudited) (Note)
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<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 34,991,000 $ 46,903,000
Short-term investments -- 5,845,000
Receivable from related party 528,000 966,000
Other current assets 863,000 1,298,000
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Total current assets 36,382,000 55,012,000
Property and equipment, at cost:
Equipment 15,395,000 14,707,000
Leasehold improvements 5,570,000 4,763,000
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20,965,000 19,470,000
Less accumulated depreciation and amortization (11,760,000) (10,860,000)
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9,205,000 8,610,000
Patents and other assets, net 1,818,000 1,716,000
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$ 47,405,000 $ 65,338,000
============= =============
Liabilities and Stockholders' Equity (Deficit)
Current Liabilities:
Accounts payable $ 2,067,000 $ 5,278,000
Accrued liabilities 9,436,000 10,606,000
Deferred revenue from related party 5,233,000 6,357,000
Current portion of obligation under capital
leases and equipment notes payable 1,407,000 1,468,000
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Total current liabilities 18,143,000 23,709,000
Obligation under capital leases and
equipment notes payable 3,308,000 3,047,000
Notes payable to related party, net of discount 35,358,000 33,933,000
Stockholders' equity (deficit):
Common stock, $.001 par value, 50,000,000 shares authorized,
32,492,478 and 32,394,433 issued and outstanding at
March 31, 1998 and December 31, 1997, respectively 32,000 32,000
Additional paid-in capital 215,973,000 215,246,000
Accumulated deficit (224,551,000) (209,732,000)
Deferred compensation (857,000) (893,000)
Unrealized gains/(losses)on short-term investments (1,000) (4,000)
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Total stockholders' equity (deficit) (9,404,000) 4,649,000
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$ 47,405,000 $ 65,338,000
============= =============
</TABLE>
Note: The condensed consolidated balance sheet at December 31, 1997 has been
derived from audited condensed consolidated financial statements at that date
but does not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements.
See accompanying notes.
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AMYLIN PHARMACEUTICALS, INC.
Condensed Consolidated Statements of Operations
(unaudited)
<TABLE>
<CAPTION>
Three months ended
March 31,
-------------------------------
1998 1997
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<S> <C> <C>
Revenues under collaborative agreements
from related party $ 7,086,000 $ 12,358,000
Operating Expenses:
Research and development 18,169,000 16,530,000
General and administrative 2,923,000 2,847,000
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21,092,000 19,377,000
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Loss from operations (14,006,000) (7,019,000)
Interest and other income 512,000 686,000
Interest and other expense (1,325,000) (316,000)
------------ ------------
Net loss $(14,819,000) $ (6,649,000)
============ ============
Net loss per share - basic and diluted $ (0.46) $ (0.21)
============ ============
Shares used in computing net loss per share
basic and diluted 32,438,000 32,023,000
============ ============
</TABLE>
See accompanying notes.
<PAGE> 5
AMYLIN PHARMACEUTICALS, INC.
Condensed Consolidated Statements of Cash Flows
(unaudited)
<TABLE>
<CAPTION>
Three months ended
March 31,
-------------------------------
1998 1997
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<S> <C> <C>
Operating Activities:
Net loss $(14,819,000) $ (6,649,000)
Adjustments to reconcile net loss to net
cash used for operating activities:
Depreciation and amortization 931,000 713,000
Deferred revenue from related party (1,124,000) 4,906,000
Deferred rent and other expense 0 (6,000)
Amortization of deferred compensation 202,000 130,000
Amortization of warrants issued with debt 299,000 --
Changes in assets and liabilities:
Receivable from related party 438,000 1,534,000
Other current assets 435,000 (99,000)
Accounts payable (3,211,000) (2,839,000)
Accrued liabilities (1,170,000) 158,000
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Net cash flows used for operating activities (18,019,000) (2,152,000)
Investing activities:
Decrease in short-term investments 5,847,000 11,000
Purchase of equipment and leasehold improvements (1,495,000) (2,074,000)
Increase in deposits, patents and other assets (132,000) (89,000)
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Net cash flows provided by (used for) investing activities 4,220,000 (2,152,000)
Financing activities:
Issuance of notes payable 1,771,000 1,625,000
Principal payments on capital leases and
equipment notes payable (445,000) (330,000)
Issuance of common stock, net 561,000 489,000
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Net cash flows provided by financing activities 1,887,000 1,784,000
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Decrease in cash and cash equivalents (11,911,000) (2,520,000)
Cash and cash equivalents at beginning of period 46,903,000 42,654,000
------------ ------------
Cash and cash equivalents at end of period $ 34,991,000 $ 40,134,000
============ ============
Supplemental disclosure of cash flow information:
Interest paid $ 122,000 $ 89,000
</TABLE>
See accompanying notes.
<PAGE> 6
AMYLIN PHARMACEUTICALS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
(unaudited)
1. Summary of Significant Accounting Policies
Basis of Presentation
The information contained herein has been prepared in accordance with
instructions for Form 10-Q and Article 10 of Regulation S-X. The information at
March 31, 1998, and for the three months ended March 31, 1998 and 1997, is
unaudited. In the opinion of management, the information reflects all
adjustments necessary to make the results of operations for the interim periods
a fair statement of such operations. All such adjustments are of a normal
recurring nature. Interim results are not necessarily indicative of results for
a full year. For a presentation including all disclosures required by generally
accepted accounting principles, these financial statements should be read in
conjunction with the audited financial statements included in the Company's
Annual Report to Shareholders on Form 10-K for the year ended December 31, 1997.
Per Share Data
Basic and diluted net loss per share is computed using the weighted average
number of shares outstanding during the periods.
Consolidation
The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiary, Amylin Europe Limited. All significant intercompany
transactions and balances have been eliminated.
2. Stockholders' Equity
In early May 1998, the Company distributed a supplement to its Notice of Annual
Meeting and Proxy Statement requesting that stockholders approve a partial
option-exchange program which was further restricted to non-executive officer
employees of the Company. Under the program, which was approved by the Company's
Board of Directors in late April 1998, only options held by qualifying employees
are eligible to be exchanged for new options to purchase the same number of
shares at an option price equal to the closing price of the Company's Common
Stock on the date the offers of employees to exchange such options are accepted
by the Company. Subject only to certain limited exceptions, no exchanged options
will be exercisable until June 30, 1999, at which time they will continue to
vest according to the same schedule as the old options surrendered therefor.
<PAGE> 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Except for the historical information contained herein, the discussion
in this report contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
discussed in this report due to, among other things, the results of the
Company's ongoing and planned clinical studies of pramlintide, the Company's
ability to raise additional capital to finance its business operations through
and following the first quarter of 1999, and the timing of filing for regulatory
approval of pramlintide. Additional factors that could cause or contribute to
such differences include, without limitation, those discussed in the section
entitled "Liquidity and Capital Resources" herein as well as those discussed in
the Company's Annual Report on Form 10-K for the year ended December 31, 1997
under the heading "Risk Factors".
Since its inception in September 1987, Amylin has devoted substantially
all of its resources to its research and development programs. Substantially all
of the Company's revenues to date have been derived from fees and expense
reimbursements under collaborative agreements and from interest income. Amylin
has no product sales and 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 March 31,
1998, the Company's accumulated deficit was approximately $225 million.
Since June 1995, the Company and Johnson & Johnson have been
collaborating on the development and commercialization of pramlintide, a
diabetes drug candidate that was invented and patented by the Company and which
is now in Phase III clinical trials. Through March 31, 1998 Johnson & Johnson
entities made various financial payments to the Company totaling $170 million.
In late February 1998, Johnson & Johnson provided the Company with six-months
notice of its intention to terminate their collaboration with the Company.
Johnson & Johnson's financial and other obligations under the Collaboration
Agreement will continue during the termination notice period. Based upon Johnson
& Johnson's decision, in early March 1998 Amylin initiated the process of
restructuring its operations by reducing its workforce by approximately 25% and
reducing other non-personnel related expenses. The Company believes that its
ongoing restructuring will permit the Company to finance its current operations
into the first quarter of 1999.
RESULTS OF OPERATIONS
Revenue
The Company had $7.1 million of revenue for the three months ended
March 31, 1998 as compared to $12.4 million for the same period in 1997. The
revenues recognized in 1998 and 1997 were related to the Company's Collaboration
Agreement dated as of June
<PAGE> 8
20, 1995 (the Collaboration Agreement") with LifeScan, Inc., a wholly owned
subsidiary of Johnson & Johnson (hereinafter referred to as Johnson & Johnson).
Revenues in 1998 were comprised of Johnson & Johnson's reimbursement of its
one-half share of pramlintide development expenses incurred by Amylin during the
first quarter. Revenues in the first quarter of 1997 were comprised of Johnson &
Johnson's reimbursement of its one-half share of pramlintide development
expenses incurred by Amylin and a $6.0 million option fee payment made by
Johnson & Johnson.
Operating Expenses
The Company's total operating expenses for the quarter ended March 31,
1998 increased to $21.1 million from $19.4 million for the same period in 1997.
Research and development expenses increased to $18.2 million for the
three months ended March 31, 1998 as compared to $16.5 million for the same
period in 1997. The increase in these expenditures was primarily due to the
costs of the Company's ongoing pramlintide clinical development efforts. In
addition to increased clinical trial expenses, the Company also incurred
increased personnel expenses and facilities related expenses in support of the
pramlintide program.
General and administrative expenses increased slightly to $2.9 million
for the three months ended March 31, 1998 as compared to $2.8 million for the
same period in 1997. The increase was primarily due to increased personnel
expenses.
Other Income and Expense
Interest and other income is principally comprised of interest income
from investment of the Company's cash reserves. Interest and other income was
$0.5 million for the quarter ended March 31, 1998 as compared to $0.7 million
for the same period in 1997. The decrease in interest and other income was
primarily due to lower average cash reserves available for investment for the
three months ended March 31, 1998 as compared to the same period in 1997.
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, to fund tenant
improvements to the Company's facilities, and for other working capital
purposes. In addition, in accordance with the terms of the Collaboration
Agreement, Johnson & Johnson has advanced Amylin's share of pramlintide
pre-launch marketing expenses incurred since the date of the collaboration.
Separately, in September 1997, the Company received proceeds of approximately
$30.6 million from a draw down under its Development Loan Facility with Johnson
& Johnson. The proceeds were used to fund the Company's one-half share of
development expenses for its pramlintide invention during the second through
fourth quarters of 1997. In conjunction with the borrowing under the Development
Loan
<PAGE> 9
Facility, the Company issued warrants to Johnson & Johnson to purchase 1,530,950
shares of the Company's common stock. The estimated value of the warrants will
be amortized to interest expense over the life of the Development Loan Facility.
Both the development loan and the pre-marketing loan were provided under the
terms and conditions of the Company's Loan and Security Agreement with Johnson &
Johnson and will be repaid with interest over time out of the Company's share of
future pramlintide profits, if any, subject to certain exceptions set forth in
the Loan Agreement. Interest and other expense increased to $1.3 million for the
three months ended March 31, 1998 from $0.3 million for the same period in 1997.
The increase in interest and other expense was primarily due to the interest
associated with the development loan debt, amortization of the valuation placed
on the warrants, and interest expense related to the pre-marketing loan.
Net Loss
The net loss for the quarter ended March 31, 1998 was $14.8 million
compared to a net loss for the same quarter in 1997 of $6.6 million. The
increase in the net loss was due to decreased collaborative revenues, increased
operating expenses and increased interest expense.
Amylin expects to incur substantial operating losses over the next
several years due to continuing expenses associated with its research and
development programs, including clinical development of pramlintide, preclinical
and potential clinical testing of additional 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, the Company has financed its operations primarily
through private placements of preferred stock, sales of common stock,
reimbursement of pramlintide development expenses through its collaboration with
Johnson & Johnson, and debt financings.
In June 1995, the Company entered into the Collaboration Agreement for
the development and commercialization of pramlintide, a diabetes drug candidate
which was invented and patented by the Company and is currently in Phase III
clinical trials. In conjunction with the Collaboration Agreement, the Company
simultaneously entered into a Stock Purchase Agreement with Johnson & Johnson
Development Corporation (a wholly owned subsidiary of Johnson & Johnson and
hereinafter referred to as "Johnson & Johnson")and the Loan Agreement.
In September 1997, the Company received proceeds of approximately $30.6
million from a draw down under its Development Loan Facility with Johnson &
Johnson. The proceeds were applied
<PAGE> 10
against the Company's one-half share of development expenses for pramlintide
incurred during the second through fourth quarters of 1997. The loan carries an
interest rate of 9.0%. In conjunction with the borrowing, the Company issued
warrants to Johnson & Johnson to purchase 1,530,950 shares of the Company's
common stock with a fixed exercise price of $12 per share and a 10-year exercise
period. The loan is repayable 12 months after approval of a new drug application
for pramlintide out of 50% of the Company's pramlintide profits, subject to
certain exceptions set forth in the Loan Agreement. The loan is secured by the
Company's issued patents and pending patent applications relating to amylin.
In late February 1998, Johnson & Johnson provided the Company six-months
notice of its intention to terminate their collaboration. All product rights
held by the collaboration will be returning to Amylin following the termination
of the collaboration. Johnson & Johnson's financial and other obligations under
the Collaboration Agreement will continue during the termination notice period.
Based upon Johnson & Johnson's decision, in early March 1998 Amylin initiated
the process of restructuring its operations by reducing its workforce by
approximately 25% and reducing other non-personnel related expenses. The Company
believes that the restructuring will permit the Company to finance its current
operations into the first quarter of 1999.
Prior to Johnson & Johnson's notification of its intent to terminate the
collaboration, the regulatory strategy for pramlintide was based on plans for
global filings in both type 1 and type 2 diabetes during the first half of 2000.
However, as the Phase III trials have proceeded, Amylin scientists and advisors
have concluded that available data should support an earlier filing for use by
type 1 patients. In the major pharmaceutical markets, there are about
two-million type 1 patients for whom the only important glucose-control drug is
insulin. The Company believes that Europe offers the earliest market
opportunity. Thus, Amylin aims to file its first marketing application in Europe
for type 1 diabetes during the first half of 1999 and, subject to the approval
of this indication and the results of its ongoing clinical trials, plans to
submit regulatory filings in Europe for type 2 diabetes in the first half of
2000.
The Company plans to file a New Drug Application in the United States
during the first half of 2000 for type 1 and type 2 diabetes. The acceleration
of the regulatory filing in Europe for type 1 diabetes will require a
significant dedication of resources, including financial resources, to that
program.
At March 31, 1998, the Company had $35.0 million in cash, cash
equivalents and short-term investments as compared to $52.7 million at December
31, 1997. 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 its pramlintide invention, including the
<PAGE> 11
Phase III clinical trials, for its exendin research program, and for 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,
research activities to further explore amylin biology, and research and
development of other compounds targeted at metabolic diseases. 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
availability of additional sources of funds, the establishment of collaborative
arrangements with other companies, and other factors.
As of March 31, 1998, the Company leased or sub-leased approximately
141,000 square feet of space. In association with the Company's process of
restructuring its operations, the Company intends on reducing its ongoing
facilities lease expense during 1998. The Company does not intend on renewing a
sub-lease which expires at the end of June 1998 for 14,000 square feet. The
Company also believes that it should be able to sub-lease an additional 42,000
square feet of space during 1998. At this time, the Company expects to incur
less than $1.0 million of capital expenditures in the remainder of 1998. These
expenditures will primarily be directed toward the purchase of new equipment to
support its research and development efforts and for tenant improvements.
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. The Company cash resources will be directed toward the
funding of the Phase III studies and other ancillary studies in its pramlintide
clinical program. The Company plans to continue advancing its expanded research
and development pipeline when resources permit. The Company anticipates that
pending completion of its corporate restructuring, that its existing cash,
including interest income from cash investments, and financial commitments from
Johnson & Johnson during the termination notice period, will be adequate to
satisfy the Company's capital requirements into the first quarter of 1999. The
Company believes that if the results of its two six-month European clinical
trials for pramlintide are positive it should be able to raise additional funds
through other corporate partnerships, equity offerings, debt offerings, and/or
investor partnerships. 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. In the event that Amylin is unable to obtain
additional financing, the Company will not have the financial resources to
continue research and development of pramlintide or any of the Company's other
product candidates.
<PAGE> 12
The Company cannot assure that any of its drug candidates will
successfully meet any or all of their development goals. Important technical
milestones remain to be achieved before the Company can commercialize any of its
products, and failure to achieve these milestones could seriously jeopardize the
Company's chances of success and its financial condition would be adversely
affected. The Company's future capital requirements will depend on many factors,
including continued scientific progress in its research and development
programs, the magnitude of these programs, progress with preclinical and
clinical trials, the time and costs involved in preparing regulatory submissions
and seeking regulatory approvals, the costs involved in preparing, filing,
prosecuting, maintaining, and enforcing patents, the costs of defending against
litigation, competing technological and market developments, the ability of the
Company to establish collaborative arrangements for its other research and
development programs, and the cost of manufacturing scale-up.
Prior to marketing, any drug developed by the Company must undergo
rigorous preclinical and clinical testing and an extensive regulatory approval
process mandated by the Food and Drug Administration (FDA) and equivalent
foreign authorities. Human clinical testing is now underway on the Company's
first product candidate, pramlintide. Subject to compliance with FDA and foreign
authorities regulations, the Company plans to undertake extensive clinical
testing in an effort to demonstrate optimal dose, safety, and efficacy for its
product candidates in humans. Although the Company believes the initial Phase
III clinical data about pramlintide's clinical value warrants continuing with
the Phase III development program, there can be no assurance that these studies
will confirm or improve the results of the initial Phase III studies to date or
that the data will support regulatory approval of pramlintide. Further testing
of pramlintide and the Company's other product candidates in research or
development may reveal undesirable and unintended side effects or other
characteristics that may prevent or limit their commercial use. The Company or
the 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 the
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. Products, if any, resulting from Amylin's research
and development programs are not expected to be commercially available for a
number of years.
The Company believes that patent and other proprietary rights are
important to its business, and in this regard intends to file applications as
appropriate for patents covering both its products and processes. The Company
currently owns 24 issued United States Patents and a number of other
still-pending U.S. applications, three of which have been allowed but are not
yet issued. Included within the Company's patent portfolio are issued patents
for (1) pramlintide and other amylin agonist analogues invented by Company
<PAGE> 13
researchers; (2) the amylin molecule, which was discovered by University of
Oxford researchers Tony Willis and Garth Cooper, a co-founder of the Company;
(3) amylin agonist pharmaceutical compositions, including a)compositions
containing pramlintide, b)compositions containing pramlintide and insulin,
c)compositions containing amylin, and d)compositions containing amylin and
insulin; (4) methods for treating diabetes using any amylin agonist; (5) methods
for synthesis of amylin and amylin analogues; and, (6) methods for preparing
products that include an amylin agonist in composition for parenteral
administration. Litigation, which could result in substantial cost to the
Company, may also be necessary to enforce patents issued to the Company.
Litigation, whether or not there is any basis for it, may also be required to
determine the scope and validity of third-party proprietary rights. The Company
has received letters from the University of Minnesota (the "University")and Per
Westermark ("Westermark") asserting that the Company's patented pramlintide
invention is covered by a patent (the "University Patent") which was licensed to
the Company before it issued, while it was still pending as an application,
pursuant to a License Agreement dated November 11, 1991 among the Company, the
University and Westermark (the "University License Agreement"). The University
Patent is directed to a different, tumor-derived molecule called "Insulinoma
Amyloid Polypeptide." In its letters, the University and Westermark claim that
they are entitled to 50% of any sublicense fees received by the Company from
sublicensing the University Patent to Johnson & Johnson pursuant to the
Collaboration Agreement, as well as future royalties as specified in the
University License Agreement. The Company has informed the University and
Westermark that no such sublicensing moneys have been received by the Company
from Johnson & Johnson, who is not a sublicensee under the University Patent. On
December 5, 1996, the Company filed a complaint against the University and
Westermark in the U.S. District Court for the Southern District of California
seeking a declaratory judgment that its patented pramlintide invention is not
covered by the University Patent and that no moneys are owed to the University
or Westermark. Although discussions were underway with the University and
Westermark, they did not result in any agreement regarding the litigation. The
Company's complaint was served on the University and Westermark in April 1997.
The Company believes that the University's and Westermark's assertions are
without merit and intends to defend vigorously against the claims that have now
been brought against the Company related to the foregoing. In addition, should
any of the Company's competitors have prepared and filed patent applications in
the United States which claim technology also invented by the Company, Amylin
may have to participate in interference proceedings declared by the U.S. Patent
and Trademark Office in order to determine priority of invention and, thus, the
right to a patent for the technology, all of which could result in substantial
cost to the Company to determine its rights. To date, no such interferences have
been declared. It is uncertain whether any third-party patents will require the
Company to alter its products or processes, obtain licenses, or cease certain
activities. If any licenses are required, there can be no
<PAGE> 14
assurances that the Company will be able to obtain any such license on
commercially favorable terms, if at all. Failure by the Company to obtain a
license to any technology that it may require to commercialize its products may
have a material adverse impact on the Company.
YEAR 2000 ISSUE
The Company is currently developing a plan to provide assurances that
its systems and software infrastructure are Year 2000 compliant. Key financial,
information and operation systems will be assessed and plans will be developed
to address required system modifications. Given the relatively small size of the
Company's systems and the relatively new hardware, software and operating
systems, management does not anticipate any significant delays in becoming Year
2000 compliant. However, the Company is unable to control whether the firms and
vendors that it does business with currently and in the future have systems that
are Year 2000 compliant. To the extent that these firms and vendors would be
unable to provide services and ship products, the Company's operations could be
affected. However, management does not believe that Year 2000 changes will have
a material impact on the Company's business and financial condition or results
of operations.
<PAGE> 15
ITEM 6
Exhibits and Reports Submitted on Form 8-K
(a) EXHIBITS. The exhibits listed below are filed with this report.
<TABLE>
<CAPTION>
Exhibit
Number Description
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<S> <C>
10.42 Registrant's Employee Stock Purchase Plan, as amended on
November 20, 1997.
10.43 Special Form of Incentive Stock Option Agreement under the
Option Plan of the Registrant.
(1) 10.44 Employee Phantom Stock Salary Deferral Plan (the "Deferral Plan").
(1) 10.45 Form of Deferred Compensation Agreement under the Deferral Plan.
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</TABLE>
(1) Filed as an exhibit to the Registrant's Registration Statement on Form
S-8 (No. 333-51577) or amendments thereto and incorporated herein by
reference.
(b) REPORTS ON FORM 8-K. No reports on Form 8-K were filed during the
quarter for which this report is filed.
<PAGE> 16
AMYLIN PHARMACEUTICALS, INC.
March 31, 1998
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Amylin Pharmaceuticals, Inc.
Date: May 13, 1998 By: /s/ Joseph C. Cook, Jr.
------------------------------------
Joseph C. Cook, Jr.
Chairman of the Board and
Chief Executive Officer
(on behalf of the registrant
and as the registrant's
principal financial officer)
<PAGE> 1
EXHIBIT 10.42
AMYLIN PHARMACEUTICALS, INC.
EMPLOYEE STOCK PURCHASE PLAN
Adopted November 20, 1991
Amended by the Board of Directors on May 29, 1997
Amended by the Compensation Committee on November 19, 1997
1. PURPOSE
(a) The purpose of the Employee Stock Purchase Plan (the "Plan") is
to provide a means by which employees of Amylin Pharmaceuticals, Inc., a
Delaware corporation (the "Company"), and its Affiliates, as defined in
subparagraph 1(b), which are designated as provided in subparagraph 2(b), may be
given an opportunity to purchase stock of the Company.
(b) The word "Affiliate" as used in the Plan means any parent
corporation or subsidiary corporation of the Company, as those terms are defined
in Sections 424(e) and (f), respectively, of the Internal Revenue Code of 1986,
as amended (the "Code").
(c) The Company, by means of the Plan, seeks to retain the services
of its employees, to secure and retain the services of new employees, and to
provide incentives for such persons to exert maximum efforts for the success of
the Company.
(d) The Company intends that the rights to purchase stock of the
Company granted under the Plan be considered options issued under an "employee
stock purchase plan" as that term is defined in Section 423(b) of the Code.
1. ADMINISTRATION.
(a) The Plan shall be administered by the Board of Directors (the
"Board") of the Company unless and until the Board delegates administration to a
Committee, as provided in subparagraph 2(c). Whether or not the Board has
delegated administration, the Board shall have the final power to determine all
questions of policy and expediency that may arise in the administration of the
Plan.
(b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:
(i) To determine when and how rights to purchase stock of
the Company shall be granted and the provisions of each offering of such
rights (which need not be identical).
(ii) To designate from time to time which Affiliates of the
Company shall be eligible to participate in the Plan.
(iii) To construe and interpret the Plan and rights granted
under it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan, in a manner and to the extent it
shall deem necessary or expedient to make the Plan fully effective.
1.
<PAGE> 2
(iv) To amend the Plan as provided in paragraph 13.
(v) Generally, to exercise such powers and to perform such
acts as the Board deems necessary or expedient to promote the best
interests of the Company.
(c) The Board may delegate administration of the Plan to a Committee
composed of not fewer than two (2) members of the Board (the "Committee"). If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board, subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan.
2. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of paragraph 12 relating to
adjustments upon changes in stock, the stock that may be sold pursuant to rights
granted under the Plan shall not exceed in the aggregate five hundred thousand
(500,000) shares of the Company's common stock (the "Common Stock"). If any
right granted under the Plan shall for any reason terminate without having been
exercised, the Common Stock not purchased under such right shall again become
available for the Plan.
(b) The stock subject to the Plan may be unissued shares or
reacquired shares, bought on the market or otherwise.
3. GRANT OF RIGHTS; OFFERING.
The Board or the Committee may from time to time grant or provide
for the grant of rights to purchase Common Stock of the Company under the Plan
to eligible employees (an "Offering") on a date or dates (the "Offering
Date(s)") selected by the Board or the Committee. Each Offering shall be in such
form and shall contain such terms and conditions as the Board or the Committee
shall deem appropriate. If an employee has more than one right outstanding under
the Plan, unless he or she otherwise indicates in agreements or notices
delivered hereunder: (1) each agreement or notice delivered by that employee
will be deemed to apply to all of his or her rights under the Plan, and (2) a
right with a lower exercise price (or an earlier-granted right, if two rights
have identical exercise prices), will be exercised to the fullest possible
extent before a right with a higher exercise price (or a later-granted right, if
two rights have identical exercise prices) will be exercised. The provisions of
separate Offerings need not be identical, but each Offering shall include
(through incorporation of the provisions of this Plan by reference in the
Offering or otherwise) the substance of the provisions contained in paragraphs 5
through 8, inclusive.
4. ELIGIBILITY.
(a) Rights may be granted only to employees of the Company or, as
the Board or the Committee may designate as provided in subparagraph 2(b), to
employees of any Affiliate of the Company. Except as provided in subparagraph
5(b), an employee of the Company or any Affiliate shall not be eligible to be
granted rights under the Plan, unless, on the Offering Date, such employee has
been in the employ of the Company or any Affiliate for such continuous
2.
<PAGE> 3
period preceding such grant as the Board or the Committee may require, but in no
event shall the required period of continuous employment be equal to or greater
than two (2) years. In addition, unless otherwise determined by the Board or the
Committee and set forth in the terms of the applicable Offering, no employee of
the Company or any Affiliate shall be eligible to be granted rights under the
Plan, unless, on the Offering Date, such employee's customary employment with
the Company or such Affiliate is at least twenty (20) hours per week and at
least five (5) months per calendar year.
(b) The Board or the Committee may provide that, each person who,
during the course of an Offering, first becomes an eligible employee of the
Company or designated Affiliate will, on a date or dates specified in the
Offering which coincides with the day on which such person becomes an eligible
employee or occurs thereafter, receive a right under that Offering, which right
shall thereafter be deemed to be a part of that Offering. Such right shall have
the same characteristics as any rights originally granted under that Offering,
as described herein, except that:
(i) the date on which such right is granted shall be the
"Offering Date" of such right for all purposes, including determination of
the exercise price of such right;
(ii) the Purchase Period (as defined below) for such right
shall begin on its Offering Date and end coincident with the end of such
Offering; and
(iii) the Board or the Committee may provide that if such
person first becomes an eligible employee within a specified period of time
before the end of the Purchase Period (as defined below) for such Offering, he
or she will not receive any right under that Offering.
(c) No employee shall be eligible for the grant of any rights under
the Plan if, immediately after any such rights are granted, such employee owns
stock possessing five percent (5%) or more of the total combined voting power or
value of all classes of stock of the Company or of any Affiliate. For purposes
of this subparagraph 5(c), the rules of Section 424(d) of the Code shall apply
in determining the stock ownership of any employee, and stock which such
employee may purchase under all outstanding rights and options shall be treated
as stock owned by such employee.
(d) An eligible employee may be granted rights under the Plan only
if such rights, together with any other rights granted under "employee stock
purchase plans" of the Company and any Affiliates, as specified by Section
423(b)(8) of the Code, do not permit such employee's rights to purchase stock of
the Company or any Affiliate to accrue at a rate which exceeds twenty-five
thousand dollars ($25,000) of fair market value of such stock (determined at the
time such rights are granted) for each calendar year in which such rights are
outstanding at any time.
(e) Officers of the Company and any designated Affiliate shall be
eligible to participate in Offerings under the Plan, provided, however, that the
Board may provide in an Offering that certain employees who are highly
compensated employees within the meaning of Section 423(b)(4)(D) of the Code
shall not be eligible to participate.
5. RIGHTS; PURCHASE PRICE.
(a) On each Offering Date, each eligible employee, pursuant to an
Offering made under the Plan, shall be granted the right to purchase up to the
number of shares of Common
3.
<PAGE> 4
Stock of the Company purchasable with a percentage designated by the Board or
the Committee not exceeding fifteen percent (15%) of such employee's Earnings
(as defined in Section 7(a)) during the period which begins on the Offering Date
(or such later date as the Board or the Committee determines for a particular
Offering) and ends on the date stated in the Offering, which date shall be no
more than twenty-seven (27) months after the Offering Date (the "Purchase
Period"). In connection with each Offering made under this Plan, the Board or
the Committee shall specify a maximum number of shares which may be purchased by
any employee as well as a maximum aggregate number of shares which may be
purchased by all eligible employees pursuant to such Offering. In addition, in
connection with each Offering which contains more than one Exercise Date (as
defined in the Offering), the Board or the Committee may specify a maximum
aggregate number of shares which may be purchased by all eligible employees on
any given Exercise Date under the Offering. If the aggregate purchase of shares
upon exercise of rights granted under the Offering would exceed any such maximum
aggregate number, the Board or the Committee shall make a pro rata allocation of
the shares available in as nearly a uniform manner as shall be practicable and
as it shall deem to be equitable.
(b) The purchase price of stock acquired pursuant to rights granted
under the Plan shall be not less than the lesser of:
(i) an amount equal to eighty-five percent (85%) of the
fair market value of the stock on the Offering Date; or
(ii) an amount equal to eighty-five percent (85%) of the
fair market value of the stock on the Exercise Date.
6. PARTICIPATION; WITHDRAWAL; TERMINATION.
(a) An eligible employee may become a participant in an Offering by
delivering a participation agreement to the Company within the time specified in
the Offering, in such form as the Company provides. Each such agreement shall
authorize payroll deductions of up to the maximum percentage specified by the
Board or the Committee of such employee's Earnings during the Accounting Period
(as defined in subparagraph 8(a)). "Earnings" is defined as the total
compensation paid to an employee, including all salary, wages (including amounts
elected to be deferred by the employee, that would otherwise have been paid,
under any cash or deferred arrangement established by the Company), overtime
pay, commissions, bonuses, and other remuneration paid directly to the employee,
but excluding profit sharing, the cost of employee benefits paid for by the
Company, education or tuition reimbursements, imputed income arising under any
Company group insurance or benefit program, traveling expenses, business and
moving expense reimbursements, income received in connection with stock options,
contributions made by the Company under any employee benefit plan, and similar
items of compensation, or such other inclusions or exclusions as the Board or
the Committee may determine for one or more specified Offerings. The payroll
deductions made for each participant shall be credited to an account for such
participant under the Plan and shall be deposited with the general funds of the
Company. A participant may reduce (including to zero), increase or begin such
payroll deductions after the beginning of any Purchase Period only as provided
for in the Offering. A participant may make additional payments into his or her
account only if specifically provided for in the Offering and only if the
participant has not had the maximum amount withheld during the Purchase Period.
(b) At any time during a Purchase Period a participant may terminate
his or her
4.
<PAGE> 5
payroll deductions under the Plan and withdraw from the Offering by delivering
to the Company a notice of withdrawal in such form as the Company provides. Such
withdrawal may be elected at any time prior to the end of the Purchase Period
except as provided by the Board or the Committee in the Offering. Upon such
withdrawal from the Offering by a participant, the Company shall distribute to
such participant all of his or her accumulated payroll deductions (reduced to
the extent, if any, such deductions have been used to acquire stock for the
participant) under the Offering, without interest, and such participant's
interest in that Offering shall be automatically terminated. A participant's
withdrawal from an Offering will have no effect upon such participant's
eligibility to participate in any other Offerings under the Plan but such
participant will be required to deliver a new participation agreement in order
to participate in subsequent Offerings under the Plan.
(c) Rights granted pursuant to any Offering under the Plan shall
terminate immediately upon cessation of any participating employee's employment
with the Company and any designated Affiliate, for any reason, and the Company
shall distribute to such terminated employee all of his or her accumulated
payroll deductions (reduced to the extent, if any, such deductions have been
used to acquire stock for the terminated employee), under the Offering, without
interest.
(d) Rights granted under the Plan shall not be transferable, and
shall be exercisable only by the person to whom such rights are granted.
7. EXERCISE.
(a) On each exercise date, as defined in the relevant Offering (an
"Exercise Date"), each participant's accumulated payroll deductions for the
Accounting Period and other additional payments specifically provided for in the
Offering (without any increase for interest) will be applied to the purchase of
whole shares of stock of the Company, up to the maximum number of shares
permitted pursuant to the terms of the Plan and the applicable Offering, at the
purchase price specified in the Offering. For purposes of this subparagraph
8(a), "Accounting Period" shall mean (i) the payroll period ending no later than
five (5) days after the immediately preceding Exercise Date and (2) each
subsequent payroll period which ends before the relevent Exercise Date. No
fractional shares shall be issued upon the exercise of rights granted under the
Plan. The amount, if any, of accumulated payroll deductions remaining in each
participant's account after the purchase of shares which is less than the amount
required to purchase one share of stock on the final Exercise Date of an
Offering shall be held in each such participant's account for the purchase of
shares under the next Offering under the Plan, unless such participant withdraws
from such next Offering, as provided in subparagraph 7(b), or is no longer
eligible to be granted rights under the Plan, as provided in paragraph 5, in
which case such amount shall be distributed to the participant after said final
Exercise Date, without interest. The amount, if any, of accumulated payroll
deductions remaining in any participant's account after the purchase of shares
which is equal to the amount required to purchase whole shares of stock on the
final Exercise Date of an Offering shall be distributed in full to the
participant after such Exercise Date, without interest.
(b) No rights granted under the Plan may be exercised to any extent
unless the Plan (including rights granted thereunder) is covered by an effective
registration statement pursuant to the Securities Act of 1933, as amended (the
"Securities Act"). If on an Exercise Date of any Offering hereunder the Plan is
not so registered, no rights granted under the Plan or any Offering shall be
exercised on said Exercise Date and the Exercise Date shall be delayed until the
Plan is
5.
<PAGE> 6
subject to such an effective registration statement, except that the
Exercise Date shall not be delayed more than two (2) months and the Exercise
Date shall in no event be more than twenty-seven (27) months from the Offering
Date. If on the Exercise Date of any Offering hereunder, as delayed to the
maximum extent permissible, the Plan is not registered, no rights granted under
the Plan or any Offering shall be exercised and all payroll deductions
accumulated during the purchase period (reduced to the extent, if any, such
deductions have been used to acquire stock) shall be distributed to the
participants, without interest.
8. COVENANTS OF THE COMPANY.
(a) During the terms of the rights granted under the Plan, the
Company shall keep available at all times the number of shares of stock required
to satisfy such rights.
(b) The Company shall seek to obtain from each regulatory commission
or agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of stock upon exercise of the rights granted under the
Plan. If, after reasonable efforts, the Company is unable to obtain from any
such regulatory commission or agency the authority which counsel for the Company
deems necessary for the lawful issuance and sale of stock under the Plan, the
Company shall be relieved from any liability for failure to issue and sell stock
upon exercise of such rights unless and until such authority is obtained.
9. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to rights granted under the
Plan shall constitute general funds of the Company.
10. RIGHTS AS A STOCKHOLDER.
A participant shall not be deemed to be the holder of, or to have
any of the rights of a holder with respect to, any shares subject to rights
granted under the Plan unless and until certificates representing such shares
shall have been issued.
11. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or
subject to any rights granted under the Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Company), the Plan and outstanding rights will
be appropriately adjusted in the class(es) and maximum number of shares subject
to the Plan and the class(es) and number of shares and price per share of stock
subject to outstanding rights.
(b) In the event of: (1) a dissolution or liquidation of the
Company; (2) a merger or consolidation in which the Company is not the surviving
corporation; (3) 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 (4) any other capital
reorganization in which more than fifty percent (50%) of the shares of the
Company entitled to vote are exchanged, then, as determined by the Board in its
sole discretion (i) any surviving corporation may assume outstanding rights or
substitute similar rights for those under the Plan,
6.
<PAGE> 7
(ii) such rights may continue in full force and effect, or (iii) participants'
accumulated payroll deductions may be used to purchase Common Stock immediately
prior to the transaction described above and the participants' rights under the
ongoing Offering terminated.
12. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may amend the
Plan. However, except as provided in paragraph 12 relating to adjustments upon
changes in stock, no amendment shall be effective unless approved by the
stockholders of the Company within twelve (12) months before or after the
adoption of the amendment, where the amendment will:
(i) Increase the number of shares reserved for rights
under the Plan;
(ii) Modify the provisions as to eligibility for
participation in the Plan (to the extent such modification requires stockholder
approval in order for the Plan to obtain employee stock purchase plan treatment
under Section 423 of the Code; or
(iii) Modify the Plan in any other way if such modification
requires stockholder approval in order for the Plan to obtain employee stock
purchase plan treatment under Section 423 of the Code.
It is expressly contemplated that the Board may amend the Plan in any respect
the Board deems necessary or advisable to provide eligible employees with the
maximum benefits provided or to be provided under the provisions of the Code and
the regulations promulgated thereunder relating to employee stock purchase plans
and/or to bring the Plan and/or rights granted under it into compliance
therewith.
(b) Rights and obligations under any rights granted before amendment of
the Plan shall not be impaired by any amendment of the Plan, except with the
consent of the person to whom such rights were granted or except as necessary to
comply with any laws or governmental regulation.
13. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time. Unless
sooner terminated, the Plan shall terminate on November 19, 2001. No rights may
be granted under the Plan while the Plan is suspended or after it is terminated.
(b) Rights and obligations under any rights granted while the Plan
is in effect shall not be impaired by suspension or termination of the Plan,
except with the consent of the person to whom such rights were granted or except
as necessary to comply with any laws or governmental regulation.
14. EFFECTIVE DATE OF PLAN.
The Plan shall become effective as determined by the Board, but no
rights granted under the Plan shall be exercised unless and until the Plan has
been approved by the stockholders of the Company.
7.
<PAGE> 1
EXHIBIT 10.43
INCENTIVE STOCK OPTION
_____________________, Optionee:
Amylin Pharmaceuticals, Inc. (the "Company"), pursuant to its 1991
Stock Option Plan (the "Plan") has this day granted to you, the optionee named
above, an option to purchase shares of the common stock of the Company ("Common
Stock"). This option is intended to qualify as an "incentive stock option"
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code").
The details of your option are as follows:
1. The total number of shares of Common Stock subject to this option is
_________________ (_________). Subject to the limitations contained herein, this
option shall become exercisable ("vest") according to the following vesting
schedule:
If you continue as an employee of the Company or an affiliate (as
defined in the Plan) through June 30, 1999 (the "Initial Vesting Date") this
option shall become exercisable on the Initial Vesting Date with respect to
one-half (1/2) of the total number of shares subject to this option;
Thereafter, for as long as you continue as an employee of the
Company or an affiliate, the balance of the shares subject to this option will
become exercisable in equal daily installments for each day of continuous
employment occurring after the Initial Vesting Date through the date that is
four years from the date this option was granted.
Notwithstanding the foregoing paragraphs, in the event of the
occurrence of a "Change in Control" (defined below) of the Company, then
immediately prior to the effective date of such Change in Control, the foregoing
vesting schedule shall be accelerated and this option shall become fully vested.
For purposes of the preceding paragraph, "Change in Control" is defined as any
of the following: (i) any merger, acquisition, consolidation, reorganization or
other similar transaction pursuant to which the shareholders of the Company
immediately prior to such merger, 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 all or substantially all of the assets of the
Company.
2. (a) The exercise price of this option is ______________ ($____) per
share, being not less than the fair market value of the Common Stock on the date
of grant of this option.
(b) Payment of the exercise price per share is due in
full upon exercise of all or any part of each installment which has accrued
to you. You may elect, to the extent permitted by applicable statutes and
regulations, to make payment of the exercise price under one of the following
alternatives:
i. Payment of the exercise price per share in cash
(including check) at the time of exercise;
ii. Payment pursuant to a program developed under
Regulation T as promulgated by the Federal Reserve Board which results in the
receipt of cash (or check) by the Company prior to the issuance of Common Stock;
iii. Provided that at the time of exercise the Company's
Common Stock is publicly traded and quoted regularly in the Wall
Street Journal, payment by delivery of already-owned shares of Common Stock of
the Company, held for the period required to avoid a charge to the Company's
reported earnings, and owned free and clear of any liens, claims, encumbrances
or security interests, which Common Stock of the Company shall be valued at its
fair market value (determined in accordance with the Plan) on the date of
exercise;
<PAGE> 2
iv. Payment by a combination of the methods of payment
permitted by subparagraph 2(b)(i) through 2(b)(iii) above.
3. The minimum number of shares with respect to which this option may
be exercised at any one time is one hundred (100), except that this minimum
shall not apply with respect to the final exercise of this option. In no event
may this option be exercised for any number of shares which would require the
issuance of anything other than whole shares.
4. Notwithstanding anything to the contrary contained herein, this
option may not be exercised unless the shares issuable upon exercise of this
option are then registered under the Act or , if such shares are not then so
registered, the Company has determined that such exercise and issuance would be
exempt from the registration requirements of the Act.
5. The term of this option commences on the date hereof and, unless
sooner terminated as set forth below or in the Plan, terminates on ___________
(which date shall be no more than ten (10) years from the date this option is
granted). In no event may this option be exercised on or after the date on which
it terminates. This option shall terminate prior to the expiration of its term
as follows: three (3) months after the termination of your employment with the
Company or an affiliate of the Company (as defined in the Plan) for any reason
or for no reason unless:
(a) such termination of employment is due to
your permanent and total disability (within the meaning of Section 422(c)(6) of
the Code), in which event the option shall terminate on the earlier of the
termination date set forth above or one (1) year following such termination of
employment; or
(b) such termination of employment is due to
your death, in which event the option shall terminate on the earlier of the
termination date set forth above or eighteen (18) months after your death; or
(c) during any part of such three (3) month
period the option is not exercisable solely because of the condition set forth
in paragraph 4 above, in which event the option shall not terminate until the
earlier of the termination date set forth above or until it shall have been
exercisable for an aggregate period of three (3) months after the termination of
employment; or
(d) exercise of the option within three (3)
months after termination of your employment with the Company or with an
affiliate would result in liability under section 16(b) of the Securities
Exchange Act of 1934, in which case the option will terminate on the earlier of
the termination date set forth above, the tenth (10th) day after the last date
upon which exercise would result in such liability or six (6) months and ten
(10) days after the termination of your employment with the Company or an
affiliate.
However, this option may be exercised following
termination of employment only as to that number of shares as to which it was
exercisable on the date of termination of employment under the provisions of
paragraph I of this option.
6. (a) This option may be exercised, to the extent specified above, by
delivering a notice of exercise (in a form designated by the Company) together
with the exercise price to the Secretary of the Company, or to such other person
as the Company may designate, during regular business hours, together with such
additional documents as the Company may then require pursuant to subparagraph
6(f) of the plan.
<PAGE> 3
(b) By exercising this option you agree that:
(i) the Company may require you to
enter an arrangement providing for the payment by you to the Company of any tax
withholding obligation of the Company arising by reason of the exercise of this
option; the lapse of any substantial risk of forfeiture to which the shares are
subject at the time of exercise; or the disposition of shares acquired upon such
exercise; and
(ii) you will notify the Company in
writing within fifteen (15) days after the date of any disposition of any of the
shares of the Common Stock issued upon exercise of this option that occurs
within two (2) years after the date of this option grant or within one (1) year
after such shares of Common Stock are transferred upon exercise of this option.
7. This option is not transferable, except by will or by the laws of
descent and distribution, and is exercisable during your life only by you.
8. This option is not an employment contract and nothing in this option
shall be deemed to create in any way whatsoever any obligation on your part to
continue in the employ of the Company, or of the Company to continue your
employment with the Company.
9. Any notices provided for in this option or the Plan shall be given
in writing and shall be deemed effectively given upon receipt or, in the case of
notices delivered by the Company to you, five (5) days after deposit in the
United States mail, postage prepaid, addressed to you at the address specified
below or at such other address as you hereafter designate by written notice to
the Company.
10. This option is subject to all the provisions of the Plan, a copy of
which is attached hereto and its provisions are hereby made a part of this
option, including without limitation the provisions of paragraph 5 of the Plan
relating to option provisions, and is further subject to all interpretations,
amendments, rules and regulations which may from time to time be promulgated and
adopted pursuant to the Plan. In the event of any conflict between the
provisions of this option and those of the Plan, the provisions of the Plan
shall control.
Dated: ___________, 1998
Very Truly Yours,
AMYLIN PHARMACEUTICALS, INC.
By:_____________________________
Duly authorized on behalf of the
Board of Directors
<PAGE> 4
The undersigned:
Acknowledges receipt of the foregoing option and the attachments referenced
therein and understands that all rights and liabilities with respect to this
option are set forth in the option and the Plan; and
Acknowledges that as of the date of grant of this option, it sets forth the
entire understanding between the undersigned optionee and the Company and its
affiliates regarding the acquisition of stock in the Company and supersedes all
prior oral and written agreements on that subject with the exception of the
options previously granted and delivered to the undersigned, if any, under the
Stock Option Plans of the Company and the rights of the undersigned under the
1992 Employee Stock Purchase Plan of the Company and the agreements to purchase
restricted stock, if any, made prior to the Company's Initial Public Offering.
___________________________________
Optionee
Address: ________________________
________________________
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AND THE CONDENSED CONSOLIDATED STATEMENT OF
OPERATIONS AS FILED AS PART OF THE QUARTERLY REPORT ON FORM 10-Q AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH QUARTERLY REPORT ON FORM 10-Q.
</LEGEND>
<S> <C>
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<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
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<PP&E> 20,965,000
<DEPRECIATION> 11,760,000
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<BONDS> 0
0
0
<COMMON> 32,000
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<TOTAL-LIABILITY-AND-EQUITY> 47,405,000
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<OTHER-EXPENSES> 21,092,000
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<INCOME-TAX> 0
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<NET-INCOME> (14,819,000)
<EPS-PRIMARY> (0.46)
<EPS-DILUTED> (0.46)
</TABLE>
