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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM __________ TO __________ .
COMMISSION FILE NO. 0-19700
AMYLIN PHARMACEUTICALS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 33-0266089
(STATE OR OTHER JURISDICTION OF INCORPORATION OR (I.R.S. EMPLOYER IDENTIFICATION NO.)
ORGANIZATION)
9373 TOWNE CENTRE DRIVE, SAN DIEGO, CALIFORNIA 92121
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
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REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (619) 552-2200
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON STOCK, $.001 PAR VALUE
(TITLE OF CLASS)
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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of Registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates of
the Registrant as of March 1, 1999 was $22,796,666.*
The number of shares outstanding of the Registrant's Common Stock was
36,797,806 as of March 1, 1999.
DOCUMENTS INCORPORATED BY REFERENCE
Registrant's Definitive Proxy Statement to be filed with the Securities and
Exchange Commission (the "Commission") pursuant to Regulation 14A in connection
with the 1999 Annual Meeting of Stockholders to be held on May 24, 1999 (the
"1999 Annual Meeting") is incorporated herein by reference into Part III of this
Report.
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* Excludes the Common Stock held by executive officers, directors and
stockholders whose beneficial ownership exceeds 5% of the Common Stock
outstanding at March 1, 1999. Exclusion of such shares should not be construed
to indicate that any such person possesses the power, direct or indirect, to
direct or cause the direction of the management or policies of the Registrant
or that such person is controlled by or under common control with the
Registrant.
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This Annual Report on Form 10-K contains certain forward-looking statements
that involve risks and uncertainties. The actual future results for Amylin
Pharmaceuticals, Inc. ("Amylin" or the "Company") may differ materially from
those discussed here. Additional information concerning factors that could cause
or contribute to such differences can be found in this Annual Report on Form
10-K in Part I, Item 1 under the caption "Certain Risk Factors Related to the
Company's Business," Part II, Item 7 entitled "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and elsewhere
throughout this Annual Report.
PART I
ITEM 1. BUSINESS
Amylin Pharmaceuticals, Inc. ("Amylin" or the "Company") is an early
development pharmaceutical company focused on metabolic disorders, and
specializing in preclinical characterization of lead molecules and demonstration
of proof of principle in humans. The Company has pioneered research of the
hormone amylin and is developing pramlintide, its patented synthetic analog of
human amylin, for the treatment of diabetes. The Company has previously
performed various Phase 1, 2 and 3 studies of pramlintide. Currently, two one-
year US Phase 3 clinical studies of pramlintide in type 1 and insulin-using type
2 diabetes are ongoing.
The Company is also conducting Phase 1-2 clinical studies of AC2993
(synthetic exendin-4), an investigational drug for type 2 diabetes and related
metabolic disorders. Exendin-4 is a naturally occurring peptide initially
derived from the salivary secretions of the Gila monster.
BACKGROUND -- AMYLIN THE HORMONE
Amylin is a pancreatic beta cell hormone that was discovered at Oxford
University and reported in 1987. Amylin is stored and secreted with the hormone
insulin. Numerous studies have shown that amylin and insulin work together with
glucagon to maintain normal glucose concentrations.
In people without diabetes, amylin concentrations increase after meals. In
people with type 1 diabetes, amylin concentrations are low or undetectable under
fasting conditions, and do not increase after meals. In people with type 2
diabetes, fasting amylin concentrations are comparable to those seen in people
without diabetes; however, the post-meal responses tend to be decreased and, in
patients who have progressed to insulin therapy, virtually absent. The Company
is carrying out clinical studies to better characterize amylin deficiency in
type 1 diabetes mellitus, and the deficient post-meal response in type 2
diabetes, and their contribution to impaired glucose control.
BACKGROUND -- DIABETES
Diabetes is a major global health problem, and is the fourth- to
fifth-leading cause of death in most developed countries. The American Diabetes
Association (ADA) estimates that the total annual economic cost of diabetes in
the US in 1997 was $98 billion. The 1997 per capita cost of health care for
people with diabetes was $10,071, nearly four times that for people without
diabetes. In 1997, an estimated 124 million people worldwide had
diabetes -- about 2% of the world's population. Of these, approximately 3.5
million had type 1 diabetes, and 120.5 million had type 2 diabetes.
Type 1 diabetes is an autoimmune disease that destroys the ability of the
pancreas to produce insulin, and most often is diagnosed in children and young
adults. Lifelong daily insulin therapy is essential for people with type 1
diabetes. Type 2 diabetes is a complex metabolic disorder resulting from the
body's inability to make enough insulin or to properly use available insulin.
Diet and exercise therapy, in addition to a number of oral medications that
either stimulate insulin production or improve the use of insulin by target
tissues (improve insulin sensitivity), are used to manage type 2 diabetes.
However, no single therapeutic agent is currently able to control the disease
over its full course (from impaired glucose tolerance stages to insulin
dependency). As the disease progresses, treatments often become ineffective and
must be supplemented or replaced. Insulin becomes part of the treatment regimen
for many people with type 2 diabetes when oral therapies become
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ineffective. Multiple daily insulin injections are often added to the treatment
regimen when desired glucose control goals cannot be achieved with other
available therapies.
In both type 1 and type 2 diabetes, a lack of control of glucose
concentrations has been shown to result in long-term complications. Effective
treatments for diabetes target the control of blood glucose to limit
microvascular complications such as retinopathy (eye damage), nephropathy
(kidney damage), neuropathy (nerve damage), and peripheral vascular disease.
Other metabolic effects resulting from diabetes and associated co-morbidities
such as hypertension and obesity may result in macrovascular complications such
as abnormal fat metabolism (dyslipidemia) and cardiovascular disease. It is
these complications and co-morbidities that lead to increased morbidity and
mortality compared with the general population. Landmark studies in type 1
(Diabetes Control and Complications Trial [DCCT], 1993) and type 2 (United
Kingdom Prospective Diabetes Study [UKPDS], 1998) diabetes have shown that
improved glucose control -- as measured by any improvement in HbA1c (glycated
hemoglobin) -- can reduce the incidence of long-term complications. HbA1c
measurement is a recognized indicator of average blood glucose concentration
over the three- to four-month period before testing. Lower HbA1c values indicate
better blood glucose control; HbA1c values in people without diabetes are
usually less than 6%. American Diabetes Association (ADA) Clinical Practice
Recommendations (1999) suggest that people with diabetes should aim for an HbA1c
value that is lower than 7%, and should discuss a possible therapy change with
their diabetes care management team if their HbA1c value exceeds 8%.
Aggressive use of insulin and other available therapies to achieve target
glucose control can be associated with an increased risk of hypoglycemia (low
blood glucose concentrations) and weight gain. Using currently available
therapies, less than 10% of people with diagnosed diabetes in the US are able to
achieve the ADA's recommended glucose control targets, indicating a clear
therapeutic need. Further, there is a pressing need to develop new treatment
strategies that improve the overall metabolic profile of patients with diabetes
and reduce the risk of microvascular and macrovascular complications without
increased morbidity.
PRAMLINTIDE
PROGRAM OVERVIEW
Pramlintide is a synthetic analog of the human hormone amylin. From June
1995 until August 1998, Amylin collaborated with Johnson & Johnson on the
development of pramlintide for commercialization.
The patient population focus for pramlintide development is people with
diabetes whose therapy includes multiple daily insulin injections. The Company
estimates that this group comprises 5.2 million people in North America and
Europe, based on published and proprietary estimates of people who use multiple
daily insulin injections. Within this population group, the Company believes
that approximately 1.9 million people (40%) have type 1 diabetes, and the
remaining 3.3 million (60%) have type 2 diabetes.
The Company is performing extensive clinical trials aimed at understanding
the effects of pramlintide in people with diabetes. Over 1,400 subjects,
including people with either type 1 diabetes or type 2 diabetes using insulin,
as well as healthy volunteers, have been enrolled in 34 completed Phase 1 and
Phase 2 studies. These studies investigated the short-term safety and
tolerability of pramlintide, mechanisms of action, interactions with insulin and
oral drugs, and effects on short- and medium-term measures of glucose control.
In these studies, pramlintide has been shown to reduce post-meal glucose
variation in people with type 1 or type 2 diabetes who use insulin. Pramlintide
has also been shown to significantly reduce average 24-hour plasma glucose
concentrations, and to significantly reduce plasma fructosamine in these
populations. These improvements in glucose control were shown without an
increase in the incidence of hypoglycemic events or clinically important safety
issues. The Phase 3 program was designed to evaluate the safety and efficacy of
administration of pramlintide for 6 months, 1 year, or longer in over 3,500
people. This program comprises six double-blind, placebo-controlled studies (two
in type 1 diabetes in the US, two in type 2 diabetes in the US, one each in type
1 and type 2 diabetes in Europe/Canada), and two longer term open-label, safety
studies. In addition, the Company sponsored certain open-label extensions of the
Phase 3 placebo-controlled studies to assess longer-term effects of pramlintide.
To date, the Company has reported results from seven Phase 3 studies.
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Initial US Phase 3 Results
An initial Phase 3 clinical study was conducted in the US to explore the
one-year effects of pramlintide administration (in addition to insulin) on
metabolic control in people with type 1 diabetes. These results were reported in
August 1997. At one year, pramlintide recipients achieved a sustained,
statistically significant decrease in the mean reduction of HbA1c from baseline
compared with those who received insulin alone (-0.4% for pramlintide; -0.1%
insulin only) without an increase in the frequency of patient-reported severe
hypoglycemic events. In addition, patients receiving pramlintide achieved a
significant weight loss. Those receiving only insulin gained weight, a common
result of intensifying insulin therapy. A positive effect on the lipid profiles
of patients receiving pramlintide was also observed.
An initial Phase 3 study in insulin-using type 2 patients was also
conducted in the US to explore the one-year effects of the addition of
pramlintide to existing insulin regimens on metabolic control in those patients.
The results of this study were also reported in August 1997. The mean change
from baseline in HbA1c concentrations for patients receiving pramlintide 75 or
150 (LOGO)g were significantly reduced at 13 and 26 weeks, compared with placebo
recipients. A reduction in HbA1c was maintained over the one-year study, but due
in part to insufficient patient numbers, did not achieve statistical
significance compared with placebo at one year. Pramlintide administration
resulted in a statistically significant weight loss compared with those
receiving insulin alone.
Amylin interpreted the outcomes of these first two Phase 3 studies as
positive in type 1 diabetes and encouraging in insulin-using type 2 diabetes.
These studies also extended pramlintide's excellent safety and tolerability
profile to dosing of up to 1 year. The most common drug-related side effect in
the studies was initial transient nausea, which in most patients was relatively
mild and usually dissipated during the initial 4 to 8 weeks of treatment; only
at the highest drug dose in the type 2 study was the patient dropout rate
significantly higher than the dropout rate in the placebo group.
European/Canadian Phase 3 Results
In October 1998, the Company announced results from two six-month Phase 3
European/Canadian studies of pramlintide, one in type 1 diabetes and one in
insulin-using type 2 diabetes. In the study involving people with type 1
diabetes, the average change in HbA1c after 26 weeks of pramlintide treatment
compared with those who received insulin alone was -0.2% for the 90 (LOGO)g two
or three times daily dosage groups, and -0.3% for the 60 (LOGO)g three times
daily dosage group. In two of these dosage arms (90 (LOGO)g two times daily and
60 (LOGO)g three times daily), the effect on HbA1c was statistically different
from placebo. Unexpectedly, the effect on HbA1c observed in the group who
received the highest pramlintide dosage (90 (LOGO)g three times a day) did not
reach statistical significance. This highest dosage group had been designated in
advance as the primary arm for statistical analysis for regulatory purposes. As
a consequence, under the procedure specified in the statistical analysis plan,
the results from the primary pramlintide dosage arm alone did not meet the
regulatory requirements to support a new drug application (NDA). The magnitude
of these results is similar to the results reported from the initial Phase 3
study of pramlintide announced in August 1997 and described above.
In the study involving people with type 2 diabetes, the average change in
HbA1c after 26 weeks of pramlintide treatment compared with those who received
insulin alone was -0.2% for the 90 (LOGO)g two times daily dosage group, -0.3
for the 90 (LOGO)g three times daily dosage group, and -0.3% for the 120 (LOGO)g
two times daily dosage group. Two of these dosage groups, including the highest
dosage (90 (LOGO)g three times a day), did not achieve statistical significance.
A third dosage group (120 (LOGO)g two times daily) was statistically different
from placebo. As with the type 1 study, the highest dosage group had been
designated in advance as the primary arm and did not achieve statistical
significance. Thus, the regulatory requirements for an NDA were not met.
These October 1998 results delayed the Company's regulatory filing
timelines for pramlintide. In an effort to concentrate its resources on the
ongoing pramlintide and AC2993 (synthetic exendin-4) development programs, the
Company also reduced its work force by approximately 75% and significantly
reduced operating expenses.
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Additional Analyses of First Four Phase 3 Studies
The Company has conducted further analyses of data from the four completed
Phase 3 studies of pramlintide (the two 1-year US studies completed in 1997 and
the two six-month European/Canadian studies completed in 1998). These additional
analyses have led to a method that appears to identify those patients who had
lower HbA1c concentrations on average than the population as a whole at study
end. In these four studies, approximately 50% of all participants (with either
type 1 diabetes or insulin-using type 2 diabetes) who received pramlintide
achieved a 4-week HbA1c reduction that was greater than or equal to 0.5%. These
participants, designated as "responders" by the Company, achieved average HbA1c
reductions that ranged from 0.6 to 1.1% at 6 months. In the type 1 diabetes
studies, those responders who received the well-tolerated dosages of 30 (LOGO)g
four times daily or 60 (LOGO)g three times daily had no increase in severe
hypoglycemia and showed a reduction in body weight over the course of the
studies. In the insulin-using type 2 diabetes studies, responders also achieved
and maintained a reduction in body weight during treatment with pramlintide.
Other Phase 3 Study Results
At the close of the US Phase 3 studies in 1997, participants were given the
opportunity to voluntarily receive pramlintide in an open-label extension study.
In the type 1 study, approximately 70% of the participants who had received
pramlintide during the 1-year study voluntarily continued using pramlintide in
the open-label extension study. Preliminary analyses indicate that patients
completing 24 months of pramlintide therapy achieved average HbA1c reductions of
0.6% (6 months), 0.5% (12 months), 0.5% (18 months) and 0.3% (24 months).
Approximately 50% of the patients were also "responders" as described above
using the initial 4-week HbA1c reduction criterion. These analyses also indicate
that responders who completed 24 months of therapy exhibited average HbA1c
reductions 0.9% (6 months), 0.8% (12 months), 0.8% (18 months) and 0.6% (24
months).
As in the type 1 diabetes study, approximately 70% of the participants in
the insulin-using type 2 diabetes study receiving pramlintide voluntarily
continued using the drug candidate in the open-label extension study.
Preliminary analyses indicate that patients receiving dosages that had a
statistically significant glucose-lowering effect at six months in the blinded
portion of the study (75 or 150 (LOGO)g three times daily), and who completed
the open-label extension portion of the study, achieved average reductions in
HbA1c of 0.7 - 0.8% (6 months), 0.7% (12 months) and 0.4 - 0.6% (24 months). In
this study, approximately 50% of the patients were also "responders" as defined
above. These analyses also indicate that those "responders" within these dosing
groups who completed 24 months of pramlintide therapy achieved average HbA1c
reductions of 1.1 - 1.2% (6 months), 0.9 - 1.0% (12 months) and 0.9% (24
months). Paralleling the positive trends in HbA1c reduction, study subjects who
completed 24 months of therapy maintained or decreased their body weight. Weight
control is considered to be important in light of the recent findings by the
UKPDS, which found that a group of people with type 2 diabetes who used an
intensive insulin regimen had gained approximately 5.5 pounds at the end of 24
months.
In 1996, Amylin initiated an open-label clinical use study in the US that
was designed to examine the long-term effects of pramlintide in people with type
1 diabetes. Premlinary analyses indicate that patients completing 18 months of
pramlintide therapy achieved average HbA1c reductions of 0.6% (6 months), 0.5%
(12 months) and 0.4% (18 months). The "responders" (as defined above) completing
18 months of pramlintide therapy achieved average HbA1c reductions of 0.9% (6
months), 0.8% (12 months) and 0.8% (18 months).
Ongoing Phase 3 Studies
The Company is currently conducting two one-year US Phase 3 clinical
studies of pramlintide. One study is in type 1 diabetes and the other is in
insulin-using type 2 diabetes. Based upon the observations described above
indicating that patients who achieve lower HbA1c concentrations than the
population as a whole can be identified using the early response criterion
(reduction in HbA of $0.5% at 4 weeks), this "responder analysis" approach has
been incorporated into the statistical analysis plans for these ongoing studies.
Results from these two studies are scheduled to be announced in the second half
of 1999.
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Regulatory Plans
Following the release of the results of the European/Canadian Phase 3
studies, the Company revised its regulatory filing timelines for pramlintide.
Based on extensive review with U.S. and European clinical and regulatory
consultants, the Company believes that if the ongoing one-year US Phase 3 study
in type 1 diabetes provides positive results, these new results, in conjunction
with data from previously completed Phase 3 studies, should form the basis of a
filing package for pramlintide in the treatment of people with type 1 diabetes.
For insulin-using type 2 diabetes, positive results from the ongoing one-year US
Phase 3 study, in conjunction with data from completed Phase 3 studies, would
provide the basis for a discussion of filing options with regulatory
authorities. The Company expects to report the results from the ongoing U.S.
Phase 3 studies in the second half of 1999. If the results from these two
ongoing Phase 3 clinical studies are positive, the Company is planning for a
mid-2000 submission of pramlintide regulatory filings in the U.S. and Europe for
type 1 and, possibly, insulin-using type 2 diabetes.
AC2993 (SYNTHETIC EXENDIN-4)
AC2993 is a 39-amino acid peptide that exhibits several of the
anti-diabetic actions of the mammalian hormone glucagon-like peptide (GLP-1).
Unlike GLP-1, AC2993 has demonstrated a prolonged duration of action. In animal
models, AC2993 has been shown to stimulate secretion of insulin (a
glucose-lowering hormone) in the presence of elevated blood glucose
concentrations, but not during periods of hypoglycemia (low blood glucose
concentrations). AC2993 also has been shown in animals to modulate gastric
emptying to slow the entry of ingested nutrients into the bloodstream. It has
also been demonstrated that chronic subcutaneous administration of AC2993
lessened food consumption in obese animals, leading to reduced body weight. Most
importantly, in animal models of type 2 diabetes, AC2993 administration resulted
in a lowering of blood glucose to near-normal concentrations.
In October 1998, Amylin Pharmaceuticals announced positive results from a
Phase 1 safety and tolerability study of AC2993 conducted by the Company in the
UK. This study involved the administration of AC2993 (0.01 (LOGO)g/kg to 0.30
(LOGO)g/kg) by injection to healthy, fasted volunteers. Doses of up to 0.1
(LOGO)g/kg were well tolerated, while tolerability of higher doses was limited
by nausea and vomiting. Biological effects were observed at all tested doses,
including the lowest dose of 0.01 (LOGO)g/kg at which a stimulation in insulin
secretion was observed. A reduction in plasma glucose was observed at doses of
0.05 (LOGO)g/kg and above. This study identified dose-limiting effects and a
maximum tolerated dose. Further, the data indicated that biologic effects of
AC2993 occur at less than the maximum tolerated dose. Additionally, independent
clinical studies by researchers affiliated with Massachusetts General Hospital
and the National Institute on Aging have demonstrated that AC2993 has a very
potent insulin stimulatory effect in people who have elevated plasma glucose
concentrations.
Using diabetic animal models, the Company has demonstrated that biologic
activity was observed when AC2993 was administered via oral, sublingual,
pulmonary, tracheal and nasal routes. The Company is actively pursuing
collaborations with drug delivery technology companies in order to further
investigate administration of AC2993 using such routes. Other delivery routes
may be considered as additional data become available.
In January 1999, Amylin filed an investigational new drug (IND) application
for AC2993 and initiated a clinical study with the drug candidate in people with
type 2 diabetes. This dose-rising study is being conducted in the US and focuses
on the safety and tolerability of AC2993 in people with type 2 diabetes.
Additionally, the study is designed to examine the effect of the drug candidate
on plasma glucose, insulin concentrations, and other metabolic parameters.
Results from this study are expected to be reported in the second quarter of
1999. The Company is planning future studies in people with type 2 diabetes.
OTHER RESEARCH AND DEVELOPMENT ACTIVITIES
Amylin has in-licensed potential drug candidates for metabolic disease and
has developed product candidates from internal research programs. The metabolic
components of diabetes, obesity and dyslipidemia are linked in many ways that
may allow the Company to leverage its decade of expertise to move new metabolic
drugs into the clinic. The Company has the following active research and
development programs
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unrelated to pramlintide or AC2993 (synthetic exendin-4). Progress in these
research programs has been slowed or delayed to conserve the Company's financial
resources, but the Company believes these programs have the potential to provide
the Company with additional product candidates in the future.
Atherosclerosis/LLAs
Amylin is in preclinical development with a new class of small molecules
that are lipid-lowering anti-oxidants (LLAs). These compounds have demonstrated
in animal models prevention of atherosclerosis (arterial plaque) and may also be
useful for prevention of restenosis (re-narrowing of blood vessels after
surgical correction). The research program has been slowed to conserve Company
resources.
Obesity/UCPs
The Company's scientists have been actively engaged in research on
uncoupling proteins (UCPs), which are believed to divert nutrient calories into
heat formation. Amylin's screening program yielded a number of small-molecule
hits that are potential candidates for testing to determine if they might cause
weight loss without affecting appetite. The Company is not funding this research
program at this time.
Obesity/NAS
Using animal models developed for amylin research, the Company has been
searching for new adipocyte signals (NASs) that are selectively activated in fat
cells when metabolic stress occurs. This work has yielded a number of potential
molecular targets that may lead to new drug candidates for testing for potential
to treat obesity. The Company is not funding this research program at this time.
CABRILLO LABORATORIES
In January 1999, the Company announced the creation of a new division,
Cabrillo Laboratories, a contract product development organization. Cabrillo
Laboratories provides services such as analytical chemistry, formulation
development, process development, clinical material packaging, quality control
and stability testing to third parties, and assists with preclinical through
regulatory filing needs. In February 1999, the Company signed a non-binding
letter of intent with Magellan Laboratories Incorporated to enter into a
definitive agreement for the purchase by Magellan of the Cabrillo Laboratories
division. Upon completion of the transaction, Cabrillo Laboratories, as a
division of Magellan, would continue to provide product development services to
Amylin and to other companies. The letter of intent provides that a definitive
agreement will include a cash payment of $2 million to Amylin and a $500,000
credit for future services to be provided by Magellan to Amylin. Magellan will
also be a preferred service provider to Amylin and will retain certain product
development capabilities to complete Amylin's planned NDA filing for
pramlintide, its diabetes drug candidate currently in Phase 3 clinical studies.
As a further component of this strategic relationship between the two companies,
Amylin will grant Magellan a warrant for the purchase of 50,000 shares of common
stock of Amylin.
STRATEGIC ALLIANCES
The Company evaluates, on an ongoing basis, potential collaborative
relationships with established pharmaceutical and biotechnology companies. The
Company is actively seeking collaborative research, development, and commercial
partners for pramlintide and AC2993 (synthetic exendin-4), and may establish
other collaborative relationships.
Johnson & Johnson
From June 1995 to August 1998, Amylin and Johnson & Johnson collaborated on
the development and commercialization of pramlintide pursuant to a worldwide
collaboration agreement (the "Collaboration Agreement") to develop and
commercialize pramlintide. Under the Collaboration Agreement, Johnson & Johnson
made payments to Amylin totaling approximately $174 million. These payments
included funding of one-half of the pramlintide development costs, draw downs
from the development loan facility under a loan
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and security agreement (the "Loan Agreement"), the purchase of $30 million of
the Company's Common Stock, milestone, license and option fee payments, and the
funding of pramlintide pre-marketing costs.
The Johnson & Johnson collaboration provided for, among other things, a
fifty-fifty sharing arrangement whereby each party would be responsible for
one-half of all development and commercialization costs and would share one-half
of all profits derived from pramlintide. As a result of Johnson & Johnson's
withdrawal from the collaboration, Johnson & Johnson has relinquished all rights
to share in any pramlintide profits. Additionally, following the collaboration
termination in August 1998, all product and other rights associated with
pramlintide and related compounds reverted to Amylin subject to the terms of the
Loan Agreement.
In conjunction with the collaboration, the Company received proceeds of
approximately $30.6 million from a draw down under the development loan facility
with Johnson & Johnson. 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. Beginning 12 months after
approval of a new drug application for pramlintide, 50% of the Company's
pramlintide profits, if any, shall be applied to repayment of the loan, subject
to certain exceptions set forth in the Loan Agreement. The loan is secured by
the Company's issued patents and patent applications relating to amylin.
At March 1, 1999, Johnson & Johnson's Common Stock ownership represented
approximately 9.4% of the Company's outstanding Common Stock. See "Risk
Factors -- Future Capital Needs."
Hoechst Marion Roussel
In March 1997, the Company entered into a Technology License Agreement (the
"License Agreement") with Hoechst Marion Roussel pursuant to which the Company
was granted exclusive worldwide rights to a series of orally active
lipid-lowering antioxidant compounds which are being evaluated for their ability
to improve cardiovascular risk factors associated with the development of
atherosclerosis and restenosis.
Under the terms of the License Agreement, the Company is responsible for
conducting the preclinical evaluation and clinical development of candidate
compounds. Upon completion of Phase 2 clinical studies of these compounds,
Hoechst Marion Roussel will have a one-time right to elect to collaborate with
the Company in the continuing development and commercialization of these
compounds in a 50:50 cost-and-profit sharing arrangement. If Hoechst Marion
Roussel exercises this option, the Company will continue to be responsible for
developing and registering the product candidates, and Hoechst Marion Roussel
will be responsible for manufacturing and marketing. If the option is exercised,
the Company and Hoechst Marion Roussel will assume equal responsibility for all
past and future research and development, manufacturing and commercialization
expenses and will share equally in any operating profits from commercialization.
If Hoechst Marion Roussel does not exercise its option, the Company will retain
all development and commercialization rights, and Hoechst Marion Roussel will be
entitled to a royalty based on any future net sales. In such case, the Company
will be free to collaborate with other companies on the development,
manufacture, and commercialization of these compounds.
PATENTS, PROPRIETARY RIGHTS, AND LICENSES
The Company believes that patents and other proprietary rights are
important to its business. The Company's policy is to file patent applications
to protect technology, inventions and improvements that may be important to the
development of its business. Amylin also relies upon trade secrets, know-how,
continuing technological innovations and licensing opportunities to develop and
maintain its competitive position. The Company plans to enforce its issued
patents and its rights to proprietary information and technology. The Company
reviews third-party patents and patent applications in its fields of endeavor,
both to shape its own patent strategy and to identify useful licensing
opportunities.
Much of the research into the role of the hormone amylin in healthy and
diseased states has been undertaken by the Company and its collaborators.
Consequently, the Company has been able to create a comprehensive intellectual
property estate which the Company believes covers relevant commercial aspects of
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amylin physiology, including methods of treatment, compositions of matter,
discovery methodologies and manufacturing techniques.
At March 1, 1999, the Company owned or held exclusive rights to 27 issued
U.S. patents and a number of other still-pending U.S. applications, The Company
has a total of nine pending and 11 issued U.S. patents that it believes are
relevant to the development and commercialization of pramlintide. The Company
has a total of seven pending and one issued US patent that it believes are
relevant to the development and commercialization of AC2993 (synthetic
exendin-4). Amylin also has filed foreign counterparts of certain of these
issued patents and applications. Included within the Company's patent portfolio
are issued patents for (1) pramlintide and other amylin agonist analogues
invented by Company 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; and (7) methods of stimulating insulin release by administering
exendin-4. Generally, it is the Company's policy to file foreign counterparts in
countries with significant pharmaceutical markets. All commercial rights to
these patents and patent applications are held by the Company. There can be no
assurance that patents will issue from any of the still-pending applications.
MANUFACTURING
The Company has internally developed and also has contracted for the
development of processes for manufacturing pramlintide and AC2993 bulk drug and
dosage form. The Company has no facilities to manufacture clinical trial or
commercial supplies of pramlintide and currently relies on third parties to do
so. The Company has selected manufacturers which it believes comply with current
Good Manufacturing Practice ("cGMP") and other regulatory standards. The Company
uses external suppliers for synthetic chemical manufacture of pramlintide and
AC2993 bulk drug, and external suppliers and Johnson & Johnson for fill-finish
activities. The Company has established a quality control and quality assurance
program, including a set of standard operating procedures, analytical methods
and specifications, designed to ensure that the Company's products are
manufactured in accordance with cGMP and other applicable domestic and foreign
regulations. However, the Company is dependent upon third party manufacturers to
comply reliably with such procedures and regulations. There can be no assurance
that these manufacturers will meet the Company's requirements for quality,
quantity or timeliness.
GOVERNMENT REGULATION
Regulation by governmental authorities in the United States and foreign
countries is a significant factor in the manufacture and marketing of
pramlintide and in the Company's ongoing research and development activities.
All of the Company's potential products, including pramlintide and AC2993, will
require regulatory approval by governmental agencies prior to commercialization.
In particular, human therapeutic products are subject to rigorous preclinical
testing and clinical trials and other pre-market approval requirements by the
FDA and regulatory authorities in foreign countries. Various federal and state
statutes and regulations also govern or influence the manufacturing, safety,
labeling, storage, record keeping and marketing of such products. The lengthy
process of seeking these approvals and the subsequent compliance with applicable
federal and state statutes and regulations require the expenditure of
substantial resources. Any failure by the Company or its collaborators or
licensees to obtain, or any delay in obtaining, regulatory approvals could
adversely affect the marketing of any products developed by the Company and its
ability to receive product revenue, royalty revenue or profit sharing payments.
The activities required before a pharmaceutical agent may be marketed in
the United States begin with preclinical testing. Preclinical tests include
laboratory evaluation of product chemistry and animal studies to assess the
potential safety and efficacy of the product and its formulations. The results
of these studies must be submitted to the FDA as part of an Investigational New
Drug (IND) application, which must be reviewed by
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the FDA before proposed clinical trials can begin. Typically, clinical studies
involve a three-phase process. In Phase 1, clinical studies are conducted with a
small number of subjects to determine the early safety and tolerability profile
and the pattern of drug distribution and metabolism. In Phase 2, clinical
studies are conducted with groups of patients afflicted with a specified disease
in order to determine preliminary efficacy, dosing regimens and expanded
evidence of safety. In Phase 3, large-scale, multicenter, adequate and well-
controlled, comparative clinical studies are conducted with patients afflicted
with a target disease in order to provide enough data for the statistical proof
of efficacy and safety required by the FDA and others. The results of the
preclinical testing and clinical studies are then submitted to the FDA for a
pharmaceutical product in the form of a New Drug Application ("NDA") for
approval to commence commercial sales. In responding to an NDA, the FDA may
grant marketing approval, request additional information, or deny the
application if it determines that the application does not satisfy its
regulatory approval criteria. There can be no assurance that approvals will be
granted on a timely basis, or at all.
Among the conditions for NDA approval is the requirement that the
prospective manufacturer's quality control and manufacturing procedures conform
with cGMP guidelines. In complying with cGMP, manufacturers must continue to
expend time, money and effort in the area of production and quality control and
quality assurance to ensure full technical compliance. Manufacturing facilities
are subject to periodic inspections by the FDA to ensure compliance. See
"-- Manufacturing."
The Company is also subject to various federal, state and local laws,
regulations and recommendations relating to safe working conditions, laboratory
and manufacturing practices, the experimental use of animals and the use and
disposal of hazardous or potentially hazardous substances, including radioactive
compounds and infectious disease agents, used in connection with the Company's
research. The extent of government regulation which might result from any
legislation or administrative action cannot be accurately predicted.
Clinical testing, manufacture and sale of the Company's products outside of
the United States will be subject to regulatory approval by other jurisdictions
which may be more or less rigorous than in the United States.
MARKETING AND SALES
The Company believes that a marketing collaboration with one or more
commercial partners may be necessary to market pramlintide and/or AC2993. There
can be no assurance that the Company will be able to find such commercial
partners or that such commercial partners will establish adequate sales and
distribution capabilities or be successful in gaining market acceptance of
pramlintide or AC2993.
COMPETITION
Although competitive activity in the diabetes market is intense, most
recent activity has resulted in additional treatment options for people with
type 2 diabetes who are responsive to oral hypoglycemic therapy. The Company
believes that pramlintide is the only non-insulin based drug candidate in late
stage clinical development for improving metabolic control in people with type 1
diabetes. Further, many people with type 2 diabetes are unable to achieve
satisfactory glucose and weight control with available oral drugs or insulin.
Pramlintide may be either complementary or competitive to these other agents.
Pramlintide or AC2993 may compete with established therapies for market
share. In addition, many companies are pursuing the development of novel
pharmaceuticals that target the same diseases to which pramlintide and AC2993
are targeted, and several product candidates are in Phase 3 clinical studies or
in registration. These companies may develop and introduce products competitive
with or superior to pramlintide or AC2993. Such competitive or potentially
competitive products include pioglitazone, rosiglitazone, troglitazone,
metformin, acarbose, repaglinide, miglitol, bromocriptine and other oral
hypoglycemic agents such as sulfonylureas. The Company's competition will be
determined in part by the indications for which the Company's products are
developed and ultimately approved by regulatory authorities. An important factor
in competition may be the timing of market introduction of the Company's or
competitors' products. Accordingly, the relative speed with which Amylin or any
future corporate partners can develop products, complete the clinical studies
and approval processes and supply commercial quantities of the products to the
market are
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expected to be important competitive factors. The Company expects that
competition among products approved for sale will be based, among other things,
on product efficacy, safety, convenience, reliability, availability, price and
patent position.
EMPLOYEES
As of December 31, 1998, Amylin had 63 full-time employees, of which 21
were employees of the Cabrillo Laboratories division. After the October 1998
announcement of results from our European/Canadian Phase 3 clinical studies, the
Company reduced its work force by approximately 75%. A significant number of the
Company's management and professional employees have had prior experience with
pharmaceutical, biotechnology or medical product companies. Amylin believes that
it has been successful in attracting skilled and experienced scientific
personnel. None of the Company's employees is covered by collective bargaining
agreements and management considers relations with its employees to be good.
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CERTAIN RISK FACTORS RELATED TO THE COMPANY'S BUSINESS
You should consider carefully the following risk factors, together with all
of the other information included in this Annual Report on Form 10-K.
CLINICAL STUDIES MAY RESULT IN FAILURE TO OBTAIN FDA APPROVAL AND INABILITY TO
SELL PRODUCTS
Before approving a drug for commercial sale as a treatment for a disease,
the FDA and other regulatory authorities generally require that the safety and
efficacy of a drug be demonstrated in humans. This is provided by showing
results from adequate and well-controlled clinical studies in which the drug is
used to treat patients who have the disease.
Pramlintide and AC2993 (synthetic exendin-4) are the only product
candidates that we currently have in human clinical studies. We have completed
and reported results from seven Phase 3 clinical studies on pramlintide and are
currently conducting two Phase 3 efficacy studies for our patented product
candidate, pramlintide. In the ongoing Phase 3 clinical studies, we are testing
whether treatment with pramlintide can improve metabolic control in patients
with diabetes who use insulin. We expect to report results from these two
ongoing clinical studies of pramlintide in the second half of 1999.
One Phase 1 clinical study of AC2993 has been completed. A Phase 1-2
clinical study of AC2993 (synthetic exendin-4) is ongoing. We expect to report
results from this ongoing study in the second quarter of 1999.
Although we believe the initial pramlintide Phase 3 clinical data obtained
to date warrants continuing with the Phase 3 development program, we cannot
predict whether our two ongoing Phase 3 clinical studies will confirm or improve
upon the results of the completed Phase 3 clinical studies or that the data will
support regulatory approval of pramlintide. Moreover, we cannot predict whether
we will encounter problems in such clinical studies that will cause us or
regulatory authorities to delay or suspend those clinical studies or delay the
analysis of data therefrom. If the results of our ongoing Phase 3 clinical
studies for pramlintide are not available when we expect them or if those
results do not improve upon the results of the completed Phase 3 clinical
studies to date, or if pramlintide does not successfully complete clinical
testing and meet applicable regulatory requirements or is not successfully
manufactured or marketed, we may not have the financial resources to continue
research and development of pramlintide or any of our other product candidates
and we may not be able to generate revenues from the commercial sale of our
products. See "-- Future Capital Needs; Uncertainty of Additional Funding" and
"Business -- Pramlintide."
WE HAVE ONLY TWO DRUG CANDIDATES CURRENTLY IN CLINICAL DEVELOPMENT AND OUR OTHER
DRUG DEVELOPMENT PROGRAMS ARE AT AN EARLY STAGE
All of our products are in research or development, and we have not
generated any revenues from product sales. To date, we have dedicated our
resources primarily to the research and development of potential pharmaceutical
products relating to the amylin hormone to treat metabolic disorders. The
physiology of fuel metabolism is highly complex, and the causes of metabolic
disorders, such as diabetes, are not fully known. Although we believe that
preclinical, Phase 2 and completed Phase 3 clinical data support our belief that
amylin plays an important role in the regulation of metabolism, we cannot assure
you that our theories are correct or that any of our product candidates will be
effective in the treatment of metabolic disorders.
Our research and development programs other than pramlintide and AC2993 are
at an early stage. Any additional product candidates will require significant
research, development, preclinical and clinical testing, regulatory approval and
commitments of resources prior to commercialization. We cannot predict whether
our research will lead to the discovery of any additional product candidates or
whether pramlintide or any such potential products will be successfully
developed, prove to be safe and efficacious in clinical studies, meet applicable
regulatory standards, be produced in commercial quantities at acceptable costs
or be marketed successfully. See "Business -- Pramlintide" and "-- AC2993
(synthetic exendin-4)" and "-- Other Research and Development Activities."
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WE WILL REQUIRE FUTURE CAPITAL AND ARE UNCERTAIN OF THE AVAILABILITY OR TERMS OF
ADDITIONAL FUNDING, WHICH MAY LEAD TO BANKRUPTCY IF FUNDING BECOMES UNAVAILABLE
OR DILUTION OR OTHER ADVERSE EFFECTS TO THE VALUE OF YOUR SHARES OR RIGHTS AS A
SHAREHOLDER EVEN IF FUNDING IS AVAILABLE
Our collaborative relationship with Johnson & Johnson was terminated in
August 1998. Accordingly, we must find alternate sources of capital in order to
complete the development and commercialization of pramlintide. Our future
capital requirements will depend on many factors, including the results of our
ongoing one-year US Phase 3 clinical studies for pramlintide (expected in the
second half of 1999), our ability to establish one or more development and/or
commercialization collaborations for our pramlintide and AC2993 programs,
progress with our other ongoing and new preclinical studies and clinical
studies, the time and costs involved in obtaining regulatory approvals,
scientific progress in our other research and development programs, the
magnitude of these programs, the costs involved in preparing, filing,
prosecuting, maintaining, enforcing or defending ourselves against patents,
competing technological and market developments, changes in collaborative
relationships, the costs of manufacturing scale-up, and the potential need to
repay outstanding indebtedness. We anticipate that our existing cash, including
interest income from cash investments, will be adequate to satisfy our capital
requirements into the first quarter of 2000. If results of our two one-year US
clinical studies for pramlintide are available when we expect and if those
results improve upon the results of our initial Phase 3 clinical studies, we
believe that we 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 us, if at all, that
any such additional financing will be adequate or that we will not be required
to use such additional financing to repay existing indebtedness. In the event we
are unable to obtain additional financing on acceptable terms, we will not have
the financial resources to continue research and development of pramlintide or
any of our other product candidates.
DELAYS IN PATIENT ENROLLMENT MAY RESULT IN INCREASED COSTS, PROGRAM DELAYS, OR
BOTH, TO CLINICAL STUDIES
Pivotal clinical studies are very costly and time-consuming. The speed with
which we are able to enroll patients in clinical studies is affected by several
factors, including the size of the patient population, competing studies, the
proximity of patients to clinical sites, and the eligibility criteria for the
study. These delays and complications can affect the cost of our clinical
studies as well as our ability to complete clinical studies on schedule. See
"Business -- Government Regulation."
OUR ABILITY TO ENTER INTO COLLABORATIVE ARRANGEMENTS OR OTHER THIRD PARTY
RELATIONSHIPS IS CRITICAL TO OUR SUCCESSFUL DEVELOPMENT, SALES AND LICENSING OF
PRODUCTS AND POTENTIAL PROFITABILITY
As a result of Johnson & Johnson's termination of the collaboration, we
assumed full responsibility for certain product development, marketing and
manufacturing functions that were previously being undertaken by Johnson &
Johnson. In order for us to perform those functions, we will require the
cooperation of third-party service providers and manufacturers and Johnson &
Johnson. We cannot predict whether third-party service providers and
manufacturers will cooperate in the transition of such services or functions or
that such transitions will proceed in a timely or cost effective manner. We
believe that we will likely need to find another corporate partner who can
provide primary responsibility for commercialization of pramlintide. We cannot
assure you that we will be able to find such a corporate partner, or that such a
corporate partner will establish adequate sales and distribution capabilities or
be successful in gaining market acceptance for products, if any.
Additionally, we cannot assure you that we will be able to find a corporate
partner for AC2993 (synthetic exendin-4), or that such a corporate partner will
establish adequate sales and distribution capabilities or be successful in
gaining market acceptance for products, if any.
THE FDA CAN IMPOSE RESTRICTIONS ON OUR OPERATIONS THAT INCREASE COSTS OR DELAY
OR PROHIBIT SALES
The FDA and other regulatory authorities will continue to review our
products and periodically inspect the facilities used to manufacture those
products both before and after the grant of regulatory approvals. If the FDA or
other regulatory authorities identify problems with a product, manufacturer of
our products or its
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facility, they may impose restrictions that may include warning letters,
suspensions of regulatory approvals, operating restrictions, delays in obtaining
new product approvals, withdrawal of the product from the market, product
recalls, fines, injunctions and criminal prosecution. See
"Business -- Government Regulation."
OUR PRODUCTS MUST OBTAIN REGULATORY APPROVAL IN OTHER COUNTRIES WHICH MAY DELAY
OR PROHIBIT SALES
We and licensees of our products must obtain regulatory approvals in
countries other than the United States before marketing products in those
countries. The requirements governing the conduct of clinical studies, product
licensing, pricing and reimbursement vary widely from country to country. Some
countries require approval of the sale price of a drug before it can be
marketed. In many countries, the pricing review period begins after product
licensing approval is granted. As a result, we or our licensees may obtain
regulatory approval for a product in a particular country, but then be subject
to price regulation that prevents the sale of the product at satisfactory
prices. See "Business -- Government Regulation."
WE HAVE A HISTORY OF OPERATING LOSSES, ANTICIPATE FUTURE LOSSES, MAY NOT
GENERATE REVENUES FROM PRODUCT SALES AND MAY NEVER BECOME PROFITABLE
We have experienced significant operating losses since our inception in
1987. As of December 31, 1998, we had an accumulated deficit of approximately
$261 million. We expect to incur significant additional operating losses over
the next several years. We have derived substantially all of our revenues to
date from development funding, fees and milestone payments under collaborative
agreements and from interest income. To date, we have not received any revenues
from product sales. To achieve profitable operations, we, alone or with others,
must successfully develop, manufacture, obtain required regulatory approvals and
market our products. We cannot assure you that we will ever become profitable or
that we will remain profitable if and when we become profitable.
WE EXPERIENCE A SUBSTANTIAL DEGREE OF UNCERTAINTY RELATING TO PATENTS THAT, IF
DETERMINED TO BE UNENFORCEABLE, COULD RESULT IN THE LOSS OF THE PATENT OR CLAIMS
AGAINST US
Our success will depend in part on our ability to (1) obtain patent
protection for our products and technologies both in the United States and other
countries and (2) operate without infringing the proprietary rights of third
parties. Legal standards relating to the validity of patents covering
pharmaceutical and biotechnological inventions and the scope of claims made
under these patents are still developing. As a result, our ability to obtain and
enforce patents that protect our products is uncertain and involves complex
legal and factual questions.
We cannot guarantee that any patents will issue from any pending or future
patent applications owned by or licensed to us. Existing or future patents may
be challenged, infringed upon, invalidated, found to be unenforceable or
circumvented by others. We cannot assure you that any of our rights under any
issued patents will provide sufficient protection against competitive products
or otherwise cover commercially valuable products or processes. Because patent
applications in the United States are maintained in secrecy until patents issue
and publication of discoveries in the scientific or patent literature often lag
behind actual discoveries, we also cannot be completely sure that the inventors
of subject matter covered by our patents and patent applications were the first
to invent or the first to file patent applications for such inventions. In the
event that a third party has also filed a patent for any of its inventions, we
may have to participate in interference proceedings declared by the US Patent
and Trademark Office to determine priority of invention, which could result in
substantial cost to us, even if the eventual outcome is favorable to us. We
cannot assure you that our patents, if issued, would be held valid by a court of
competent jurisdiction. Furthermore, we may not have identified all United
States and foreign patents that pose a risk of infringement. We cannot predict
whether the Company will be obliged to defend itself in court against
allegations of infringement of third-party patents. An adverse outcome in such a
suit could subject us to significant liabilities to third parties, require
disputed rights to be licensed from third parties or require us to cease using
such technology. If patents are issued to other companies that contain
competitive or conflicting claims and such claims are ultimately determined to
be valid, there can be no assurance that we would be able to obtain licenses to
these patents at a reasonable cost or be able to develop or obtain alternative
technology.
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WE MAY INCUR SUBSTANTIAL COSTS AND DELAYS AS A RESULT OF PROCEEDINGS AND
LITIGATION REGARDING PATENTS AND OTHER PROPRIETARY RIGHTS
Proceedings involving our patents or patent applications could result in
adverse decisions about:
- the patentability of our inventions and products; and/or
- the enforceability, validity or scope of protection offered by our
patents.
The manufacture, use or sale of our products may infringe on the patent
rights of others. If we are unable to avoid infringement of the patent rights of
others, we may be required to seek a license, defend an infringement action or
challenge the validity of the patents in court. Patent litigation is costly and
time consuming. We may not have sufficient resources to bring these actions to a
successful conclusion. In addition, if we do not obtain a license, and fail
successfully to defend an infringement action or to have infringing patents
declared invalid, we may:
- incur substantial money damages;
- encounter significant delays in bringing products to market; and/or
- be precluded from participating in the manufacture, use or sale of
products or methods of treatment requiring licenses.
CONFIDENTIALITY AGREEMENTS WITH EMPLOYEES AND OTHERS MAY NOT ADEQUATELY PREVENT
DISCLOSURE OF TRADE SECRETS AND OTHER UNPATENTED PROPRIETARY INFORMATION, WHICH,
IF DISCLOSED, COULD MATERIALLY ADVERSELY AFFECT OUR OPERATIONS OR FINANCIAL
CONDITION
In order to protect our proprietary technology and processes, we also rely
in part on confidentiality agreements with our corporate partners, employees,
consultants, outside scientific collaborators and sponsored researchers and
other advisors. These agreements may not effectively prevent disclosure of
confidential information and may not provide an adequate remedy in the event of
unauthorized disclosure of confidential information. In addition, others may
independently discover trade secrets and proprietary information. Costly and
time-consuming litigation could be necessary to enforce and determine the scope
of our proprietary rights, and failure to obtain or maintain trade secret
protection could have a material adverse effect on our business, results of
operations and financial condition. See "Business -- Patents, Proprietary
Rights, and Licenses."
COMPETITION IN THE BIOTECHNOLOGY AND PHARMACEUTICAL INDUSTRIES MAY RESULT IN
COMPETING PRODUCTS, SUPERIOR MARKETING OF OTHER PRODUCTS AND LOWER REVENUES OR
PROFITS FOR US
We believe that competition may be intense for all of our product
candidates. Our competitors include multinational pharmaceutical and chemical
companies, specialized biotechnology firms and universities and other research
institutions. A number of our competitors are pursuing the development of novel
pharmaceuticals which target the same diseases that we are targeting, and we
expect that the number of companies seeking to develop products and therapies
for the treatment of diabetes and other metabolic disorders will increase. Many
of our competitors have substantially greater financial, technical and human
resources than we do. In addition, many of these competitors have significantly
greater experience than we do in undertaking preclinical testing and human
clinical studies of new pharmaceutical products and in obtaining regulatory
approvals of human therapeutic products. Accordingly, our competitors may
succeed in obtaining FDA approval for products more rapidly than we do.
Furthermore, if we are permitted to commence commercial sales of products, we
may also be competing with respect to manufacturing efficiency and marketing
capabilities, areas in which we have limited or no experience.
Other products are currently in development or exist in the market that may
compete directly with the products that we are seeking to develop and market.
Various products are available to treat type 2 diabetes, including
sulfonylureas, metformin, acarbose, repaglinide, insulin, troglitazone and other
compounds. In addition, several companies are developing various approaches to
improve treatments for type 1 and type 2 diabetes. We cannot predict whether our
products, even if successfully tested and developed, will have sufficient
advantages over existing products to cause health care professionals to adopt
them over such other
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products or that our products will offer an economically feasible alternative to
such existing products. See "Business -- Competition."
WE MAY NOT BE ABLE TO KEEP UP WITH THE RAPID TECHNOLOGICAL CHANGE IN THE
BIOTECHNOLOGY AND PHARMACEUTICAL INDUSTRIES, WHICH COULD MAKE OUR PRODUCTS
OBSOLETE
Biotechnology and related pharmaceutical technologies have undergone and
continue to be subject to rapid and significant change. We expect that the
technologies associated with biotechnology research and development will
continue to develop rapidly. Our future will depend in large part on our ability
to maintain a competitive position with respect to these technologies. Any
compounds, products or processes that we develop may become obsolete before we
recover expenses incurred in developing those products.
WE DO NOT MANUFACTURE OUR OWN PRODUCTS AND MAY NOT BE ABLE TO OBTAIN ADEQUATE
SUPPLIES, WHICH COULD CAUSE DELAYS OR REDUCE PROFIT MARGINS
The manufacturing of sufficient quantities of new drugs is a time consuming
and complex process. We currently have no facilities for the manufacture of
clinical study or commercial supplies of pramlintide or AC2993. We currently
rely on third parties to manufacture pramlintide and AC2993 for preclinical
testing and clinical studies. Pramlintide has not yet been manufactured on a
commercial scale. We will likely work with contract suppliers who have the
capabilities for the commercial manufacture of pramlintide. All manufacturing
facilities must comply with applicable regulations of the FDA. We cannot assure
you that we, alone or together with a new corporate partner, will be able to
make the transition to commercial production. We have established a quality
control and quality assurance program, including a set of standard operating
procedures and specifications, designed to ensure that our products are
manufactured in accordance with cGMP and other applicable domestic and foreign
regulatory standards. However, we are dependent upon contract manufacturers to
comply reliably with such procedures and regulations. We cannot assure you that
these manufacturers will meet our requirements for quality, quantity or
timeliness. Therefore, we may not be able to obtain supplies of products on
acceptable terms or in sufficient quantities, if at all. Our dependence on third
parties for the manufacture of products may also reduce our profit margins and
ability to develop and deliver products with sufficient speed. See
"Business -- Manufacturing."
WE DEPEND ON KEY PERSONNEL AND COMPETITION FOR QUALIFIED PERSONNEL IS INTENSE,
WHICH COULD RESULT IN DELAYS OR ADDITIONAL COSTS
We are highly dependent on the principal members of our scientific and
management staff, the loss of whose services might impede the achievement of our
research and development objectives. Recruiting and retaining qualified
scientific personnel to perform research and development work in the future will
also be critical to our success. Although we believe we will be successful in
attracting and retaining skilled and experienced scientific personnel, we cannot
assure you that we will be able to attract and retain such personnel on
acceptable terms given the competition between numerous pharmaceutical and
biotechnology companies, universities and other research institutions for
experienced scientists and management personnel. We do not maintain "key person"
insurance on any of our employees. In addition, we rely on consultants and
advisors, including scientific and clinical advisors, to assist us in
formulating research and development strategy. Certain of our consultants and
advisors are employed by employers other than us and have commitments to or
consulting or advisory contracts with other entities that may limit their
availability to us.
WE HAVE NO EXPERIENCE IN SALES, MARKETING AND DISTRIBUTION AND RELY ON THIRD
PARTIES, WHICH MAY RESULT IN LOWER SALES, HIGHER COSTS OR LOWER PROFIT MARGINS
We have limited experience in market development and no experience in
sales, marketing or distribution. To market any of our products directly, we
must obtain access to marketing and sales forces with technical expertise and
with supporting distribution capability. To this end, we believe that we will
likely need to find a corporate partner who can provide primary responsibility
for commercialization of pramlintide and/or AC2993 (synthetic exendin-4). We
cannot assure you that we will be able to find such corporate partners, or
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that such corporate partners will establish adequate sales and distribution
capabilities or be successful in gaining market acceptance for products.
OUR SUCCESS MAY DEPEND ON THIRD-PARTY REIMBURSEMENT OF PATIENTS' COSTS FOR OUR
PRODUCTS
Our ability to commercialize our products successfully will depend in part
on the extent to which reimbursement for the cost of such products and related
treatments will be available from government health administration authorities,
private health insurers and other organizations. The levels of revenues and
profitability of pharmaceutical companies may be affected by the continuing
efforts of governmental and third-party payors to contain or reduce the costs of
health care through various means. For example, in certain foreign markets
pricing or profitability of prescription pharmaceuticals is subject to
government control. In the United States, there have been, and we expect that
there will continue to be, a number of federal and state proposals to implement
similar government control. In addition, both in the United States and
elsewhere, sales of prescription pharmaceuticals are dependent in part on the
availability of reimbursement from third-party payors, such as government and
private insurance plans. Third-party payors are increasingly challenging the
prices charged for medical products and services. If we succeed in bringing
pramlintide and/or AC2993 to the market, we cannot assure you that either will
be considered cost effective and that reimbursement will be available or will be
sufficient to allow us to sell pramlintide and/or AC2993 on a competitive basis.
This could have a material adverse effect on our business.
OUR BUSINESS HAS A SUBSTANTIAL RISK OF PRODUCT LIABILITY CLAIMS, AND INSURANCE
MAY BE EXPENSIVE OR UNAVAILABLE
Our business exposes us to potential product liability risks that are
inherent in the testing, manufacturing and marketing of human therapeutic
products. Product liability claims could result in a recall of products or a
change in the indications for which they may be used. Although we currently have
product liability insurance, we cannot assure you that insurance will provide
adequate coverage against potential liabilities. Furthermore, product liability
insurance is becoming increasingly expensive. As a result, we may not be able to
maintain current amounts of insurance coverage, obtain additional insurance or
obtain insurance at a reasonable cost or in sufficient amounts to protect
against losses that could have a material adverse effect on us.
OUR ACTIVITIES INVOLVE THE USE OF HAZARDOUS MATERIALS, WHICH SUBJECT US TO
REGULATION, RELATED COSTS AND DELAYS AND POTENTIAL LIABILITIES
Our research and development involves the controlled use of hazardous
materials, chemicals and various radioactive compounds. Although we believe that
our safety procedures for handling and disposing of such materials comply with
the standards prescribed by state and federal regulations, the risk of
accidental contamination or injury from these materials cannot be eliminated. If
an accident occurs, we could be held liable for resulting damages, which could
be substantial. We are also subject to numerous environmental, health and
workplace safety laws and regulations, including those governing laboratory
procedures, exposure to blood-borne pathogens and the handling of biohazardous
materials. Additional federal, state and local laws and regulations affecting
our operations may be adopted in the future. We may incur substantial costs to
comply with and substantial fines or penalties if we violate any of these laws
or regulations.
OUR COMMON STOCK HAS A HISTORY OF VOLATILITY, WHICH MAY AFFECT THE PRICE OF THE
COMMON STOCK
The market prices for securities of biopharmaceutical and biotechnology
companies, including our Common Stock, have historically been highly volatile,
and the market from time to time has experienced significant price and volume
fluctuations that are unrelated to the operating performance of such companies.
Given the uncertainty of our future funding and the pending announcement of
results of our two ongoing one-year US Phase 3 clinical studies of pramlintide
(expected during the second half of 1999), we expect that we may continue to
experience volatility of our stock price during the remainder of 1999. In
addition, factors such as fluctuation in our operating results, announcements of
additional clinical study results, technological innovations or new commercial
therapeutic products by us or our competitors, governmental policy or
regulation, developments in patent or other proprietary rights, developments in
our relationships with
17
<PAGE> 18
collaborative partners, public concern as to the safety of drugs developed by us
and general market conditions may have a significant effect on the market price
of our Common Stock.
Our Common Stock is listed for trading on the Nasdaq SmallCap Market
("Nasdaq SmallCap"), which requires certain minimum market prices for equity
securities listed on Nasdaq SmallCap. If our stock price does not meet the
minimum requirements for listing on Nasdaq SmallCap, our securities may be
delisted from Nasdaq SmallCap or we may be required to effect a reverse stock
split in order to maintain our listing. We cannot assure you that we will be
able to maintain the listing of our Common Stock on Nasdaq SmallCap or any other
exchange.
YEAR 2000 ISSUES MAY RESULT IN UNANTICIPATED COSTS OR ADVERSE EFFECTS ON
OPERATIONS
Many currently installed systems and software products are coded to accept
only two digit entries in the date code field. Beginning in the year 2000, these
date code fields will need to accept four digit entries to distinguish 21st
century dates from 20th century dates. As a result, in less than one year,
computer systems and/or software used by many companies may need to be upgraded
to comply with these "Year 2000" requirements. We are in the process of working
with our software vendors to ensure that the software that we have licensed from
third parties will operate properly in the year 2000 and beyond. In addition, we
are working with our external suppliers, service providers and corporate
partners to ensure that they and their systems will be able to support our needs
and, where necessary, interoperate with our server and networking hardware and
software infrastructure in preparation for the year 2000. We do not anticipate
that we will incur significant operating expenses or be required to invest
heavily in computer systems improvements to be year 2000 compliant. However,
significant uncertainty exists concerning the potential costs and effects
associated with any year 2000 compliance. Any year 2000 compliance problems of
ours, our customers or vendors could have a material adverse effect on our
business, results of operations and financial condition. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations -- Year
2000."
ITEM 2. PROPERTIES
Amylin's administrative offices and research laboratories are located in
San Diego, California. As part of the company's business restructuring during
1998, the Company has reduced its headquarters space from 87,000 square feet to
45,000 square feet. A further reduction occurred on March 1, 1999 that reduced
the total space occupied by the Company to 26,500 square feet. The Company's
lease on this property will expire on August 31, 2004.
In addition, the Company leases a 35,500 square foot facility in San Diego
where its product development operations (Cabrillo Laboratories) are located
under a lease that expires in June 2000; the Company has two options to renew
this lease. Each option is for an additional two-year period. The Company plans
to assign the lease for this space to Magellan Laboratories as part of the sale
of Cabrillo Laboratories. See "Business -- Cabrillo Laboratories."
Amylin Europe Limited, a wholly owned subsidiary, occupies approximately
700 square feet of office space in Oxford, UK.
ITEM 3. LEGAL PROCEEDINGS
On December 5, 1996, the Company filed a complaint against the University
of Minnesota and Per Westermark in the U.S. District Court for the Southern
District of California seeking a declaratory judgment that the Company's
patented pramlintide invention is not covered by the University's patent
directed to a tumor-derived molecule called "Insulinoma Amyloid Polypeptide" and
that no moneys are owed to the University or Westermark. In October 1998 all
claims between the parties were settled on confidential terms.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
18
<PAGE> 19
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Since February 1, 1999, the Company's Common Stock has been traded on the
Nasdaq SmallCap Market under the symbol "AMLN." Prior to such time, the
Company's Common Stock was traded on the Nasdaq National Market. The following
table sets forth, for the periods indicated, the high and low sales prices per
share of Common Stock on the Nasdaq National Market or the Nasdaq SmallCap
Market, as applicable:
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
1998
Fourth Quarter................................... $ 3.13 $ 0.28
Third Quarter.................................... 4.13 2.50
Second Quarter................................... 6.88 2.69
First Quarter.................................... 6.38 2.50
1997
Fourth Quarter................................... $ 9.75 $ 4.75
Third Quarter.................................... 15.50 6.88
Second Quarter................................... 14.00 10.00
First Quarter.................................... 16.63 11.88
1996
Fourth Quarter................................... $13.50 $10.75
Third Quarter.................................... 13.63 8.13
Second Quarter................................... 12.25 9.00
First Quarter.................................... 13.50 9.25
</TABLE>
The last reported sale price of the Common Stock on the Nasdaq SmallCap
Market on March 1, 1999 was $0.75. As of March 1, 1999, there were approximately
1,068 stockholders of record of the Company's Common Stock.
The Company has never declared or paid any cash dividends on its capital
stock. The Company currently intends to retain any future earnings for funding
growth and, therefore, does not anticipate paying any cash dividends in the
foreseeable future.
19
<PAGE> 20
ITEM 6. SELECTED FINANCIAL DATA
The following selected financial data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," the Consolidated Financial Statements of the Company and related
notes thereto included elsewhere in this Annual Report on Form 10-K.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------------
1998 1997 1996 1995 1994
------------- ------------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS OF
OPERATIONS DATA:
Revenues under collaborative
agreements:
Related party.................. $ 16,236,000 $ 42,609,000 $ 35,803,000 $ 17,045,000 $ --
Other.......................... -- -- -- -- 500,000
------------- ------------- ------------- ------------- ------------
16,236,000 42,609,000 35,803,000 17,045,000 500,000
Expenses:
Research and development....... 53,597,000 82,281,000 64,998,000 39,337,000 30,255,000
General and administrative..... 10,191,000 15,592,000 10,420,000 8,318,000 6,383,000
------------- ------------- ------------- ------------- ------------
63,788,000 97,873,000 75,418,000 47,655,000 36,638,000
Net interest income (expense).... (3,546,000) 637,000 1,828,000 1,341,000 1,637,000
------------- ------------- ------------- ------------- ------------
Net loss......................... $ (51,098,000) $ (54,627,000) $ (37,787,000) $ (29,269,000) $(34,501,000)
============= ============= ============= ============= ============
Net loss per share -- basic and
diluted........................ $ (1.49) $ (1.70) $ (1.31) $ (1.23) $ (1.71)
============= ============= ============= ============= ============
Shares used in calculating of net
loss
per share -- basic and
diluted........................ 34,325,326 32,155,761 28,744,822 23,853,606 20,184,875
CONSOLIDATED BALANCE SHEETS DATA:
Cash, cash equivalents and short-
term investments............... $ 10,789,000 $ 52,748,000 $ 62,123,000 $ 53,521,000 $ 29,149,000
Working capital.................. 5,192,000 31,303,000 46,691,000 45,268,000 26,209,000
Total assets..................... 18,823,000 65,338,000 73,533,000 61,949,000 37,306,000
Long-term obligation under
capital leases and long-term
equipment notes payable........ 4,164,000 3,047,000 1,990,000 1,410,000 2,177,000
Long-term note payable to related
party.......................... 39,925,000 33,933,000 4,345,000 1,020,000 --
Accumulated deficit.............. (260,830,000) (209,732,000) (155,105,000) (117,318,000) (88,049,000)
Total stockholders' equity (net
capital deficiency)............ (31,462,000) 4,649,000 48,534,000 49,754,000 30,869,000
</TABLE>
Since its inception the Company has never declared a cash dividend.
20
<PAGE> 21
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
Amylin Pharmaceuticals, Inc. is an early development pharmaceutical company
focused on metabolic disorders, and specializing in preclinical characterization
of lead molecules and demonstration of proof of principle in humans. The Company
has pioneered research of the hormone amylin and is developing pramlintide, its
patented synthetic analog of human amylin, for the treatment of diabetes. The
Company has previously performed various Phase 1, 2 and 3 studies of
pramlintide. Currently, two one-year US Phase 3 clinical studies of pramlintide
in type 1 and insulin-using type 2 diabetes are ongoing. The Company is also
conducting Phase 1-2 clinical studies of AC2993 (synthetic exendin-4), an
investigational drug for type 2 diabetes and related metabolic disorders.
Exendin-4 is a naturally occurring peptide initially derived from the salivary
secretions of the Gila monster.
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 December 31,
1998, the Company's accumulated deficit was approximately $261 million.
From June 1995 to August 1998, Amylin and Johnson & Johnson collaborated on
the development and commercialization of pramlintide. Under the Collaboration
Agreement, Johnson & Johnson made payments to Amylin totaling approximately $174
million. These payments included funding of one-half of the pramlintide
development costs, draw downs from the development loan facility under a loan
and security agreement, the purchase of $30 million of the Company's Common
Stock, milestone, license and option fee payments, and the funding of
pramlintide pre-marketing costs. The Johnson & Johnson collaboration provided
for, among other things, a fifty-fifty sharing arrangement whereby each party
would be responsible for one-half of all development and commercialization costs
and would share one-half of all profits derived from pramlintide. As a result of
Johnson & Johnson's withdrawal, Johnson & Johnson has relinquished all rights to
share in any pramlintide profits. Additionally, following the collaboration
termination in August 1998, all product and other rights associated with
pramlintide and related compounds reverted to Amylin.
Following the announcement of the termination of the Johnson & Johnson
collaboration agreement in March 1998, Amylin significantly reduced the
Company's workforce and operating expenses. In October 1998, following the
announcement of the results of the Company's European/Canadian Phase 3 studies
of pramlintide, the Company further reduced its work force and operating
expenses. On March 24, 1999, the Company announced that it raised $15 million in
a private placement of shares, which, together with existing cash, including
interest income from cash investments, the Company believes should provide
sufficient funds to continue current business operations into the first quarter
of 2000.
The Company is continuing to conduct two one-year US Phase 3 clinical
studies of pramlintide. One study is in type 1 diabetes and the other is in
insulin-using type 2 diabetes. Results from these two studies are scheduled to
be announced in the second half of 1999. If results from these studies are
positive, the Company expects to complete pramlintide regulatory filings in
mid-2000 in the US and Europe for type 1 and, possibly, insulin-using type 2
diabetes.
There can be no assurance that the results of the two ongoing US Phase 3
clinical trials of pramlintide will be favorable or sufficient to support filing
for market approval in any jurisdiction or, if they are, that additional
financial resources will be raised in the necessary time frame or on terms
favorable to the Company, if at all. If for any reason Amylin is unable to
obtain additional financing on acceptable terms, the Company will not have the
financial resources to continue the research and development of pramlintide or
any of the Company's other product candidates following the first quarter of
2000.
21
<PAGE> 22
RESULTS OF OPERATIONS
REVENUE
The Company's revenues were $16.2 million in 1998, $42.6 million in 1997
and $35.8 million in 1996. The revenues recognized in each of the years are
related to the company's Collaboration Agreement with Johnson & Johnson.
Revenues in 1998 were comprised of Johnson & Johnson's reimbursement of its
one-half share of pramlintide development expenses incurred by Amylin. In
February 1998, Johnson & Johnson provided the company with six months' notice of
its intentions to terminate the collaboration; in August 1998, the collaboration
was terminated.
OPERATING EXPENSES
The Company's total operating expenses decreased to $63.8 million in 1998
from $97.9 million in 1997 and $75.4 million in 1996. Research and development
expenses decreased to $53.6 million in 1998, from $82.3 million in 1997 and
$65.0 million in 1996. General and administrative expenses also decreased to
$10.2 in 1998, from $15.6 million in 1997 and $10.4 million in 1996. The
reductions from 1997 to 1998 were primarily a result of reductions in work force
and operating expenses in the fourth quarter. The increases from 1996 to 1997
were primarily due to increases in research and development activities,
including increased staffing and increased facilities expenditures, during that
period.
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 decreased
to $1.4 million in 1998 from $2.6 million in 1997 and $2.3 million in 1996. The
decrease from 1997 to 1998 was primarily due to an overall lower average cash
balance available for investment. The increase from 1996 to 1997 was primarily
due to an overall higher cash balance available for investment.
Interest and other expense is principally comprised of interest expense
resulting from long-term debt obligations. Debt financing has been utilized by
the Company to acquire laboratory and other equipment and to fund tenant
improvements to the Company's facilities. In addition, in accordance with the
terms of the Company's Collaboration Agreement with Johnson & Johnson, Johnson &
Johnson advanced the Company's share of pramlintide pre-launch marketing
expenses incurred during the term 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
pramlintide during the second through fourth quarters of 1997. In conjunction
with the borrowing under the Development Loan 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 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 was $5.0 million in 1998 as compared to $2.0 million in 1997 and
$0.4 million in 1996. The increase in interest 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 year ended December 31, 1998 was $51.1 million as
compared to $54.6 million in 1997 and $37.8 million in 1996. The net loss
decrease from 1997 to 1998 was due to significant reductions in work force and
operating expenses. These reductions were partially offset by decreased
collaboration revenue. The increased net loss from 1996 to 1997 was due
primarily to expanded clinical development and product development efforts in
support of pramlintide during that period.
22
<PAGE> 23
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 and AC2993 (synthetic
exendin-4), preclinical and potential clinical testing of additional product
candidates, and related general and administrative support.
LIQUIDITY AND CAPITAL RESOURCES
Since its inception, the Company has financed its operations primarily
through private placements of preferred stock, sale of common stock,
reimbursement of pramlintide development expenses through its collaboration with
Johnson & Johnson, and debt financings.
At December 31, 1998, the Company had $10.8 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. On March 24, 1999, the Company announced that it raised
$15 million in a private placement of preferred stock, which, together with
existing cash, including interest income from investments, the Company believes
should provide sufficient funds to continue current business operations into the
first quarter of 2000.
The Company intends to use its financial resources for the ongoing
development of pramlintide, including the Phase 3 clinical trials, for its
AC2993 (synthetic exendin-4) development program, and for other general
corporate purposes. As a result of the termination of the Collaboration
Agreement between the Company and Johnson and Johnson, and following the
announcement in October 1998 of unexpected results from the Company's six-month
Phase 3 European/Canadian clinical studies of pramlintide, resources dedicated
toward the Company's other research programs have been sharply reduced or
eliminated. The Company plans to continue advancing its research and development
pipeline only as future resources permit. To the extent that clinical trials of
the Company's pramlintide and AC2993 compounds progress as planned, research and
development expenses will include costs of supplying materials for and/or
conducting pramlintide and AC2993 clinical trials. 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 December 31, 1998, the Company leased approximately 87,000 square
feet of space including 42,000 square feet sub-leased to a third-party tenant.
As of March 1, 1999, the Company terminated the sub-lease and amended its lease
agreement with the landlord to return this 42,000 square feet to the landlord.
As of March 1, 1999, the Company had no further financial expense associated
with this space. In association with the Company's process of restructuring its
operations, the Company reduced the square feet it directly occupies from 45,000
to 26,500 square footage as of March 1, 1999.
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 research, preclinical testing, clinical trials,
manufacturing costs, and general and administrative expenses necessary to
support such activities. Operating losses may fluctuate from quarter to quarter
as a result of differences in the timing of expenses incurred and revenues
recognized. The Company anticipates that its existing cash, including the
proceeds from the March 1999 private placement and interest income from cash
investments, will be adequate to satisfy the Company's capital requirements into
the first quarter of 2000.
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.
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 the
results of its remaining one-year US Phase 3 clinical trials of pramlintide
(scheduled to be announced during the second half of 1999), the continued
evaluation of results from its completed Phase 3 clinical trials of pramlintide,
the ability of the Company to establish one or more development and/or
commercialization collaborations for its pramlintide and AC2993 programs,
progress with its other ongoing and new preclinical studies and clinical trials,
the time and costs involved in
23
<PAGE> 24
obtaining regulatory approvals, scientific progress in its non-pramlintide
research and development programs, the magnitude of these programs, the costs
involved in preparing, filing, prosecuting, maintaining, enforcing or defending
itself against patents, competing technological and market developments, changes
in collaborative relationships, and any costs 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 two of the Company's
product candidates, pramlintide and AC2993 (synthetic exendin-4). Subject to
compliance with FDA and foreign authorities regulations, the Company continues
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 Phase 3 clinical data from its four completed studies of
pramlintide warrant continuing with the Phase 3 development program at this
time, there can be no assurance that the remaining studies will confirm or
improve the results of the completed Phase 3 studies or that any of the data,
past or future, will support regulatory approval of pramlintide.
Further testing of pramlintide, AC2993, 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.
As is the case for any drug in clinical testing, the Company or regulatory
authorities may suspend clinical trials at any time if the 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. 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.
YEAR 2000 COMPLIANCE
The Year 2000 ("Y2K") issue results from computer systems and software
products being coded using two digits rather than four to define the applicable
year. The Company's computer systems and software products with embedded
technology that are time-sensitive may recognize a date as the year 1900 rather
than the year 2000 which could cause computer system failures and errors leading
to a disruption of business operations.
The Company has substantially completed the process of evaluating its
information systems and equipment and corresponding with significant vendors
that could be affected by the Y2K issue. Although its assessment of its Y2K
issue is not complete, the Company believes its internal systems are Y2K
compliant or will be replaced or upgraded to comply with Y2K requirements.
However, a number of the Company's customers and vendors may be affected by Y2K
issues that require that they expend significant resources to modify or replace
their existing systems. The Company currently estimates that the cost of the Y2K
compliance to be approximately $25,000. These estimated costs are primarily for
consulting services and equipment upgrades and are not material to the Company's
financial condition or results of operations.
The Company has not yet completed a formal contingency plan relative to
undetected Y2K problems; however, at the current time, there does not appear to
be any critical piece of equipment for which backup cannot be provided. The
worst case scenario would likely involve adding additional short-term labor to
perform repetitive tasks. There could also be some incremental costs of
replacing current testing capabilities if the Company's on-site test equipment
should fail. While these extra costs have not yet been estimated , they would
not be expected to have a material impact on the Company's financial condition
or operating results.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
None.
24
<PAGE> 25
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Ernst & Young LLP, Independent Auditors........... 26
Consolidated Balance Sheets as of December 31, 1998 and
1997...................................................... 27
Consolidated Statements of Operations for the years ended
December 31, 1998, 1997 and 1996.......................... 28
Consolidated Statement of Stockholders' Equity (Net Capital
Deficiency) for the years ended December 31, 1998, 1997
and 1996.................................................. 29
Consolidated Statements of Cash Flows for the years ended
December 31, 1998, 1997 and 1996.......................... 30
Notes to Consolidated Financial Statements.................. 31
</TABLE>
25
<PAGE> 26
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Amylin Pharmaceuticals, Inc.
We have audited the accompanying consolidated balance sheets of Amylin
Pharmaceuticals, Inc. as of December 31, 1998 and 1997, and the related
consolidated statements of operations, stockholders' equity (net capital
deficiency), and cash flows for each of the three years in the period ended
December 31, 1998. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Amylin
Pharmaceuticals, Inc. at December 31, 1998 and 1997, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended December 31, 1998, in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
San Diego, California
March 12, 1999,
except for Note 7 as to which the date is
March 23, 1999
26
<PAGE> 27
AMYLIN PHARMACEUTICALS, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------
1998 1997
------------- -------------
<S> <C> <C>
Current assets:
Cash and cash equivalents................................. $ 8,787,000 $ 46,903,000
Short-term investments.................................... 2,002,000 5,845,000
Receivable from related party............................. -- 966,000
Other current assets...................................... 514,000 1,298,000
------------- -------------
Total current assets........................................ 11,303,000 55,012,000
Property and equipment, at cost:
Equipment................................................. 15,197,000 14,707,000
Leasehold improvements.................................... 3,955,000 4,763,000
------------- -------------
19,152,000 19,470,000
Less accumulated depreciation and amortization............ (13,556,000) (10,860,000)
------------- -------------
5,596,000 8,610,000
Patents, net................................................ 1,779,000 1,664,000
Other assets at cost........................................ 145,000 52,000
------------- -------------
$ 18,823,000 $ 65,338,000
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY (NET CAPITAL DEFICIENCY)
Current liabilities:
Accounts payable.......................................... $ 2,187,000 $ 5,278,000
Accrued liabilities, including other deferred revenue..... 2,130,000 10,606,000
Deferred collaborative revenue from related party......... -- 6,357,000
Current portion of notes payable to unrelated parties..... 1,794,000 1,240,000
Current portion of obligations under capital leases....... -- 228,000
------------- -------------
Total current liabilities................................... 6,111,000 23,709,000
Notes payable............................................... 4,164,000 3,047,000
Note payable to related party............................... 39,925,000 33,933,000
Other long-term obligations................................. 85,000 --
Commitments and contingencies
Stockholders' equity (net capital deficiency):
Preferred stock, $.001 par value, 7,500,000 shares
authorized, none issued and outstanding................ -- --
Common stock, $.001 par value, 100,000,000 shares
authorized, 36,726,000 and 32,394,000 issued and
outstanding at December 31, 1998 and 1997,
respectively........................................... 37,000 33,000
Additional paid-in capital................................ 229,757,000 215,245,000
Accumulated deficit....................................... (260,830,000) (209,732,000)
Deferred compensation..................................... (428,000) (893,000)
Accumulated other comprehensive income.................... 2,000 (4,000)
------------- -------------
Total stockholders' equity (net capital deficiency)......... (31,462,000) 4,649,000
------------- -------------
$ 18,823,000 $ 65,338,000
============= =============
</TABLE>
See accompanying notes.
27
<PAGE> 28
AMYLIN PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
Revenues under collaborative agreements with
related party.................................. $ 16,236,000 $ 42,609,000 $ 35,803,000
Expenses:
Research and development....................... 53,597,000 82,281,000 64,998,000
General and administrative..................... 10,191,000 15,592,000 10,420,000
------------ ------------ ------------
63,788,000 97,873,000 75,418,000
------------ ------------ ------------
Loss from operations............................. (47,552,000) (55,264,000) (39,615,000)
Interest and other income........................ 1,424,000 2,613,000 2,274,000
Interest and other expense....................... (4,970,000) (1,976,000) (446,000)
------------ ------------ ------------
Net loss......................................... $(51,098,000) $(54,627,000) $(37,787,000)
============ ============ ============
Basic and diluted net loss per share............. $ (1.49) $ (1.70) $ (1.31)
============ ============ ============
Shares used in computing net loss per
share -- basic and diluted..................... 34,325,326 32,155,761 28,744,822
============ ============ ============
</TABLE>
See accompanying notes.
28
<PAGE> 29
AMYLIN PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(NET CAPITAL DEFICIENCY)
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
ACCUMULATED
COMMON STOCK ADDITIONAL OTHER TOTAL
-------------------- PAID-IN ACCUMULATED DEFERRED COMPREHENSIVE STOCKHOLDERS'
SHARES AMOUNT CAPITAL DEFICIT COMPENSATION INCOME EQUITY
---------- ------- ------------ ------------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31,
1995....................... 28,018,000 $28,000 $166,994,000 $(117,318,000) $ -- $ 50,000 49,754,000
Comprehensive income
(loss):
Net loss................. -- -- -- (37,787,000) -- -- (37,787,000)
Unrealized loss on
available-for-sale
securities............. -- -- -- -- -- (66,000) (66,000)
------------
Comprehensive loss....... -- -- -- -- -- -- (37,853,000)
Issuance of common stock
in public offering..... 2,012,000 2,000 18,767,000 -- -- -- 18,769,000
Issuance of common stock
in private placement... 1,500,000 1,000 14,999,000 -- -- -- 15,000,000
Issuance of common stock
upon exercise of
options................ 447,000 1,000 1,967,000 -- -- -- 1,968,000
Deferred compensation
related to stock
options................ -- -- 2,073,000 -- (2,073,000) -- --
Amortization of deferred
compensation........... -- -- -- -- 896,000 -- 896,000
---------- ------- ------------ ------------- ----------- -------- ------------
Balance at December 31,
1996....................... 31,977,000 32,000 204,800,000 (155,105,000) (1,177,000) (16,000) 48,534,000
Comprehensive income
(loss):
Net loss................. -- -- -- (54,627,000) -- -- (54,627,000)
Unrealized gain on
available-for-sale
securities............. -- -- -- -- -- 12,000 12,000
------------
Comprehensive loss....... -- -- -- -- -- -- (54,615,000)
Issuance of common stock
upon exercise of
options................ 417,000 1,000 2,100,000 -- -- -- 2,101,000
Deferred compensation
related to stock
options................ -- -- 261,000 -- (261,000) -- --
Amortization of deferred
compensation........... -- -- -- -- 545,000 -- 545,000
Discount on Note Payable
related to grant of
common stock
warrants............... -- -- 8,084,000 -- -- -- 8,084,000
---------- ------- ------------ ------------- ----------- -------- ------------
Balance at December 31,
1997....................... 32,394,000 33,000 215,245,000 (209,732,000) (893,000) (4,000) 4,649,000
Comprehensive income
(loss):
Net loss................. -- -- -- (51,098,000) -- -- (51,098,000)
Unrealized loss on
available-for-sale
securities............. -- -- -- -- -- 6,000 6,000
------------
Comprehensive loss....... -- -- -- -- -- -- (51,092,000)
Issuance of common stock
upon exercise of
options................ 130,000 130 549,000 -- -- -- 549,000
Issuance of common stock
for employer 401(k)
match.................. 81,000 81 458,000 -- -- -- 458,000
Issuance of common stock
in private placement... 4,000,000 4,000 12,730,000 -- -- -- 12,734,000
Issuance of common stock
under Employee Stock
Purchase Plan.......... 121,000 121 438,000 -- -- -- 438,000
Deferred compensation
related to stock
options................ -- -- 337,000 -- (337,000) -- --
Amortization of deferred
compensation........... -- -- -- -- 802,000 -- 802,000
---------- ------- ------------ ------------- ----------- -------- ------------
Balance at December 31,
1998....................... 36,726,000 $37,000 $229,757,000 $(260,830,000) $ (428,000) $ 2,000 $(31,462,000)
========== ======= ============ ============= =========== ======== ============
</TABLE>
See accompanying notes.
29
<PAGE> 30
AMYLIN PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net loss......................................... $(51,098,000) $(54,627,000) $(37,787,000)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization.................. 2,696,000 2,865,000 2,345,000
Deferred revenue from related party............ (6,357,000) (1,597,000) 3,336,000
Deferred rent and other expense................ -- (17,000) (25,000)
Amortization of deferred compensation.......... 802,000 545,000 896,000
Amortization of warrants issued with debt...... 1,198,000 299,000 --
Changes in operating assets and liabilities:
Receivable from related party.................. 966,000 1,123,000 (1,866,000)
Other current assets........................... 784,000 (156,000) 130,000
Accounts payable............................... (3,091,000) 449,000 3,352,000
Accrued liabilities............................ (8,711,000) 5,995,000 1,750,000
------------ ------------ ------------
Net cash flows used in operating activities...... (62,811,000) (45,121,000) (27,869,000)
INVESTING ACTIVITIES:
Purchases of short-term investments.............. (2,158,000) (15,541,000) (38,972,000)
Maturities of short-term investments............. 2,000,000 19,005,000 29,642,000
Sales of short-term investments.................. 3,995,000 10,172,000 26,607,000
Sale (purchase) of equipment and leasehold
improvements................................... 318,000 (4,641,000) (3,278,000)
Increase in deposits, patents and other assets... 122,000 (371,000) (313,000)
------------ ------------ ------------
Net cash flows provided by investing
activities..................................... 4,277,000 8,624,000 13,686,000
FINANCING ACTIVITIES:
Issuance of notes payable........................ 7,707,000 40,467,000 5,379,000
Principal payments on capital leases and
equipment notes payable........................ (1,468,000) (1,822,000) (988,000)
Issuance of common stock, net.................... 14,179,000 2,101,000 35,737,000
------------ ------------ ------------
Net cash flows provided by financing
activities..................................... 20,418,000 40,746,000 40,128,000
------------ ------------ ------------
Decrease in cash and cash equivalents............ (38,116,000) 4,249,000 25,945,000
Cash and cash equivalents at beginning of
period......................................... 46,903,000 42,654,000 16,709,000
------------ ------------ ------------
Cash and cash equivalents at end of period....... $ 8,787,000 $ 46,903,000 $ 42,654,000
============ ============ ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Interest paid.................................... $ 129,000 $ 411,000 $ 281,000
============ ============ ============
</TABLE>
See accompanying notes.
30
<PAGE> 31
AMYLIN PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND BUSINESS ACTIVITY
Amylin Pharmaceuticals, Inc. ("Amylin" or the "Company") was incorporated
in Delaware on September 29, 1987. The Company is an early development
pharmaceutical company focused on metabolic disorders, and specializing in
preclinical characterization of lead molecules and demonstration of proof of
principle in humans. The Company is conducting a series of Phase 3 clinical
trials of its leading drug candidate, pramlintide, in people with type 1 or
insulin-using type 2 diabetes. The Company is also conducting clinical trials of
AC2993 (synthetic exendin-4), a second diabetes drug candidate.
PRINCIPLES OF 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 in consolidation.
RESEARCH REVENUES UNDER COLLABORATIVE AGREEMENTS AND RESEARCH AND DEVELOPMENT
EXPENSES
Research revenues under collaborative agreements are recorded when earned
as research activities are performed. Payments in excess of amounts earned are
deferred. Research and development costs are expensed as incurred.
CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS
Cash, cash equivalents and short-term investments consist principally of
U.S. government securities and other highly liquid debt instruments. The Company
considers instruments with remaining maturities of less than 90 days when
purchased to be cash equivalents.
CONCENTRATION OF CREDIT RISK
The Company invests its excess cash in U.S. government securities and debt
instruments of financial institutions and corporations with strong credit
ratings. The Company has established guidelines relative to diversification and
maturities that maintain safety and liquidity. These guidelines are periodically
reviewed.
INVESTMENTS
The Company has classified its debt securities as available-for-sale, and
accordingly, carries its short term investments at fair value, and unrealized
holding gains or losses on these securities are carried as a separate component
of stockholders' equity. The amortized cost of debt securities in this category
is adjusted for amortization of premiums and accretion of discounts to maturity.
Such amortization is included in interest income. Realized gains and losses and
declines in value judged to be other-than-temporary (of which there have been
none to date) on available-for-sale securities are included in interest income.
The cost of securities sold is based on the specific identification method.
DEPRECIATION AND AMORTIZATION
Depreciation of equipment is computed using the straight-line method over
two to five years. Leasehold improvements are amortized over the shorter of the
estimated useful lives of the assets or the remaining term of the lease.
Amortization of equipment under capital leases is reported with depreciation of
property and equipment. Patents consist of patent filing costs which are
amortized over the estimated economic life of the patents when issued.
31
<PAGE> 32
AMYLIN PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NET LOSS PER SHARE
In 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard ("SFAS") No. 128, Earnings per Share. SFAS 128
replaced the calculation of primary and fully diluted earnings per share with
basic and diluted earnings per share. Unlike primary earnings per share, basic
earnings per share excludes any dilutive effects of options, warrants and
convertible securities. Diluted earnings per share is very similar to the
previously reported fully diluted earnings per share. The adoption of SFAS 128
had no effect on the Company's financial statements.
OPTIONS
The Company has elected to follow Accounting Principles Board Opinion No.
25 Accounting for Stock Issued to Employees and related Interpretations ("APB
25") in accounting for its employee stock options. Under APB 25, when the
exercise price of the Company's employee stock options is not less than the
market price of the underlying stock on the date of grant, no compensation
expense is recognized.
COMPREHENSIVE INCOME
Effective January 1, 1998, the Company adopted SFAS No. 130, Reporting
Comprehensive Income, which requires that all components of comprehensive
income, including net income, be reported in the financial statements in the
period in which they are recognized. Comprehensive income is defined as the
change in equity during a period from transactions and other events and
circumstances from non-owner sources. Net income and other comprehensive income,
including unrealized gains and losses on investments, shall be reported, net of
their related tax effect, to arrive at comprehensive income. Prior year
financial statements have been reclassified to conform to the requirements of
SFAS No. 130.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
2. INVESTMENTS
The following is a summary of investments as of December 31, 1998 and 1997,
including $7,628,000 and $37,211,000 classified as cash equivalents in the
accompanying balance sheets as of December 31, 1998 and 1997, respectively. All
respective investments mature in less than one year.
<TABLE>
<CAPTION>
AVAILABLE-FOR-SALE SECURITIES
-------------------------------------------------
GROSS GROSS
UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
DECEMBER 31, 1998
U.S. Treasury securities and obligations of U.S
government agencies.............................. $5,051,000 $1,000 $-- $5,052,000
Other debt securities.............................. 4,577,000 1,000 -- 4,578,000
---------- ------ -- ----------
Total.................................... $9,628,000 $2,000 $-- $9,630,000
========== ====== == ==========
</TABLE>
32
<PAGE> 33
AMYLIN PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
AVAILABLE-FOR-SALE SECURITIES
---------------------------------------------------
GROSS GROSS
UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
DECEMBER 31, 1997
U.S. Treasury securities and obligations of U.S
government agencies............................ $21,832,000 $-- $(3,000) $21,829,000
Other debt securities............................ 21,228,000 -- (1,000) 21,227,000
----------- -- ------- -----------
Total.................................. $43,060,000 $-- $(4,000) $43,056,000
=========== == ======= ===========
</TABLE>
The gross realized gains on sales of available-for-sale securities totaled
$1,400 and $1,000 and the gross realized losses totaled $500 and $3,000 for the
years ended December 31, 1998 and 1997, respectively.
3. COMMITMENTS
LEASES
The Company leases its facilities and certain machinery and equipment under
operating and capital leases. The minimum annual rent on the Company's
facilities is subject to increases based on stated rental adjustment terms of
certain leases, taxes, insurance and operating costs. Certain equipment leases
require the Company to provide the lessor with a guaranteed residual at the end
of the lease term at which time title to the equipment passes to the Company.
Minimum future annual obligations for operating leases for years ending
after December 31, 1998 are as follows:
<TABLE>
<S> <C>
1999............................................. $ 926,000
2000............................................. 827,000
2001............................................. 860,000
2002............................................. 894,000
Thereafter....................................... 1,571,000
----------
Total minimum lease payments........... $5,078,000
==========
</TABLE>
Rent expense for 1998, 1997, and 1996 was $2,402,000, $2,697,000 and
$2,315,000, respectively.
DEBT
As of December 31, 1998, the Company had an outstanding loan of $15,000 for
financing of equipment and tenant improvements. The loan is payable over
forty-eight months which commenced on February 1, 1995. Payments include
principal and monthly interest of prime plus 1.75% (9.5% at December 31, 1998)
of the outstanding principal balance. The loan agreement contains provisions for
the complete repayment of any outstanding principal balance should the Company's
cash balances fall below certain minimum levels.
In 1996, the Company entered into a master line of credit agreement (as
amended) to provide up to $5,000,000 of net financing for standard equipment. As
of December 31, 1998, the Company had an outstanding loan balance of $3,243,896.
Borrowings under each loan schedule are payable over forty-eight months to
include principal and monthly interest based on the average of three and
five-year U.S. Treasury maturities (approximately 10.63% at December 31, 1998).
Principal payments due in 1999 through 2002 are $1,239,820, $1,272,351,
$705,520, and $26,205, respectively. The credit agreement provides the lender
with a security interest in all equipment financed under the line.
In November 1997, the Company entered into a commitment agreement to enter
into a financing agreement which will provide up to $2,700,000 of financing for
equipment purchases. As of December 31,
33
<PAGE> 34
AMYLIN PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1998, the Company had an outstanding loan balance of $2,700,000. Borrowings
under this agreement are payable over a sixty-month period with principal
payments commencing on January 1, 1999. Monthly interest payments are calculated
based on prime plus 0.5% (approximately 8.25% at December 31, 1998) of the
outstanding principal balance and commenced with the outstanding balance in
1998. Principal payments due in 1999 through 2003 are $540,000 annually. The
credit agreement provides the lender with a security interest in all equipment
financed under the agreement and requires payment of a security deposit of 50%
of the outstanding balance should the Company's cash balances fall below
$10,000,000.
4. STOCKHOLDERS' EQUITY
STOCK PURCHASE PLAN
In November 1991, the Company adopted the Employee Stock Purchase Plan (the
"Purchase Plan"), under which 500,000 shares of common stock may be issued to
eligible employees, including officers. The price of common stock under the
Purchase Plan is equal to the lessor of 85% of the market price on the effective
date of an employee's participation in the plan or 85% of the fair market value
of the common stock at the purchase date. At December 31, 1998, 422,956 shares
of common stock had been issued under the plan.
STOCK OPTIONS
Under the Company's 1991 Stock Option Plan (the "Plan"), 7,800,000 shares
of common stock are reserved for issuance upon exercise of options granted to
employees and consultants of the Company. The Plan provides for the grant of
incentive and nonstatutory stock options. The exercise price of incentive stock
options must equal at least the fair market value on the date of grant, and the
exercise price of nonstatutory stock options may be no less than 85% of the fair
market value on the date of grant. Additionally, the Company is authorized to
issue supplemental stock options for up to 70,000 options outside of the Plan.
The maximum term of all options granted is ten years.
Under the Company's Non-Employee Directors' Stock Option Plan (the
"Directors' Plan") 350,000 shares of common stock are reserved for issuance upon
exercise of nonqualified stock options granted to Non-Employee Directors of the
Company.
The following table summarizes option activity:
<TABLE>
<CAPTION>
SHARES WEIGHTED
UNDER AVERAGE
OPTION EXERCISE PRICE
---------- --------------
<S> <C> <C>
Outstanding at December 31, 1995........... 4,308,233 $ 5.74
Granted.................................. 1,927,796 $10.58
Exercised................................ (404,671) $ 4.46
Cancelled................................ (331,576) $ 9.43
---------- ------
Outstanding at December 31, 1996........... 5,499,782 $ 7.31
Granted.................................. 566,914 $11.94
Exercised................................ (376,826) $ 4.71
Cancelled................................ (327,231) $ 8.48
---------- ------
Outstanding at December 31, 1997........... 5,362,639 $ 7.91
Granted.................................. 3,364,337 $ 2.54
Exercised................................ (169,069) $ 4.32
Cancelled................................ (2,590,778) $ 8.67
---------- ------
Outstanding at December 31, 1998........... 5,967,129 $ 4.65
========== ======
</TABLE>
At December 31, 1998, 1,214,555 shares remained available for grant or
sale.
34
<PAGE> 35
AMYLIN PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Following is a further breakdown of the options outstanding as of December
31, 1998:
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
AVERAGE AVERAGE WEIGHTED
RANGE NUMBER REMAINING EXERCISE NUMBER AVERAGE EXERCISE
OF EXERCISE PRICES OUTSTANDING CONTRACTUAL LIFE PRICE EXERCISABLE PRICE
------------------ ----------- ---------------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
$0.313 1,230,000 9.81 $ 0.31300 -- $ 0.00000
$0.438 - $4.375 1,138,441 7.76 2.62945 438,166 2.31577
$4.500 1,254,223 5.05 4.50000 1,254,038 4.50000
$4.750 - $7.125 1,288,041 7.19 5.81223 896,949 6.02831
$7.250 - $14.375 1,056,424 6.52 10.65456 966,715 10.51093
--------- ---- --------- --------- ---------
$0.313 - $14.375 5,967,129 7.27 $ 4.65292 3,555,868 $ 6.25052
========= ==== ========= ========= =========
</TABLE>
Adjusted pro forma information regarding net loss and loss per share is
required by SFAS No. 123, and has been determined as if the Company had
accounted for its employee stock options and stock purchase plan under the fair
value method of SFAS No. 123. The fair value for these options was estimated at
the date of grant using the "Black-Scholes" method for option pricing with the
following weighted average assumptions for 1998, 1997 and 1996, respectively:
risk-free interest of 5.50%, 5.71% and 6.39%; dividend yield of 0%; volatility
factors of the expected market price of the Company's common stock of 73.5%,
65.4% and 64.7%; and a weighted-average expected life of the option of five
years.
For purposes of adjusted pro forma disclosures, the estimated fair value of
the option is amortized to expense over the option's vesting period.
The Company's adjusted pro forma information is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
Adjusted pro forma net loss...................... $(52,713,000) $(59,850,000) $(41,969,000)
Adjusted pro forma basic and diluted net loss per
share.......................................... $ (1.54) $ (1.86) $ (1.46)
</TABLE>
The weighted-average fair value of options granted during 1998, 1997, and
1996 was $1.66, $7.14 and $6.67, respectively.
STOCK WARRANTS
In May 1997, in conjunction with an amendment to a License Agreement, the
Company issued warrants to the licensor to purchase 20,000 shares of the
Company's common stock with a fixed exercise price of $11.375 per share and a
10-year exercise period.
On September 30, 1997, in conjunction with the draw down under the
Development Loan Facility with Johnson & Johnson, the Company issued a warrant
to Johnson & Johnson to purchase 1,530,950 shares of the Company's common stock
at an exercise price of $12.00 per share which expires on September 29, 2007
(see "Collaborative Agreements").
35
<PAGE> 36
AMYLIN PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SHARES RESERVED FOR FUTURE ISSUANCE
The following shares of common stock are reserved for future issuance at
December 31, 1998:
<TABLE>
<S> <C>
1991 Stock Option Plan........................... 6,803,198
Employee Stock Purchase Plan..................... 91,211
Directors Plan................................... 328,576
Phantom Stock Plan............................... 141,195
Warrants......................................... 1,530,950
----------
8,895,130
==========
</TABLE>
5. COLLABORATIVE AGREEMENTS
JOHNSON & JOHNSON
In June 1995, the Company entered into a worldwide Collaboration Agreement
(the "Collaboration Agreement") with LifeScan, Inc. for the development and
commercialization of pramlintide, a diabetes drug candidate currently in Phase 3
clinical trials. In conjunction with the Collaboration Agreement, the Company
also entered into a Stock Purchase Agreement with Johnson & Johnson Development
Corporation ("JJDC") and a Loan Agreement with Johnson & Johnson. LifeScan, Inc.
and JJDC, each of which are wholly-owned subsidiaries of Johnson & Johnson, are
referred to herein as Johnson & Johnson.
Johnson & Johnson paid the Company a license fee, which was recognized as
revenue upon the signing of the Collaboration Agreement in 1995. Approximately
$16.2 million, $33.6 million, and $27.4 million of development payments were
made to the Company and recognized as revenues during 1998, 1997, and 1996,
respectively. Also included in receivables from related party was $1.0 million
of pre-marketing expenses due to the Company from Johnson & Johnson as of
December 31, 1997. Additionally, the Company's December 31, 1997 balance sheet
includes approximately $6.4 million in short-term deferred revenues reflecting
amounts advanced from Johnson & Johnson representing an equalization payment for
its share of projected development expenses for the first quarter of 1997.
Payments from Johnson & Johnson to Amylin Pharmaceuticals for development
expenses were recognized as revenue in the period in which they were earned.
In accordance with the terms of the Stock Purchase Agreement, Johnson &
Johnson purchased 3,455,407 shares of the Company's common stock through
December 31, 1998.
In September 1997, the Company received proceeds of approximately $30.6
million from the loan facility (the "Development Loan Facility"). The proceeds
were applied against the Company's one-half share of development expenses for
pramlintide. 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 over a 10-year exercise period.
The estimated fair value of the warrants has been accounted for as a discount
from the face value of the note. The loan is repayable beginning 12 months after
approval of a new drug application for pramlintide with 50% of the Company's
pramlintide profits, if any, subject to certain exceptions set forth in the
Development Loan facility. The loan is secured by the Company's issued patents
and patent applications relating to Amylin. Additionally, as of December 31,
1998, the Company owed Johnson & Johnson approximately $12.3 million for its
share of pre-launch marketing expenses.
In February 1998, Johnson & Johnson provided the Company with six-months
notice of its intention to terminate their collaboration. Johnson & Johnson's
financial and other obligations under the Collaboration Agreement continued
during the termination notice period and ended in August 1998. Based upon
Johnson & Johnson's decision, Amylin restructured its operations which included
reducing its workforce by approximately 25%. The impact of this restructuring
slowed down other (non-pramlintide) research programs.
36
<PAGE> 37
AMYLIN PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
In September 1998, the Company entered into a repurchase agreement (the
"Pramlintide Repurchase Agreement") with Ortho-Biotech, Inc., an affiliate of
Johnson & Johnson ("J&J"), which provided that J&J will order and purchase
certain amounts of pramlintide from third party vendors and will place in
inventory such amounts of pramlintide for possible future purchase by Amylin.
J&J will purchase the pramlintide from certain vendors based upon agreed upon
prices per gram. The repurchase price of the compound shall be the same price
paid by J&J to the supplier. Amylin must repurchase the pramlintide in full on
the first to occur of the following: (i) Amylin executes any agreement with a
major company relating to the development, commercialization and/or sale of
pramlintide; (ii) Amylin requests in writing that J&J process the material or
requests that J&J transfer the material to a third party for processing; (iii)
Amylin receives regulatory approval for the sale of pramlintide; or (iv) Amylin
is acquired by a third party. If none of the above listed events occur, Amylin
will not have an obligation to purchase the pramlintide inventory from J&J. As
of December 31, 1998, J&J had purchased pramlintide inventory for Amylin
totaling approximately $1.1 million.
6. INCOME TAXES
Significant components of the Company's deferred tax assets as of December
31, 1998 and 1997 are shown below. A valuation allowance of $109,822,000, of
which $42,232,000 is related to 1998 changes, has been recognized as of December
31, 1998 to offset the deferred tax assets as realization of such assets is
uncertain.
<TABLE>
<CAPTION>
1998 1997
------------- ------------
<S> <C> <C>
Deferred tax assets:
Capitalized research expenses.......... $ 8,672,000 $ 9,653,000
Net operating loss carryforwards....... 87,943,000 68,892,000
Research and development credits....... 12,464,000 9,615,000
Other.................................. 743,000 3,790,000
------------- ------------
Total deferred tax assets.............. 109,822,000 91,950,000
Valuation allowance for deferred tax
assets............................... (109,822,000) (91,950,000)
------------- ------------
Net deferred tax assets................ $ -- $ --
============= ============
</TABLE>
Approximately $382,000 of the valuation allowance for deferred tax assets
relates to stock option deductions which when recognized will be allocated
directly to additional paid-in capital.
At December 31, 1998, the Company has federal, California and foreign tax
net operating loss carryforwards of approximately $241,881,000, $21,932,000 and
$6,528,000, respectively. The difference between the tax loss carryforwards for
federal and California purposes is attributable to the capitalization of
research and development expenses for California tax purposes and the fifty
percent limitation on California loss carryforwards. The federal tax loss
carryforwards will begin expiring in 2002 unless previously utilized. The
California tax loss carryforwards will continue to expire in 1999 ($998,000
expired in 1998). The Company also has federal and California research and
development tax credit carryforwards of $10,149,000 and $3,561,000,
respectively, which will begin expiring in 2003 unless previously utilized.
Pursuant to Internal Revenue Code Sections 382 and 383, the use of the
Company's net operating loss and credit carryforwards may be limited if a
cumulative change in ownership of more than 50% occurs within a three-year
period. However, the Company does not believe that such a limitation would have
a material impact upon the future utilization of these carryforwards.
7. SUBSEQUENT EVENT
In March 1999, the Company raised $15 million through a private placement
of Series A Convertible Preferred Stock (the "Series A Preferred Stock") to a
group of investors ("the Investors"). Subject to
37
<PAGE> 38
AMYLIN PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
adjustment in certain events, the Series A Preferred Stock is convertible into
common stock of the Company at $1.20 per share (the "Conversion Price"). The
Conversion Price will be adjusted using a weighted-average formula for issuances
of other securities at a price per share lower than the then current Conversion
Price, provided that, at no time shall the Conversion Price fall below $0.96 per
share. The Series A Preferred Stock accrues dividends at a rate of 5% of the
purchase price per share per annum. Beginning at the first anniversary of the
closing, dividends are payable semi-annually in cash or common stock valued at a
ten day trailing average closing price.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this item with respect to executive officers
and directors is incorporated by reference from the information under the
caption of "Election of Directors," contained in the Company's Definitive Proxy
Statement to be filed with the Commission pursuant to Regulation 14A in
connection with the 1999 Annual Meeting (the "Proxy Statement").
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is incorporated by reference to the
information under the caption "Executive Compensation" contained in the Proxy
Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is incorporated by reference to the
information under the caption "Security Ownership of Certain Beneficial Owners
and Management" contained in the Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is incorporated by reference to the
information under the caption contained in "Certain Transactions" contained in
the Proxy Statement.
38
<PAGE> 39
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1) INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Reference is made to the Index to Consolidated Financial Statements under
Item 8 in Part II hereof, where these documents are listed.
(a)(2) FINANCIAL STATEMENT SCHEDULES: All schedules have been omitted because
they are not applicable or required, or the information required to be set forth
therein is included in the Consolidated Financial Statements or notes thereto
included in Item 8 ("Financial Statements and Supplementary Data").
(a)(3) INDEX TO EXHIBITS -- See (c) below.
(b) REPORTS ON FORM 8-K
Not applicable.
(c) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT EXHIBIT
FOOTNOTE NUMBER DESCRIPTION
-------- ------- -----------
<C> <C> <S>
(1) 3.1 Amended and Restated Certificate of Incorporation of the
Registrant.
(1) 3.2 Amended and Restated Bylaws of the Registrant.
(19) 3.3 Certificate of Amendment of Amended and Restated Certificate
of Incorporation of the Registrant.
3.4 Certificate of Designation of the 5% Series A Convertible
Preferred Stock of the Registrant.
4.1 Reference is made to Exhibits 3.1 and 3.2.
4.2 Form of Stock Purchase Agreement dated March 22, 1999
between the Registrant and purchasers of the Registrant's 5%
Series A Convertible Preferred Stock.
(1) 10.1 Form of Indemnity Agreement entered into between the
Registrant and its directors and officers.+
(19) 10.2 Registrant's 1991 Stock Option Plan, as amended (the "Option
Plan").+
(8) 10.3 Form of Incentive Stock Option Agreement under the Option
Plan.+
(1) 10.4 Form of Supplemental Stock Option Agreement under the Option
Plan.+
(1) 10.5 Form of Supplemental Stock Option Agreement not granted
under the Option Plan with related schedule.+
(20) 10.6 Registrant's Employee Stock Purchase Plan, as amended.+
(1) 10.7 Stock Purchase Agreement, dated as of October 28, 1991,
between the Registrant and the parties named therein, as
amended.
(1)(2) 10.8 License Agreement, dated as of November 22, 1991, among the
Registrant, the Regents of the University of Minnesota, and
Per Westermark.
(1) 10.9 Lease, dated as of January 2, 1989, between the Registrant
and Nippon Landic (USA), Inc., the assignee of
NEXUS/GADCO-UTC, as amended.
(3) 10.10 Lease Agreement, dated as of January 22, 1993, between the
Registrant and Loma Palisades, Ltd., a California Limited
Partnership, and related Sublease Agreements, each dated
January 21, 1993 between the Registrant and Lam Research
Corporation.
(3) 10.11 Master Equipment Lease Agreement Number 10453, Equipment
Financing Agreement Number 10753, Negative Covenant Pledge
Agreements and Collateral Security Agreement, each dated as
of March 19, 1993, between the Registrant and Lease
Management Services, Inc.
</TABLE>
39
<PAGE> 40
<TABLE>
<CAPTION>
EXHIBIT EXHIBIT
FOOTNOTE NUMBER DESCRIPTION
-------- ------- -----------
<C> <C> <S>
(19) 10.12 Registrant's Non-Employee Directors Stock Option Plan (the
"Directors' Plan").+
(4) 10.13 Form of Nonstatutory Stock Option Agreement under the
Directors' Plan.+
(5) 10.14 Sublease Agreement, dated September 1, 1994, between the
Registrant and ORINCON Corporation.
(5) 10.15 Loan Agreement, dated July 5, 1994, and related Note and
Credit Terms and Conditions Agreement between the Registrant
and Imperial Bank.
(5) 10.16 Phantom Stock Unit Agreement, dated January 4, 1995, between
the Registrant and Farview Management Co., L.P.+
(6)(7) 10.17 Collaboration Agreement, dated June 20, 1995 between the
Registrant and LifeScan, Inc.
(6)(7) 10.18 Stock Purchase Agreement, dated June 20, 1995 between the
Registrant and Johnson & Johnson Development Corporation.
(6)(7) 10.19 Loan and Security Agreement, dated June 20, 1995 between the
Registrant and Johnson & Johnson.
(6)(7) 10.20 Agreement to Discontinue Collaboration, dated June 20, 1995
between the Registrant and Glaxo Wellcome, Inc.
(8) 10.21 Consulting Agreement, dated June 15, 1995, between the
Registrant and Joseph C. Cook, Jr., as amended on March 25,
1996, and related Nonstatutory Stock Option grant dated June
15, 1995.+
(8) 10.22 Addendums No. 10453 and 10753 to Master Lease Agreement
dated January 19, 1996 between the Registrant and Lease
Management Services with Related Negative Covenant Pledge
Agreement and Collateral Security Agreement.
(9) 10.23 Employment agreement dated July 11, 1996, between the
registrant and Richard M. Haugen.+
(10)(11) 10.24 Patent and Technology License Agreement, Consulting
Agreement and Nonstatutory Stock Option Agreement dated
October 1, 1996, between the Registrant and Dr. John Eng.
(10)(11) 10.25 Collaborative Research and Assignment Agreement dated
October 15, 1996, among the Registrant, London Health
Sciences Centre and Dr. John Dupre.
(12) 10.26 Employment agreement dated August 1, 1996 between the
Registrant and Howard E. Greene, Jr.+
(12) 10.27 Amendment dated November 5, 1996 to the Lease Agreement,
dated January 22, 1993, between the Registrant and Loma
Palisades, Ltd., a California Limited Partnership.
(12) 10.28 Amendment dated January 15, 1997 to the Consulting
Agreement, dated June 15, 1995, between the Registrant and
Joseph C. Cook, Jr.+
(12) 10.29 Addendum to the Master Financing Agreement No, 10753 dated
January 19, 1996 between the Registrant and Lease Management
Services with amendments to the Related Negative Covenant
Pledge Agreement and Collateral Security Agreement, each
dated as of January 30, 1997.
(12) 10.30 Sublease Agreement, dated January 31, 1997, between the
Registrant and Gensia, Inc.
(12) 10.31 Fourth Amendment dated February 26, 1997 to the Lease
Agreement, dated January 2, 1989, between the Registrant and
Nippon Landic (U.S.A.), Inc., as amended.
(13)(14) 10.32 Collaboration Agreement between the Registrant and Hoechst
Marion Roussel Dated March 31, 1997.
(13)(14) 10.33 License and Option Agreement between the Registrant and
Hoechst Marion Roussel Dated March 31, 1997.
</TABLE>
40
<PAGE> 41
<TABLE>
<CAPTION>
EXHIBIT EXHIBIT
FOOTNOTE NUMBER DESCRIPTION
-------- ------- -----------
<C> <C> <S>
(15) 10.34 Registrant's Directors' Deferred Compensation Plan.+
(16) 10.35 Warrant Agreement between the Registrant and the Medical
Research Council dated May 9, 1997.
(16) 10.36 Promissory Note dated September 30, 1997 issued by the
Registrant to Johnson & Johnson.
(16) 10.37 Warrant Agreement between the Registrant and Johnson &
Johnson dated September 30, 1997.
(17) 10.38 Amendment dated September 1, 1996 to Option Agreements
between the Registrant and Howard E. Greene, Jr.+
(19) 10.39 Amendment Dated March 25, 1998, to Option Agreements between
the Registrant and Howard E. Greene, Jr.+
(17) 10.40 Margin Account Loan Agreement between the Registrant and
Bradford and Kimberly Duft dated December 19, 1997.+
(17) 10.41 Credit Agreement and related Note between the Registrant and
Imperial Bank dated January 15, 1998.
(17) 10.42 Amendment dated February 1, 1998 to Option Agreements
between the Registrant and Marjorie T. Sennett.+
(18) 10.43 Employee Phantom Stock Salary Deferral Plan (the "Deferral
Plan").+
(18) 10.44 Form of Deferred Compensation Agreement under the Deferral
Plan.+
(19) 10.45 Employment Agreement dated March 25, 1998, between the
Registrant and Richard M. Haugen.+
(19) 10.46 Letter agreement dated June 12, 1998, between the Registrant
and Richard M. Haugen regarding Mr. Haugen's participation
in the Deferral Plan.+
(19) 10.47 Employment Agreement dated March 25, 1998, between the
Registrant and Joseph C. Cook, Jr.+
10.48 Fifth Amendment dated February 8, 1999 to the Lease
Agreement, dated January 2, 1989, between the Registrant and
Nippon Landic (U.S.A.), Inc., as amended.
10.49 Stock Option Agreement dated March 25, 1998 between the
Registrant and Joseph C. Cook, Jr.+
10.50 Stock Option Agreement dated October 23, 1998 between the
Registrant and Joseph C. Cook, Jr.+
23.1 Consent of Ernst & Young LLP, Independent Auditors.
24.1 Power of Attorney. Reference is made to page 43.
27 Financial Data Schedule.
</TABLE>
- ---------------
+ Indicates management or compensatory plan or arrangement required to be
identified pursuant to Item 14(c).
(1) Filed as an exhibit to the Registrant's Registration Statement on Form S-1
(No. 33-44195) or amendments thereto and incorporated herein by reference.
(2) Certain confidential portions deleted pursuant to Order Granting
Application Under the Securities Act of 1933 and Rule 406 Thereunder
Respecting Confidential Treatment dated January 17, 1992.
(3) Filed as an exhibit to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1992.
(4) Filed as an exhibit to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1993.
(5) Filed as an exhibit to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994.
41
<PAGE> 42
(6) Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1995.
(7) Certain confidential portions deleted pursuant to Order Granting
Application Under the Securities Exchange Act of 1934 and Rule 24b-2
Thereunder Respecting Confidential Treatment dated March 7, 1997.
(8) Filed as an exhibit to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995.
(9) Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1996.
(10) Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1996.
(11) Certain confidential portions deleted pursuant to Order Granting
Application Under the Securities Exchange Act of 1934 and Rule 24b-2
Thereunder Respecting Confidential Treatment dated December 20, 1996.
(12) Filed as an exhibit to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996.
(13) Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1997.
(14) Certain confidential portions deleted pursuant to Order Granting
Application Under the Securities Exchange Act of 1934 and Rule 24b-2
Thereunder Respecting Confidential Treatment dated June 24, 1997.
(15) Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1997.
(16) Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1997.
(17) Filed as an exhibit to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1997.
(18) 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.
(19) Filed as an exhibit to the Registrant's Registration Statement on Form S-3
(No. 33-58831) or amendments thereto and incorporated herein by reference.
(20) Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1998.
(d) FINANCIAL STATEMENT SCHEDULES
The financial statement schedules required by this item are listed under
Item 14(a)(2).
42
<PAGE> 43
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
By: /s/ JOSEPH C. COOK, JR.
------------------------------------
Joseph C. Cook, Jr.
Chairman of the Board
and Chief Executive Officer
Date: March 30, 1999
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Joseph C. Cook, Jr., and Nancy K. Dahl,
and each of them, as his or her true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him or her and in his or
her name, place, and stead, in any and all capacities, to sign any and all
amendments to this Report, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith, as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming that all said attorneys-in-fact and agents, or any of them or
their or his substitute or substituted, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
/s/ JOSEPH C. COOK, JR. Chairman of the Board and Chief March 30, 1999
- ------------------------------------- Executive Officer (Principal
Joseph C. Cook, Jr. Executive, Financial and Accounting
Officer)
/s/ JAMES C. BLAIR Director March 30, 1999
- -------------------------------------
James. C. Blair, Ph.D.
/s/ JAMES C. GAITHER Director March 30, 1999
- -------------------------------------
James C. Gaither
/s/ GINGER L. GRAHAM Director March 30, 1999
- -------------------------------------
Ginger L. Graham
/s/ HOWARD E. GREENE, JR. Director March 30, 1999
- -------------------------------------
Howard E. Greene, Jr.
/s/ VAUGHN M. KAILIAN Director March 30, 1999
- -------------------------------------
Vaughn M. Kailian
</TABLE>
43
<PAGE> 1
EXHIBIT 3.4
CERTIFICATE OF DESIGNATION
OF THE
5% SERIES A CONVERTIBLE PREFERRED STOCK
(PAR VALUE $.001 PER SHARE)
OF
AMYLIN PHARMACEUTICALS, INC.
PURSUANT TO SECTION 151 OF THE
GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
AMYLIN PHARMACEUTICALS, INC., a company organized and existing under the
General Corporation Law of the State of Delaware (the "Company"), in accordance
with the provisions of Section 103 thereof, and pursuant to Section 151 thereof,
DOES HEREBY CERTIFY:
That the Amended and Restated Certificate of Incorporation of the
Company, as amended to date, (the "Certificate of Incorporation") authorizes the
creation of up to 7,500,000 shares of the Company's preferred stock, par value
$.001 per share (such preferred stock, together with all other preferred stock
of the Company the creation of which is in the future authorized by the
Certificate of Incorporation, referred to herein as the "Preferred Stock"); and
That pursuant to the authority conferred upon the Board of Directors
(the "Board") by the Certificate of Incorporation of the Company and delegated
to a special Private Placement Committee of the Board on March 9, 1999 (the
"Private Placement Committee"), said Private Placement Committee on March 17,
1999, approved the creation, issuance and the voting powers of shares of Series
A Convertible Preferred Stock (the "Series A Preferred") and adopted the
following resolution creating a series of one hundred twenty-five thousand
(125,000) shares of Series A Preferred designated as set forth below:
RESOLVED, that pursuant to the authority expressly granted to and vested in the
Private Placement Committee by the Board, provisions of the Certificate of
Incorporation of the Company and the General Corporation Law of the State of
Delaware, the issuance of Series A Preferred, which shall consist of one hundred
twenty-five thousand (125,000) shares of the 7,500,000 shares of Preferred Stock
which the Company now has authority to issue, be, and the same hereby is,
authorized, and the Private Placement Committee hereby fixes the powers,
designations, preferences and relative participating, optional or other special
rights, and the qualifications, limitations or restrictions thereof, of the
shares of such series (in addition to the powers, designations, preferences and
relative participating, optional or other special rights, and the
qualifications, limitations or restrictions thereof, set forth in the
Certificate of Incorporation which may be applicable to the Series A Preferred)
authorized by this resolution as follows:
1.
<PAGE> 2
1. DESIGNATION OF SERIES A PREFERRED STOCK.
a. The designation of such series of Preferred Stock
authorized by this resolution shall be Series A Convertible Preferred Stock (the
"Series A Preferred"). The Series A Preferred is issuable solely in whole shares
that shall entitle the holder thereof to exercise the voting rights, to
participate in the distributions and to have the benefit of all other rights of
holders of Series A Preferred, as set forth herein and in the Certificate of
Incorporation.
2. DIVIDEND RIGHTS.
a. SERIES A DIVIDENDS. Holders of the Series A Preferred,
in preference to the holders of any other stock of the Company including Common
Stock ("Junior Stock"), shall be entitled to receive, but only out of funds that
are legally available therefor, cumulative dividends in the form of cash or
shares of Common Stock, the form of which shall be at the sole discretion of the
Company, at the rate of five percent (5%) of the "Original Issue Price" per
annum compounded annually on each outstanding share of Series A Preferred (as
adjusted for any stock dividends, combinations, splits, recapitalizations and
the like with respect to such shares). The Original Issue Price of the Series A
Preferred shall be one hundred twenty dollars ($120.00) per share.
b. DIVIDENDS CUMULATIVE. The dividends provided for under
Section 2(a) cumulate daily from the Original Issue Date (as defined in Section
4(e) below, and are payable semi-annually beginning with the date that is twelve
months after the date that Series A Preferred is first issued by the Company
(the "Original Issue Date") and continuing on each six-month anniversary
thereafter while any Series A Preferred is outstanding (hereinafter, a "Payment
Date"). Subject to applicable law, the Company shall be obliged to pay such
dividends as provided in Section 2(c) below, provided that any unpaid dividends
shall continue to accumulate on each such share of Series A Preferred until the
date of payment of any unpaid cumulative dividends. Any unpaid cumulative
dividends shall earn interest at the rate of 5% compounded semi-annually and
shall be payable in cash or shares of Common Stock as provided in Section 2(c)
below. No dividends (other than those payable in Common Stock) shall be declared
or paid on any Common Stock, and there shall be no redemption or repurchase
(other than repurchases by the Company of unvested shares pursuant to the terms
of applicable stock purchase agreements) of any Common Stock, during any fiscal
year of the Company until the full annual dividend on the Series A Preferred
(and any dividends from prior year(s) accumulated but unpaid) shall have been
paid in cash or declared and set apart in cash.
c. PAYMENT OF DIVIDENDS. The dividends provided for under
paragraph (a) of this Section 2 shall be payable, at the option of the Company,
either (i) in cash (by check or wire transfer) or (ii) in shares of Common Stock
valued as of the Payment Date based on the closing price of the Company's Common
Stock as quoted on the Nasdaq Stock Market, or, if on any day the Common Stock
is not so listed, the average of the highest bid and the lowest asked price on
such day in the domestic over-the-counter market as reported by the National
Quotation Bureau, Incorporated, or any similar successor organization, in each
case averaged over a period of 10 trading days consisting of the day as of which
the current fair
2.
<PAGE> 3
market value of Common Stock is being determined and the 9 consecutive trading
days prior to such day. If at any time the Common Stock is not listed on any
securities exchange or quoted in the over-the-counter market, the current fair
market value of Common Stock shall be used, and shall be determined in good
faith by the Board of Directors of the Company.
d. DIVIDENDS ON COMMON STOCK. So long as any shares of
Series A Preferred shall be outstanding, no dividend, whether in cash or
property, shall be paid or declared nor shall any other distribution be made
(other than repurchases by the Company of unvested shares pursuant to the terms
of applicable stock purchase agreements), on any Common Stock (other than any
dividend or distribution payable solely in Common Stock of the Company), unless
a dividend is paid with respect to all outstanding shares of Series A Preferred
in an amount per share (on an as-if-converted to Common Stock basis) equal to
the amount paid or set aside for each share of Common Stock.
3. VOTING RIGHTS. Except as otherwise required by law, the Series
A Preferred shall be voted equally with the shares of the Common Stock of the
Company and not as a separate class, at any annual or special meeting of
stockholders of the Company, and may act by written consent in the same manner
as the Common Stock (if permitted), in either case upon the following basis:
each holder of shares of Series A Preferred shall be entitled to such number of
votes as shall be equal to the whole number of shares of Common Stock into which
such holder's aggregate number of shares of Series A Preferred are convertible
(pursuant to Section 4 hereof) immediately after the close of business on the
record date fixed for such meeting or the effective date of such written
consent.
4. CONVERSION RIGHTS.
The holders of the Series A Preferred shall have the
following rights with respect to the conversion of the Series A Preferred into
shares of Common Stock (the "Conversion Rights"):
a. OPTIONAL CONVERSION. Subject to and in compliance with
the provisions of this Section 4, any shares of Series A Preferred may, at the
option of the holder, be converted at any time into fully-paid and nonassessable
shares of Common Stock. The number of shares of Common Stock to which a holder
of Series A Preferred shall be entitled upon conversion shall be the product
obtained by multiplying the "Series A Preferred Conversion Rate" then in effect
(determined as provided in Section 4(b)) by the number of shares of Series A
Preferred being converted.
b. SERIES A PREFERRED CONVERSION RATE. The conversion rate
in effect at any time for conversion of the Series A Preferred (the "Series A
Preferred Conversion Rate") shall be the quotient obtained by dividing the
Original Issue Price of the Series A Preferred by the "Series A Preferred
Conversion Price," calculated as provided in Section 4(c).
c. SERIES A PREFERRED CONVERSION PRICE. The conversion
price for the Series A Preferred shall initially be one dollar and twenty cents
($1.20) (the "Series A Preferred Conversion Price"). Such initial Series A
Preferred Conversion Price shall be adjusted
3.
<PAGE> 4
from time to time in accordance with this Section 4. All references to the
Series A Preferred Conversion Price herein shall mean the Series A Preferred
Conversion Price as so adjusted.
d. MECHANICS OF CONVERSION. Each holder of Series A
Preferred who desires to convert the same into shares of Common Stock pursuant
to this Section 4 shall surrender the certificate or certificates therefor, duly
endorsed, at the office of the Company or any transfer agent for the Series A
Preferred, and shall give written notice to the Company at such office that such
holder elects to convert the same. Such notice shall state the number of shares
of Series A Preferred being converted. Thereupon, the Company shall promptly
issue and deliver at such office to such holder a certificate or certificates
for the number of shares of Common Stock to which such holder is entitled and
shall promptly pay in cash, or, to the extent sufficient funds are not then
legally available therefor, in Common Stock (at the fair market value of the
Common Stock as determined by the Company's Board of Directors as of the date of
such conversion), any declared and unpaid dividends, including all accrued and
unpaid dividends pursuant to Section 1(a), on the shares of Series A Preferred
being converted. Such conversion shall be deemed to have been made at the close
of business on the date of such surrender of the certificates representing the
shares of Series A Preferred to be converted, and the person entitled to receive
the shares of Common Stock issuable upon such conversion shall be treated for
all purposes as the record holder of such shares of Common Stock on such date.
e. ADJUSTMENT FOR STOCK SPLITS AND COMBINATIONS. If the
Company shall at any time or from time to time after the Original Issue Date
effect a subdivision of the outstanding Common Stock without a corresponding
subdivision of the Series A Preferred, the Series A Preferred Conversion Price
in effect immediately before that subdivision shall be proportionately
decreased. Conversely, if the Company shall at any time or from time to time
after the Original Issue Date combine the outstanding shares of Common Stock
into a smaller number of shares without a corresponding combination of the
Series A Preferred, the Series A Preferred Conversion Price in effect
immediately before the combination shall be proportionately increased. Any
adjustment under this Section 4(e) shall become effective at the close of
business on the date the subdivision or combination becomes effective.
f. ADJUSTMENT FOR COMMON STOCK DIVIDENDS AND
DISTRIBUTIONS. If the Company at any time or from time to time after the
Original Issue Date makes, or fixes a record date for the determination of
holders of Common Stock entitled to receive, a dividend or other distribution
payable in additional shares of Common Stock, in each such event the Series A
Preferred Conversion Price that is then in effect shall be decreased as of the
time of such issuance or, in the event such record date is fixed, as of the
close of business on such record date, by multiplying the Series A Preferred
Conversion Price then in effect by a fraction (i) the numerator of which is the
total number of shares of Common Stock issued and outstanding immediately prior
to the time of such issuance or the close of business on such record date, and
(ii) the denominator of which is the total number of shares of Common Stock
issued and outstanding immediately prior to the time of such issuance or the
close of business on such record date plus the number of shares of Common Stock
issuable in payment of such dividend or distribution; provided, however, that if
such record date is fixed and such dividend is not fully paid or if such
distribution is not fully made on the date fixed therefor, the Series A
Preferred Conversion Price
4.
<PAGE> 5
shall be recomputed accordingly as of the close of business on such record date
and thereafter the Series A Preferred Conversion Price shall be adjusted
pursuant to this Section 4(f) to reflect the actual payment of such dividend or
distribution.
g. ADJUSTMENT FOR RECLASSIFICATION, EXCHANGE AND
SUBSTITUTION. If at any time or from time to time after the Original Issue Date,
the Common Stock issuable upon the conversion of the Series A Preferred is
changed into the same or a different number of shares of any class or classes of
stock, whether by recapitalization, reclassification or otherwise (other than a
subdivision or combination of shares or stock dividend or a reorganization,
merger, consolidation or sale of assets provided for elsewhere in this Section
4), in any such event each holder of Series A Preferred shall have the right
thereafter to convert such stock into the kind and amount of stock and other
securities and property receivable upon such recapitalization, reclassification
or other change by holders of the maximum number of shares of Common Stock into
which such shares of Series A Preferred could have been converted immediately
prior to such recapitalization, reclassification or change, all subject to
further adjustment as provided herein or with respect to such other securities
or property by the terms thereof.
h. REORGANIZATIONS, MERGERS, CONSOLIDATIONS OR SALES OF
ASSETS. If at any time or from time to time after the Original Issue Date, there
is a capital reorganization of the Common Stock (other than a recapitalization,
subdivision, combination, reclassification, exchange or substitution of shares
provided for elsewhere in this Section 4), as a part of such capital
reorganization, provision shall be made so that the holders of the Series A
Preferred shall thereafter be entitled to receive upon conversion of the Series
A Preferred the number of shares of stock or other securities or property of the
Company to which a holder of the number of shares of Common Stock deliverable
upon conversion would have been entitled on such capital reorganization, subject
to adjustment in respect of such stock or securities by the terms thereof. In
any such case, appropriate adjustment shall be made in the application of the
provisions of this Section 4 with respect to the rights of the holders of Series
A Preferred after the capital reorganization to the end that the provisions of
this Section 4 (including adjustment of the Series A Preferred Conversion Price
then in effect and the number of shares issuable upon conversion of the Series A
Preferred) shall be applicable after that event and be as nearly equivalent as
practicable.
i. SALE OF SHARES BELOW SERIES A PREFERRED CONVERSION
PRICE.
(i) If at any time or from time to time after the
Original Issue Date, the Company issues or sells, or is deemed by the express
provisions of this Section 4(i) to have issued or sold, Additional Shares of
Common Stock (as defined in subsection i(iv) below), other than as a dividend or
other distribution on any class of stock, and other than a stock split,
combination, reclassification, exchange, substitution, reorganization or other
event otherwise provided for in this Section 4 above, for an Effective Price (as
defined in subsection i(iv) below) less than the then effective Series A
Preferred Conversion Price, then and in each such case the then existing Series
A Preferred Conversion Price shall be reduced (subject to the final sentence of
this subsection i(i)), as of the opening of business on the date of such issue
or sale, to a price determined by subtracting from the then existing Series A
Preferred Conversion Price a number
5.
<PAGE> 6
equal to the product of (i) the then existing Series A Preferred Conversion
Price less the Effective Price for the Additional Shares of Common Stock,
multiplied by (ii) a fraction (a) the numerator of which shall be the aggregate
consideration received (as defined in subsection i(ii)), by the Company for the
total number of Additional Shares of Common Stock so issued, and (b) the
denominator of which shall be the sum of $15 million and the aggregate
consideration received (as defined in subsection i(ii)), by the Company for the
total number of Additional Shares of Common Stock so issued. Notwithstanding the
foregoing, at no time shall the Series A Preferred Conversion Price be less than
the higher of (i) ninety-six cents ($0.96) and (ii) the closing bid price of the
Company's Common Stock as quoted on the Nasdaq Stock Market on the Original
Issue Date.
(ii) For the purpose of making any adjustment
required under this Section 4(i), the consideration received by the Company for
any issue or sale of securities shall (A) to the extent it consists of cash, be
computed at the net amount of cash received by the Company after deduction of
any underwriting or similar commissions, compensation or concessions paid or
allowed by the Company in connection with such issue or sale but without
deduction of any expenses payable by the Company, (B) to the extent it consists
of property other than cash, be computed at the fair value of that property as
determined in good faith by the Board of Directors, and (C) if Additional Shares
of Common Stock, Convertible Securities (as defined in subsection i(iii)) or
rights or options to purchase either Additional Shares of Common Stock or
Convertible Securities are issued or sold together with other stock or
securities or other assets of the Company for a consideration which covers both,
be computed as the portion of the consideration so received that may be
reasonably determined in good faith by the Board of Directors to be allocable to
such Additional Shares of Common Stock, Convertible Securities or rights or
options.
(iii) For the purpose of the adjustment required
under this Section 4(i), if the Company issues or sells (i) stock or other
securities convertible into Additional Shares of Common Stock (such convertible
stock or securities being herein referred to as "Convertible Securities") or
(ii) rights or options for the purchase of Additional Shares of Common Stock or
Convertible Securities, and if the Effective Price of such Additional Shares of
Common Stock is less than the Series A Preferred Conversion Price, in each case
the Company shall be deemed to have issued at the time of the issuance of such
rights or options or Convertible Securities the maximum number of Additional
Shares of Common Stock issuable upon exercise or conversion thereof and to have
received as consideration for the issuance of such shares an amount equal to the
total amount of the consideration, if any, received by the Company for the
issuance of such rights or options or Convertible Securities, plus, in the case
of such rights or options, the minimum amounts of consideration, if any, payable
to the Company upon the exercise of such rights or options, plus, in the case of
Convertible Securities, the minimum amounts of consideration, if any, payable to
the Company (other than by cancellation of liabilities or obligations evidenced
by such Convertible Securities) upon the conversion thereof; provided that if in
the case of Convertible Securities the minimum amounts of such consideration
cannot be ascertained, but are a function of antidilution or similar protective
clauses, the Company shall be deemed to have received the minimum amounts of
consideration without reference to such clauses; provided further that if the
minimum amount of consideration
6.
<PAGE> 7
payable to the Company upon the exercise or conversion of rights, options or
Convertible Securities is reduced over time or on the occurrence or
non-occurrence of specified events other than by reason of antidilution
adjustments, the Effective Price shall be recalculated using the figure to which
such minimum amount of consideration is reduced; provided further that if the
minimum amount of consideration payable to the Company upon the exercise or
conversion of such rights, options or Convertible Securities is subsequently
increased, the Effective Price shall be again recalculated using the increased
minimum amount of consideration payable to the Company upon the exercise or
conversion of such rights, options or Convertible Securities. No further
adjustment of the Series A Preferred Conversion Price, as adjusted upon the
issuance of such rights, options or Convertible Securities, shall be made as a
result of the actual issuance of Additional Shares of Common Stock on the
exercise of any such rights or options or the conversion of any such Convertible
Securities. If any such rights or options or the conversion privilege
represented by any such Convertible Securities shall expire without having been
exercised, the Series A Preferred Conversion Price as adjusted upon the issuance
of such rights, options or Convertible Securities shall be readjusted to the
Series A Preferred Conversion Price which would have been in effect had an
adjustment been made on the basis that the only Additional Shares of Common
Stock so issued were the Additional Shares of Common Stock, if any, actually
issued or sold on the exercise of such rights or options or rights of conversion
of such Convertible Securities, and such Additional Shares of Common Stock, if
any, were issued or sold for the consideration actually received by the Company
upon such exercise, plus the consideration, if any, actually received by the
Company for the granting of all such rights or options, whether or not
exercised, plus the consideration received for issuing or selling the
Convertible Securities actually converted, plus the consideration, if any,
actually received by the Company (other than by cancellation of liabilities or
obligations evidenced by such Convertible Securities) on the conversion of such
Convertible Securities, provided that such readjustment shall not apply to prior
conversions of Series A Preferred.
(iv) "Additional Shares of Common Stock" shall mean
all shares of Common Stock issued by the Company or deemed to be issued pursuant
to this Section 4(i), whether or not subsequently reacquired or retired by the
Company other than (A) shares of Common Stock issued upon conversion of or as
dividends on the Series A Preferred; (B) shares of Common Stock and/or options,
or other Common Stock purchase rights, and the Common Stock issued pursuant to
such options or other rights, issued or issuable to employees, officers or
directors of, or consultants or advisors to the Company or any subsidiary
pursuant to stock purchase or stock option plans or other arrangements that are
approved by the Board; (C) shares of Common Stock issued or deemed issued by
operation of any of the provisions of this Section 4; and (D) up to 50,000
additional shares of Common Stock or Convertible Securities that may be issued
by the Company for such purposes as the Board of Directors may determine to be
in the best interests of the Company. The "Effective Price" of Additional Shares
of Common Stock shall mean the quotient determined by dividing the total number
of Additional Shares of Common Stock issued or sold, or deemed to have been
issued or sold by the Company under this Section 4(i), into the aggregate
consideration received, or deemed to have been received by the Company for such
issue under this Section 4(i), for such Additional Shares of Common Stock.
7.
<PAGE> 8
j. CERTIFICATE OF ADJUSTMENT. In each case of an
adjustment or readjustment of the Series A Preferred Conversion Price for the
number of shares of Common Stock or other securities issuable upon conversion of
the Series A Preferred, if the Series A Preferred is then convertible pursuant
to this Section 4, the Company, at its expense, shall compute such adjustment or
readjustment in accordance with the provisions hereof and prepare a certificate
showing such adjustment or readjustment, and shall mail such certificate, by
first class mail, postage prepaid, to each registered holder of Series A
Preferred at the holder's address as shown in the Company's books. The
certificate shall set forth such adjustment or readjustment, showing in detail
the facts upon which such adjustment or readjustment is based, including a
statement of (i) the consideration received or deemed to be received by the
Company for any Additional Shares of Common Stock issued or sold or deemed to
have been issued or sold, (ii) the Series A Preferred Conversion Price at the
time in effect, (iii) the number of Additional Shares of Common Stock, and (iv)
the type and amount, if any, of other property which at the time would be
received upon conversion of the Series A Preferred.
k. NOTICES OF RECORD DATE. Upon (i) any taking by the
Company of a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend or
other distribution, or (ii) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company, any
merger or consolidation of the Company with or into any other corporation, or
any voluntary or involuntary dissolution, liquidation or winding up of the
Company, the Company shall mail to each holder of Series A Preferred at least
twenty (20) days prior to the record date specified therein a notice specifying
(A) the date on which any such record is to be taken for the purpose of such
dividend or distribution and a description of such dividend or distribution, (B)
the date on which any such reorganization, reclassification, transfer,
consolidation, merger, dissolution, liquidation or winding up is expected to
become effective, and (C) the date, if any, that is to be fixed as to when the
holders of record of Common Stock (or other securities) shall be entitled to
exchange their shares of Common Stock (or other securities) for securities or
other property deliverable upon such reorganization, reclassification, transfer,
consolidation, merger, dissolution, liquidation or winding up.
l. AUTOMATIC CONVERSION.
(i) Each share of Series A Preferred shall
automatically be converted into shares of Common Stock, based on the
then-effective Series A Preferred Conversion Price, at the earlier to occur of
the following: (A) at any time upon the affirmative election of the holders of
at least a majority of the outstanding shares of the Series A Preferred; and (B)
immediately upon the Company's Common Stock maintaining a closing bid price of
at least $2.40 per share for thirty (30) consecutive market trading days on the
Nasdaq Stock Market (or any similar successor market) (inclusive of any market
trading days on which the Company's stock is not traded).
(ii) Upon the occurrence of any of the events
specified in Section 4(l)(i), the outstanding shares of Series A Preferred shall
be converted automatically without any further action by the holders of such
shares and whether or not the certificates
8.
<PAGE> 9
representing such shares are surrendered to the Company or its transfer agent;
provided, however, that the Company shall not be obligated to issue certificates
evidencing the shares of Common Stock issuable upon such conversion unless the
certificates evidencing such shares of Series A Preferred are either delivered
to the Company or its transfer agent as provided below, or the holder notifies
the Company or its transfer agent that such certificates have been lost, stolen
or destroyed and executes an agreement satisfactory to the Company to indemnify
the Company from any loss incurred by it in connection with such certificates.
Upon the occurrence of such automatic conversion of the Series A Preferred, the
holders of Series A Preferred shall surrender the certificates representing such
shares at the office of the Company or any transfer agent for the Series A
Preferred. Thereupon, there shall be issued and delivered to such holder
promptly at such office and in its name as shown on such surrendered certificate
or certificates, a certificate or certificates for the number of shares of
Common Stock into which the shares of Series A Preferred surrendered were
convertible on the date on which such automatic conversion occurred, and any
declared or accrued and unpaid dividends other than all accrued and unpaid
dividends pursuant to Section 1(a) shall be paid in accordance with the
provisions of Section 4(d).
m. FRACTIONAL SHARES. No fractional shares of Common Stock
shall be issued upon conversion of Series A Preferred. All shares of Common
Stock (including fractions thereof) issuable upon conversion of more than one
share of Series A Preferred by a holder thereof shall be aggregated for purposes
of determining whether the conversion would result in the issuance of any
fractional share. If, after the aforementioned aggregation, the conversion would
result in the issuance of any fractional share, the Company shall, in lieu of
issuing any fractional share, pay cash equal to the product of such fraction
multiplied by the Common Stock's fair market value (as determined by the Board
of Directors) on the date of conversion.
n. RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The
Company shall at all times reserve and keep available out of its authorized but
unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the shares of the Series A Preferred, such number of its shares of
Common Stock as shall from time to time be sufficient to effect the conversion
of all outstanding shares of the Series A Preferred. If at any time the number
of authorized but unissued shares of Common Stock shall not be sufficient to
effect the conversion of all then outstanding shares of the Series A Preferred,
the Company will take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purpose.
o. NOTICES. Any notice required by the provisions of this
Section 4 shall be in writing and shall be deemed effectively given: (i) upon
personal delivery to the party to be notified, (ii) when sent by confirmed telex
or facsimile if sent during normal business hours of the recipient; if not, then
on the next business day, (iii) five (5) days after having been sent by
registered or certified mail, return receipt requested, postage prepaid, or (iv)
one (1) day after deposit with a nationally recognized overnight courier,
specifying next day delivery, with written verification of receipt. All notices
shall be addressed to each holder of record at the address of such holder
appearing on the books of the Company.
9.
<PAGE> 10
p. PAYMENT OF TAXES. The Company will pay all taxes (other
than taxes based upon income) and other governmental charges that may be imposed
with respect to the issue or delivery of shares of Common Stock upon conversion
of shares of Series A Preferred, excluding any tax or other charge imposed in
connection with any transfer involved in the issue and delivery of shares of
Common Stock in a name other than that in which the shares of Series A Preferred
so converted were registered.
5. NO REISSUANCE OF SERIES A PREFERRED. No share or shares of
Series A Preferred acquired by the Company by reason of redemption, purchase,
conversion or otherwise shall be reissued.
6. NO PREEMPTIVE RIGHTS. Stockholders shall have no preemptive
rights except as granted by the Company pursuant to written agreements.
7. RESIDUAL RIGHTS. All rights accruing to the outstanding shares
of the Company not expressly provided for to the contrary herein shall be vested
in the Common Stock.
10.
<PAGE> 11
IN WITNESS WHEREOF, Amylin Pharmaceuticals, Inc. has caused this
Certificate to be signed by its Chief Executive Officer and Chairman of the
Board on this 22nd day of March, 1999.
AMYLIN PHARMACEUTICALS, INC.
By: /s/ Joseph C. Cook, Jr.
--------------------------------------
Joseph C. Cook, Jr.
Chief Executive Officer and
Chairman of the Board
11.
<PAGE> 1
EXHIBIT 4.2
STOCK PURCHASE AGREEMENT
OF
AMYLIN PHARMACEUTICALS, INC.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
1. AUTHORIZATION OF SALE OF THE SHARES..................................................1
2. AGREEMENT TO SELL AND PURCHASE THE SHARES............................................1
3. DELIVERY OF THE SHARES AT THE CLOSING................................................1
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.............................2
4.1 Organization and Qualification................................................2
4.2 Due Execution, Delivery and Performance of the Agreements.....................2
4.3 Issuance, Sale and Delivery of the Shares.....................................2
4.4 Public Information............................................................3
4.5 Eligibility for Form S-3......................................................3
4.6 No Material Change............................................................3
4.7 Use of Proceeds...............................................................3
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER...........................3
6. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS...............................5
7. REGISTRATION OF THE COMMON STOCK; COMPLIANCE WITH THE SECURITIES ACT.................5
7.1 Registration Procedures and Expenses..........................................5
7.2 Transfer of Shares After Registration.........................................6
7.3 Indemnification...............................................................6
7.4 Termination of Conditions and Obligations.....................................8
8. BROKER'S FEE.........................................................................9
9. NOTICES..............................................................................9
10. CHANGES.............................................................................10
11. HEADINGS............................................................................10
12. SEVERABILITY........................................................................10
13. GOVERNING LAW.......................................................................10
14. COUNTERPARTS........................................................................10
15. REMEDIES............................................................................10
16. SUCCESSORS AND ASSIGNS..............................................................10
17. FURTHER ACTIONS.....................................................................10
18. CONFIDENTIAL DISCLOSURE AGREEMENT...................................................11
</TABLE>
<PAGE> 3
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made as of March 22,
1999 between AMYLIN PHARMACEUTICALS, INC., a Delaware corporation with its
principal place of business at 9373 Towne Centre Drive, Suite 250, San Diego,
California 92121 (the "Company"), and the purchaser whose name and address are
set forth on the signature page hereof (the "Purchaser").
IN CONSIDERATION of the mutual covenants contained in this Agreement,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company and the Purchaser agree as follows:
1. AUTHORIZATION OF SALE OF THE SHARES. Subject to the terms and conditions of
this Agreement, the Company has authorized the sale of up to one hundred
twenty-five thousand (125,000) shares of Series A Preferred Stock of the Company
(the "Shares") at a price of $120.00 per Share.
2. AGREEMENT TO SELL AND PURCHASE THE SHARES. At the Closing (as defined in
Section 3), the Company will sell to the Purchaser, and the Purchaser will buy
from the Company, upon the terms and conditions hereinafter set forth, the
number of Shares set forth next to Purchaser's name on the signature page
hereof. The Shares shall have the rights, preferences, privileges and
restrictions set forth in the Company's Certificate of Designation of 5% Series
A Convertible Preferred Stock, in the form attached hereto as EXHIBIT A (the
"Certificate of Designation").
3. DELIVERY OF THE SHARES AT THE CLOSING. The completion of the purchase and
sale of the Shares to be issued pursuant to this Agreement (the "Closing") shall
occur (i) upon receipt by the Company of (A) a copy of this Agreement which has
been executed on Purchaser's behalf, (B) a completed Stock Certificate
Questionnaire, the form of which is attached hereto as EXHIBIT B, and (C) the
aggregate purchase price for the Shares, or (ii) following the occurrence of the
actions set forth in clause (i) above on such other date as may be agreed to by
the Company and the Purchaser. At the Closing, the Company shall deliver to the
Purchaser or the Purchaser's custodian bank, in accordance with the Purchaser's
delivery instructions, (A) a copy of this Agreement which has been executed on
behalf of the Company, and (B) one or more stock certificates registered in the
name of the Purchaser, or in such nominee name(s) as designated by the
Purchaser, representing the number of Shares referred to in Section 2 above. The
name(s) in which the stock certificates are to be issued shall be set forth in
the Stock Certificate Questionnaire attached hereto as EXHIBIT B, as completed
by Purchaser. The Company's obligation to complete the purchase and sale of the
Shares and deliver such stock certificate(s) to the Purchaser at the Closing
shall be subject to the following conditions, any one or more of which may be
waived in writing by the Company: (a) subject to delivery of the Share
certificates to the Purchaser or Purchaser's custodian bank, receipt by the
Company of immediately available funds, by check or wire transfer, in the full
amount of the purchase price for the Shares being purchased hereunder; (b) the
accuracy of the representations and warranties made by the Purchaser herein as
of the Closing; and (c) the fulfillment of those undertakings of
<PAGE> 4
the Purchaser to be fulfilled prior to the Closing. The Purchaser's obligation
to accept delivery of such stock certificate(s) and to pay for the Shares
evidenced thereby shall be subject to the following conditions: (a) the accuracy
of the representations and warranties made by the Company herein as of the
Closing; and (b) the fulfillment of those undertakings of the Company to be
fulfilled prior to the Closing.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY. The Company hereby
represents and warrants to, and covenants with, the Purchaser as of the date of
this Agreement as follows:
4.1 ORGANIZATION AND QUALIFICATION. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to conduct its
business as currently conducted.
4.2 DUE EXECUTION, DELIVERY AND PERFORMANCE OF THE AGREEMENTS. The
Company's execution, delivery and performance of this Agreement (a) has been
duly authorized by all requisite corporate action by the Company, and (b) will
not violate the Amended and Restated Certificate of Incorporation or Bylaws of
the Company, each as amended to date, or violate or result in a breach of or
constitute a default under any provision of any material indenture, mortgage,
agreement, contract or other material instrument to which the Company or any
subsidiary is a party or by which the Company or any subsidiary or any of their
respective properties or assets is bound as of the date hereof. Upon execution
and delivery, and assuming the valid execution hereof by the Purchaser, this
Agreement will constitute a valid and binding obligation of the Company,
enforceable in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' and contracting parties' rights generally and
except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) and except as the indemnification agreements of the Company in
Section 7.4 hereof may be legally unenforceable.
4.3 ISSUANCE, SALE AND DELIVERY OF THE SHARES. The authorized capital
stock of the Company consists of one hundred million (100,000,000) shares of
Common Stock, par value one-tenth of one cent ($.001) per share, thirty-six
million seven hundred ninety-seven thousand eight hundred six (36,797,806)
shares of which are issued and outstanding as of March 15, 1999, five million
seven hundred eight-seven thousand one hundred eighty-two (5,787,182) shares of
which are subject to outstanding options as of March 15, 1999, one million four
hundred forty-two thousand forty-four (1,442,044) shares of which are reserved
for future issuance to employees, directors and consultants pursuant to the
Company's stock plans, including the Company's 1991 Stock Option Plan, the
Company's Non-Employee Directors' Stock Option Plan, the Company's Employee
Stock Purchase Plan, the Company's Directors' Deferred Compensation Plan and the
Company's Employee Phantom Stock Salary Deferral Plan as of March 15, 1999, and
one million five hundred fifty thousand nine hundred fifty (1,550,950) shares of
which are subject to outstanding warrants, and seven million five hundred
thousand (7,500,000) shares of Preferred Stock, par value one-tenth of one cent
($.001) per share, one hundred twenty-five thousand (125,000) of which are
designated Series A Preferred Stock, none of which, prior to the Closing, are
issued and outstanding. All issued and outstanding shares of the Company's
Common Stock have been duly authorized and validly issued, and are fully paid
2.
<PAGE> 5
and nonassessable. The Company will take all reasonable measures to ensure that,
at all times, a sufficient number of shares of its Common Stock are reserved for
issuance upon conversion of the Shares (the "Conversion Shares"). When issued,
delivered to Purchaser or Purchaser's custodian bank and paid for by Purchaser
in accordance with the terms and conditions of this Agreement, the Shares to be
sold hereunder will be validly issued, fully paid and nonassessable and will be
delivered by the Company free and clear of all liens, pledges, claims,
encumbrances, security interests or other restrictions, except for restrictions
on transfer imposed to ensure compliance with the Securities Act of 1993, as
amended (the "Securities Act"). When issued and delivered upon conversion of the
Shares in accordance with the terms and conditions of the Certificate of
Designation, the Conversion Shares and any shares of Common Stock issued as
dividends upon the Shares (the "Dividend Shares") will be validly issued, fully
paid and nonassessable and will be delivered by the Company free and clear of
all liens, pledges, claims, encumbrances, security interests or other
restrictions, except for restrictions on transfer imposed to ensure compliance
with the Securities Act.
4.4 PUBLIC INFORMATION. The Company represents that it has delivered to
Purchaser copies of the Company's: (i) Annual Report on Form 10-K for the year
ended December 31, 1997; (ii) Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1998, June 30, 1998, and September 30, 1998; (iii) Registration
Statement on Form S-3 (Registration No. 333-58831), as amended; and (iv) press
releases since September 30, 1998. All of the foregoing public documents are
collectively referred to herein as the "Public Documents."
4.5 ELIGIBILITY FOR FORM S-3. The Company represents and warrants that
it meets the requirements for the use of Form S-3 for registration of the sale
by the Purchaser of the Conversion Shares and any Dividend Shares, and the
Company shall file all reports required to be filed by the Company with the
Securities and Exchange Commission (the "Commission") in a timely manner and
take all other necessary action so as to maintain such eligibility for the use
of Form S-3.
4.6 NO MATERIAL CHANGE. As of the date hereof, there has been no
material adverse change and no material adverse development in the business,
properties, operations, financial condition, results of operations or prospects
of the Company since December 31, 1998.
4.7 USE OF PROCEEDS. The Company shall use the proceeds from the sale of
the Shares for working capital purposes.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER.
The Purchaser represents and warrants to, and covenants with, the
Company as follows:
5.1 INVESTMENT REPRESENTATIONS. The Purchaser represents and warrants
to, and covenants with, the Company that: (i) the Purchaser, taking into account
the personnel and resources it can practically bring to bear on the purchase of
the Shares contemplated hereby, is knowledgeable, sophisticated and experienced
in making, and is qualified to make, decisions with respect to investments in
shares presenting an investment decision like that involved in the purchase of
the Shares, including investments in securities issued by the Company, and has
requested, received, reviewed and considered all information it deems relevant
in making an
3.
<PAGE> 6
informed decision to purchase the Shares, including all of the Company's Public
Documents; (ii) the Purchaser is acquiring the number of Shares referred to in
Section 2 above for its own account for investment only and with no present
intention of distributing any of such Shares, Conversion Shares or Dividend
Shares, if any, or any arrangement or understanding with any other persons
regarding the distribution of such Shares, Conversion Shares or Dividend Shares;
(iii) the Purchaser has completed or caused to be completed the Stock
Certificate Questionnaire attached hereto as EXHIBIT B and the information
provided therein by Purchaser is true and correct to the best knowledge of the
Purchaser as of the date hereof; (iv) the Purchaser has, in connection with its
decision to purchase the number of Shares set forth in Section 2 above, relied
solely upon the information delivered to the Purchaser as described in clause
(i) above and the representations and warranties of the Company contained
herein; and (v) the Purchaser is an "accredited investor" within the meaning of
Rule 501 of Regulation D promulgated under the Securities Act.
5.2 REQUISITE POWER AND AUTHORITY. The Purchaser further represents and
warrants to, and covenants with, the Company that (i) the Purchaser has full
right, power, authority and capacity to enter into this Agreement and to
consummate the transactions contemplated hereby and has taken all necessary
action to authorize the execution, delivery and performance of this Agreement,
and (ii) upon the execution and delivery of this Agreement, this Agreement shall
constitute a valid and binding obligation of the Purchaser enforceable in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' and contracting parties' rights generally and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law)
and except as the indemnification agreements of the Purchaser in Section 7.4
hereof may be legally unenforceable.
5.3 RULE 144. Purchaser acknowledges and agrees that the Shares acquired
by Purchaser hereunder, as well as the Conversion Shares and any Dividend
Shares, must be held indefinitely unless they are subsequently registered under
the Securities Act or an exemption from such registration is available.
Purchaser has been advised or is aware of the provisions of Rule 144 promulgated
under the Securities Act, which permits limited resale of securities in a
private placement subject to the satisfaction of certain conditions, including,
among other things: the availability of certain current public information about
the Company, the resale occurring not less than one year after a party has
purchased and paid for the security to be sold, the sale being made through an
unsolicited "broker's transaction" or in transactions directly with a market
maker (as said term is defined under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) and the number of shares being sold during any
three-month period not exceeding specified limitations.
5.4 COVENANTS. The Purchaser hereby covenants with the Company as
follows: (i) prior to the effective date of the Registration Statement
referenced in Section 7.1(a) below (the "Effective Date"), the Purchaser shall
not transfer any Shares, Conversion Shares or Dividend Shares except in
compliance with the Securities Act and the rules and regulations promulgated
thereunder, and any transferee of Shares, Conversion Shares or Dividend Shares
prior to the Effective Date shall agree in advance in a writing acceptable to
the Company to be subject to all of the provisions of this Agreement with
respect to the Shares, Conversion Shares
4.
<PAGE> 7
or Dividend Shares; and (ii) commencing as of the Effective Date, the Purchaser
shall not make any sale of the Conversion Shares or the Dividend Shares, if any,
without effectively causing the prospectus delivery requirement under the
Securities Act to be satisfied, and the Purchaser acknowledges and agrees that
on and after the Effective Date, such Conversion Shares or the Dividend Shares,
if any, are not transferable on the books of the Company unless the certificate
submitted to the transfer agent evidencing the Conversion Shares or the Dividend
Shares, if any, is accompanied by a separate purchaser's certificate: (i) in the
form of EXHIBIT C hereto, (ii) executed by the Purchaser or by an officer of, or
other authorized person designated by, the Purchaser, and (iii) to the effect
that (A) the Conversion Shares or the Dividend Shares, if any, have been sold in
accordance with the Registration Statement and (B) the requirement of delivering
a current prospectus has been satisfied. The Purchaser acknowledges that there
may occasionally be times when the Company must suspend the use of the
prospectus forming a part of the Registration Statement until such time as an
amendment to the Registration Statement has been filed by the Company and
declared effective by the Securities and Exchange Commission (the "Commission"),
or until such time as the Company has filed an appropriate report with the
Commission pursuant to the Securities Exchange Act of 1934, as amended. The
Purchaser hereby covenants that it will not sell any Conversion Shares or
Dividend Shares, if any, pursuant to said prospectus during the period
commencing at the time at which the Company gives the Purchaser notice of the
suspension of the use of said prospectus and ending at the time the Company
gives the Purchaser notice that the Purchaser may thereafter effect sales
pursuant to said prospectus. The Purchaser further covenants to promptly notify
the Company of the sale of any of its Conversion Shares or Dividend Shares, if
any.
6. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. Notwithstanding any
investigation made by any party to this Agreement, all covenants, agreements,
representations and warranties made by the Company and the Purchaser herein and
in the certificates for the Shares delivered pursuant hereto shall survive the
execution of this Agreement, the delivery to the Purchaser of the Shares being
purchased and the payment therefor.
7. REGISTRATION OF THE COMMON STOCK; COMPLIANCE WITH THE SECURITIES ACT.
7.1 REGISTRATION PROCEDURES AND EXPENSES. The Company shall:
(a) within the earlier of (i) 30 days following the receipt by
the Company of a notice of conversion of the Series A Shares from the Purchaser,
(ii) 10 days following the automatic conversion of the Series A Shares and (iii)
10 days following the first payment by the Company of a dividend on the Series A
Shares in the form of common stock, in each case pursuant to the Certificate of
Designation, prepare and file with the Commission a registration statement on
Form S-3 (the "Registration Statement") in order to register with the Securities
and Exchange Commission (the "Commission") the sale of all the Conversion Shares
and Dividend Shares, if any (collectively, the "Registrable Securities") by the
Purchaser from time to time through underwriters, agents or otherwise, in
negotiated or market transactions or through the automated quotation system of
Nasdaq or the facilities of any national securities exchange on which the
Company's Common Stock is then traded or in privately negotiated transactions or
pursuant to such other method or methods of distribution as Purchaser may
require. It shall be a condition precedent to the obligations of the Company to
take any action pursuant to this Section
5.
<PAGE> 8
7.1 that the Purchaser shall furnish to the Company such information regarding
itself, the Registrable Securities to be sold by Purchaser, and the intended
method of disposition of such securities as shall be required to effect the
registration of the Registrable Securities;
(b) use reasonable efforts, subject to the receipt of necessary
information from the Purchasers, to cause the Registration Statement to become
effective as soon as commercially practicable following the filing thereof with
the Commission;
(c) prepare and file with the Commission such amendments and
supplements to the Registration Statement and the prospectus used in connection
therewith and take such other actions as may be necessary to keep the
Registration Statement continually effective and available for use for a period
of two years following the Closing (the "Registration Period") or, if earlier,
until all of the Registrable Securities have been sold pursuant thereto;
(d) furnish to the Purchaser with respect to the Registrable
Securities registered under the Registration Statement such number of copies of
prospectuses and preliminary prospectuses in conformity with the requirements of
the Securities Act, in order to facilitate the public sale or other disposition
of all or any of the Registrable Securities by the Purchaser; provided, however,
that the obligation of the Company to deliver copies of prospectuses or
preliminary prospectuses to the Purchaser shall be subject to the receipt by the
Company of reasonable assurances from the Purchaser that the Purchaser will
comply with the applicable provisions of the Securities Act and of such other
securities or blue sky laws as may be applicable in connection with any use of
such prospectuses or preliminary prospectuses;
(e) file documents required of the Company for normal blue sky
clearance in states specified in writing by the Purchaser; provided, however,
that the Company shall not be required to qualify to do business or consent to
service of process in any jurisdiction in which it is not now so qualified or
has not so consented; and
(f) bear all expenses incurred by the Company in connection with
the procedures in paragraphs (a) through (e) of this Section 7.1 and the
registration of the Registrable Securities pursuant to the Registration
Statement.
7.2 TRANSFER OF SHARES AFTER REGISTRATION. The Purchaser agrees that it
will promptly notify the Company of any changes in the material information set
forth in the Registration Statement regarding the Purchaser or its plan of
distribution with respect to the Registrable Securities, as applicable.
7.3 INDEMNIFICATION.
(a) the term "Selling Stockholder" shall mean the Purchaser and,
if the Purchaser is an institution, the Purchaser's directors or trustees,
officers and employees and each person who controls the Purchaser within the
meaning of the Securities Act;
(b) the term "Registration Statement" shall include any final
prospectus, exhibit, supplement or amendment included in or relating to the
Registration Statement referred to in Section 7.1; and
6.
<PAGE> 9
(c) the term "untrue statement" shall include any untrue
statement or alleged untrue statement, or any omission or alleged omission to
state in the Registration Statement a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
The Company agrees to indemnify and hold harmless each Selling Stockholder from
and against any losses, claims, damages or liabilities to which such Selling
Stockholder may become subject (under the Securities Act or otherwise) insofar
as such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of, or are based upon, any untrue statement of a
material fact contained in the Registration Statement on the Effective Date
thereof, or arise out of any failure by the Company to fulfill any undertaking
included in the Registration Statement, and the Company will reimburse such
Selling Stockholder for any reasonable legal or other expenses reasonably
incurred in investigating, defending or preparing to defend any such action,
proceeding or claim; provided, however, that the Company shall not be liable in
any such case to the extent that such loss, claim, damage or liability arises
out of, or is based upon, an untrue statement made in such Registration
Statement in reliance upon and in conformity with written information furnished
to the Company by or on behalf of such Selling Stockholder specifically for use
in preparation of the Registration Statement, or the failure of such Selling
Stockholder to comply with the covenants and agreements contained in Section 5
or 7.2 hereof respecting sale of the Registrable Securities or any statement or
omission in any prospectus that is corrected in any subsequent prospectus that
was delivered to the Purchaser prior to the pertinent sale or sales by the
Purchaser.
The Purchaser agrees to indemnify and hold harmless the Company (and each
person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act, each officer of the Company who signs the Registration Statement
and each director of the Company) from and against any losses, claims, damages
or liabilities to which the Company (or any such officer, director or
controlling person) may become subject (under the Securities Act or otherwise),
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of, or are based upon, any failure to
comply with the covenants and agreements contained in Section 5 or 7.2 hereof
respecting sale of the Registrable Securities, or any untrue statement of a
material fact contained in the Registration Statement on the Effective Date if
such untrue statement was made in reliance upon and in conformity with written
information furnished by or on behalf of the Purchaser specifically for use in
preparation of the Registration Statement, and the Purchaser will reimburse the
Company (or such officer, director or controlling person, as the case may be),
for any legal or other expenses reasonably incurred in investigating, defending
or preparing to defend any such action, proceeding or claim. In no event shall
the liability of the Purchaser hereunder be greater in amount than the dollar
amount of the gross proceeds received by the Purchaser upon the sale of
Registrable Securities giving rise to such indemnification obligation.
Promptly after receipt by any indemnified person of a notice of a claim or the
beginning of any action in respect of which indemnity is to be sought against an
indemnifying person pursuant to this Section 7.3, such indemnified person shall
notify the indemnifying person in writing of such claim or of the commencement
of such action, and, subject to the provisions hereinafter stated, in case any
such action shall be brought against an indemnified person and such indemnifying
person shall have been notified thereof, such indemnifying person shall be
entitled to participate
7.
<PAGE> 10
therein, and, to the extent it shall wish, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified person. After notice from
the indemnifying person to such indemnified person of its election to assume the
defense thereof, such indemnifying person shall not be liable to such
indemnified person for any legal expenses subsequently incurred by such
indemnified person in connection with the defense thereof; provided, however,
that if there exists or shall exist a conflict of interest that would make it
inappropriate, in the opinion of counsel to the indemnified person, for the same
counsel to represent both the indemnified person and such indemnifying person or
any affiliate or associate thereof, the indemnified person shall be entitled to
retain its own counsel at the expense of such indemnifying person; provided,
however, that no indemnifying person shall be responsible for the fees and
expenses of more than one separate counsel for all indemnified parties.
If the indemnification provided for in this Section 7.3 is held by a court of
competent jurisdiction to be unavailable to an indemnified party with respect to
any losses, claims, damages or liabilities referred to herein, the indemnifying
party, in lieu of indemnifying such indemnified party thereunder, shall to the
extent permitted by applicable law contribute to the amount paid or payable by
such indemnified party as a result of such loss, claim, damage or liability in
such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
connection with the act or omission that resulted in such loss, claim, damage or
liability, as well as any other relevant equitable considerations. The relative
fault of the indemnifying party and of the indemnified party shall be determined
by a court of law by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission to state a material
fact relates to information supplied by the indemnifying party or by the
indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission;
provided, that in no event shall any contribution by Purchaser hereunder exceed
the gross proceeds from the offering received by such Purchaser.
The obligations of the Company and Purchaser under this Section 7.3 shall
survive completion of any offering of Registrable Securities in a Registration
Statement and the termination of this Agreement. No indemnifying party, in the
defense of any such claim or litigation, shall, except with the consent of each
indemnified party, consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such indemnified party of a release from all liability
in respect to such claim or litigation.
To the extent any indemnification by an indemnifying party is prohibited or
limited by law, the indemnifying party agrees to make the maximum contribution
with respect to any amounts for which it would otherwise be liable under this
Section 7.3 to the fullest extent permitted by law; provided, however, that (i)
no person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any seller
of Conversion Shares or Dividend Shares who was not guilty of such fraudulent
misrepresentation, and (ii) contribution (together with any indemnification or
other obligations under this Agreement) by any seller of Conversion Shares or
Dividend Shares shall be limited in amount to the net amount of proceeds
received by such seller from the sale of such Conversion Shares or Dividend
Shares.
8.
<PAGE> 11
7.4 TERMINATION OF CONDITIONS AND OBLIGATIONS. Notwithstanding anything
stated herein to the contrary, the conditions precedent imposed by Section 5 or
this Section 7 upon the transferability of the Shares, Conversion Shares and
Dividend Shares shall cease and terminate as to any particular number of the
Shares, Conversion Shares or Dividend Shares, when such Conversion Shares or
Dividend Shares, shall have been effectively registered under the Securities Act
and sold or otherwise disposed of in accordance with the intended method of
disposition set forth in the Registration Statement covering such or at such
time as an opinion of counsel satisfactory to the Company shall have been
rendered to the effect that such conditions are not necessary in order to comply
with the Securities Act.
The rights of the Purchaser hereunder, including the right to have the Company
register the Conversion Shares and Dividend Shares, if any, pursuant to this
Agreement, shall be automatically assigned by each Purchaser to any transferee
of all or any portion of the Shares, the Conversion Shares, or the Dividend
Shares, if any, if: (a) the Purchaser agrees in writing with the transferee or
assignee to assign such rights, and a copy of such agreement is furnished to the
Company within a reasonable time after such assignment, (b) the Company is,
within a reasonable time after such transfer or assignment, furnished with
written notice of (i) the name and address of such transferee or assignee, and
(ii) the securities with respect to which such registration rights are being
transferred or assigned, (c) following such transfer or assignment, the further
disposition of such securities by the transferee or assignee is restricted under
the Securities Act or applicable state securities laws, (d) at or before the
time the Company receives the written notice contemplated by clause (ii) of this
sentence, the transferee or assignee agrees in writing for the benefit of the
Company to be bound by all of the provisions contained herein, and (e) such
transfer shall have been made in accordance with the applicable requirements of
the this Agreement.
8. BROKER'S FEE. Each of the parties hereto hereby represents that on the basis
of any actions and agreements by it, there are no brokers or finders entitled to
compensation in connection with the sale of Shares to the Purchaser.
9. NOTICES. All notices, requests, consents and other communications hereunder
shall be in writing, shall be sent by facsimile or mailed by first class
registered or certified airmail, or nationally recognized overnight express
courier postage prepaid, and shall be deemed given when so sent by facsimile or
mailed and shall be delivered as follows:
(A) if to the Company, to:
Amylin Pharmaceuticals, Inc.
9373 Towne Centre Drive, Suite 250
San Diego, CA 92121
Attention: Chief Executive Officer
with a copy so mailed to:
Cooley Godward LLP
4365 Executive Drive, Suite 1100
San Diego, California 92121
9.
<PAGE> 12
Attention: Thomas A. Coll, Esq.
or to such other person at such other place as the Company shall designate to
the Purchaser in writing; and
(b) if to the Purchaser, at its address as set forth on the
signature page of this Agreement, or at such other address or addresses as may
have been furnished to the Company in writing.
10. CHANGES. This Agreement may not be modified or amended except pursuant to an
instrument in writing signed by the Company and the Purchaser.
11. HEADINGS. The headings of the various sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed to be part of
this Agreement.
12. SEVERABILITY. In case any provision contained in this Agreement should be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby.
13. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California as applied to contracts
entered into and performed entirely in California by California residents.
14. COUNTERPARTS. This Agreement may be executed in two or more counterparts,
each of which shall constitute an original, but all of which, when taken
together, shall constitute but one instrument.
15. REMEDIES. In addition to being entitled to exercise all rights and remedies
provided herein or granted by law for any breach by the Company hereunder, the
Purchaser will be entitled to specific performance of its rights under this
Agreement. In that regard, the Company acknowledges and agrees that monetary
damages would not be adequate compensation for any loss incurred by reason of a
breach by it of the provisions of this Agreement and hereby agrees to waive the
defense in any action for specific performance that a remedy at law would be
adequate.
16. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of and be
binding upon the successors and assigns of each of the parties hereto.
Notwithstanding anything to the contrary contained herein, including, without
limitation, the rights of Purchaser hereunder shall be assignable to and
exercisable by a bona fide pledgee of the Shares, Conversion Shares, Warrants or
Warrant Shares in connection with Purchaser's margin or brokerage accounts.
17. FURTHER ACTIONS. Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as the other
party may reasonably request in transactions of this nature in order to carry
out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
10.
<PAGE> 13
18. CONFIDENTIAL DISCLOSURE AGREEMENT. Notwithstanding any provision of this
Agreement to the contrary, the Confidential Disclosure Agreement previously
executed by the Company and the Purchaser in connection with the transactions
contemplated by this Agreement shall remain in full force and effect in
accordance with its terms following the execution of this Agreement and the
consummation of the transactions contemplated hereby.
11.
<PAGE> 14
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
AMYLIN PHARMACEUTICALS, INC.
By:/s/ Nancy K. Dahl
--------------------------------
Nancy K. Dahl, Esq.
Vice President and
General Counsel
PURCHASER
By: Number of Shares:
-------------------------------- -----------------------
Name:
------------------------------
Title:
-----------------------------
Notices to be sent to:
- -----------------------------------
- -----------------------------------
- -----------------------------------
List of Attachments
- -------------------
EXHIBIT A - CERTIFICATE OF DESIGNATION OF SERIES A PREFERRED STOCK
EXHIBIT B - STOCK CERTIFICATE AND WARRANT QUESTIONNAIRE
EXHIBIT C - PURCHASER'S CERTIFICATE
12.
<PAGE> 15
EXHIBIT A
CERTIFICATE OF DESIGNATION OF SERIES A PREFERRED STOCK
<PAGE> 16
EXHIBIT B
AMYLIN PHARMACEUTICALS, INC.
STOCK CERTIFICATE QUESTIONNAIRE
Pursuant to Section 3 of the Stock Purchase Agreement, please provide us
with the following information:
1. The exact name that your Shares are to be registered in (this is the
name that will appear on your stock certificate(s)). You may use a
nominee name if appropriate:____________________________________________
2. The relationship between the Purchaser of the Shares and the Registered
Holder listed in response to item 1 above:______________________________
3. The mailing address of the Registered Holder listed in response to item
1 above:________________________________________________________________
4. The Social Security Number or Tax Identification Number of the
Registered Holder listed in the response to item 1 above:_______________
<PAGE> 17
EXHIBIT C
Attention:
PURCHASER'S CERTIFICATE OF SUBSEQUENT SALE
The undersigned, an officer of, or other person duly authorized by
________________________________ hereby certificates that he/she [said
institution] is the Purchaser of the shares evidenced by the attached
certificate, and as such, sold such shares on ____________________________ in
accordance with registration statement number
__________________________________________________ and the requirement of
delivering a current prospectus and current annual and quarterly reports (Forms
10-K and 10-Q) by the Company has been complied with in connection with such
sale.
Print or Type:
Name of Purchaser (Individual or Institution):__________________________________
Name of Individual representing Purchaser
(if an Institution)_____________________________________________________________
Title of Individual representing Purchaser
(if an Institution)_____________________________________________________________
Signature by:
Individual Purchaser or Individual
Representing Purchaser:_________________________________________________________
<PAGE> 1
EXHIBIT 10.48
FIFTH AMENDMENT TO LEASE
This FIFTH AMENDMENT TO LEASE ("Amendment") is entered into as of the
8th day of February, 1999 by and between NIPPON LANDIC (U.S.A.), INC., a
Delaware Corporation ("Landlord") and AMYLIN PHARMACEUTICALS, INC. (formerly
known as AMYLIN, INC.), a Delaware corporation ("Tenant").
RECITALS
A. Nexus/Gadco - UTC, a California joint venture, as Landlord, and
Amylin, Inc., as Tenant, entered into that certain Lease dated as of January 2,
1989, as amended by that certain Amendment to Lease dated as of February 23,
1989, that certain Second Amendment to Lease dated as of July 29, 1991, that
certain Third Amendment to Lease dated August 22, 1991, and that certain Fourth
Amendment to Lease ("Fourth Amendment") dated February 26, 1997 (collectively,
the "Lease"), of the certain premises located in the buildings commonly known as
9363, 9373, and 9393 Towne Centre Drive, San Diego, California, as more
particularly described therein ("Demised Premises"). Capitalized terms used
herein and not otherwise defined herein shall have the meanings set forth in the
Lease.
B. Landlord is the successor in interest to the initial landlord
identified in Recital A.
C. Landlord and Tenant now desire to amend the Lease in order to,
among other things, reduce the size of the Demised Premises. The parties further
intend that the changes to the Lease set forth in this Amendment shall not be
effective unless and until the "Effective Date" (defined in Section 13 below)
shall have occurred.
AGREEMENT
NOW, THEREFORE, Landlord and Tenant hereby agree as follows:
1. Demised Premises. The Demised Premises are hereby reduced to
include only approximately 6,366 square feet of Rentable Area on the east side
of the first floor of the Building located at 9363 Towne Centre Drive and
approximately 20,139 square feet of rentable area on the second floor of the
Building located at 9373 Towne Centre Drive, as more particularly shown on
Exhibit A-1 attached hereto and incorporated herein by this reference. Said
Exhibit A-1 replaces the Exhibit A-1 previously attached to the Fourth
Amendment.
2. Take Down Premises.
Section 2 of the Fourth Amendment is hereby deleted in its
entirety.
3. Basic Lease Provisions.
The following sections of Article 2 of the Lease are hereby amended to
read as follows:
1
<PAGE> 2
"Section 2.1.2: Designation of Tenant's Premises (Demised Premises): a portion
of the second floor of 9373 Towne Centre Drive, and a portion of the ground
floor of 9363 Towne Centre Drive.
Section 2.1.3(a): Initial Rentable Area: Approximately 26,505 square feet.
Section 2.1.3(b): Initial Usable Area: Approximately 24,179 square feet.
Section 2.1.4: Initial Basic Annual Rent: $619,789.32.
Section 2.1.5: Initial Monthly Rental Installments: $51,649.11.
Section 2.1.6: Tenant's Pro Rata Share: Approximately 18.88% of the Project.
Section 2.1.7(b): Term Expiration Date: August 31, 2004."
4. Possession and Rent for 9393 Towne Centre Drive.
Section 5 of the Fourth Amendment is hereby deleted in its entirety.
5. Improvement Allowance.
(a) Section 6 of the Fourth Amendment is hereby deleted in
its entirety. Landlord will provide Tenant an allowance for improvements equal
to $25,000 to reimburse Tenant for the cost of refurbishing the Demised
Premises. Tenant acknowledges that Landlord has previously delivered to Tenant
the sum of $250,000.00 as reimbursement for amounts paid by Tenant to Cytel
Corporation, a Delaware corporation ("Cytel") pursuant to Section 5.5 of that
certain Sublease Agreement entered into as of June 1, 1998 between Cytel and
Tenant ("Cytel Sublease Agreement").
(b) The general contractor selected by Tenant for
improvement work and plans for such work must be approved by Landlord in
writing, which approval shall not be unreasonably withheld, prior to
commencement of any work. Upon completion, Tenant shall provide Landlord with a
copy of "as-built" drawings.
(c) Landlord shall disburse such improvement allowance to
Tenant within thirty (30) days after completion and/or satisfaction of all of
the following: (i) the improvements for which Tenant seeks reimbursement shall
have been completed in accordance with Tenant's approved plans and
specifications, (ii) Tenant shall provide Landlord with invoices for such
improvements, and (iii) Tenant shall provide Landlord with mechanics lien
releases from the general contractor and all subcontractors involved in the
construction of such improvements. Tenant acknowledges and agrees that the
improvement allowance described in this Section 5 represents Landlord's total
commitment in connection with funding any improvements or alterations to the
Demised Premises.
6. CPI Adjustments. Section 6.1 of the Lease is amended and
restated to read in full as follows: "The Basic Annual Rent for the Demised
Premises will be
2
<PAGE> 3
increased annually throughout the term of the Lease by four percent (4.0%) per
year, compounded, commencing April 1, 1999 and adjusting on April 1st of each
succeeding year during the term.
7. Parking. Section 12 of the Fourth Amendment is hereby deleted in
its entirety. Landlord shall provide Tenant with the number of parking spaces
corresponding to a parking ratio of three and one-half spaces per one thousand
square feet (3.5:1,000) of Useable Area (less parking spaces used by Tenant for
equipment rooms or other non-parking purposes), at no charge for the duration of
the term. In addition, Landlord shall provide Tenant with a total of two (2)
reserved spaces in the garage, and three (3) reserved visitor spaces on the
parking deck for the term of the Lease at no additional charge.
8. Utilities. To the extent that any portion of the Demised
Premises is not separately metered for utilities, Tenant will pay its pro rata
share of such shared utilities based on the ratio of (a) the Useable Area of the
portion of the Demised Premises subject to such master meter, to (b) the useable
area of the total square footage serviced by such master meter, or such other
method as deemed appropriate by Landlord.
9. Additional Payment to Landlord. [Intentionally Omitted]
10. Rights of First Refusal; Right of First Offer.
(a) Tenant shall no longer have any rights of first refusal
on leasing additional space within the Project. All references to any such
rights contained in the Lease are hereby deleted in their entirety.
(b) Landlord hereby grants to Tenant a right of first offer
to lease a portion of the Demised Premises located in the 9363 Towne Centre
Drive Building, as more particularly described in Exhibit "B" attached hereto
and made a part hereof ("First Right Space"), subject to the following terms and
conditions: (1) Landlord shall, prior to offering such First Right Space to any
other person or entity, deliver to Tenant a notice (a "First Right Availability
Notice") describing the material business terms under which Landlord intends to
market such space. Landlord may deliver the First Right Availability Notice to
Tenant at any time within the last one hundred twenty days prior to the Term
Expiration Date (or the expiration of the Term following exercise of any
applicable extensions thereto). Tenant's right of first offer is expressly
conditioned upon Tenant's physical occupancy of the First Right Space on the
date of delivery of the First Right Availability Notice from Landlord to Tenant
("Delivery Date").
(2) If Tenant shall deliver to Landlord a notice (a
"Tenant's Interest Notice") that it desires to engage in negotiations with
Landlord regarding the leasing of such First Right Space within ten (10)
business days after receipt of the First Right Availability Notice and Tenant is
in fact physically occupying the First Right Space on the Delivery Date, then
for fifteen (15) days (the "Negotiation Period") after Tenant so notifies
Landlord, Landlord shall negotiate exclusively with Tenant to enter into a lease
(or a lease amendment, at Landlord's election) under which Landlord would lease
such First Right Space to Tenant; provided, however, that neither Tenant nor
Landlord shall have any obligation to agree to any provision or term with
respect to such lease or lease amendment.
(3) If Tenant does not timely deliver to Landlord a
Tenant's Interest Notice in response to a First Right Availability Notice in
accordance with this Section
3
<PAGE> 4
10(b), or if an agreement for the leasing of such First Right Space is not
executed and delivered by Landlord and Tenant within the Negotiation Period,
time being of the essence, then (i) Tenant shall have waived and relinquished
its rights under this Section 10(b) with respect to the First Right Space, and
(ii) Landlord may, at any time after the expiration of the Negotiation Period,
offer, show, market and lease such First Right Space at such rental rates and
upon such terms as Landlord in its sole discretion may desire.
(4) Notwithstanding any provision of this Section
10(b) to the contrary, Tenant shall have no right to give a Tenant's Interest
Notice on any date on which Tenant is in default under this Lease beyond any
applicable grace, notice and cure period. At any time when Tenant is so in
default under this Lease, Landlord may cancel a Tenant's Interest Notice by
notice to Tenant, and on and after the date of such notice to Tenant, Tenant
shall have no rights, and Landlord shall have no obligations, under this Section
10(b) with respect to the First Right Space for which Tenant gave such Tenant's
Interest Notice.
11. Options to Extend. Section 39.1 of the Lease, as amended by the
Fourth Amendment, is hereby deleted in its entirety.
12. Landlord's Work.
(a) Landlord shall make the improvements set forth in
Exhibit "C" attached hereto and made a part hereof ("Landlord's Work").
(b) Tenant hereby acknowledges and agrees that Landlord may,
after giving Tenant at least twenty-four (24) hours prior telephonic notice,
enter onto the Demised Premises at any time (including without limitation during
Tenant's normal business hours) following the execution of this Amendment to
install the Landlord's Work. Tenant hereby waives any and all rights, defenses
and claims for damages which may result from annoyance, inconvenience or
interruption (other than interruption which makes Tenant's operation upon the
Demised Premises unreasonably difficult) of Tenant's business while Landlord's
Work is ongoing.
13. Effectiveness of Amendment. This Amendment and the Lease
modifications contained herein shall be effective on the date (the "Effective
Date") upon which all of the following conditions precedent shall have occurred:
(i) Landlord shall have entered into a new lease with Cytel covering the "Take
Down Premises" (defined in Section 2 of the Fourth Amendment) on terms
satisfactory to Landlord in the exercise of its sole and absolute discretion,
(ii) Landlord shall enter into a new lease with Orincon Corporation covering
approximately 2,959 rentable square feet on the first floor of the 9363 Towne
Centre Drive building on terms satisfactory to Landlord in the exercise of its
sole and absolute discretion, (iii) Landlord shall have received from Tenant a
cashier's check in the amount of $85,677.70, representing the security deposit
("Cytel Deposit") paid by Cytel to Tenant pursuant to the Cytel Sublease
Agreement, (iv) Tenant and Cytel shall have terminated the Cytel Sublease
Agreement, and (v) Tenant has vacated the portion of the 9373 Building to be
given back to Landlord, all of Tenant's personal property has been removed from
such space (except for items of equipment and furniture which Tenant is
permitted to leave within such space pursuant to that certain Limited License
for Temporary Use of Unleased Space to be executed by Landlord and Tenant
substantially concurrently herewith), and such space has been left in broom
clean condition. Landlord shall furnish
4
<PAGE> 5
Tenant with the first page and the signature page of the new lease with Cytel
upon mutual execution thereof, prior to Tenant's delivery to Landlord of the
Cytel Deposit.
14. Effective Date. Until the Effective Date shall have occurred
(i.e., all conditions precedent set forth in Section 13 above shall have been
satisfied), Tenant shall continue to pay Monthly Rental and Additional Rent and
shall observe and perform all other terms contained in the Lease, all as though
this Amendment was never executed. In the event that all conditions precedent
set forth in Section 13 have not been satisfied by 5:00 PM on March 31, 1999,
Landlord may at any time thereafter terminate this Amendment by delivering
written notice of termination to Tenant.
15. Counterparts. This Amendment may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
taken together shall constitute one and the same instrument. Signature pages may
be detached from the counterparts and attached to a single copy of this document
to physically form one document.
16. Effect. Except as specifically amended herein, the terms and
provisions of the Lease shall remain unmodified and in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the
date first above written.
LANDLORD: TENANT:
NIPPON LANDIC (U.S.A.), INC., AMYLIN PHARMACEUTICALS, INC.,
a Delaware corporation a Delaware corporation
By: /s/ Mitsuhiko Hashimoto By: /s/ Nancy K. Dahl
--------------------------------- ----------------------------------
Mitsuhiko Hashimoto
General Manager Its: Vice President and General Counsel
---------------------------------
5
<PAGE> 6
EXHIBIT A-1
DEMISED PREMISES
[Floorplan of demised premises]
6
<PAGE> 7
EXHIBIT B
DESCRIPTION OF FIRST RIGHT SPACE
[Floorplan of First Right Space]
7
<PAGE> 8
EXHIBIT C
DESCRIPTION OF LANDLORD'S WORK
9363 Towne Centre Drive
1) Add one wall on the first floor to separate the hallways indicated as
rooms #127 and #139.
2) Lock and remove handle at door that currently joins the rooms indicated
as #133 and #134.
9373 Towne Centre Drive
1) Add wall at base of interior stairwell that links second floor and first
floor lab areas.
2) Place metal panel over dumbwaiter opening on first floor.
8
<PAGE> 1
EXHIBIT 10.49
INCENTIVE STOCK OPTION
Joseph C. Cook, 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 Five
Hundred Thousand (500,000). Subject to the limitations contained herein, this
option shall become exercisable ("vest") according to the following vesting
schedule:
(a) 200,000 of the 500,000 option shares will vest and shall
become exercisable in equal monthly installments over the twelve (12) months
following the date this option was granted, provided you continue as an employee
of the Company or an affiliate (as defined in the Plan) through that period;
(b) Thereafter, the remaining 300,000 options shall vest in equal
monthly installments over the following thirty-six (36) months until this option
has become fully exercisable, provided you continue as an employee of the
Company or an affiliate (as defined in the Plan) through that period.
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 Two and 656/000 Dollars
($2.656) 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;
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
<PAGE> 2
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 March 24, 2008
(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 1 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.
(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. Subject to the provisions of paragraph 5, you may elect to exercise all or
part of your option, including any unvested portion of your option; provided,
however, that:
<PAGE> 3
(a) the first thirty-seven thousand six-hundred fifty (37,650)
option shares that shall vest in each calendar year cannot be exercised pursuant
to this paragraph 7 prior to their having vested pursuant to the schedule set
forth under paragraph 1 above;
(b) a partial exercise of your option shall be deemed to cover
first vested shares and then the earliest vesting installment of unvested shares
(but not including the first 37,650 shares that shall vest in any calendar year,
if such shares are unvested at the time of exercise);
(c) any shares so purchased from installments which have not
vested as of the date of exercise shall be subject to the purchase option in
favor of the Company as described in the Company's form of Early Exercise Stock
Purchase Agreement; and
(d) you shall enter into the Company's form of Early Exercise
Stock Purchase Agreement with a vesting schedule that will result in the same
vesting as if no early exercise had occurred; and
(e) if your option is an incentive stock option, then, as
provided in the Plan, to the extent that the aggregate Fair Market Value
(determined at the time of grant) of stock with respect to which your option
plus all other incentive stock options you hold are exercisable for the first
time by you during any calendar year (under all plans of the Company and its
Affiliates) exceeds one hundred thousand dollars ($100,000), the options or
portions thereof that exceed such limit (according to the order in which they
were granted) shall be treated as nonstatutory stock options.
8. 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.
9. 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.
10. 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.
11. 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 March 25, 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, the rights of the undersigned under the 1992
Employee Stock Purchase Plan of the Company and the Company's Directors'
Deferred Compensation Plan, and the agreements to purchase restricted stock, if
any, made prior to the Company's Initial Public Offering.
____________________________________
Joseph C. Cook, Optionee
Address: 26 Timber Park Drive
Black Mountain, NC 28711
<PAGE> 1
EXHIBIT 10.50
INCENTIVE STOCK OPTION
Joseph C. Cook, Jr., 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 Two
Hundred Fifty Thousand (250,000). Subject to the limitations contained herein,
this option shall become exercisable ("vest") according to the following vesting
schedule:
No portion of this option will be vested prior to April 23,
1999, the date that is six months from the date this option was granted (the
"Cliff Date"). If you continue as an employee, consultant or director of the
Company or an affiliate (as defined in the Plan) through the Cliff Date, this
option shall become exercisable on the Cliff Date with respect to one-fourth
(1/4) 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, this option will become exercisable with respect to an
additional .1368924% total number of shares subject to this option for each day
of continuous employment occurring after the Cliff Date until this option has
become fully exercisable.
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 sentence, "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 Zero and 313/1000
Dollars ($0.313) 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;
<PAGE> 2
iii. Provided that at the time of exercise the Company's
Common Stock is publicly traded, 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;
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 October 22, 2008
(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 or
continued service as a director or consultant 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.
<PAGE> 3
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.
(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. Subject to the provisions of paragraph 5, you may elect to exercise all or
part of your option, including any unvested portion of your option; provided,
however, that:
(a) a partial exercise of your option shall be deemed to cover
the first vested shares and then the earliest vesting installment of unvested
shares;
(b) any shares so purchased from installments which have not
vested as of the date of exercise shall be subject to the purchase option in
favor of the Company as described in the Company's form of Early Exercise Stock
Purchase Agreement; and
(c) you shall enter into the Company's form of Early Exercise
Stock Purchase Agreement with a vesting schedule that will result in the same
vesting as if no early exercise had occurred; and
(d) if your option is an incentive stock option, then, as
provided in the Plan, to the extent that the aggregate Fair Market Value
(determined at the time of grant) of stock with respect to which your option
plus all other incentive stock options you hold are exercisable for the first
time by you during any calendar year (under all plans of the Company and its
Affiliates) exceeds one hundred thousand dollars ($100,000), the options or
portions thereof that exceed such limit (according to the order in which they
were granted) shall be treated as non-statutory stock options.
8. 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.
9. 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.
10. 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.
<PAGE> 4
11. 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 October 23, 1998
Very Truly Yours,
AMYLIN PHARMACEUTICALS, INC.
By:
-----------------------------------
Duly authorized on behalf of the
Board of Directors
<PAGE> 5
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.
---------------------------------
Joseph C. Cook, Jr., Optionee
Address: 26 Timber Park Drive
Black Mountain, NC 28711
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statements
(Forms S-8 No. 333-51577, No. 33-32896, No. 33-32894 and No. 33-45092)
pertaining to the Employee Phantom Stock Salary Deferral Plan, 1991 Stock Option
Plan, Non-Employee Directors Stock Option Plan, and Employee Stock Option Plan
of Amylin Pharmaceuticals, Inc. of our report dated March 12, 1999, except for
Note 7, as to which the date is March 23, 1999, with respect to the consolidated
financial statements of Amylin Pharmaceuticals, Inc. included in its Annual
Report (Form 10-K) for the year ended December 31, 1998, filed with the
Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
San Diego, California
March 25, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND THE CONSOLIDATED STATEMENT OF OPERATIONS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 8,787,000
<SECURITIES> 2,002,000
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 11,303,000
<PP&E> 19,152,000
<DEPRECIATION> 13,556,000
<TOTAL-ASSETS> 18,823,000
<CURRENT-LIABILITIES> 6,111,000
<BONDS> 0
0
0
<COMMON> 37,000
<OTHER-SE> (31,499,000)
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</TABLE>
