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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
AND EXCHANGE ACT OF 1934
For The Quarterly Period Ended March 31,1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
AND EXCHANGE ACT OF 1934
Commission File Number: 0-19700
AMYLIN PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
Delaware 33-0266089
- ------------------------------- ----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9373 Towne Centre Drive, San Diego, California 92121
- ---------------------------------------------- -----
(Address of principal executive offices) (Zip code)
(619) 552-2200
----------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
------------------------------------------------------------------
(Former name, former address and former
fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at March 31, 1999
----- --------------------------------
Common Stock, $.001 par value 37,166,326
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AMYLIN PHARMACEUTICALS, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
<S> <C>
COVER PAGE ............................................................. 1
TABLE OF CONTENTS ...................................................... 2
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Condensed Consolidated Balance Sheets as of March 31, 1999 and
December 31, 1998 ................................................. 3
Condensed Consolidated Statements of Operations for the three
months ended March 31, 1999 and 1998 .............................. 4
Condensed Consolidated Statements of Cash Flows for the three
months ended March 31, 1999 and 1998 .............................. 5
Notes to Condensed Consolidated Financial Statements .............. 6
ITEM 2
Management's Discussion and Analysis of Financial Condition and
Results of Operations ............................................. 7
ITEM 3
Quantitative and Qualitative Disclosures about Market Risk ........ *
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings ......................................... 13
ITEM 2. Changes in Securities and Use of Proceeds ................. 13
ITEM 3. Defaults upon Senior Securities ........................... 14
ITEM 4. Submission of Matters to a Vote of Security Holders ....... 14
ITEM 5. Other Information ......................................... 14
ITEM 6. Exhibits and Reports on Form 8-K .......................... 14
SIGNATURE .............................................................. 15
</TABLE>
* No information provided due to inapplicability of item.
2
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AMYLIN PHARMACEUTICALS, INC.
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
(unaudited) (Note)
------------ ------------
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 17,391,000 $ 8,787,000
Short-term investments 2,000,000 2,002,000
Other current assets 227,000 514,000
------------ ------------
Total current assets 19,618,000 11,303,000
Property and equipment, at cost:
Equipment 14,945,000 15,197,000
Leasehold improvements 3,955,000 3,955,000
------------ ------------
18,900,000 19,152,000
Less accumulated depreciation and amortization (14,171,000) (13,556,000)
------------ ------------
4,729,000 5,596,000
Patents and other assets, net 2,005,000 1,924,000
------------ ------------
$ 26,352,000 $ 18,823,000
============ ============
Liabilities and Stockholders' Equity (Deficit)
Current Liabilities:
Accounts payable $ 452,000 $ 2,187,000
Accrued liabilities 1,927,000 2,130,000
Current portion of obligation under capital leases and
equipment notes payable 2,040,000 1,794,000
------------ ------------
Total current liabilities 4,419,000 6,111,000
Obligation under capital leases and equipment notes payable 3,783,000 4,164,000
Notes payable to related party, net of discount 40,990,000 40,010,000
Stockholders' equity (deficit):
Preferred stock, $.001 par value, 7,500,000 shares authorized,
125,000 issued and outstanding at March 31, 1999, none at
December 31, 1998 - -
Common stock, $.001 par value, 100,000,000 shares authorized,
37,166,000 and 36,726,000 issued and outstanding at
March 31, 1999 and December 31, 1998, respectively 37,000 37,000
Additional paid-in capital 244,940,000 229,757,000
Accumulated deficit (267,461,000)
Deferred compensation (356,000) (428,000)
Unrealized gains/(losses) on short-term investments - 2,000
------------ ------------
Total stockholders' equity (deficit) (22,840,000) (31,462,000)
------------ ------------
$ 26,352,000 $ 18,823,000
============ ============
</TABLE>
Note: the condensed consolidated balance sheet at December 31, 1998 has been
derived from audited consolidated financial statements at that date but does not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements.
See accompanying notes.
3
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AMYLIN PHARMACEUTICALS, INC.
Condensed Consolidated Statements of Operations
(unaudited)
<TABLE>
<CAPTION>
Three months ended
March 31,
--------------------------------
1999 1998
----------- -----------
<S> <C> <C>
Revenues under collaborative agreements
from related party $ - $ 7,086,000
Operating Expenses:
Research and development 3,886,000 18,169,000
General and administrative 1,468,000 2,923,000
----------- ------------
5,354,000 21,092,000
----------- ------------
Loss from operations (5,354,000) (14,006,000)
Interest and other income 176,000 512,000
Interest and other expense (1,453,000) (1,325,000)
----------- ------------
Net loss $(6,631,000) $(14,819,000)
=========== ============
Net loss per share - basic and diluted $ (0.18) $ (0.46)
=========== ============
Shares used in computing net loss per share -
basic and diluted 36,822,000 32,438,000
=========== ============
</TABLE>
See accompanying notes.
4
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AMYLIN PHARMACEUTICALS, INC.
Condensed Consolidated Statements of Cash Flows
(unaudited)
<TABLE>
<CAPTION>
Three months ended
March 31,
---------------------------------
1999 1998
------------ ------------
<S> <C> <C>
Operating Activities:
Net loss (6,631,000) (14,819,000)
Adjustments to reconcile net loss to net
cash used for operating activities:
Depreciation and amortization $ 615,000 $ 931,000
Deferred revenue from related party - (1,124,000)
Amortization of deferred compensation 72,000 202,000
Amortization of warrants issued with debt 980,000 299,000
Changes in assets and liabilities:
Receivable from related party - 438,000
Other current assets 287,000 435,000
Accounts payable (1,735,000) (3,211,000)
Accrued liabilities (203,000) (1,170,000
------------ ------------
Net cash flows used for operating activities (6,615,000) (18,019,000)
Investing activities:
Decrease in short-term investments - 5,847,000
Purchase/sale of equipment and leasehold improvements 252,000 (1,495,000)
Change in deposits, patents and other assets (81,000) (132,000)
------------ ------------
Net cash flows provided by (used for) investing activities 171,000 4,220,000
Financing activities:
Issuance of notes payable - 1,771,000
Principal payments on capital leases and
equipment notes payable (135,000) (445,000)
Issuance of preferred and common stock, net 15,183,000 561,000
------------ ------------
Net cash flows provided by financing activities 15,048,000 1,887,000
------------ ------------
Change in cash and cash equivalents 8,604,000 (11,911,000)
Cash and cash equivalents at beginning of period 8,787,000 46,903,000
------------ ------------
Cash and cash equivalents at end of period $ 17,391,000 $ 34,991,000
============ ============
Supplemental disclosure of cash flow information:
Interest paid $ 159,000 $ 295,000
</TABLE>
See accompanying notes.
5
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AMYLIN PHARMACEUTICALS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1999
(unaudited)
1. Summary of Significant Accounting Policies
Basis of Presentation
The information contained herein has been prepared in accordance with
instructions for Form 10-Q and Article 10 of Regulation S-X. The information at
March 31, 1999 is unaudited. In the opinion of management, the information
reflects all adjustments necessary to make the results of operations for the
interim periods a fair statement of such operations. All such adjustments are of
a normal recurring nature. Interim results are not necessarily indicative of
results for a full year. For a presentation including all disclosures required
by generally accepted accounting principles, these financial statements should
be read in conjunction with the audited financial statements included in the
Company's Annual Report on Form 10-K for the year ended December 31,1998.
Per Share Data
Basic and diluted net loss per share is computed using the weighted average
number of common shares outstanding during the periods.
Consolidation
The consolidated financial statements include the accounts of Amylin
Pharmaceuticals Inc. ("Amylin" or the "Company") and its wholly owned
subsidiary, Amylin Europe Limited. All significant intercompany transactions and
balances have been eliminated.
2. Stockholders' Equity
In March 1999, the Company completed a private stock offering of 125,000 shares
of its Series A Preferred Stock. The gross proceeds to the Company from the
financing were $15.0 million. Each share of Series A Preferred Stock is
automatically convertible into 100 shares of common stock whenever the closing
bid price of the Company's stock remains above $2.40 per share for 30
consecutive trading days.
3. Subsequent Event
On April 30, 1999, the Company entered into a definitive agreement with Magellan
Laboratories Incorporated for the sale of the assets of the Company's Cabrillo
Laboratories division,for which the Company received a cash payment of $2.1
million. Additionally, the Company and Magellan entered in to an agreement
pursuant to which Magellan agreed to perform a portion of the Company's future
product development services. Magellan agreed to maintain certain product
development capabilities important for the preparation of the Company's
regulatory filings for SYMLIN(TM) (pramlintide acetate). As a further
component, the Company issued Magellan a warrant for the purchase of 50,000
shares of common stock in exchange for a $500,000 credit for future laboratory
services to be provided by Magellan to the Company. The warrant is exercisable
from December 1, 1999 and may be exercised up to and including November 30,
2001.
6
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Except for the historical information contained herein, the discussion
in this report contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
discussed in this report due to, among other things, the results and timing of
the results of the Company's ongoing and planned clinical trials of SYMLIN(TM)
(pramlintide acetate), the Company's ability to raise additional capital to
finance its business operations through and following the first quarter of 2000,
and the timing of filing for regulatory approval of SYMLIN. Additional factors
that could cause or contribute to such differences include, without limitation,
those discussed in the section entitled "Liquidity and Capital Resources" herein
as well as those discussed in the Company's Annual Report on Form 10-K for the
year ended December 31, 1998, under the heading "Risk Factors."
Since its inception in September 1987, Amylin has devoted substantially
all of its resources to its research and development programs,including
SYMLIN(TM) (pramlintide acetate) and AC2993 (synthetic exendin-4). 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 significant additional operating losses for the next several years. As of
March 31, 1999, the Company's accumulated deficit was approximately $267
million.
From June 1995 to August 1998, Amylin and Johnson & Johnson collaborated
on the development and commercialization of SYMLIN. Under the Collaboration
Agreement, Johnson & Johnson made payments to Amylin totaling approximately $174
million. These payments included funding of one-half of the SYMLIN 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 SYMLIN 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 SYMLIN. As a result of Johnson & Johnson's
withdrawal from the collaboration, Johnson & Johnson has relinquished all rights
to share in any SYMLIN profits. Additionally, following the
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collaboration termination in August 1998, all product and other rights
associated with SYMLIN and related compounds reverted to Amylin.
Following the announcement of the termination of the Johnson & Johnson
collaboration agreement in March 1998, Amylin 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 SYMLIN, the
Company further reduced its work force and operating expenses.
On April 30, 1999 the Company entered into a definitive agreement with
Magellan Laboratories Incorporated for the sale of the assets of the Company's
Cabrillo Laboratories division, for which the Company received a cash payment of
$2.1 million. Additionally, the Company and Magellan entered in to an agreement
pursuant to which Magellan agreed to perform a portion of the Company's future
product development services. Magellan agreed to maintain certain product
development capabilities important for the preparation of the Company's
regulatory filings for SYMLIN(TM) (pramlintide acetate). As a further component,
the Company issued Magellan a warrant for the purchase of 50,000 shares of
common stock in exchange for a $500,000 credit for future laboratory services to
be provided by Magellan to the Company. The warrant is exercisable from December
1, 1999 and may be exercised up to and including November 30, 2001.
The Company believes that its cash at March 31, 1999, together with the
proceeds from its sale of the Cabrillo Laboratories division, and interest
income from cash investments will permit the Company to finance its current
operations into the first quarter of 2000.
The Company is continuing to conduct two one-year US Phase 3 clinical
studies of SYMLIN. 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 SYMLIN 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 SYMLIN 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, including the regulatory filing
processes, of SYMLIN or any of the Company's other product candidates following
the first quarter of 2000.
8
<PAGE> 9
RESULTS OF OPERATIONS
Revenue
The Company received no collaborative revenue for the first quarter of
1999, compared with $7.1 million received in the first quarter of 1998. This
reduction was due to the termination of the Company's Collaborative Agreement
with Johnson & Johnson.
Operating Expenses
The Company's total operating expenses for the quarter ended March 31,
1999 decreased to $5.4 million from $21.1 million for the same period in 1998.
Research and development expenses decreased to $3.9 million for the
three months ended March 31, 1999 as compared to $18.2 million for the same
period in 1998.
General and administrative expenses were $1.5 million for the three
months ended March 31, 1999 as compared to $2.9 million for the same period in
1998.
The decreases in these expenditures were primarily due to a
significantly reduced workforce and lower external clinical expenses.
Other Income and Expense
Interest and other income is comprised of interest income from
investment of the Company's cash reserves and external services income generated
by the Company's Cabrillo division. Interest and other income was $0.2 million
for the quarter ended March 31, 1999 as compared to $0.5 million for the same
period in 1998. The decrease in interest and other income was primarily due to
lower average cash reserves available for investment, offset partially by an
increase in income generated by the Cabrillo Division.
Interest and other expense is principally comprised of interest expense
resulting from long-term debt obligations. Debt financing has been utilized by
the Company to acquire laboratory and other equipment, to fund tenant
improvements to the Company's facilities, and for other working capital
purposes. In addition, in accordance with the terms of the Collaboration
Agreement, Johnson & Johnson advanced Amylin's share of SYMLIN pre-launch
marketing expenses incurred during the term of the collaboration.
Separately, in 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 SYMLIN during that year. 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 SYMLIN profits, if any, subject
to certain exceptions set forth in
9
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the Loan Agreement. The loan is secured by the Company's issued patents and
pending patent applications relating to amylin and amylin agonists, including
SYMLIN.
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 with a fixed exercise price of $12 per share and a
10-year exercise period. The estimated value of the warrants is being amortized
to interest expense over the life of the Development Loan Facility.
Interest and other expense increased to $1.5 million for the three
months ended March 31, 1999 from $1.3 million for the same period in 1998. The
increase in interest and other expense was primarily due to the compounding of
interest associated with the Development Loan debt, amortization of the
valuation placed on the warrants, and interest expense related to the
pre-marketing loan.
Net Loss
The net loss for the quarter ended March 31, 1999 was $6.6 million
compared to a net loss for the same quarter in 1998 of $14.8 million. The
decrease in the net loss was primarily due to the significant reductions in work
force and lower external clinical expenses.
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 SYMLIN(TM) (pramlintide
acetate) and AC2993 (synthetic exendin-4), preclinical and potential clinical
testing of additional product candidates, and related general and administrative
support. Operating losses may fluctuate from quarter to quarter as a result of
differences in the timing of expenses incurred and revenues recognized.
LIQUIDITY AND CAPITAL RESOURCES
Since its inception, the Company has financed its operations primarily
through private placements of preferred stock, sales of common stock,
reimbursement of SYMLIN development expenses through its collaboration with
Johnson & Johnson, and debt financings.
At March 31, 1999, the Company had $19.4 million in cash, cash
equivalents and short-term investments as compared to $10.8 million at December
31, 1998. The Company invests its cash in U.S. government and other highly rated
liquid debt instruments. On April 30, 1999, the Company received $2.1 million in
connection with the sale of the assets of its Cabrillo Laboratories division.
The Company believes that its cash at March 31, 1999, together with the proceeds
from its sale of the Cabrillo Laboratories division, including interest income
from investments, should provide sufficient funds to continue current business
operations into the first quarter of 2000.
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The Company intends to use its financial resources for the ongoing
development of SYMLIN, including the Phase 3 clinical trials, for its AC2993
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 SYMLIN, 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 SYMLIN and AC2993 compounds progress as
planned, research and development expenses will include costs of supplying
materials for and/or conducting SYMLIN 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 pre-clinical 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 part of its restructuring of operations, the Company reduced the
square footage occupied by the Company's research, development and
administrative staff from 45,000 square feet to 26,500 square feet as of March
1, 1999.
In addition, as part of the April 30, 1999 sale of the assets of its
Cabrillo Laboratories division, the Company assigned to Magellan Laboratories
its lease for the 35,500 square foot facility where its former product
development operations (Cabrillo Laboratories) were located.
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, pre-clinical testing, clinical trials,
manufacturing costs, and general and administrative expenses necessary to
support such activities. Operating losses in the future may fluctuate from
quarter to quarter as a result of differences in the timing of expenses incurred
and revenues recognized.
The Company cannot make any assurances 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 in development. 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 SYMLIN (scheduled to be announced during the second
half of 1999), the continued evaluation of results from its completed Phase 3
clinical trials
11
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of SYMLIN, the ability of the Company to establish one or more development
and/or commercialization collaborations for its SYMLIN and AC2993 programs,
progress with its other ongoing and new pre-clinical studies and clinical
trials, the time and costs involved in obtaining regulatory approvals,
scientific progress in its 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, SYMLIN and AC2993. 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 SYMLIN 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 SYMLIN.
Further testing of SYMLIN, 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.
The Company's 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 the stock price does not meet
the minimum requirements for listing on Nasdaq SmallCap, the securities may be
delisted from Nasdaq SmallCap or the Company may be required to effect a reverse
stock split in order to maintain the listing. The Company cannot guarantee that
it will be able to maintain the listing of the Common Stock on Nasdaq SmallCap
or any other exchange.
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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.
Part II - Other Information
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
During March 1999, the Company issued 125,000 shares of Series A Preferred Stock
priced at $120.00 per share. Each share is convertible into Common Stock of the
Company at an initial conversion rate of 100 shares of Common Stock per share of
Series A Preferred Stock. The Series A Preferred Stock will automatically be
converted into Common Stock if the closing bid
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price of the Company's common stock remains above $2.40 per share for 30
consecutive trading days. Dividends on the Series A Preferred Stock will accrue
at a rate of 5% per year. The Company has agreed to file a registration
statement covering the re-sale of the shares of Common Stock underlying the
Series A Preferred Stock. The Company intends to use the proceeds from the sale
of the Series A Preferred Stock to fund operations.
The sale and issuance of the Series A Preferred Stock in the transaction
described above in the foregoing paragraph was deemed to be exempt from
registration under the Securities Act of 1933, as amended, by virtue of
Regulation D promulgated under such Act. The recipients in each case represented
their intention to acquire the securities for investment only and not with a
view to the distribution thereof. Appropriate legends are affixed to the stock
certificates issued in such transactions. All recipients either received
adequate information about the Company or had access, through employment or
other relationships, to such information.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to Vote of Securities Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
<TABLE>
<CAPTION>
Exhibits
<S> <C>
10.51 Form of Special Bonus Award for Supplemental Incentive Bonus
Program
</TABLE>
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AMYLIN PHARMACEUTICALS, INC.
March 31, 1999
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Amylin Pharmaceuticals, Inc.
Date: May 14, 1999 By: /s/ Joseph C. Cook, Jr.
--------------------------------------
Joseph C. Cook, Jr.
Chairman of the Board and
Chief Executive Officer
(on behalf of the registrant
and as the registrant's
principal financial officer)
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10-Q: EXHIBIT 10.51
Confidential Memorandum
[Amylin Pharmaceuticals Letterhead]
TO: Final Memo
FROM: Rick Haugen
DATE: March 16, 1998
RE: Special Bonus Award
The Company's Compensation Committee recently approved a Supplemental Incentive
Bonus Program (the "Program") for certain Amylin employees that they believe
will be critical to Amylin's success in the next 2 years. The benefits available
under the Program are set out in the following description.
ELIGIBLE EMPLOYEES: Only employees specifically designated by the Compensation
Committee of the Company's Board of Directors (referred to herein as "Eligible
Employee(s)") are eligible to receive a benefit under the Program. As a named
recipient of this Program description memorandum you have been designated an
Eligible Employee.
PRIMARY BENEFIT: Each Eligible Employee will receive a cash bonus equal to fifty
percent (50%) of his/her base salary on March 1, 2000, less applicable payroll
taxes and benefit contributions, (the "Supplemental Bonus") if he/she meets the
following qualifications: (1) the Eligible Employee must be continuously
employed by the Company, or an affiliate of the Company, on a full-time basis
through March 1, 2000 (the "Bonus Date"); and (2) the Eligible Employee must
maintain a performance rating of "good" or better from March 1, 1998 through the
Bonus Date. Supplemental Bonuses will be paid by the Company as soon as
practicable following the Bonus Date.
CHANGE IN CONTROL BENEFITS: In the event of a Change in Control of the Company
or, in some cases, an affiliate of the Company prior to the Bonus Date, an
Eligible Employee may be eligible to receive a pro-rata portion of the
Supplemental Bonus (calculated as set forth below) if he/she meets the following
qualifications: (1) the Eligible Employee is continuously employed by the
Company, or an affiliate of the Company, on a full-time basis from March 1, 1998
until the date immediately prior to the effective date of such Change in
Control; and (2) the Eligible Employee has maintained a performance rating of
"good" or better throughout such period (the "CIC Qualifications"). If you are
an employee of an affiliate of the Company, then you may also be able to receive
a portion of the Supplemental Bonus in the event of an independent Change in
Control of that affiliate if: (1) prior to such Change in Control of the
affiliate the Company has not offered you an equivalent employment position with
the Company or another affiliate of the Company; and (2) you have otherwise
satisfied the CIC Qualifications. No Eligible Employee will receive more than
one bonus, or portion thereof, under the Program.
1.
<PAGE> 2
The pro-rata portion of the Supplemental Bonus to be paid to a qualifying
Eligible Employee in the event of a Change in Control shall be equal to: fifty
percent (50%) of the Eligible Employee's base salary on the date immediately
preceding the triggering Change in Control multiplied by the quotient of the
actual number of days elapsed from March 1, 1998 through such date divided by
730. Any such bonus shall be paid by the Company on the date immediately
preceding the triggering Change in Control.
For purposes of this Program description, "Change in Control" means any
transaction or series of related transactions in which a third party acquires or
becomes the beneficial owner of (i) more than fifty percent (50%) of the
outstanding voting securities of Amylin or the surviving entity, whether by
merger, consolidation, reorganization, tender offer or similar means, or (ii)
substantially all of the assets of Amylin.
PARTICIPATION IN COMPANY-WIDE PROGRAMS: The Supplemental Bonus shall be in
addition to any other bonus (cash, stock or otherwise) program now or hereafter
offered to employees of the Company for which the Eligible Employee is also
eligible.
CONFIDENTIALITY: This Supplemental Bonus Program will not be announced publicly
to the Company. Consequently, we ask that you keep this memorandum and its
contents strictly confidential. Please do not discuss the Program or your
eligibility with anyone outside the Company or any employee of the Company,
including your supervisor. If you have any questions concerning this
Supplemental Bonus Program please contact me or Sue Burgess directly.
AT-WILL EMPLOYMENT: This Supplemental Bonus Program shall not be construed as
creating a contract, express or implied, of continued employment or of
employment for a particular period of time. Employment is at-will, that is
either you or the Company may terminate the employment relationship at any time,
with or without cause. The at-will relationship shall remain in full force and
effect notwithstanding any statement to the contrary made by any Company
personnel or set forth in any document.
2.
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THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
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<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
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<SECURITIES> 2,000,000
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