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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, 1999
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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<S> <C>
DELAWARE 33-0266089
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
9373 TOWNE CENTRE DRIVE 92121
SAN DIEGO, CALIFORNIA (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
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REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (858) 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. [X]
The aggregate market value of the voting stock held by non-affiliates of
the Registrant as of March 1, 2000 was $656,138,732.*
The number of shares outstanding of the Registrant's Common Stock was
62,504,058 as of March 1, 2000.
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 2000 Annual Meeting of Stockholders to be held on June 1, 2000 (the
"2000 Annual Meeting") is incorporated herein by reference into Part III of this
Report. Certain exhibits filed with the Registrant's Registration Statement on
Form S-1 (33-44195), Form 10-K for the fiscal year ended December 31, 1992, Form
10-K for the fiscal year ended December 31, 1993, Form 10-K for the fiscal year
ended December 31, 1994, Form 10-Q for the quarter ended June 30, 1995, Form
10-K for the fiscal year ended December 31, 1995, Forms 10-Q for the quarter
ended September 30, 1996, Form 10-K for the fiscal year ended December 31, 1996,
Forms 10-Q for the quarters ended March 31 and September 30, 1997, Form 10-K for
the fiscal year ended December 31, 1997, Registration Statement on Form S-8 (No.
333-51577), Registration Statement on Form S-3 (No. 33-58831), Form 10-Q for the
quarter ended March 31, 1998, Form 10-K for the fiscal year ended December 31,
1998 and Forms 10-Q for the quarters ended March 31 and September 30, 1999 are
incorporated herein by reference into Part IV 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, 2000. 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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You should read the following together with the more detailed information
regarding our company, our common stock and our financial statements and notes
to those statements appearing elsewhere in this document or incorporated here by
reference. The SEC allows us to "incorporate by reference" information that we
filed with them, which means that we can disclose important information to you
by referring you to those documents. The information incorporated by reference
is considered to be part of this Annual Report, and information that we file
later with the SEC will automatically update and supersede this information.
Except for the historical information contained herein, the following
discussion contains forward-looking statements that involve risks and
uncertainties. Our future results could differ materially from those discussed
here. Factors that could cause or contribute to such differences are described
below in "Risk Factors" and elsewhere in this Form 10-K.
PART I
ITEM 1. BUSINESS
AMYLIN PHARMACEUTICALS, INC.
Amylin Pharmaceuticals, Inc is engaged in the discovery and development of
potential drug candidates for the treatment of metabolic disorders.
We pioneered research of a hormone called "amylin." We are developing
SYMLIN(TM) (pramlintide acetate) for the treatment of people with diabetes who
use insulin. SYMLIN is a synthetic analog of the human hormone, amylin, that was
invented by our scientists. We have completed clinical testing of SYMLIN that we
believe is sufficient to support United States Food and Drug administration
approval to market SYMLIN. We are currently preparing a New Drug Application for
planned submission to the FDA in mid-2000. We are also preparing a Marketing
Approval Application for submission to European regulatory authorities, for
submission following our FDA submission.
Our second drug candidate, AC2993 (synthetic exendin-4), is in Phase 2
clinical studies. AC2993 is our code name for synthetic exendin-4. Exendin-4 is
a naturally occurring peptide initially derived from the salivary secretions of
the Gila monster.
Our third drug candidate, AC3056, is a compound that we in-licensed from
Aventis Pharma (formerly Hoechst Marion Roussel). We are evaluating AC3056 in
preclinical testing for potential utility in the treatment of metabolic
disorders relating to cardiovascular disease.
AMYLIN, THE HORMONE
Amylin is a hormone that was discovered at Oxford University and reported
in 1987. Amylin is made in and secreted from the same cells in the pancreas that
make and secrete insulin. These pancreatic cells are called "beta cells." Amylin
and insulin work together with another pancreatic hormone, glucagon, to maintain
normal glucose concentrations.
Amylin concentrations normally increase after meals. However, in people
with type 1 diabetes, amylin concentrations are extremely low or undetectable
under fasting conditions, and do not increase after meals. In type 2 diabetes
patients whose disease has progressed to the point where they need insulin
therapy, the normal post-meal increase in amylin concentrations does not occur.
Amylin has been shown in animal studies to exert multiple actions involved
in the regulation of nutrient uptake. These actions include inhibiting food
intake, slowing the emptying of the contents of the stomach into the small
intestine, slowing the rate of digestion of food in the stomach and small
intestine, and inhibiting the release of glucagon, a glucose-elevating hormone.
Slowing of the emptying of the stomach and inhibiting glucagon release are
actions of amylin that have been demonstrated to occur in humans.
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DIABETES
Diabetes is a major global health problem, and is the fourth or fifth
leading cause of death in most developed countries. The American Diabetes
Association 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 destroys the ability of the pancreas to produce insulin and
amylin, 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 sensitivity to insulin, are used to treat type 2 diabetes.
However, no single therapy 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 ineffective. Additional insulin
injections are often added to the treatment regimen when desired blood sugar
control cannot be achieved with other available therapies.
In both type 1 and type 2 diabetes, poor control of blood sugar, also known
as blood glucose, concentrations has been shown to result in long-term
complications. Effective treatments for diabetes target the control of blood
glucose to limit complications involving small blood vessels, such as
retinopathy (eye damage), nephropathy (kidney damage), neuropathy (nerve
damage), and peripheral vascular disease. Other metabolic effects resulting from
diabetes and associated metabolic disorders such as high blood pressure,
abnormal fat metabolism (dyslipidemia) and obesity, may result in complications
involving large blood vessels, which lead to heart attacks, strokes and
amputations of lower extremities. It is these complications and associated
metabolic disorders that lead to increased pain, suffering and early death
compared with the general population.
A recognized indicator of average blood glucose concentrations over a 3-to
4-month period is called "HbA1c," an abbreviation for glycated hemoglobin. Lower
HbA1c values indicate better blood glucose control. HbA1c values in people
without diabetes are usually less than 6%, indicating that less than 6% of the
hemoglobin in their red blood cells has been modified by glucose. American
Diabetes Association Clinical Practice Recommendations (1999) suggest that
people with diabetes should aim for an HbA1c value that is lower than 7%. Fewer
than 10% of people with diagnosed diabetes in the US are able to achieve the
American Diabetes Association'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 complications without increased pain and
suffering.
In 1993, a landmark study in type 1 diabetes, called the Diabetes Control
and Complications Trial (DCCT), showed that improved glucose control -- as
measured by any reduction in HbA1c -- reduced the incidence of long-term
complications. In 1998, a similar landmark study in type 2 diabetes, the United
Kingdom Prospective Diabetes Study (UKPDS), reported similar conclusions for
type 2 diabetes
Aggressive use of insulin and other available therapies to achieve target
glucose control can be associated with an increased risk of low blood glucose
concentrations, called hypoglycemia, and weight gain. For example, the UKPDS
found that people with type 2 diabetes who used an intensive insulin regimen had
gained approximately 5.5 pounds at the end of 24 months.
SYMLIN(TM) (PRAMLINTIDE ACETATE)
The primary patient population focus for SYMLIN is people with diabetes
whose therapy includes multiple insulin injections per day. We estimate that
this group is made up of 5.3 million people in North America and Europe, based
on published and proprietary estimates. Within this population group, approxi-
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mately 1.9 million people (40%) have type 1 diabetes, and the remaining 3.4
million (60%) have type 2 diabetes.
We have performed extensive clinical trials aimed at understanding the
effects of SYMLIN in people with diabetes. Over 1,400 participants, including
people with diabetes and healthy volunteers, took part in our 34 completed Phase
1 and Phase 2 studies. These studies investigated the short-term safety and
tolerability of SYMLIN, mechanisms of action, interactions with insulin and oral
drugs, and effects on short- and medium-term measures of glucose control. In
these studies, SYMLIN reduced post-meal glucose increases in people with type 1
diabetes and in people with type 2 diabetes who use insulin. SYMLIN also
significantly reduced average 24-hour plasma glucose concentrations in people
with type 1 diabetes and in people with type 2 diabetes who use insulin. These
improvements in glucose control were achieved without an increase in the
incidence of hypoglycemic events or clinically important safety issues.
Over 3,500 participants took part in our completed Phase 3 studies for
SYMLIN. We completed 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). In double-blind, placebo-controlled studies
neither the physician or the patient knows which patients are receiving the
study drug and which patients are receiving placebo (inactive material).
Additionally, we completed two longer term open-label safety studies and open-
label extensions of the Phase 3 placebo-controlled studies to assess longer-term
effects of SYMLIN. In open-label studies, all participants receive study drug.
Our Phase 3 studies are summarized below:
FIRST SET OF PHASE 3 CLINICAL STUDIES: STUDIES IA AND IIA
Based on findings in Phase 2 studies, initial Phase 3 clinical studies were
conducted in the US to explore the effects of SYMLIN administration (in addition
to insulin) for one year on metabolic control in people. Study IA examined the
effects of SYMLIN administration in people with type 1 diabetes and Study IIA
examined the effects of SYMLIN administration in people with type 2 diabetes who
use insulin. We reported the results of both initial Phase 3 studies in August
1997.
In Study IA, participants receiving 30/60 micrograms of SYMLIN four times a
day achieved a sustained, statistically significant decrease in HbA1c from
baseline at one year, compared with those who received insulin alone (-0.4% for
SYMLIN; -0.1% insulin only) without an increase in the frequency of
patient-reported severe hypoglycemic events. In addition, patients receiving
SYMLIN did not gain weight. Instead, they achieved a weight loss, while those
receiving only insulin gained weight, a common result of intensifying insulin
therapy. After one year, SYMLIN recipients had a statistically significant
improvement in body weight compared to the participants who received insulin
alone. A positive effect on the lipid profiles of patients receiving SYMLIN was
also observed.
In Study IIA, the HbA1c concentrations for patients receiving 75 or 150
micrograms of SYMLIN three times a day were significantly reduced at 13 and 26
weeks, compared with those who received insulin alone. A reduction in HbA1c was
maintained over one year, but due in part to insufficient patient numbers, did
not achieve statistical significance at one year. SYMLIN administration also
resulted in a statistically significant weight loss compared with those
receiving insulin alone. Again, participants receiving insulin alone gained
weight. The most common drug-related side effect in the first two clinical
studies was initial transient nausea, which in most patients was relatively mild
and usually dissipated during the initial 4 to 8 weeks of treatment.
SECOND SET OF PHASE 3 CLINICAL STUDIES: STUDIES IB AND IIB
In October 1998, the Company announced results from two six-month Phase 3
European/Canadian studies of SYMLIN, one in type 1 diabetes (Study IB) and one
in insulin-using type 2 diabetes (Study IIB). In Study IB, the average reduction
in HbA1c after 26 weeks of SYMLIN treatment compared with those who received
insulin alone was 0.2% for the 90 micrograms two or three times a day dosage
groups, and 0.3% for the 60 micrograms three times a day dosage group.
Unexpectedly, the glucose control effect observed in the group who received the
highest SYMLIN dosage (90 micrograms three times a day) did not reach
statistical significance. This highest dosage group had been designated in
advance as the primary dosage group for statistical analysis for regulatory
purposes. As a consequence, under the procedure specified in the statistical
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analysis plan, the results from the primary SYMLIN dosage group alone did not
meet the regulatory requirements to support a New Drug Application, even though
the other two dosage groups did achieve statistical significance.
In Study IIB , the average reduction in HbA1c after 26 weeks of SYMLIN
treatment compared with those who received insulin alone was 0.2% for the 90
micrograms two times daily dosage group, 0.3% for the 90 micrograms three times
a day dosage group, and 0.3% for the 120 micrograms two times a day dosage
group. Two of these dosage groups, including the highest dosage (90 micrograms
three times a day), did not achieve statistical significance. As in Study IB,
because the highest dosage group had been designated in advance as the primary
evaluation group and did not achieve statistical significance, the regulatory
requirements for a positive study were not met even though another dosage group
did achieve statistical significance.
ADDITIONAL ANALYSES OF FIRST TWO SETS OF PHASE 3 STUDIES
We conducted further analyses of data from the first four Phase 3 studies
of SYMLIN. In these four studies, approximately half of all participants who
received SYMLIN evidenced an early reduction in HbA1c. After 4 weeks, these
participants experienced a reduction in HbA1c of at least 0.5%. The percentage
of patients in the SYMLIN treatment groups who experienced an early reduction in
HbA1c was about twice the percentage in the group of patients treated with
insulin alone. The participants identified by their early response achieved
average HbA1c reductions that ranged from 0.6 to 1.1% at 6 months. In the type 1
diabetes studies, those participants who experienced an early glycemic response
and received the well-tolerated dosages of 30 micrograms four times daily or 60
micrograms 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, the participants who experienced an early glycemic
response also achieved and maintained a reduction in body weight during
treatment with SYMLIN. This weight loss was independent of the lowering of
HbA1c.
OPEN-LABEL PHASE 3 STUDY RESULTS
At the close of Studies IA and IIA in 1997, participants were given the
opportunity to voluntarily receive SYMLIN in an open-label extension study in
which all participants received SYMLIN. In the type 1 study (Study IA),
approximately 70% of the participants who had received SYMLIN voluntarily
continued using SYMLIN in the open-label extension. Approximately half of the
patients in the open label extension study experienced an early glycemic
response, as defined above using the initial 4-week HbA1c reduction criterion.
Participants who experienced an early glycemic response and 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 Study IA, approximately 70% of the participants in the insulin-using
type 2 diabetes study (Study IIA) receiving SYMLIN voluntarily continued using
the drug candidate in the open-label extension. Approximately 50% of the
patients experienced an early glycemic response, as defined above. Participants
who experienced an early glycemic response within these dosing groups who
completed 24 months of SYMLIN therapy achieved 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 glucose control, study subjects who completed 24 months of therapy
maintained or decreased their body weight.
In a separate open-label clinical use study in the US that we began in
1996, we examined the long-term effects of SYMLIN in people with type 1
diabetes. Patients completing 18 months of SYMLIN therapy achieved average HbA1c
reductions of 0.6% (6 months), 0.5% (12 months) and 0.4% (18 months).
Participants who experienced an early glycemic response as defined above, and
completed 18 months of SYMLIN therapy achieved average HbA1c reductions of 0.9%
(6 months), 0.8% (12 months) and 0.8% (18 months).
In all of these open-label studies, the percentage of patients in the
SYMLIN treatment groups who experienced any early reduction in HbA1c was about
twice the percentage in the group of patients treated with insulin alone.
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THIRD SET OF PHASE 3 STUDIES: STUDIES IC AND IIC
In August 1999, we reported results of our final Phase 3 study in people
with type 2 diabetes who use insulin (Study IIC). In the intent-to-treat
analysis, which is the statistical analysis required by the FDA, patients
receiving SYMLIN in addition to their usual diabetes therapy achieved a
statistically significant reduction in HbA1c at 6 months. Those receiving a
dosage of 120 micrograms twice a day achieved a reduction of 0.7% in the primary
endpoint of HbA1c at 6 months, compared to a reduction of 0.3% in the control
group. For patients in the SYMLIN 120 micrograms twice a day group who completed
one year of treatment, the reduction in HbA1c was 0.7%, compared with a
reduction of 0.1% for the control group. The lower dosage group, SYMLIN 90
micrograms twice a day, did not reach statistical significance. In the SYMLIN
120 micrograms twice a day group, the 44% of participants who evidenced an early
glycemic response had an average reduction in HbA1c of at least 1.0% from Week
13 through the end of the one-year study. Participants receiving SYMLIN 120
micrograms twice a day lost 3.1 pounds at the end of one year, while those in
the control group gained 1.5 pounds.
In November 1999 we reported results from our final Phase 3 clinical study
in type 1 diabetes (Study IC). For the SYMLIN 60 micrograms three times a day
group, HbA1c was reduced by 0.3% at 6 months, compared to those receiving
insulin alone. Those receiving SYMLIN 60 micrograms four times a day also
achieved a significant reduction in HbA1c at 6 months. Patients receiving SYMLIN
who completed one year of therapy achieved an HbA1c reduction of 0.4% at study
end compared to those receiving insulin alone. To better understand the effects
of SYMLIN independent of the effects of insulin, a stable insulin group was
predefined in Study IC as those participants who did not vary their insulin
usage by more than 10% from baseline. SYMLIN recipients in this stable insulin
group achieved a reduction in HbA1c of 0.7% at one year compared to placebo
recipients who met the stable insulin criterion. Participants in the SYMLIN 60
micrograms three times a day group who evidenced an early glycemic response had
an average reduction in HbA1c of 0.7% at one year. As in previous studies, the
percentage of SYMLIN patients experiencing an early glycemic response was about
twice the percentage of patients who received insulin alone. SYMLIN recipients
demonstrated significantly improved weight control during the study compared
with those receiving insulin alone. Over 40% of the study participants were
overweight upon study entry. In a predefined analysis of these overweight
participants, those receiving SYMLIN 60 micrograms three times a day lost 3.5
pounds, while those receiving insulin alone gained 3.5 pounds by the end of one
year.
Based on the results of our clinical studies to date, we believe we have
sufficient data to support the submission of an NDA to the FDA in mid-2000 and a
submission to European regulatory authorities after our FDA submission.
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 in the presence
of elevated blood glucose concentrations, but not during periods of low blood
glucose concentrations (hypoglycemia). AC2993 has also 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. Using diabetic animal models, our research scientists have
demonstrated that AC2993 is biologically active when administered via oral,
sublingual, pulmonary, tracheal and nasal routes.
In October 1998, we announced positive results from a UK Phase 1 safety and
tolerability study of AC2993 (0.01 to 0.30 microgram per kilogram) administered
by injection to healthy, fasted volunteers. Doses of up to 0.1 microgram per
kilogram 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 microgram per kilogram at which a
statistically significant stimulation in insulin secretion was observed. A
statistically significant reduction in plasma glucose was observed at doses of
0.05 microgram per kilogram
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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 (Harvard Medical
School) 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.
In January 1999, we filed an investigational new drug application for
AC2993, and initiated a clinical study with the drug candidate in people with
type 2 diabetes. In April 30, 1999, we announced results from a single-blind,
dose-rising, placebo-controlled study in the US that assessed the safety,
tolerability and efficacy of AC2993 in eight male subjects with type 2 diabetes.
Each subject received three or four single subcutaneous doses of AC2993 (0.1 to
0.4 microgram per kilogram body weight) and placebo at 48-hour intervals, and
ingested a standardized liquid meal with each dose. No safety issues were
identified during the study and the data indicated that AC2993 was tolerated at
doses up to 0.3 microgram per kilogram. There was a dose-dependent lowering of
plasma glucose concentrations following AC2993 administration compared to
placebo. Additionally, AC2993 administration reduced both post-meal increases in
glucagon concentrations and the rate of nutrient release from the stomach.
Patients reported sustained sensations of fullness and satiety following AC2993
administration compared to placebo. Plasma concentrations of AC2993 were
detectable up to 15 hours after administration.
In October 1999, we reported results from a Phase 2 crossover study in
which participants received subcutaneous AC2993 or placebo twice daily for five
days. On the first and last days of the study, a standard liquid meal was
ingested. The plasma glucose concentration during the first five hours following
the standardized meal was reduced on average by 34% (from 213 to 141 mg/dL) when
participants were treated with AC2993 compared to placebo. The 24 participants
included people who used diet and exercise to manage their diabetes, those who
used oral hypoglycemic agents, and those who used insulin. The dose of AC2993
used was 0.1 microgram per kilogram of body weight. The safety and tolerability
profile observed in this single-blind, placebo-controlled study was similar to
that in previous studies of AC2993.
In January 2000, we reported additional results from the Phase 2 study
first reported in October 1999. These additional analyses showed that AC2993
suppressed the post-meal rise in triglyceride concentrations in people with type
2 diabetes. Elevations in post-meal triglycerides are recognized as a
cardiovascular risk factor. Additional analyses from this study also confirmed
that administration of AC2993 reduced post-meal increases in glucagon
concentrations and slowed the rate of nutrient release from the stomach.
In January 2000, we announced results from a Phase 2 study of AC2993 in
type 2 diabetes that used doses lower than those previously evaluated in type 2
diabetes. These lower dosages demonstrated significant glucose lowering effects.
In addition, a substantially reduced incidence of side effects, such as nausea
and vomiting, was associated with these lower doses. Fourteen subjects with type
2 diabetes of varying severity received single subcutaneous doses of AC2993
(0.01 to 0.1 microgram per kilogram body weight) or placebo at 24-hour
intervals. In this single-blind study designed to further define the preferred
dose of AC2993, a standardized liquid meal was ingested with each dose. A dose
proportional glucose-lowering effect was observed in the range of doses studied,
and a no-effect dose for glucose lowering was determined.
Additional Phase 2 studies of AC2993 are underway and planned for 2000.
AC3056
We are currently evaluating AC3056, a compound we in-licensed from Aventis
Pharma (formerly Hoechst Marion Roussel), in laboratory and animal tests for
potential utility in the treatment of metabolic disorders relating
cardiovascular disease. In animal studies, AC3056 has been shown to reduce serum
low density lipids (LDLs), but not serum high density lipids (HDLs), to inhibit
lipoprotein oxidation, and to inhibit cell adhesion molecules in vascular cells.
We plan to submit an investigational new drug application with the FDA in the
first half of 2000 which, if accepted, would allow us to begin Phase 1 clinical
trials.
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RESEARCH ACTIVITIES
The metabolic components of diabetes, obesity and dyslipidemia are linked
in many ways that may allow us to leverage our decade of expertise to move new
metabolic drugs into the clinic. Our scientists are using their abilities to
determine biological function in laboratory and animal tests to investigate
actions and potential utilities of new peptide hormone candidates. We are also
using our ability to optimize pharmaceutical properties of peptide drugs to
develop new peptide hormone analogs. Additionally, our scientists have been
engaged in research on uncoupling proteins that are believed to divert nutrient
calories into heat formation.
SALE OF CABRILLO LABORATORIES
In January 1999, we announced the creation of a new division of our
company, Cabrillo Laboratories, a contract product development organization. In
February 1999, we signed a non-binding letter of intent with Magellan
Laboratories Incorporated regarding the sale to Magellan of the Cabrillo
Laboratories division. The sale was completed on April 30, 1999. Cabrillo
Laboratories, now a division of Magellan, continues to provide product
development services, such as analytical chemistry, formulation development,
process development, clinical material packaging, quality control and stability
testing to Amylin and to other companies. The transaction included a cash
payment of $2.1 million to Amylin and a $500,000 credit for future services to
be provided by Magellan to Amylin. Amylin also granted to Magellan a warrant for
the purchase of 50,000 shares of common stock of Amylin.
STRATEGIC ALLIANCES
We evaluate, on an ongoing basis, potential collaborative relationships
with established pharmaceutical and biotechnology companies with the goal of
maximizing the economic value of SYMLIN and AC2993. We are considering a wide
range of commercialization options for SYMLIN, including some combination of (1)
a worldwide distribution arrangement with a major pharmaceutical company, (2)
regional distribution and marketing arrangements and (3) performance of some
commercialization activities by Amylin. We are also examining collaborative
research, development, and commercialization opportunities for AC2993.
JOHNSON & JOHNSON
From June 1995 to August 1998, Amylin and Johnson & Johnson collaborated on
the development and commercialization of SYMLIN pursuant to a worldwide
collaboration agreement. Under the collaboration agreement, Johnson & Johnson
made payments to us totaling approximately $174 million. These payments included
funding of one-half of the SYMLIN development costs during the term of the
agreement, draw downs from the development loan facility under a loan and
security agreement, the purchase of $30 million of our common stock, milestone,
license and option fee payments, and the funding of SYMLIN pre-marketing costs.
Our collaboration with Johnson & Johnson terminated in August 1998. As a result
of Johnson & Johnson's withdrawal, Johnson & Johnson relinquished its rights to
share in SYMLIN profits. Additionally, following the collaboration termination,
all patent and other rights associated with SYMLIN and related compounds
reverted to us.
In conjunction with the collaboration, we received proceeds of
approximately $30.6 million from a draw down under the development loan
facility. The loan carries an interest rate of 9.0%. Additionally, as of
December 31, 1999 we owed Johnson & Johnson approximately $13.4 million for our
share of pre-launch marketing expenses. As of December 31, 1999 the total
principal and interest due to Johnson and Johnson was approximately $50.6
million. In conjunction with the borrowing, Amylin issued warrants to Johnson &
Johnson to purchase 1,530,950 shares of our common stock with a fixed exercise
price of $12 per share and a 10-year exercise period. The loan is secured by our
issued patents and patent applications relating to amylin, including those
relating to SYMLIN.
At February 15, 2000, Johnson & Johnson owned 3,963,357 shares of our
common stock, which represents 6.3% of our outstanding common stock as of March
1, 2000.
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AVENTIS PHARMA
In March 1997, Amylin entered into a license agreement with Hoechst Marion
Roussel, now known as Aventis Pharma after the merger of Hoechst Marion Roussel
and Rhone Poulenc Rorer. Under the license agreement, Amylin received exclusive
worldwide rights to AC3056, which is currently being evaluated in preclinical
studies to evaluate its potential utility in the treatment of metabolic
disorders relating to cardiovascular disease.
Under the terms of the license agreement, we are responsible for conducting
the preclinical evaluation and clinical development of AC3056. Upon completion
of Phase 2 clinical studies, Aventis Pharma will have a one-time right to elect
to collaborate with us in the continuing development and commercialization of
AC3056 in a 50:50 cost-and-profit sharing arrangement. If Aventis Pharma
exercises this option, we will continue to be responsible for developing and
registering AC3056, and Aventis Pharma will be responsible for manufacturing and
marketing. If the option is exercised, Amylin and Aventis Pharma 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 Aventis Pharma does not exercise
its option, we will retain all development and commercialization rights, and
Aventis Pharma will be entitled to a royalty based on any future net sales. In
such case, we will be free to collaborate with other companies on the
development, manufacture, and commercialization of AC3056.
PATENTS, PROPRIETARY RIGHTS, AND LICENSES
We believe that patents and other proprietary rights are important to our
business. Our policy is to file patent applications to protect technology,
inventions and improvements that may be important to the development of our
business. Amylin also relies upon trade secrets, know-how, continuing
technological innovations and licensing opportunities to develop and maintain
its competitive position. We plan to enforce our issued patents and our rights
to proprietary information and technology. We review third-party patents and
patent applications in our fields of endeavor, both to shape our own patent
strategy and to identify useful licensing opportunities.
At March 17, 2000, we owned or held exclusive rights to 28 issued U.S.
patents and a number of other still-pending U.S. applications. We have has a
total of eight pending and 12 issued U.S. patents relevant to the development
and commercialization of SYMLIN. We have a total of 12 pending and one issued US
patent relevant to the development and commercialization of AC2993. Amylin also
has filed foreign counterparts of many of these issued patents and applications.
Included within our patent portfolio are issued patents for (1) SYMLIN and other
amylin agonist analogues invented by our researchers; (2) the amylin molecule,
which was discovered by University of Oxford researchers Tony Willis and Garth
Cooper, a co-founder of Amylin; (3) amylin agonist pharmaceutical compositions,
including (a) compositions containing SYMLIN, (b) compositions containing SYMLIN
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, our policy is to file foreign counterparts in countries
with significant pharmaceutical markets.
MANUFACTURING
We contract with others for manufacture of SYMLIN and AC2993. We currently
rely on three manufacturers for bulk SYMLIN, one manufacturer for dosage form
SYMLIN in vials and one manufacturer for dosage form SYMLIN in cartridges. We
currently rely on one manufacturer of pens for delivery of SYMLIN in cartridges.
We have selected manufacturers that we believe comply with current good
manufacturing practice and other regulatory standards. We have established a
quality control and quality assurance program, including a set of standard
operating procedures, analytical methods and specifications, designed to ensure
that SYMLIN and AC2993 are manufactured in accordance with current good
manufacturing practice and other domestic and foreign regulations. Under our
collaboration agreement
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regarding AC3056, Aventis Pharma has agreed to supply quantities of AC3056
manufactured in accordance with current good manufacturing practices that are
sufficient to complete initial Phase 1 clinical studies.
GOVERNMENT REGULATION
Regulation by governmental authorities in the United States and foreign
countries is a significant factor in the development, manufacture and marketing
of pharmaceutical products. All of our potential products, including SYMLIN 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 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 activity 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 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.
Among the conditions for NDA approval is the requirement that the
prospective manufacturer's quality control and manufacturing procedures conform
with current good manufacturing practices. In complying with these practices,
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.
We are 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 our research.
Clinical testing, manufacture and sale of products outside of the United
States is subject to regulatory approval by other jurisdictions which may be
more or less rigorous than in the United States.
MARKETING AND SALES
We are considering a wide range of commercialization options for SYMLIN,
including some combination of 1) a worldwide distribution arrangement with a
major pharmaceutical company, 2) regional distribution and marketing
arrangements and 3) performance of some commercialization activities by Amylin.
We are also examining collaborative research, development, and commercialization
opportunities for AC2993. We have limited experience in market development and
no experience in sales, marketing or distribution. To market any of our
products, we must obtain access to marketing and sales forces with technical
expertise and with supporting distribution capability.
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COMPETITION
Our target population for SYMLIN is people with diabetes whose therapy
includes multiple insulin injections per day. This population includes people
with type 1 diabetes and those people with type 2 diabetes whose disease has
progressed to a point at which they receive several insulin injections per day.
We believe that SYMLIN 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.
SYMLIN or AC2993 may be complementary to, or competitive with, these other
agents. 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.
If approved for marketing, SYMLIN or AC2993 may compete with established
therapies for market share. In addition, many companies are pursuing the
development of novel pharmaceuticals that target diabetes. These companies may
develop and introduce products competitive with or superior to SYMLIN 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.
Similarly, if AC3056 is ultimately approved for marketing, it may compete with
established therapies for market share. Potentially competitive products include
HMG-CoA reductase inhibitors known as statins.
The lengthy process of seeking regulatory approvals and the subsequent
compliance with applicable federal and state statutes and regulations require
the expenditure of substantial resources. Any failure by us or our collaborators
or licensees to obtain, or any delay in obtaining, regulatory approvals could
adversely affect the marketing of any products developed by us and our ability
to receive product revenue, royalty revenue or profit sharing payments.
Competition of SYMLIN, AC2993 or AC3056 will be determined in part by the
indications for which the these products are developed and ultimately approved
by regulatory authorities. An important factor in competition may be the timing
of market introduction of our products and 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 expected to be
important competitive factors. We expect 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 March 1, 2000, Amylin has 60 full-time and 15 part-time employees. A
significant number of our management and professional employees have had
experience with pharmaceutical, biotechnology or medical product companies. We
believe that we have been highly successful in attracting skilled and
experienced scientific personnel. None of our employees is covered by collective
bargaining agreements and we consider our relations with our employees to be
good.
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DIRECTORS AND OFFICERS
Our directors and officers are as follows:
<TABLE>
<CAPTION>
NAME POSITION
---- --------
<S> <C>
Joseph C. Cook, Jr. ............ Chairman of the Board and Chief Executive Officer
James C. Blair, Ph.D.(1)........ Director
Vaughn D. Bryson(1)............. Director
James C. Gaither(1)............. Director
Ginger L. Graham(2)............. Director
Howard E. Greene, Jr.(2)........ Director
Vaughn M. Kailian(2)............ Director
Donald H. Rumsfeld.............. Director
Jay S. Skyler, M.D. ............ Director
Daniel M. Bradbury.............. Senior Vice President of Corporate Development
Martin R. Brown................. Senior Vice President of Operations
Joann L. Data, M.D., Ph.D. ..... Senior Vice President of Regulatory Affairs and Quality
Assurance
Orville G. Kolterman, M.D. ..... Senior Vice President of Clinical Affairs
Alain D. Baron, M.D. ........... Vice President of Clinical Research
Nancy K. Dahl................... Vice President, General Counsel and Secretary
Andrew A. Young, M.D., Ph.D. ... Vice President of Research
</TABLE>
- ---------------
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
MR. BRYSON has served as a director since July 1999. Mr. Bryson was a
thirty-two year employee of Eli Lilly & Company and served as its President and
Chief Executive Officer from 1991 to 1993. He was Executive Vice President from
1986 until 1991, and served as a member of Eli Lilly's board of directors from
1984 until his retirement in 1993. Mr. Bryson was Vice Chairman of Vector
Securities International from April 1994 to 1996. Mr. Bryson is President of
Life Science Advisors, a consulting firm focused on assisting biopharmaceutical
and medical device companies in building shareholder value. He also serves as a
director for the following publicly traded companies: Ariad Pharmaceuticals,
Chiron Corporation, Fusion Medical Technologies, Inc. and Quintiles
Transnational Corp. Mr. Bryson received a B.S. in Pharmacy from the University
of North Carolina.
MR. COOK has been our Chairman of the Board and Chief Executive Officer
since March 1998. Mr. Cook previously served as a member of our board, and a
consultant to us since 1994. Mr. Cook is a founder and serves as Chairman of the
Board of Microbia, Inc., a privately held biotechnology company. Mr. Cook is
also a founder of Clinical Products, Ltd., Life Science Advisors, LLC, Cambrian
Associates, LLC, and Mountain Ventures, Inc. Mr. Cook retired as a Group
Vice-President of Eli Lilly in 1993 after more than 28 years of service. Mr.
Cook is also a director of Dura Pharmaceuticals, Inc. and NABI, Inc. Mr. Cook
received a B.S. in Engineering from the University of Tennessee.
DR. BLAIR has served as a director since December 1988 and serves on the
Compensation Committee. He has been a managing member of Domain Associates,
L.L.C., a venture capital investment firm, since 1985. Domain Associates manages
Domain Partners, L.P., Domain Partners II, L.P., Domain Partners III, L.P. and
Domain Partners IV, L.P. and is the U.S. venture capital advisor to
Biotechnology Investments, Ltd. From 1969 to 1985, Dr. Blair was an officer of
three investment banking and venture capital firms. Dr. Blair is a director of
Aurora Biosciences, Inc., Dura Pharmaceuticals, Inc., Trega Biosciences, Inc.
and Vista Medical Technologies, Inc. Dr. Blair received a B.S.E. from Princeton
University and the M.S.E. and Ph.D. degrees from the University of Pennsylvania
in electrical engineering.
MR. GAITHER has served as a director since November 1995 and serves on the
Compensation Committee. He has been a partner of the law firm Cooley Godward LLP
since 1971 where he also served as managing
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partner from 1984 to 1990. Prior to joining Cooley Godward in 1969, Mr. Gaither
served as Staff Assistant to the President of the United States from July 1966
to January 1969. He is a director of Basic American, Inc., Levi Strauss & Co.,
NVIDIA Corporation and Siebel Systems, Inc. and serves on the executive
committee of the Board of Visitors at Stanford Law School. He previously served
as President of the Board of Trustees of Stanford University and as Chairman of
its Investment Committee. He is a trustee of the Carnegie Endowment for
International Peace, The James Irvine Foundation, RAND Corporation, and The
William and Flora Hewlett Foundation. Mr. Gaither received his J.D. from
Stanford University.
MS. GRAHAM has served as a director since November 1995 and serves on the
Audit Committee. Since 1993, Ms. Graham has served as President of the Vascular
Intervention Group of Guidant Corporation, a medical device company, which
includes Advanced Cardiovascular Systems and Devices for Vascular Intervention.
She has also served as President and Chief Executive Officer of Advanced
Cardiovascular Systems since January 1993. Prior to joining Advanced
Cardiovascular, she held various positions with Eli Lilly from 1979 to 1992,
including sales and strategic planning positions. She serves on the Board of
Directors and the Executive Committee for the California Healthcare Institute
and on the Advisory Board of the California Institute for Federal Policy
Research and is a HIMA special representative to the Payment and Health Care
Delivery Committee. She is also a member of the Committee 200. Ms. Graham
received an M.B.A. from Harvard University.
MR. GREENE is one of Amylin's co-founders and has served as a director
since our inception in September 1987. Mr. Greene serves on our Audit Committee.
Mr. Greene is an entrepreneur who has founded, managed, and financed several
medical technology companies. From September 1987 to July 1996, Mr. Greene
served as our Chief Executive Officer. He was a full time employee from
September 1989 until September 1996, and a half-time employee and Chairman of
our Executive Committee until March 1998. From October 1986 until July 1993, Mr.
Greene was a founding general partner of Biovest Partners, a seed venture
capital firm. He was Chief Executive Officer of Hybritech from March 1979 until
its acquisition by Eli Lilly in March 1986, and he was co-inventor of
Hybritech's patented monoclonal antibody assay technology. Prior to joining
Hybritech, he was an executive with the medical diagnostics division of Baxter
Healthcare Corporation from 1974 to 1979 and a consultant with McKinsey &
Company from 1967 to 1974. He is Chairman of the Board of Cytel Corporation, and
a director of Biosite Diagnostics, Inc. and The International Biotechnology
Trust plc, a British investment company. Mr. Greene received an M.B.A. from
Harvard University.
MR. KAILIAN has served as a director since November 1995 and serves on the
Audit Committee. Mr. Kailian has served as President and Chief Executive Officer
and as a director of COR Therapeutics, Inc. since March 1990. From 1967 to 1990,
Mr. Kailian was employed by Marion Merrell Dow, Inc., a pharmaceutical company,
and its predecessor companies, in various general management, product
development, marketing and sales positions. Among the positions held by Mr.
Kailian were President and General Manager, Merrell Dow USA and Corporate Vice
President of Global Commercial Development, Marion Merrell Dow, Inc. Mr. Kailian
is also a director of the Biotechnology Industry Organization and the California
Healthcare Institute and is a director and serves on the compensation committee
of Axys Pharmaceuticals, Inc. Mr. Kailian holds a B.A. from Tufts University.
MR. RUMSFELD has served as a director since September 1999. Mr. Rumsfeld
also previously served as a member of the our board of directors from 1991 to
1996. Mr. Rumsfeld is Chairman of the Board of Gilead Sciences, Inc. He also is
a member of the boards of directors of ABB (Asea Brown Boveri) Ltd., Forstmann
Little & Co., Tribune Company and RAND Corporation. He is also currently
Chairman of the Salomon Smith Barney International Advisory Board. Mr. Rumsfeld
was Chairman and Chief Executive Officer of General Instrument Corporation from
October 1990 to August 1993 and served as a senior advisor to William Blair &
Co., an investment banking firm, from 1985 to 1990. He was Chief Executive
Officer of G.D. Searle & Co. from 1977 to 1985. Mr. Rumsfeld formerly served as
U.S. Secretary of Defense, White House Chief of Staff, U.S. Ambassador to NATO,
and as a U.S. Congressman. He has also served as the President's envoy to the
Middle East and recently completed service as Chairman of the U.S. Government
Commission to Assess the Ballistic Missile Threat to the United States. He is a
recipient of the Presidential Medal of Freedom, the United States' highest
civilian award.
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DR. SKYLER has served as a director since August 1999. He is Professor of
Medicine, Pediatrics, and Psychology and Co-Director of the Medicine Research
Center at the University of Miami in Florida. He is also Director of the
Operations Coordinating Center for the National Institute of Diabetes &
Digestive & Kidney Diseases (NIDDK) Diabetes Prevention Trial in Type 1
Diabetes. Dr. Skyler has served as President of the American Diabetes
Association, and is currently Vice President of the International Diabetes
Federation. Dr. Skyler is a member of the Florida Governor's Diabetes Advisory
Council, and serves on the editorial board of diabetes and general medicine
journals. He received his M.D. from Jefferson Medical College, and completed
postdoctoral studies at Duke University Medical Center.
DR. BARON joined Amylin as Vice President of Clinical Research in December
1999. Dr. Baron previously worked for the Indiana University School of Medicine
in Indianapolis, where he served as Professor of Medicine and Director, Division
of Endocrinology and Metabolism. Prior to this position at Indiana, Dr. Baron
held academic and clinical positions in the Division of Endocrinology and
Metabolism at University of California, San Diego, and the Veterans
Administration Medical Center in San Diego. He is the recipient of several
prestigious awards for his research in diabetes and vascular disease, including
the 1996 Outstanding Clinical Investigator Award from the American Federation
for Medical Research, several from the American Diabetes Association, and is a
current National Institutes of Health MERIT award recipient. Dr. Baron is
currently Principal Investigator for several diabetes studies, including the
Early Diabetes Intervention Program study sponsored by the NIH and Bayer
Pharmaceuticals. He earned his M.D. from the Medical College of Georgia,
Augusta, and completed postdoctoral studies at the University of California, San
Diego.
MR. BRADBURY, an executive officer, has served as our Senior Vice President
of Corporate Development since April 1998. Mr. Bradbury previously served as
Vice President of Marketing from June 1995 to April 1998, and Director of
Marketing, Amylin Europe Limited, from July 1994 to May 1995. Prior to joining
Amylin, Mr. Bradbury was employed by SmithKline Beecham Pharmaceuticals from
September 1984 to July 1994, where he held a number of positions, most recently
as Associate Director, Anti-Infectives in the Worldwide Strategic Product
Development Division. Mr. Bradbury holds a B.Pharm. (Hons.) from Nottingham
University and a Diploma in Management Studies from Harrow and Ealing Colleges
of Higher Education and is a member of the Royal Pharmaceutical Society of Great
Britain.
MR. BROWN, an executive officer, has served as Senior Vice President of
Operations since March 2000 and previously served as Vice President of
Operations from October 1998 to February 2000. Mr. Brown previously served as
our Senior Director, Information Technology from May 1994 to October 1998. From
1989 to 1993, Mr. Brown was Director, Information Systems, Europe, for Eli
Lilly. From 1988 to 1989, Mr. Brown was Director, Information Systems for the
Medical Devices and Diagnostics Division of Eli Lilly; he served as Director,
Information Systems of IVAC Corporation, one of the seven companies in that
division, from 1983 to 1988. Mr. Brown received a B.S. in Commerce and
Engineering and a M.B.A. in Operations Research from Drexel University.
DR. DATA has served as Senior Vice President of Regulatory Affairs and
Quality since August 1999. Dr. Data previously served as Executive Vice
President, Product Development and Regulatory for CoCensys. Before that, Dr.
Data held several positions at The Upjohn Company, the most recent of which was
Corporate Vice President for Pharmaceutical Regulatory Affairs and Project
Management. Previously, she held a number of positions at Hoffman-La Roche,
including Vice President of Clinical Research and Development. Dr. Data has been
an adjunct assistant professor in medicine and pharmacology at Duke University
Medical Center since 1982 and at Cornell Medical Center since 1986. She earned
her M.D. from Washington University School of Medicine and her Ph.D. in
Pharmacology from Vanderbilt University.
DR. KOLTERMAN, an executive officer, has served as Senior Vice President of
Clinical Affairs since February 1997. Dr. Kolterman previously served as Vice
President, Medical Affairs from July 1993 to February 1997 and Director, Medical
Affairs from May 1992 to July 1993. From 1983 to May 1992, he was Program
Director of the General Clinical Research Center and Medical Director of the
Diabetes Center, at the University of California, San Diego Medical Center.
Since 1989, he has been Adjunct Professor of Medicine at UCSD. From 1978 to
1983, he was Assistant Professor of Medicine in the Endocrinology and Metabolism
Division at the University of Colorado School of Medicine, Denver. He was a
member of the
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Diabetes Control and Complications Trial (DCCT) Study Group at the time of its
completion in 1993 and presently serves as a member of the Epidemiology of
Diabetes Intervention and Complications (EDIC) Study. He is also a
past-President of the California Affiliate of the American Diabetes Association.
Dr. Kolterman earned a M.D. from Stanford University School of Medicine.
MS. DAHL, an executive officer, has served as Vice President and General
Counsel since January 1999. Ms. Dahl previously served as Vice President and
Associate General Counsel from November 1998 to December 1998. From 1996 to
1998, Ms. Dahl held the position of Associate General Counsel, and from 1993 to
1996, she served as Senior Attorney. Prior to joining Amylin, from 1989 to 1993,
she was an attorney in private practice with the law firm of Lyon & Lyon. From
1987 to 1989, Ms. Dahl was in private practice with the law firm of Brobeck,
Phleger & Harrison. From 1986 to 1987, she served as a judicial clerk to the
Honorable David R. Thompson of the U.S. Court of Appeals for the Ninth Circuit.
Ms. Dahl received a J.D. degree from the University of Oregon and a B.S. degree
in Zoology from the University of Wisconsin.
DR. YOUNG has served as Vice President of Research since October 1998 and
served as Vice President of Physiology from January 1994 until October 1998.
From 1989 to 1993 he held a number of positions in our physiology department.
Prior to 1989, Dr. Young was a lecturer in the Department of Physiology at the
University of Auckland, New Zealand and a part-time general medical
practitioner. From 1984 to 1987, Dr. Young was a Clinical Research Scientist at
the National Institutes of Health in Phoenix, Arizona, where he studied insulin
resistance and diabetes. He received his M.B., Ch.B. (M.D.) and his Ph.D. in
Physiology from the University of Auckland, New Zealand.
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RISK FACTORS RELATED TO OUR BUSINESS
Except for the historical information contained or incorporated by
reference, this annual report on Form 10-K and the information incorporated by
reference contains forward-looking statements that involve risks and
uncertainties. Our actual results may differ materially from those discussed
here. Factors that could cause or contribute to differences in our actual
results include those discussed in the following section, as well as those
discussed in Part II, Item 7 entitled "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and elsewhere throughout this
annual report and in any other documents incorporated by reference into this
annual report. You should consider carefully the following risk factors,
together with all of the other information included in this annual report on
Form 10-K. Each of these risk factors could adversely affect our business,
operating results and financial condition, as well as adversely affect the value
of an investment in our common stock.
RESULTS FROM OUR CLINICAL TRIALS MAY NOT BE SUFFICIENT TO OBTAIN REGULATORY
CLEARANCE TO MARKET SYMLIN OR AC2993 IN THE UNITED STATES OR ABROAD ON A TIMELY
BASIS, OR AT ALL.
Our drug candidates are subject to extensive government regulations related
to development, clinical trials, manufacturing and commercialization. The
process of obtaining FDA and other regulatory approvals is costly, time
consuming, uncertain and subject to unanticipated delays. The FDA may refuse to
approve an application for approval of a drug candidate if it believes that
applicable regulatory criteria are not satisfied. The FDA may also require
additional testing for safety and efficacy. Moreover, if the FDA grants
regulatory approval of a product, the approval may be limited to specific
indications or limited with respect to its distribution. Foreign regulatory
authorities may apply similar limitations or may refuse to grant any approval.
The data collected from our clinical trials may not be sufficient to
support approval of SYMLIN or AC2993 by the FDA or any foreign regulatory
authorities. With respect to SYMLIN, the results of the first four Phase 3
clinical studies were not sufficient, standing alone, to support an application
with the FDA for marketing approval. In some of these first four studies, the
statistical requirements agreed in advance with the FDA were not met. However,
the results of our final two Phase 3 clinical studies for SYMLIN that were
reported in August and November 1999 met the statistical requirements that we
agreed with the FDA. We believe that the results of our entire SYMLIN clinical
trial program, including the two most recently completed Phase 3 clinical
studies of SYMLIN, should support regulatory approval of SYMLIN. However, it is
possible that the FDA or other regulatory authorities may deem our SYMLIN
clinical trial results insufficient to meet regulatory requirements for
marketing approval or may limit approval for only selected uses. Manufacturing
facilities operated by the third party manufacturers with whom we contract to
manufacture SYMLIN may not pass an FDA or other regulatory authority preapproval
inspection for SYMLIN. Any failure or delay in obtaining these approvals could
prohibit or delay us from marketing SYMLIN. Consequently, even if we believe
that preclinical and clinical data are sufficient to support regulatory approval
for SYMLIN, the FDA and foreign regulatory authorities may not ultimately
approve SYMLIN for commercial sale in any jurisdiction. If SYMLIN does not meet
applicable regulatory requirements for approval, we may not have the financial
resources to continue research and development of SYMLIN or any of our other
product candidates and we may not be able to generate revenues from the
commercial sale of any of our products.
DELAYS IN THE CONDUCT OR COMPLETION OF OUR CLINICAL TRIALS OR THE ANALYSIS OF
THE DATA FROM OUR CLINICAL TRIALS MAY RESULT IN DELAYS IN OUR PLANNED FILINGS
FOR REGULATORY APPROVALS, OR ADVERSELY AFFECT OUR ABILITY TO ENTER INTO NEW
COLLABORATIVE ARRANGEMENTS.
We cannot predict whether we will encounter problems with any of our
completed or ongoing clinical studies that will cause us or regulatory
authorities to delay or suspend our ongoing clinical studies or delay the
analysis of data from our completed or ongoing clinical studies. If the results
of our ongoing and planned
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clinical studies for AC2993 are not available when we expect or if we encounter
any delay in the analysis of our clinical studies for SYMLIN or AC2993:
- we may delay the submission of our applications for regulatory approval
of SYMLIN with regulatory authorities in North America and Europe;
- we may not have the financial resources to continue research and
development of any of our product candidates; and
- we may not be able to enter into collaborative arrangements relating to
any product subject to delay in regulatory filing.
Any of the following reasons could delay the completion of our ongoing and
future clinical studies:
- delays in enrolling volunteers;
- lower than anticipated retention rate of volunteers in a trial; or
- serious side effects experienced by study participants relating to the
drug candidate.
EVEN IF WE OBTAIN INITIAL REGULATORY APPROVAL FOR OUR PRODUCTS, IF WE FAIL TO
COMPLY WITH EXTENSIVE CONTINUING REGULATIONS ENFORCED BY DOMESTIC AND FOREIGN
REGULATORY AUTHORITIES, IT COULD HARM OUR ABILITY TO GENERATE REVENUES AND THE
MARKET PRICE OF OUR STOCK COULD FALL.
Even if we are able to obtain United States regulatory approval for SYMLIN,
the approval will be subject to continual review, and newly discovered or
developed safety issues may result in revocation of the marketing approval.
Moreover, if and when we obtain marketing approval for SYMLIN, the marketing of
the product will be subject to extensive regulatory requirements administered by
the FDA and other regulatory bodies, including adverse event reporting
requirements and the FDA's general prohibition against promoting products for
unapproved uses. The SYMLIN manufacturing facilities are also subject to
continual review and periodic inspection and approval of manufacturing
modifications. Domestic manufacturing facilities are subject to biennial
inspections by the FDA and must comply with the FDA's Good Manufacturing
Practices regulations. In complying with these regulations, manufacturers must
spend funds, time and effort in the areas of production, record keeping,
personnel and quality control to ensure full technical compliance. The FDA
stringently applies regulatory standards for manufacturing. Failure to comply
with any of these postapproval requirements can, among other things, result in
warning letters, product seizures, recalls, fines, injunctions, suspensions or
revocations of marketing licenses, operating restrictions and criminal
prosecutions. Any of these enforcement actions or any unanticipated changes in
existing regulatory requirements or the adoption of new requirements could
adversely affect our ability to market products and generate revenues and thus
adversely affect our ability to continue as a going concern and cause our stock
price to fall.
The manufacturers of SYMLIN also are subject to numerous federal, state and
local laws relating to such matters as safe working conditions, manufacturing
practices, environmental protection, fire hazard control and hazardous substance
disposal. In the future, our manufacturers may incur significant costs to comply
with those laws and regulations which could increase our manufacturing costs and
reduce our ability to operate profitably.
EXISTING PRICING REGULATIONS AND REIMBURSEMENT LIMITATIONS MAY REDUCE OUR
POTENTIAL PROFITS FROM THE SALE OF OUR PRODUCTS.
The requirements governing 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 may
obtain regulatory approval for a product in a particular country, but then be
subject to price regulations that reduce our profits from the sale of the
product. Also, in some foreign markets pricing of prescription pharmaceuticals
is subject to continuing government control even after initial marketing
approval.
17
<PAGE> 18
Our ability to commercialize our products successfully also will depend in
part on the extent to which reimbursement for the cost of our products and
related treatments will be available from government health administration
authorities, private health insurers and other organizations. Third-party payors
are increasingly challenging the prices charged for medical products and
services. If we succeed in bringing SYMLIN and/or AC2993 to the market, we
cannot assure you that either product will be considered cost effective and that
reimbursement will be available or will be sufficient to allow us to sell SYMLIN
and/or AC2993 on a competitive basis.
WE WILL REQUIRE FUTURE CAPITAL AND ARE UNCERTAIN OF THE AVAILABILITY OR TERMS OF
ADDITIONAL FUNDING. IF OUR CAPITAL BECOMES INSUFFICIENT AND ADDITIONAL FUNDING
IS UNAVAILABLE, INADEQUATE, OR NOT AVAILABLE ON ACCEPTABLE TERMS, IT MAY
ADVERSELY AFFECT THE VALUE OF YOUR SHARES.
We must continue to find sources of capital in order to complete the
development and commercialization of SYMLIN and AC2993. Our future capital
requirements will depend on many factors, including:
- the time and costs involved in obtaining regulatory approvals;
- the costs of manufacturing SYMLIN and AC2993;
- our ability to establish one or more marketing, distribution or other
commercialization arrangements for SYMLIN and AC2993;
- progress with our preclinical studies and clinical studies;
- scientific progress in our other research programs and the magnitude of
these programs;
- the costs involved in preparing, filing, prosecuting, maintaining, and
enforcing patents or defending ourselves against competing technological
and market developments; and
- the potential need to repay outstanding indebtedness.
You should be aware that:
- we may not obtain additional financial resources in the necessary time
frame or on terms favorable to us, if at all;
- any available additional financing may not be adequate; and
- we may be required to use future financing to repay existing indebtedness
to our current or future creditors, including Johnson & Johnson.
As of December 31, 1999, the total principal and interest due to Johnson &
Johnson was approximately $50.6 million, which is secured by our issued patents
and patent applications relating to amylin, including several that relate to
SYMLIN. In the event our capital becomes insufficient and we are unable to
obtain additional financing on acceptable terms, we would not have the financial
resources to continue research and development of SYMLIN, AC2993 or any of our
other product candidates and we would curtail or cease our operations, which
would adversely affect the value of your shares.
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, 1999, we had an accumulated deficit of approximately
$292 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 may not ever become profitable. If we become profitable,
we may not remain profitable.
18
<PAGE> 19
WE HAVE NOT PREVIOUSLY SOLD, MARKETED OR DISTRIBUTED A PRODUCT, AND OUR ABILITY
TO ENTER INTO THIRD PARTY RELATIONSHIPS IS IMPORTANT TO OUR SUCCESSFUL
DEVELOPMENT AND COMMERCIALIZATION OF PRODUCTS AND POTENTIAL PROFITABILITY.
We have not previously sold, marketed or distributed a product. To market
any of our products, we must obtain access to marketing and sales forces with
technical expertise and with supporting distribution capability. We believe that
we will likely need to enter into marketing and distribution arrangements with
third parties for SYMLIN and AC2993 or find a corporate partner who can provide
support for commercialization of SYMLIN and/or AC2993. We may not be able to
enter into marketing and distribution arrangements or find a corporate partner
for these drug candidates. If we do not, or are not able to enter into a
marketing or distribution arrangement or find a corporate partner who can
provide support for commercialization of SYMLIN and/or AC2993, we may perform
some marketing and distribution activities for those potential drug products. We
may not be able to successfully perform these marketing or distribution
activities. Moreover, any new marketer or distributor or corporate partner for
SYMLIN or AC2993 may not establish adequate sales and distribution capabilities
or gain market acceptance for products, if any.
OUR COMMERCIALIZATION PLANS FOR SYMLIN AND AC2993 ARE DEPENDENT ON THE
PERFORMANCE OF, AND OUR RELATIONSHIPS WITH, THIRD PARTIES THAT PROVIDE US WITH
PRODUCT DEVELOPMENT, CLINICAL AND REGULATORY SUPPLIES AND SERVICES.
We depend to a significant degree on third parties to perform the majority
of product development, clinical and regulatory functions for our product
candidates. In particular, we rely to a significant degree on third parties for
the preparation of our planned regulatory submissions for SYMLIN. While we
believe that business relations between us and our third-party suppliers and
service providers have been good, we cannot predict whether third-party
suppliers and service providers will continue to cooperate with us in the
performance of our most important services or functions. Any difficulties or
interruptions of service with our third-party product development, clinical and
regulatory suppliers and service providers could disrupt the development of our
product candidates, the completion of our clinical trials, the manufacture of
our products and delay our submissions for regulatory approval of SYMLIN.
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 SYMLIN or AC2993. We currently rely on
third parties to manufacture SYMLIN and AC2993. We work with three contract
suppliers who have the capabilities for the commercial manufacture of SYMLIN.
We, alone or together with a new corporate partner, may not be able to make the
transition to commercial production. While we believe that our business
relations between us and our contract manufacturers are good, we cannot predict
whether these manufacturers will meet our requirements for quality, quantity or
timeliness for the manufacture of SYMLIN or AC2993. 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.
If any of our existing manufacturers cease to manufacture SYMLIN, we may
need to locate and engage another manufacturer. The cost and time to establish
manufacturing facilities to produce SYMLIN would be substantial. As a result,
using a new manufacturer could disrupt our ability to supply SYMLIN or reduce
our profit margins. Any delay or disruption in the manufacturing of SYMLIN could
require us to raise additional funds.
OUR OTHER RESEARCH AND DEVELOPMENT PROGRAMS MAY NOT RESULT IN ADDITIONAL DRUG
CANDIDATES, WHICH COULD REQUIRE US TO RAISE ADDITIONAL FUNDS.
Our research and development programs other than SYMLIN, AC2993 and AC3056
are at an early stage. Any additional product candidates will require
significant research, development, preclinical and clinical
19
<PAGE> 20
testing, regulatory approval and commitments of resources before
commercialization. We cannot predict whether our research will lead to the
discovery of any additional product candidates that could generate revenues for
us. If we do not develop additional drug candidates or if our discovery efforts
are delayed, we may have to raise additional funds to continue our business.
IF OUR PATENTS ARE DETERMINED TO BE UNENFORCEABLE OR IF WE ARE UNABLE TO OBTAIN
NEW PATENTS BASED ON CURRENT PATENT APPLICATIONS OR FOR FUTURE INVENTIONS, WE
MAY NOT BE ABLE TO PREVENT OTHERS FROM USING OUR INTELLECTUAL PROPERTY.
We own or hold exclusive rights to 28 issued United States patents and
approximately 30 pending United States patent applications. Of these issued
patents and patent applications, we have a total of 11 issued U.S. patents and
nine pending applications that we believe are relevant to the development and
commercialization of SYMLIN and one issued US patent and 12 pending applications
that we believe are relevant to the development and commercialization of AC2993.
We also own or hold exclusive rights to various foreign patent applications that
correspond to issued United States patents or pending United States patent
applications.
Our success will depend in part on our ability to obtain patent protection
for our products and technologies both in the United States and other countries.
We cannot guarantee that any patents will issue from any pending or future
patent applications owned by or licensed to us. For instance, a third party may
successfully circumvent our patents. Our rights under any issued patents may not
provide us with sufficient protection against competitive products or otherwise
cover commercially valuable products or processes. In addition, 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 cannot be 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 these 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. Furthermore, we may
not have identified all United States and foreign patents that pose a risk of
infringement.
LITIGATION REGARDING PATENTS AND OTHER PROPRIETARY RIGHTS MAY BE EXPENSIVE,
CAUSE DELAYS IN BRINGING PRODUCTS TO MARKET AND HARM OUR ABILITY TO OPERATE.
Our success will depend in part on our ability to 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, the ability to obtain and enforce patents is uncertain and involves
complex legal and factual questions. Third parties may challenge or infringe
upon existing or future patents. In the event that a third party challenges a
patent, a court may invalidate the patent or determine that the patent is not
enforceable. Proceedings involving our patents or patent applications or those
of others could result in adverse decisions about:
- the patentability of our inventions and products relating to our drug
candidates; and/or
- the enforceability, validity or scope of protection offered by our
patents relating to our drug candidates.
The manufacture, use or sale of any of our drug candidates 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, develop or obtain non-infringing technology, 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 our drug candidates to market;
and/or
20
<PAGE> 21
- be precluded from participating in the manufacture, use or sale of our
drug candidates or methods of treatment requiring licenses.
CONFIDENTIALITY AGREEMENTS WITH EMPLOYEES AND OTHERS MAY NOT ADEQUATELY PREVENT
DISCLOSURE OF TRADE SECRETS AND OTHER PROPRIETARY INFORMATION.
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 adversely affect our competitive business position.
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 and
provide these competitors with an advantage for the marketing of products with
similar potential uses. 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.
Our target patient population for SYMLIN is people with diabetes whose
therapy includes multiple insulin injections daily. AC2993 is currently being
studied for the treatment of type 2 diabetes. 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:
<TABLE>
<S> <C>
- - sulfonylureas - meglitinides
- - metformin - alpha-glucosidase inhibitors
- - insulin - thiozolidinediones
</TABLE>
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 other products or that our products will offer an economically
feasible alternative to existing products.
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 AND REDUCE OUR REVENUES.
Biotechnology and related pharmaceutical technologies have undergone and
continue to be subject to rapid and significant change. Our future will depend
in large part on our ability to maintain a competitive position with respect to
these technologies. Any products that we develop may become obsolete before we
recover expenses incurred in developing those products, which may require that
we raise additional funds to continue our operations.
21
<PAGE> 22
OUR FUTURE SUCCESS DEPENDS ON OUR ABILITY TO RETAIN OUR CHIEF EXECUTIVE OFFICER
AND OUR SENIOR VICE PRESIDENT OF CLINICAL AFFAIRS AND TO ATTRACT, RETAIN AND
MOTIVATE QUALIFIED PERSONNEL.
We are highly dependent on Joseph C. Cook, Jr., our Chairman and Chief
Executive Officer, and Orville G. Kolterman, M.D., our Senior Vice President of
Clinical Affairs, and the other 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 may
not be able to attract and retain these 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. Our consultants and advisors may be employed by employers
other than us and may have commitments to for consulting or advisory contracts
with other entities that may limit their availability to us.
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 those 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.
PROVISIONS IN AMYLIN'S CORPORATE CHARTER AND BYLAWS MAY DISCOURAGE TAKE-OVER
ATTEMPTS AND THUS DEPRESS THE MARKET PRICE OF OUR STOCK.
Provisions in Amylin's certificate of incorporation, as amended, may have
the effect of delaying or preventing a change of control or changes in its
management. These provisions include:
- the right of the board of directors to elect a director to fill a vacancy
created by the expansion of the board of directors; and
- the ability of the board of directors to issue, without stockholder
approval, up to 7,375,000 shares of preferred stock with terms set by the
board of directors.
Each of these provisions could discourage potential take-over attempts and
could adversely affect the market price of our common stock.
22
<PAGE> 23
SUBSTANTIAL FUTURE SALES OF OUR COMMON STOCK BY EXISTING STOCKHOLDERS OR BY US
COULD CAUSE OUR STOCK PRICE TO FALL.
Sales by existing stockholders of a large number of shares of our common
stock in the public market or the perception that additional sales could occur
could cause the market price of our common stock to drop. As of March 1, 2000,
we had approximately 62.5 million shares of common stock outstanding, of which
approximately 37.9 million are freely tradeable, approximately 12.6 million may
be sold in accordance with Rule 144 and approximately 12.0 million are currently
restricted but may be sold in the future in accordance with registration
statements covering the shares. Likewise, additional equity financings or other
share issuances by us, including shares issued in connection with strategic
alliances, could adversely affect the market price of our common stock.
SIGNIFICANT VOLATILITY IN THE MARKET PRICE FOR OUR COMMON STOCK COULD EXPOSE US
TO LITIGATION RISK.
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 these
biopharmaceutical and biotechnology companies. Given the uncertainty of our
future funding and our planned filing for regulatory approval of SYMLIN, we
expect that we may continue to experience volatility of our stock price
throughout 2000. In addition, the following factors may have a significant
effect on the market price of our common stock:
- announcements of additional clinical study results;
- announcements of determinations by regulatory authorities with respect to
our drug candidates;
- developments in our relationships with current or future collaborative
partners;
- fluctuations in our operating results;
- public concern as to the safety of drugs developed by us;
- technological innovations or new commercial therapeutic products by us or
our competitors;
- developments in patent or other proprietary rights;
- governmental policy or regulation; and
- general market conditions.
Broad market and industry factors may materially adversely affect the
market price of our common stock, regardless of our actual operating
performance. In the past, following periods of volatility in the market price of
a company's securities, securities class-action litigation has often been
instituted against those companies. This type of litigation, if instituted,
could result in substantial costs and a diversion of management's attention and
resources, which would materially adversely affect our business, financial
condition and results of operations.
ITEM 2. PROPERTIES
Amylin's administrative offices and research laboratories are located in
San Diego, California. As of March 1, 2000, we occupy 30,395 square feet of
office and laboratory space. The Company's lease on this property will expire on
August 31, 2004.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any material legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
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<PAGE> 24
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Since February 10, 2000, our common stock has been traded on the Nasdaq
National Market under the symbol "AMLN." From February 1, 1999 to February 9,
2000, our common stock traded on the Nasdaq SmallCap Market. Before February
1999, our common stock 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>
1999
Fourth Quarter................................... $ 9.63 $ 3.75
Third Quarter.................................... 5.81 1.03
Second Quarter................................... 1.47 0.88
First Quarter.................................... 1.97 0.50
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
</TABLE>
The last reported sale price of our common stock on the Nasdaq National
Market on March 1, 2000 was $17.00. As of March 1, 2000, there were
approximately 1,043 shareholders of record of our common stock.
We have never declared or paid any cash dividends on our capital stock. We
currently intend to retain any future earnings for funding growth and,
therefore, do not anticipate paying any cash dividends in the foreseeable
future.
24
<PAGE> 25
ITEM 6. SELECTED FINANCIAL DATA
Please read the following selected financial data in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," the Consolidated Financial Statements and related notes included
elsewhere in this annual report on Form 10-K.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------------------------
1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS OF OPERATIONS DATA:
Revenues under collaborative agreements:
Related party............................ $ -- $ 16,236 $ 42,609 $ 35,803 $ 17,045
Other.................................... -- -- -- -- --
----------- ----------- ----------- ----------- -----------
-- 16,236 42,609 35,803 17,045
Expenses:
Research and development................. 19,181 53,597 82,281 64,998 39,337
General and administrative............... 7,920 10,191 15,592 10,420 8,318
----------- ----------- ----------- ----------- -----------
27,101 63,788 97,873 75,418 47,655
Net interest income........................ (3,463) (3,546) 637 1,828 1,341
----------- ----------- ----------- ----------- -----------
Net loss................................... (30,564) (51,098) (54,627) (37,787) (29,269)
Dividends paid on preferred stock.......... 335 -- -- -- --
----------- ----------- ----------- ----------- -----------
Net loss available to common
shareholders............................. (30,899) (51,098) (54,627) (37,787) (29,269)
=========== =========== =========== =========== ===========
Net loss per common share -- basic and
diluted.................................. $ (.73) $ (1.49) $ (1.70) $ (1.31) $ (1.23)
=========== =========== =========== =========== ===========
Shares used in calculating of net loss per
share -- basic and diluted............... 42,271,064 34,325,326 32,155,761 28,744,822 23,853,606
CONSOLIDATED BALANCE SHEETS DATA:
Cash, cash equivalents and short-term
investments.............................. $ 22,503 $ 10,789 $ 52,748 $ 62,123 $ 53,521
Working capital............................ 17,360 5,192 31,303 46,691 45,268
Total assets............................... 26,422 18,823 65,338 73,533 61,949
Long-term obligation under capital lease
obligations and notes payable............ 1,620 4,164 3,047 1,990 1,410
Long-term note payable to related party.... 45,227 39,925 33,933 4,345 1,020
Accumulated deficit........................ (291,729) (260,830) (209,732) (155,105) (117,318)
Total stockholders' equity (net capital
deficiency).............................. (26,400) (31,462) 4,649 48,534 49,754
</TABLE>
25
<PAGE> 26
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
Amylin Pharmaceuticals, Inc. is engaged in the discovery and development of
potential drug candidates for the treatment of metabolic disorders.
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. We have been unprofitable since our inception and expect to incur
additional operating losses for the next several years. As of December 31, 1999,
the Company's accumulated deficit was approximately $292 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, Johnson & Johnson has relinquished all rights to share in any SYMLIN
profits. Additionally, following the collaboration termination in August 1998,
all product and other rights associated with SYMLIN and related compounds
reverted to Amylin.
Following the termination of the Johnson & Johnson collaboration agreement,
Amylin significantly reduced its workforce and operating expenses. On March 24,
1999, we announced that we raised $15 million in a private placement of shares
of Series A Preferred Stock to a select group of investors. The financing was
led by $6.7 million in investments by Amylin board members and their affiliated
funds. On October 7, 1999, we announced that we raised $18.5 million in a
private placement of shares of common stock. These funds were raised from a
select group of institutional and private investors, predominately those
investors who participated in the March 1999 financing.
On February 22, 2000, we announced that we raised gross proceeds of $100
million from the sale of newly issued common stock to select institutional and
individual investors in a private placement.
RESULTS OF OPERATIONS
REVENUE
We recognized no revenues in 1999. Our revenues were $16.2 million in 1998
and $42.6 million in 1997. The revenues recognized in 1998 and 1997 are related
to our collaboration agreement with Johnson & Johnson that terminated in August
1998.
OPERATING EXPENSES
Our total operating expenses decreased to $27.1 million in 1999 from $63.8
million in 1998 and $97.9 million in 1997. These reductions were primarily a
result of reductions in work force in 1998 and reductions in operating expenses
in the fourth quarter of 1998 and 1999.
Our research and development expenses decreased to $19.2 million in 1999
from $53.6 million in 1998, and $82.3 million in 1997. General and
administrative expenses also decreased to $7.9 million in 1999, from $10.2
million in 1998, and $15.6 million in 1997. These reductions were primarily the
result of reductions in work force in 1998 and reductions in operating expenses
in the fourth quarter of 1998 and 1999.
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<PAGE> 27
OTHER INCOME AND EXPENSE
Interest and other income is principally comprised of interest income from
investment of our cash reserves. Interest income increased to $2.2 million in
1999 from $1.4 million in 1998, and compared with $2.6 million in 1997. The
increase in 1999 is as a result of higher overall cash reserves available for
investment. The decrease in 1998 was primarily due to an overall lower cash
balance available for investment.
Interest and other expense principally comprised of interest expense
resulting from long-term debt obligations. We have used debt financing to
acquire laboratory and other equipment. In addition, in accordance with the
terms of our collaboration agreement with Johnson & Johnson, Johnson & Johnson
advanced our share of SYMLIN pre-launch marketing expenses incurred during the
term of the collaboration. Separately, in September 1997, we received proceeds
of approximately $30.6 million from a draw down under our development loan
facility with Johnson & Johnson. The proceeds were used to fund our one-half
share of development expenses for SYMLIN during the second through fourth
quarters of 1997. In conjunction with the borrowing under the development loan
facility, we issued warrants to Johnson & Johnson to purchase 1,530,950 shares
of our 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 our loan and security agreement with Johnson & Johnson and will be
repaid with interest over time, subject to certain exceptions set forth in the
loan and security agreement. As of December 31, 1999 we owed Johnson & Johnson
approximately $13.4 million for our share of pre-launch marketing expenses. As
of December 31, 1999 the total principal and interest due to Johnson and Johnson
was approximately $50.6 million.
Interest and other expense was $5.7 million in 1999, as compared with $5.0
million in 1998 and $2.0 million in 1997. The increases in interest expense were
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, 1999 was $30.6 million as
compared to $51.1 million in 1998 and $54.6 million in 1997. The decrease in net
loss from 1998 and 1999 was primarily a result of significant reductions in work
force in 1998 and reduced operating expenses in 1999. The decrease in net loss
from 1997 to 1998 was due to significant reductions in work force and operating
expenses in 1998. These reductions were offset by decreased collaboration
revenue in 1998 and a lack of collaboration revenue in 1999.
Amylin expects to incur substantial operating losses over the next few
years due to continuing expenses associated with its research and development
programs, including the preparation of regulatory submissions for and
commercialization of SYMLIN and the clinical development of AC2993 and AC3056,
and research, preclinical development and potential clinical testing of
additional product candidates, and related general and administrative support.
LIQUIDITY AND CAPITAL RESOURCES
Since our inception, we have financed our operations primarily through
private placements of common stock and preferred stock, sale of common stock,
reimbursement of SYMLIN development expenses through our collaboration with
Johnson & Johnson, and debt financings.
At December 31, 1999 we had $22.5 million in cash, cash equivalents and
short-term investments as compared to $10.8 million at December 31, 1998. We
invest our cash in U.S. government and other highly rated debt instruments. In
February 2000, we announced that we raised gross proceeds of $100 million from
newly issued common stock to select institutional and individual investors.
We intend to use our financial resources for the development, registration
and preparation for commercialization of SYMLIN, for our AC2993 development
program, including clinical trials, for our AC3056 development program,
including the submission of an IND and clinical trials, and for other general
corporate purposes. Research and development expenses will include costs of
supplying materials for and/or conducting
27
<PAGE> 28
clinical trials. The amounts actually expended for each purpose may vary
significantly depending upon numerous factors, including the progress of our
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 our
compounds, and the status of competitive products. Expenditures will also depend
upon the availability of additional sources of funds, the establishment of
commercial or collaborative arrangements with other companies, and other
factors.
We do not expect to generate a positive internal cash flow for the next few
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.
Our future capital requirements will depend on many factors, including our
ability to complete the preparation of an NDA, and a European application for
marketing approval for SYMLIN, or ability to establish commercialization
arrangements for SYMLIN and AC2993, our ability to progress with our other
ongoing and new preclinical studies and clinical trials, the time and costs
involved in obtaining regulatory approvals, scientific progress in our 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.
We plan to use the cash from our financing and investment activities to
carry on our current business, including the preparation of submissions for
marketing approval for SYMLIN, the continuation of our AC2993 clinical program,
the continuation of our AC3056 preclinical program and for research activities.
Prior to marketing, any drug we develop must undergo rigorous preclinical
and clinical testing and an extensive regulatory approval process mandated by
the FDA and equivalent foreign authorities. Subject to compliance with FDA and
foreign authority regulations, we continue to undertake extensive clinical
testing in an effort to demonstrate optimal dose, safety, and efficacy for our
drug candidates in humans. Further testing of SYMLIN, AC2993, AC3056, and the
Company's other drug 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, we or regulatory authorities may suspend clinical trials at any time if
the patients participating in such trials are being exposed to unacceptable
health risks. We may encounter problems in clinical trials which would cause us
or the regulatory authorities to delay or suspend clinical trials. In addition,
we may not obtain regulatory approval of any of our drug candidates for any
indication. Products, if any, resulting from Amylin's research programs are not
expected to be commercially available for a number of years.
We believe that patent and other proprietary rights are important to
business, and in this regard, we intend to file applications as appropriate for
patents covering our products and processes. Litigation, which could result in
substantial cost, may also be necessary to enforce our patents. 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.
IMPACT OF YEAR 2000
In prior years, we discussed the nature and progress of our plans to become
Year 2000 ready. In late 1999, we completed our remediation and testing of
systems. As a result of those planning and implementation efforts, we
experienced no significant disruptions in mission critical information
technology and non-information technology systems and we believe those systems
successfully responded to the Year 2000 date change. We are not aware of any
material problems resulting from Year 2000 issues, either with our products, our
internal systems, or the products and services of third parties. We will
continue to monitor our mission critical computer applications and those of our
suppliers and vendors throughout the year 2000 to ensure that any latent Year
2000 matters that may arise are addressed promptly. We have no reason to believe
that Year 2000 issues will have a material impact on our business or financial
condition.
28
<PAGE> 29
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We invest our excess cash primarily in U.S. government securities and
marketable securities of financial institutions and corporations with strong
credit ratings. These instruments have various short term maturities. We do not
utilize derivative financial instruments, derivative commodity instruments or
other market risk sensitive instruments, positions or transactions in any
material fashion. Accordingly, we believe that, while the instruments we hold
are subject to changes in the financial standing of the issuer of such
securities, we are not subject to any material risks arising from changes in
interest rates, foreign currency exchange rates, commodity prices, equity prices
or other market changes that affect market risk sensitive investments. Our debt
is not subject to significant swings in valuation as interest rates on our debt
approximate current interest rates.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplemental data required by this item are
set forth at the pages indicated in Item 14(a)(1).
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 proxy statement to be
filed with the SEC pursuant to Regulation 14A in connection with Amylin's 2000
annual meeting.
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 to be filed with the SEC pursuant to Regulation 14A in connection with
Amylin's 2000 annual meeting.
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 to be filed with the SEC
pursuant to Regulation 14A in connection with Amylin's 2000 annual meeting.
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 to be filed with the SEC pursuant to Regulation 14A in
connection with Amylin's 2000 annual meeting.
29
<PAGE> 30
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1) INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
The financial statements required by this item are submitted in a separate
section beginning on page F-1 of this Report.
(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.
(a)(3) INDEX TO EXHIBITS -- See Item 14(c) below.
(b) REPORTS ON FORM 8-K
Not applicable.
(c) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT EXHIBIT
FOOTNOTE NUMBER
- -------- -------
<S> <C> <C>
(1) 3.1 Amended and Restated Certificate of Incorporation of the
Registrant.
(1) 3.2 Amended and Restated Bylaws of the Registrant.
(20) 3.3 Certification of Amendment of Amended and Restated
Certificate of Incorporation of the Registrant.
(22) 3.4 Amendment to Amended and Restated Bylaws.
4.1 Reference is made to Exhibits 3.1 - 3.4.
(21) 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.
(23) 4.3 Form of Stock Purchase Agreement dated October 6, 1999
between the Registrant and purchasers of the Registrant's
Common Stock.
(23) 4.4 Warrant Agreement dated December 8, 1999 issued by the
Registrant to 1149336 Ontario, Inc.
4.5 Form of Stock Purchase Agreement dated February 18, 2000
between the Registrant and purchasers of the Registrant's
Common Stock.
(1) 10.1 Form of Indemnity Agreement entered into between the
Registrant and its directors and officers.+
(22) 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.+
(18) 10.6 Registrant's Employee Stock Purchase Plan, as amended.+
(1)(2) 10.7 License Agreement, dated as of November 22, 1991, among the
Registrant, the Regents of the University of Minnesota, and
Per Westermark.
(1) 10.8 Lease, dated as of January 2, 1989, between the Registrant
and Nippon Landic (USA), Inc., the assignee of
NEXUS/GADCO-UTC, as amended.
(3) 10.9 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>
30
<PAGE> 31
<TABLE>
<CAPTION>
EXHIBIT EXHIBIT
FOOTNOTE NUMBER
- -------- -------
<S> <C> <C>
(22) 10.10 Registrant's Non-Employee Directors Stock Option Plan (the
"Directors' Plan").+
(4) 10.11 Form of Nonstatutory Stock Option Agreement under the
Directors' Plan.+
(5) 10.12 Sublease Agreement, dated September 1, 1994, between the
Registrant and ORINCON Corporation.
(5) 10.13 Loan Agreement, dated July 5, 1994, and related Note and
Credit Terms and Conditions Agreement between the Registrant
and Imperial Bank.
(5) 10.14 Phantom Stock Unit Agreement, dated January 4, 1995, between
the Registrant and Farview Management Co., L.P.+
(6)(7) 10.15 Collaboration Agreement, dated June 20, 1995 between the
Registrant and LifeScan, Inc.
(6)(7) 10.16 Stock Purchase Agreement, dated June 20, 1995 between the
Registrant and Johnson & Johnson Development Corporation.
(6)(7) 10.17 Loan and Security Agreement, dated June 20, 1995 between the
Registrant and Johnson & Johnson.
(8) 10.18 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) 10.19 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) 10.20 Patent and Technology License Agreement, Consulting
Agreement and Nonstatutory Stock Option Agreement dated
October 1, 1996, between the Registrant and Dr. John Eng.
(9)(10) 10.21 Collaborative Research and Assignment Agreement dated
October 15, 1996, among the Registrant, London Health
Sciences Centre and Dr. John Dupre.
(11) 10.22 Amendment dated January 15, 1997 to the Consulting
Agreement, dated June 15, 1995, between the Registrant and
Joseph C. Cook, Jr.+
(11) 10.23 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.
(11) 10.24 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.
(12)(13) 10.25 Collaboration Agreement between the Registrant and Hoechst
Marion Roussel Dated March 31, 1997.
(12)(13) 10.26 License and Option Agreement between the Registrant and
Hoechst Marion Roussel Dated March 31, 1997.
(22) 10.27 Registrant's Directors' Deferred Compensation Plan.+
(14) 10.28 Warrant Agreement between the Registrant and the Medical
Research Council dated May 9, 1997.
(14) 10.29 Promissory Note dated September 30, 1997 issued by the
Registrant to Johnson & Johnson.
(14) 10.30 Warrant Agreement between the Registrant and Johnson &
Johnson dated September 30, 1997.
</TABLE>
31
<PAGE> 32
<TABLE>
<CAPTION>
EXHIBIT EXHIBIT
FOOTNOTE NUMBER
- -------- -------
<S> <C> <C>
(15) 10.31 Amendment dated September 1, 1996 to Option Agreements
between the Registrant and Howard E. Greene, Jr.+
(15) 10.32 Credit Agreement and related Note between the Registrant and
Imperial Bank dated January 15, 1998.
(15) 10.33 Amendment dated February 1, 1998 to Option Agreements
between the Registrant and Marjorie T. Sennett.+
(16) 10.34 Employee Phantom Stock Salary Deferral Plan (the "Deferral
Plan").+
(16) 10.35 Form of Deferred Compensation Agreement under the Deferral
Plan.+
(17) 10.36 Employment Agreement dated March 25, 1998, between the
Registrant and Richard M. Haugen.+
(17) 10.37 Letter agreement dated June 12, 1998, between the Registrant
and Richard M. Haugen regarding Mr. Haugen's participation
in the Deferral Plan.+
(17) 10.38 Employment Agreement dated March 25, 1998, between the
Registrant and Joseph C. Cook, Jr.+
(18) 10.39 Special Form of Incentive Stock Option Agreement under the
Option Plan of the Registrant.+
(19) 10.40 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.
(19) 10.41 Stock Option Agreement dated March 25, 1998 between the
Registrant and Joseph C. Cook, Jr.+
(19) 10.42 Stock Option Agreement dated October 23, 1998 between the
Registrant and Joseph C. Cook, Jr.+
(21) 10.43 Form of Special Bonus Award for Supplemental Incentive Bonus
Program.+
10.44 Agreement, dated July 2, 1997, by and among the Registrant
and Ortho-Biotech and Bachem California.*
10.45 Assignment and Amendment Agreement, dated September 9, 1998,
by and among the Registrant and Bachem California and
Ortho-Biotech.*
10.46 Pramlintide Repurchase Agreement, dated September 16, 1998,
between the Registrant and Ortho-Biotech.*
10.47 Manufacturing Agreement, dated April 28, 1999, between the
Registrant and CP Pharmaceuticals Limited.*
23.1 Consent of Ernst & Young LLP, Independent Auditors.
24.1 Power of Attorney. Reference is made to page 44.
27 Financial Data Schedule.
</TABLE>
- ---------------
+ Indicates management or compensatory plan or arrangement required to be
identified pursuant to Item 14(c).
* The Registrant has requested confidential treatment with respect to certain
portions of this exhibit. Omitted portions have been filed separately with
the Securities and Exchange Commission.
(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.
32
<PAGE> 33
(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.
(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 September 30, 1996.
(10) 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.
(11) Filed as an exhibit to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996.
(12) Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1997.
(13) 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.
(14) Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1997.
(15) Filed as an exhibit to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1997.
(16) 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.
(17) 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.
(18) Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1998.
(19) Filed as an exhibit to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1998.
(20) Filed as an exhibit to the Registrant's Registration Statement on Form S-3
(No. 333-58831) or amendments thereto and incorporated herein by reference.
(21) Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1999.
(22) Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1999.
(23) Filed as an exhibit to the Registrant's Registration Statement (No.
333-87033) or amendments thereto and incorporated herein by reference.
(d) FINANCIAL STATEMENT SCHEDULES
The financial statement schedules required by this item are listed under
Item 14(a)(2).
33
<PAGE> 34
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 27, 2000
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 March 27, 2000
- ----------------------------------------------------- and Chief Executive Officer
Joseph C. Cook, Jr. (Principal Executive and
Financial Officer)
/s/ JAMES C. BLAIR Director March 27, 2000
- -----------------------------------------------------
James. C. Blair, Ph.D.
/s/ VAUGHN D. BRYSON Director March 27, 2000
- -----------------------------------------------------
Vaughn D. Bryson
/s/ JAMES C. GAITHER Director March 27, 2000
- -----------------------------------------------------
James C. Gaither
/s/ GINGER L. GRAHAM Director March 27, 2000
- -----------------------------------------------------
Ginger L. Graham
/s/ HOWARD E. GREENE, JR. Director March 27, 2000
- -----------------------------------------------------
Howard E. Greene, Jr.
/s/ VAUGHN M. KAILIAN Director March 27, 2000
- -----------------------------------------------------
Vaughn M. Kailian
/s/ DONALD H. RUMSFELD Director March 27, 2000
- -----------------------------------------------------
Donald H. Rumsfeld
/s/ JAY S. SKYLER Director March 27, 2000
- -----------------------------------------------------
Jay S. Skyler
/s/ MARTIN R. BROWN Senior Vice President of March 27, 2000
- ----------------------------------------------------- Operations,
Martin R. Brown (Principal Accounting Officer)
</TABLE>
34
<PAGE> 35
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Ernst & Young LLP, Independent Auditors........... F-2
Consolidated Balance Sheets as of December 31, 1999 and
1998...................................................... F-3
Consolidated Statements of Operations for the years ended
December 31, 1999, 1998 and 1997.......................... F-4
Consolidated Statement of Stockholders' Equity (Net Capital
Deficiency) for the years ended December 31, 1999, 1998
and 1997.................................................. F-5
Consolidated Statements of Cash Flows for the years ended
December 31, 1999, 1998 and 1997.......................... F-6
Notes to Consolidated Financial Statements.................. F-7
</TABLE>
F-1
<PAGE> 36
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, 1999 and 1998, 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, 1999. 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 auditing standards generally
accepted in the United States. 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, 1999 and 1998, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended December 31, 1999, in conformity with accounting principles
generally accepted in the United States.
/s/ ERNST & YOUNG LLP
San Diego, California
February 22, 2000
F-2
<PAGE> 37
AMYLIN PHARMACEUTICALS, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------
1999 1998
------------- -------------
<S> <C> <C>
Current assets:
Cash and cash equivalents................................. $ 8,171,000 $ 8,787,000
Short-term investments.................................... 14,332,000 2,002,000
Other current assets...................................... 831,000 514,000
------------- -------------
Total current assets........................................ 23,334,000 11,303,000
Property and equipment, at cost:
Equipment................................................. 6,961,000 15,197,000
Leasehold improvements.................................... 12,000 3,955,000
------------- -------------
6,973,000 19,152,000
Less accumulated depreciation and amortization............ (6,045,000) (13,556,000)
------------- -------------
928,000 5,596,000
Patents, net................................................ 2,020,000 1,779,000
Other assets................................................ 140,000 145,000
------------- -------------
$ 26,422,000 $ 18,823,000
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY (NET CAPITAL DEFICIENCY)
Current liabilities:
Accounts payable.......................................... $ 359,000 $ 2,187,000
Accrued liabilities, including deferred revenue........... 4,501,000 2,130,000
Current portion of notes payable to unrelated parties..... 1,115,000 1,794,000
------------- -------------
Total current liabilities................................... 5,975,000 6,111,000
Note payable and capital lease obligations.................. 1,620,000 4,164,000
Note payable to related party............................... 45,227,000 39,925,000
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 at December 31, 1999 and
1998, respectively..................................... -- --
Common stock, $.001 par value,
100,000,000 shares authorized, 53,972,000 and
36,726,000 issued and outstanding at December 31, 1999
and 1998, respectively................................. 54,000 37,000
Additional paid-in capital................................ 265,983,000 229,757,000
Accumulated deficit....................................... (291,729,000) (260,830,000)
Deferred compensation..................................... (653,000) (428,000)
Accumulated other comprehensive income (loss)............. (55,000) 2,000
------------- -------------
Total stockholders' equity (net capital deficiency)......... (26,400,000) (31,462,000)
------------- -------------
$ 26,422,000 $ 18,823,000
============= =============
</TABLE>
See accompanying notes.
F-3
<PAGE> 38
AMYLIN PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
Revenues under collaborative agreements with
related party.................................. $ -- $ 16,236,000 $ 42,609,000
Expenses:
Research and development....................... 19,181,000 53,597,000 82,281,000
General and administrative..................... 7,920,000 10,191,000 15,592,000
------------ ------------ ------------
27,101,000 63,788,000 97,873,000
------------ ------------ ------------
Loss from operations............................. (27,101,000) (47,552,000) (55,264,000)
Interest and other income........................ 2,215,000 1,424,000 2,613,000
Interest and other expense....................... (5,678,000) (4,970,000) (1,976,000)
------------ ------------ ------------
Net Loss......................................... (30,564,000) (51,098,000) (54,627,000)
Dividends paid on preferred stock................ 335,000
------------ ------------ ------------
Net loss available to Common Stockholders........ $(30,899,000) $(51,098,000) $(54,627,000)
============ ============ ============
Net loss per share -- basic and diluted.......... $ (.73) $ (1.49) $ (1.70)
============ ============ ============
Weighted average shares --
basic and diluted.............................. 42,271,000 34,325,000 32,156,000
============ ============ ============
</TABLE>
See accompanying notes.
F-4
<PAGE> 39
AMYLIN PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(NET CAPITAL DEFICIENCY)
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
PREFERRED STOCK COMMON STOCK
----------------- -------------------- ADDITIONAL ACCUMULATED DEFERRED
SHARES AMOUNT SHARES AMOUNT PAID-IN CAPITAL DEFICIT COMPENSATION
-------- ------ ---------- ------- --------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1996..... -- $ -- 31,977,000 $32,000 $204,800,000 $(155,105,000) $(1,177,000)
Comprehensive income (loss):
Net loss..................... -- -- -- -- -- (54,627,000) --
Unrealized gain on
available-for-sale
securities................. -- -- -- -- -- -- --
Comprehensive loss........... -- -- -- -- -- -- --
Issuance of common stock upon
exercise of options.......... -- -- 417,000 1,000 2,100,000 -- --
Deferred compensation related
to stock options............. -- -- -- -- 261,000 -- (261,000)
Amortization of deferred
compensation................. -- -- -- -- -- -- 545,000
Discount on Note Payable
related to grant of common
stock warrants............... -- -- -- -- 8,084,000 -- --
-------- ---- ---------- ------- ------------ ------------- -----------
Balance at December 31, 1997..... -- -- 32,394,000 33,000 215,245,000 (209,732,000) (893,000)
Comprehensive income (loss):
Net loss..................... -- -- -- -- -- (51,098,000) --
Unrealized gain on
available-for-sale
securities................. -- -- -- -- -- -- --
Comprehensive loss........... -- -- -- -- -- -- --
Issuance of common stock upon
exercise of options.......... -- -- 130,000 130 549,000 -- --
Issuance of common stock for
employer 401(k) match........ -- -- 81,000 81 458,000 -- --
Issuance of common stock in
private placement............ -- -- 4,000,000 4,000 12,730,000 -- --
Issuance of common stock under
Employee Stock Purchase
Plan......................... -- -- 121,000 121 438,000 -- --
Deferred compensation related
to stock options............. -- -- -- -- 337,000 -- (337,000)
Amortization of deferred
compensation................. -- -- -- -- -- -- 802,000
-------- ---- ---------- ------- ------------ ------------- -----------
Balance at December 31, 1998..... -- -- 36,726,000 37,000 229,757,000 (260,830,000) (428,000)
Comprehensive income (loss):
Net loss..................... -- -- -- -- -- (30,564,000) --
Unrealized loss on
available-for-sale
securities................. -- -- -- -- -- -- --
Comprehensive loss........... -- -- -- -- -- -- --
Issuance of preferred stock.... 125,000 125 -- -- 15,000,000 -- --
Conversion of preferred stock
into common stock............ (125,000) (125) 12,500,000 12,500 -- (13,000) --
Dividends paid on preferred
stock in shares of common
stock........................ -- -- 94,000 94 322,000 (322,000) --
Issuance of common stock upon
exercise of options.......... -- -- 685,000 685 1,104,000 -- --
Issuance of common stock for
employer 401(k) match........ -- -- 167,000 167 108,000 -- --
Issuance of common stock in
private placement............ -- -- 3,700,000 3,700 18,480,000 -- --
Issuance of common stock under
Employee Stock Purchase
Plan......................... -- -- 52,000 52 54,000 -- --
Deferred compensation related
to stock options............. -- -- -- -- 990,000 -- (990,000)
Amortization of deferred
compensation................. -- -- -- -- -- -- 765,000
Issuance of common stock in
lieu of salary............... -- -- 48,000 48 56,000 -- --
Warrants issued in connection
with acquisition of
technology and other......... -- -- -- -- 112,000 -- --
-------- ---- ---------- ------- ------------ ------------- -----------
Balance at December 31, 1999..... -- $ -- 53,972,000 $54,000 $265,983,000 $(291,729,000) $ (653,000)
======== ==== ========== ======= ============ ============= ===========
<CAPTION>
TOTAL
ACCUMULATED STOCKHOLDERS'
OTHER EQUITY
COMPREHENSIVE (NET CAPITAL
INCOME (LOSS) DEFICIENCY)
------------- -------------
<S> <C> <C>
Balance at December 31, 1996..... $(16,000) $ 48,534,000
Comprehensive income (loss):
Net loss..................... -- (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.......... -- 2,101,000
Deferred compensation related
to stock options............. -- --
Amortization of deferred
compensation................. -- 545,000
Discount on Note Payable
related to grant of common
stock warrants............... -- 8,084,000
-------- ------------
Balance at December 31, 1997..... (4,000) 4,649,000
Comprehensive income (loss):
Net loss..................... -- (51,098,000)
Unrealized gain on
available-for-sale
securities................. 6,000 6,000
------------
Comprehensive loss........... -- (51,092,000)
Issuance of common stock upon
exercise of options.......... -- 549,000
Issuance of common stock for
employer 401(k) match........ -- 458,000
Issuance of common stock in
private placement............ -- 12,734,000
Issuance of common stock under
Employee Stock Purchase
Plan......................... -- 438,000
Deferred compensation related
to stock options............. -- --
Amortization of deferred
compensation................. -- 802,000
-------- ------------
Balance at December 31, 1998..... 2,000 (31,462,000)
Comprehensive income (loss):
Net loss..................... -- (30,564,000)
Unrealized loss on
available-for-sale
securities................. (57,000) (57,000)
------------
Comprehensive loss........... -- (30,621,000)
Issuance of preferred stock.... -- 15,000,000
Conversion of preferred stock
into common stock............ -- --
Dividends paid on preferred
stock in shares of common
stock........................ -- --
Issuance of common stock upon
exercise of options.......... -- 1,105,000
Issuance of common stock for
employer 401(k) match........ -- 108,000
Issuance of common stock in
private placement............ -- 18,483,000
Issuance of common stock under
Employee Stock Purchase
Plan......................... -- 54,000
Deferred compensation related
to stock options............. -- --
Amortization of deferred
compensation................. -- 765,000
Issuance of common stock in
lieu of salary............... -- 56,000
Warrants issued in connection
with acquisition of
technology and other......... -- 112,000
-------- ------------
Balance at December 31, 1999..... $(55,000) $(26,400,000)
======== ============
</TABLE>
See accompanying notes.
F-5
<PAGE> 40
AMYLIN PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net loss......................................... $(30,564,000) $(51,098,000) $(54,627,000)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization.................. 1,424,000 2,696,000 2,865,000
Deferred revenue from related party............ -- (6,357,000) (1,597,000)
Deferred rent and other expense................ -- -- (17,000)
Amortization of deferred compensation.......... 765,000 802,000 545,000
Amortization of debt discount.................. 1,198,000 1,198,000 299,000
Warrants issued for acquisition of technology
and other................................... 112,000 -- --
Changes in operating assets and liabilities:
Receivable from related party............... -- 966,000 1,123,000
Other current assets........................ (317,000) 784,000 (156,000)
Accounts payable............................ (1,828,000) (3,091,000) 449,000
Accrued liabilities......................... 2,371,000 (8,711,000) 5,995,000
------------ ------------ ------------
Net cash flows used in operating
activities..................................... (26,839,000) (62,811,000) (45,121,000)
INVESTING ACTIVITIES:
Purchases of short-term investments.............. (22,260,000) (2,158,000) (15,541,000)
Maturities of short-term investments............. 6,900,000 2,000,000 19,005,000
Sales of short-term investments.................. 3,190,000 3,995,000 10,172,000
Proceeds from sale of Cabrillo Laboratories
assets......................................... 2,100,000 -- --
Sale (purchase) of equipment, net................ 215,000 318,000 (4,641,000)
Change in deposits, patents and other assets..... (484,000) 122,000 (371,000)
------------ ------------ ------------
Net cash flows provided by (used in) investing
activities..................................... (10,339,000) 4,277,000 8,624,000
FINANCING ACTIVITIES:
Issuance of notes payable........................ 4,019,000 7,707,000 40,467,000
Principal payments on capital leases and
equipment notes payable and other long-term
obligations.................................... (2,095,000) (1,468,000) (1,822,000)
Proceeds from issuance of preferred stock, net... 15,000,000
Proceeds from issuance of common stock, net...... 19,638,000 14,179,000 2,101,000
------------ ------------ ------------
Net cash flows provided by financing
activities..................................... 36,562,000 20,418,000 40,746,000
------------ ------------ ------------
Decrease in cash and cash equivalents............ (616,000) (38,116,000) 4,249,000
Cash and cash equivalents at beginning of
period......................................... 8,787,000 46,903,000 42,654,000
------------ ------------ ------------
Cash and cash equivalents at end of period....... $ 8,171,000 $ 8,787,000 $ 46,903,000
============ ============ ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Interest paid.................................... $ 290,000 $ 411,000 $ 281,000
============ ============ ============
NON-CASH TRANSACTION:
Conversion of preferred stock and dividend to
common stock................................... $ 12,594,000 -- --
============ ============ ============
</TABLE>
See accompanying notes.
F-6
<PAGE> 41
AMYLIN PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND BUSINESS ACTIVITY
Amylin Pharmaceuticals, Inc. was incorporated in Delaware on September 29,
1987. The Company is engaged in the discovery and development of potential drug
candidates for the treatment of metabolic disorders. The Company is planning to
submit marketing approval applications for its lead drug candidate, SYMLIN, for
use in treatment of people with type 1 or insulin-using type 2 diabetes. The
Company is also conducting Phase 2 clinical trials of AC2993, a second diabetes
drug candidate. The Company plans to submit an Investigational New Drug
Application for AC3056 in the first half of 2000, which would allow the Company
to begin Phase 1 clinical trials.
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. Internally funded 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 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.
LONG-LIVED ASSETS
Depreciation of equipment is computed using the straight-line method over
three 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.
F-7
<PAGE> 42
AMYLIN PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The Company records impairment losses on long-lived assets used in
operations when events and circumstances indicate that assets might be impaired
and the undiscounted cash flows estimated to be generated by those assets are
less than the carrying amount of those assets. The Company also records the
assets to be disposed of at the lower of their carrying amount or fair value
less cost to sell. To date, the Company has not experienced any impairment
losses on its long-lived assets used in operations. While the Company's current
and historical operating and cash flow losses are indicators of impairment, the
Company believes the future cash flows to be received support the carrying value
of its long-lived assets and accordingly, the Company has not recognized any
impairment losses as of December 31, 1999.
PATENTS
The Company has filed several patent applications with the United States
Patent and Trademark Office and in foreign countries. Legal costs and expenses
incurred in connection with pending patent applications have been deferred.
Costs related to successful patent applications are amortized using the
straight-line method over the lesser of the remaining useful life of the related
technology or the remaining patent life, commencing on the date the patent is
issued. Accumulated amortization at December 31, 1999 and 1998 was $477,000 and
$344,000, respectively. Deferred costs related to patent applications are
charged to operations at the time a determination is made not to pursue such
applications. The Company wrote off previously capitalized patent costs of
$112,000 in 1999.
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. The value of options or stock awards issued to
non-employees have been determined in accordance with SFAS No. 123, Accounting
for Stock-Based Compensation and EITF 96-18. Deferred charges for options
granted to non-employees are periodically remeasured as the options vest.
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.
F-8
<PAGE> 43
AMYLIN PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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, 1999 and 1998,
including $7,412,000 and $7,628,000 classified as cash equivalents in the
accompanying balance sheets as of December 31, 1999 and 1998, respectively. All
respective investments mature in less than two years.
<TABLE>
<CAPTION>
AVAILABLE-FOR-SALE SECURITIES
------------------------------------------------------
GROSS GROSS
UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
DECEMBER 31, 1999
U.S. Treasury securities and obligations of
U.S. government agencies................. $19,316,000 $1,000 $(55,000) $19,262,000
Other debt securities...................... 2,483,000 1,000 (2,000) 2,482,000
----------- ------ -------- -----------
Total............................ $21,799,000 $2,000 $(57,000) $21,744,000
=========== ====== ======== ===========
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>
The gross realized gains on sales of available-for-sale securities totaled
$948 and $1,400 and the gross realized losses totaled $1,890 and $500 for the
years ended December 31, 1999 and 1998, respectively. Approximately $18,290,000
and $3,454,000 mature in 2000 and 2001, respectively.
3. DEBT AND LEASE COMMITMENTS
The Company leases its facilities and some 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 leases for years ending after
December 31, 1999 and for equipment notes payable are as follows:
<TABLE>
<CAPTION>
LEASES DEBT
---------- ----------
<S> <C> <C>
2000.................................................. $1,090,000 $1,287,000
2001.................................................. 1,187,000 664,000
2002.................................................. 1,235,000 615,000
2003.................................................. 1,681,000 169,000
Thereafter............................................ 1,336,000 --
---------- ----------
Total minimum lease payments.......................... $6,529,000 $2,735,000
========== ==========
</TABLE>
Rent expense for 1999, 1998, and 1997 was $961,000, $2,402,000 and
$2,697,000, respectively.
F-9
<PAGE> 44
AMYLIN PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DEBT
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, 1999, the Company had an outstanding loan balance of $574,651.
Borrowings 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 10.25% at December 31, 1999). The outstanding loan balance is due
as of October, 2000. 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, 1999, the Company had an outstanding
loan balance of $2,160,000. Borrowings under this agreement are payable over a
sixty-month period. Principal payments commenced on January 1, 1999. Monthly
interest payments are calculated based on prime plus 0.5% (approximately 9.25%
at December 31, 1999) of the outstanding principal balance and commenced with
the outstanding balance in 1998. 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 and investment balances fall below $10,000,000.
On April 30, 1999, the Company entered into an 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 and Amylin committed to contract with Magellan for
$2 million in services for the 12 month period ended April 30, 2000. 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. Amylin also
agreed to offer Magellan the right of first refusal to provide up to $4 million
dollars of certain contracted services.
4. STOCKHOLDERS' EQUITY
STOCK PURCHASE PLAN
In November 1991, the Company adopted the Employee Stock Purchase Plan (the
"Purchase Plan"), under which 600,000 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, 1999, 475,347 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.
F-10
<PAGE> 45
AMYLIN PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The following table summarizes option activity:
<TABLE>
<CAPTION>
SHARES WEIGHTED AVERAGE
UNDER OPTION EXERCISE PRICE
------------ ----------------
<S> <C> <C>
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
---------- ------
Granted....................................... 1,240,800 $ 2.04
Exercised..................................... (688,373) $ 1.60
Cancelled..................................... (1,951,490) $ 5.49
---------- ------
Outstanding at December 31, 1999................ 4,568,066 $ 4.10
========== ======
</TABLE>
At December 31, 1999, 1,919,733 shares remained available for grant or
sale.
Following is a further breakdown of the options outstanding as of December
31, 1999:
<TABLE>
<CAPTION>
WEIGHTED AVERAGE
RANGE OF NUMBER REMAINING WEIGHTED AVERAGE NUMBER WEIGHTED AVERAGE
EXERCISE PRICES OUTSTANDING CONTRACTUAL LIFE EXERCISE PRICE EXERCISABLE EXERCISE PRICE
- ----------------- ----------- ---------------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
$ 0.313 - $ 0.781 1,171,752 8.95 $ 0.50 487,301 $ 0.42
$ 0.875 - $ 2.656 981,393 8.56 $ 2.13 333,026 $ 2.48
$ 2.719 - $ 4.500 926,077 5.50 $ 4.14 746,591 $ 4.38
$ 4.563 - $10.000 926,585 6.73 $ 6.13 748,712 $ 6.32
$10.625 - $14.375 562,259 5.42 $11.65 537,144 $11.61
--------- ---- ------ --------- ------
$ 0.313 - $14.375 4,568,066 7.28 $ 4.10 2,852,774 $ 5.35
========= ==== ====== ========= ======
</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 1999, 1998 and 1997, respectively:
risk-free interest of 6.00%, 5.50% and 5.71%; dividend yield of 0%; volatility
factors of the expected market price of the Company's common stock of 221.0%,
73.5% and 65.4%; 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,
--------------------------------------------
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
Adjusted pro forma net loss.............. $(32,258,000) $(52,713,000) $(59,850,000)
Adjusted pro forma net loss per share.... $ (0.76) $ (1.54) $ (1.86)
</TABLE>
The weighted-average fair value of options granted during 1999, 1998, and
1997 was $2.01, $1.66 and $7.14, respectively.
F-11
<PAGE> 46
AMYLIN PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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").
In April, 1999, in conjunction with a Services Agreement, the Company
issued warrants to the holder to either purchase 50,000 shares of the Company's
common stock with a fixed exercise price of $.96562 per share or convert this
warrant into shares equal to the value of this warrant as determined per the
Services Agreement. This warrant has a 2-year exercise period. The Company
valued the warrant under the Black-Scholes methodology at $55,000, which was
expensed as an additional cost of the transaction.
On December 8, 1999, in conjunction with an Assignment Agreement, the
Company issued warrants to the assignor to purchase 10,000 shares of the
Company's common stock with a fixed exercise price of $3.313 per share and a
3-year exercise period. The Company valued the warrant under the Black-Scholes
methodology at $57,000, which was expensed as an additional cost of the
transaction.
SHARES RESERVED FOR FUTURE ISSUANCE
The following shares of common stock are reserved for future issuance at
December 31, 1999:
<TABLE>
<S> <C>
1991 Stock Option Plan............................ 6,147,373
Employee Stock Purchase Plan...................... 124,653
Directors Plan.................................... 328,576
Warrants.......................................... 1,610,950
---------
8,211,552
=========
</TABLE>
ISSUANCE OF PREFERRED/COMMON STOCK
In March 1999, the Company raised $15 million through a private placement
of 125,000 shares of Series A Preferred Stock at a price of $120.00 per share.
The Series A Preferred Stock automatically converted to 12,594,009 shares of
Common Stock on September 2, 1999.
In October 1999, the Company raised $18.5 million in a private placement of
shares of Common Stock. These funds were raised from a select group of
institutional and private investors, predominately those investors who
participated in the Company's March 1999 financing.
5. COLLABORATIVE AGREEMENTS
JOHNSON & JOHNSON
From June 1995 to August 1998, Amylin and Johnson collaborated on the
development and commercialization of SYMLIN pursuant to a worldwide
collaboration agreement. 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 Amylin common stock, milestone, license and option fee
payments, and the funding of SYMLIN pre-marketing costs.
F-12
<PAGE> 47
AMYLIN PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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 its rights
to share in SYMLIN profits. Additionally, following the collaboration
termination in August 1998, all product and other rights associated with SYMLIN
and related compounds reverted to Amylin, subject to the terms of the loan and
security 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%. Additionally,
as of December 31, 1999, the Company owed Johnson & Johnson approximately $13.4
million for its share of pre-launch marketing expenses. As of December 31, 1999,
the total principal and interest due to Johnson & Johnson was approximately
$50.6 million, which is $45,227,000 on the accompanying balance sheet, net of
debt discount of $5,373,000 as of December 31, 1999. The Company estimates the
fair value of this note to approximate market as the note is at market interest
rates. In conjunction with the development loan borrowing, the Company issued
warrants to Johnson & Johnson to purchase 1,530,950 shares of our common stock
with a fixed exercise price of $12 per share and a SYMLIN 10-year exercise
period. The development and marketing loans are secured by the Company's issued
patents and patent applications relating to amylin, including those relating to
SYMLIN.
In September 1998, Amylin entered into a repurchase agreement with
Ortho-Biotech, Inc., an affiliate of Johnson & Johnson, which provided that
Johnson & Johnson will order and purchase certain amounts of SYMLIN from third
party vendors and will place in inventory such amounts of SYMLIN for possible
future purchase by Amylin. Johnson & Johnson will purchase the SYMLIN from
certain vendors based upon agreed upon prices. The repurchase price of the
compound shall be the same price paid by Johnson & Johnson to the supplier.
Amylin must repurchase the SYMLIN in full on the first to occur of certain
events, including the execution of our agreement with a major company relating
to the development, commercialization and/or sale of SYMLIN, receipt of
regulatory approval for the sale of SYMLIN, or change of control of Amylin. As
of December 31, 1999, Ortho-Biotech had purchased inventory under this agreement
totaling $8.5 million.
In September 1998 the Company entered into an agreement with Ortho-Biotech,
Inc. and Bachem for the assignment of the rights and obligations of
Ortho-Biotech to purchase quantities of SYMLIN from Bachem under a July 1997
agreement among Amylin, Ortho-Biotech and Bachem. Pursuant to this agreement,
Bachem has agreed to supply certain quantities of SYMLIN to Amylin over a period
of several years. A portion of this material is inventory that Amylin has agreed
to repurchase from Johnson & Johnson under the repurchase agreement discussed
above. In connection with this agreement, Amylin has provided an irrevocable
letter of credit in the amount $1,000,000 in favor of Bachem which is secured by
an equal deposit included in the short term investment balance of $14.3 million
as of December 31, 1999.
F-13
<PAGE> 48
AMYLIN PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. INCOME TAXES
Significant components of Amylin's deferred tax assets as of December 31,
1999 and 1998 are shown below. A valuation allowance of $122,293,000, of which
$12,471,000 is related to 1999 changes, has been recognized as of December 31,
1999 to offset the deferred tax assets as realization of such assets is
uncertain.
<TABLE>
<CAPTION>
1999 1998
------------- -------------
<S> <C> <C>
Deferred tax assets:
Capitalized research expenses............... $ 9,125,000 $ 8,672,000
Net operating loss carryforwards............ 99,500,000 87,943,000
Research and development credits............ 13,608,000 12,464,000
Other....................................... 60,000 743,000
------------- -------------
Total deferred tax assets........... 122,293,000 109,822,000
Valuation allowance for deferred tax assets... (122,293,000) (109,822,000)
------------- -------------
Net deferred tax assets....................... -- $ --
============= =============
</TABLE>
At December 31, 1999, Amylin had federal foreign tax net operating loss
carryforwards of approximately $272,883,000, California foreign tax net
operating loss carryforwards of approximately $31,510,000, and foreign tax net
operating loss carryforwards of approximately $7,028,000. The difference between
the federal and California tax loss carryforwards 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 carryforwards will begin expiring in 2002 unless previously utilized. The
California tax loss carryforwards will continue to expire in 2000. The Company
also has federal research and development tax credit carryforwards of
$11,001,000, and California research and development tax credit carryforwards of
$4,010,000, both of 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 this type of limitation would
have a material impact upon the future utilization of these carryforwards.
7. SUBSEQUENT EVENT
In February, 2000, the Company announced that it received gross proceeds of
$100 million from the sale of newly issued Common Stock priced at $12 per share
to select institutional and individual investors in a private placement. The
Company agreed to file a registration statement for these newly issued shares
within 30 days of the closing of the transaction.
F-14
<PAGE> 1
EXHIBIT 4.5
STOCK PURCHASE AGREEMENT
Amylin Pharmaceuticals, Inc.
9373 Towne Centre Drive
San Diego, California 92121
The undersigned (the "Investor"), hereby confirms its agreement with you as
follows:
1. This Stock Purchase Agreement (the "Agreement") is made as of the date set
forth below between Amylin Pharmaceuticals, Inc., a Delaware corporation (the
"Company"), and the Investor.
2. The Company has authorized the sale and issuance of up to
_______________________ shares (the "Shares") of common stock of the Company,
$.001 par value per share (the "Common Stock"), subject to adjustment by the
Company's Board of Directors, to certain investors in a private placement (the
"Offering").
3. The Company and the Investor agree that the Investor will purchase from the
Company and the Company will issue and sell to the Investor ____________ shares,
for a purchase price of $_________________ per share, or an aggregate purchase
price of $____________________, pursuant to the Terms and Conditions for
Purchase of Shares attached hereto as Annex I and incorporated herein by this
reference as if fully set forth herein. Unless otherwise requested by the
Investor, certificates representing the Shares purchased by the Investor will be
registered in the Investor's name and address as set forth below.
4. The Investor represents that, except as set forth below, (a) it has had no
position, office or other material relationship within the past three years with
the Company or its affiliates, (b) neither it, nor any group of which it is a
member or to which it is related, beneficially owns (including the right to
acquire or vote) any securities of the Company and (c) it has no direct or
indirect affiliation or association with any NASD member. Exceptions:
________________________________________________________________________________
(If no exceptions, write "none." If left blank,
response will be deemed to be "none.")
Please confirm that the foregoing correctly sets forth the agreement between us
by signing in the space provided below for that purpose.
DATED AS OF: , 2000
-------------------
---------------------------------------
"INVESTOR"
By:
-------------------------------------
Print Name:
-----------------------------
Title:
----------------------------------
Address:
--------------------------------
----------------------------------------
AGREED AND ACCEPTED:
AMYLIN PHARMACEUTICALS, INC.
By:
-------------------------------------
Title:
----------------------------------
<PAGE> 2
ANNEX I
TERMS AND CONDITIONS FOR PURCHASE OF SHARES
1. AUTHORIZATION AND SALE OF THE SHARES. Subject to the terms and
conditions of this Agreement, the Company has authorized the sale of the Shares.
2. AGREEMENT TO SELL AND PURCHASE THE SHARES; SUBSCRIPTION DATE.
2.1 At the Closing (as defined in Section 3), the Company will
sell to the Investor, and the Investor will purchase from the Company, upon the
terms and conditions hereinafter set forth, the number of Shares set forth on
the signature page to which these Terms and Conditions for Purchase of Shares
are attached as Annex I (the "Signature Page") at the purchase price set forth
on such Signature Page.
2.2 The Company proposes to enter into this same form of Stock
Purchase Agreement with certain other investors (the "Other Investors") and
expects to complete sales of Shares to them. (The Investor and the Other
Investors are hereinafter sometimes collectively referred to as the "Investors,"
and this Agreement and the Stock Purchase Agreements executed by the Other
Investors are hereinafter sometimes collectively referred to as the
"Agreements.") The Company will accept executed Agreements from Investors for
the purchase of Shares commencing upon the date on which the Company provides
the Investors with the proposed purchase price per Share and concluding upon the
date (the "Subscription Date") on which the Company has (i) executed Agreements
with Investors for the purchase of Shares in the amount of at least $40,000,000
in the aggregate and (ii) notified Chase Securities Inc., Prudential Vector
Healthcare Group and Warburg Dillon Read LLC (in their capacities as Placement
Agents for the Shares, the "Placement Agents") in writing that it is no longer
accepting Agreements from Investors for the purchase of Shares.
2.3 Investor acknowledges that the Company intends to pay the
Placement Agents a fee in respect of the sale of Shares to the Investor.
3. DELIVERY OF THE SHARES AT CLOSING. The completion of the purchase and
sale of the Shares (the "Closing") shall occur at a place and time (the "Closing
Date") to be specified by the Company and the Placement Agents, not later than
four (4) complete trading days following the Subscription Date unless otherwise
extended by the Company, and of which the Investors will be notified in advance
by the Placement Agents. At the Closing, (i) the Company shall deliver to the
Investor one or more stock certificates representing the number of Shares set
forth on the signature page hereto, each such certificate to be registered in
the name of the Investor or, if so indicated on the Stock Certificate
Questionnaire attached hereto as Exhibit A, in the name of a nominee designated
by the Investor and (ii) the Investor shall deliver immediately available funds
in the amount of the aggregate purchase price for the Shares by wire transfer to
an account designated by the Placement Agents.
The Company's obligation to issue the Shares to the Investor shall be
subject to the following conditions, any one or more of which may be waived by
the Company: (a) receipt by the Company of the purchase price for the Shares
being purchased hereunder as set forth on the
1.
<PAGE> 3
Signature Page hereto; (b) completion of purchases and sales under the
Agreements with the Other Investors; and (c) the accuracy of the representations
and warranties made by the Investors and the fulfillment of those undertakings
of the Investors to be fulfilled prior to the Closing.
The Investor's obligation to purchase the Shares shall be subject to the
following conditions, any one or more of which may be waived by the Investor:
(a) Investors shall have executed Agreements for the purchase of Shares in the
amount of at least $40,000,000 in the aggregate; (b) the accuracy of the
Company's representations and warranties contained in this Agreement at the
Closing; and (c) the satisfaction of all of the conditions set forth in the
Placement Agency Agreement between the Company and the Placement Agents. Subject
to clause (a) above, the Investor's obligations are expressly not conditioned on
the purchase by any or all of the other Investors of the Shares that they have
agreed to purchase from the Company.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY. Except as
otherwise described in the Company's regular reports on Form 10-Q and 10-K and
the Company's Registration Statement on Form S-3 (Registration No. 333-87033) as
filed by the Company with the Securities and Exchange Commission in 1999 (the
"SEC Documents") and provided to the Investor, in the Company's press releases
since September 30, 1999 provided to the Investor, and in the other proprietary
information disclosed by the Company to the Investor in contemplation of this
offering (including the documents incorporated by reference therein, the
"Company Information"), which qualifies the following representations and
warranties in their entirety, the Company hereby represents and warrants to, and
covenants with, the Investor, as follows:
4.1 ORGANIZATION. The Company is duly incorporated and validly
existing in good standing under the laws of the jurisdiction of its
organization. The Company has full power and authority to own, operate and
occupy its properties and to conduct its business as presently conducted and is
registered or qualified to do business and in good standing in each jurisdiction
in which it owns or leases property or transacts business and where the failure
to be so qualified would have a material adverse effect upon the business,
financial condition, properties or operations of the Company ("Material Adverse
Effect"), and no proceeding has been instituted in any such jurisdiction
revoking, limiting or curtailing, or seeking to revoke, limit or curtail, such
power and authority or qualification.
4.2 DUE AUTHORIZATION. The Company has all requisite power and
authority to execute, deliver and perform its obligations under the Agreements,
and the Agreements have been duly authorized and validly executed and delivered
by the Company and constitute legal, valid and binding agreements of the Company
enforceable against the Company in accordance with their terms, except as rights
to indemnity and contribution may be limited by state or federal securities laws
or the public policy underlying such laws, 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).
4.3 NON-CONTRAVENTION. The execution and delivery of the
Agreements, the issuance and sale of the Shares to be sold by the Company under
the Agreements, the fulfillment
2.
<PAGE> 4
of the terms of the Agreements and the consummation of the transactions
contemplated thereby will not (A) conflict with or constitute a violation of, or
default (with the passage of time or otherwise) under, (i) any material bond,
debenture, note or other evidence of indebtedness, or any material lease,
contract, indenture, mortgage, deed of trust, loan agreement, joint venture or
other agreement or instrument to which the Company is a party or by which it or
its property is bound, where such conflict, violation or default is likely to,
individually or in the aggregate, result in a Material Adverse Effect, (ii) the
charter, by-laws or other organizational documents of the Company, or (iii) any
law, administrative regulation, ordinance or order of any court or governmental
agency, arbitration panel or authority binding upon the Company or its property,
where such conflict, violation or default is likely to, individually or in the
aggregate, result in a Material Adverse Effect, or (B) result in the creation or
imposition of any lien, encumbrance, claim, security interest or restriction
whatsoever upon any of the material properties or assets of the Company or an
acceleration of indebtedness pursuant to any obligation, agreement or condition
contained in any material bond, debenture, note or any other evidence of
indebtedness or any material indenture, mortgage, deed of trust or any other
agreement or instrument to which the Company is a party or by which it is bound
or to which any of the property or assets of the Company is subject. No consent,
approval, authorization or other order of, or registration, qualification or
filing with, any regulatory body, administrative agency, or other governmental
body in the United States is required for the execution and delivery of the
Agreements and the valid issuance and sale of the Shares to be sold pursuant to
the Agreements, other than such as have been made or obtained, and except for
any securities filings required to be made under federal or state securities
laws.
4.4 CAPITALIZATION. The capitalization of the Company is
described in the Company's SEC Documents. The Company has not issued any capital
stock since September 30, 1999 other than (i) pursuant to employee benefit plans
disclosed in the Company's SEC Documents; (ii) a warrant to purchase 10,000
shares of the Company's Common Stock issued in connection with the Company's
acquisition of rights to certain intellectual property; and (iii) 3,700,000
shares of Common Stock issued in a private placement on October 6, 1999. The
Shares to be sold pursuant to the Agreements have been duly authorized, and when
issued and paid for in accordance with the terms of the Agreements, will be duly
and validly issued, fully paid and nonassessable. The outstanding shares of
capital stock of the Company have been duly and validly issued and are fully
paid and nonassessable, have been issued in compliance with all federal and
state securities laws, and were not issued in violation of any preemptive rights
or similar rights to subscribe for or purchase securities. Except as set forth
in or contemplated by the Company's SEC Documents or as otherwise described in
this Agreement, there are no outstanding rights (including, without limitation,
preemptive rights), warrants or options to acquire, or instruments convertible
into or exchangeable for, any unissued shares of capital stock or other equity
interest in the Company, or any contract, commitment, agreement, understanding
or arrangement of any kind to which the Company is a party and relating to the
issuance or sale of any capital stock of the Company, any such convertible or
exchangeable securities or any such rights, warrants or options. Without
limiting the foregoing, no preemptive right, co-sale right, registration right,
right of first refusal or other similar right exists with respect to the
issuance and sale of the Shares. Except as disclosed in the Company's SEC
Documents or as otherwise described in this Agreement, there
3.
<PAGE> 5
are no stockholders agreements, voting agreements or other similar agreements
with respect to the Common Stock to which the Company is a party.
4.5 LEGAL PROCEEDINGS. There is no legal or governmental
proceeding pending or, to the Company's knowledge, overtly threatened to which
the Company is or would be a party or of which the business or property of the
Company is or would be subject that is not disclosed in the Company's SEC
Documents that is required to be so disclosed.
4.6 NO VIOLATIONS. The Company is not in violation of its
charter, bylaws or other organizational document, or in violation of any law,
administrative regulation, ordinance or order of any court or governmental
agency, arbitration panel or authority applicable to the Company, which
violation, individually or in the aggregate, would be reasonably likely to have
a Material Adverse Effect, or is in default (and there exists no condition
which, with the passage of time or otherwise, would constitute a default) in the
performance of any material bond, debenture, note or any other evidence of
indebtedness in any indenture, mortgage, deed of trust or any other material
agreement or instrument to which the Company is a party or by which the Company
is bound or by which the property of the Company is bound, which would,
individually or in the aggregate, be reasonably likely to have a Material
Adverse Effect.
4.7 GOVERNMENTAL PERMITS, ETC. With the exception of the matters
which are dealt with separately in Sections 4.1, 4.12, and 4.13, the Company has
all necessary franchises, licenses, certificates and other authorizations from
any foreign, federal, state or local government or governmental agency,
department or body that are currently necessary for the operation of the
business of the Company as currently conducted except where the failure to
currently possess could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
4.8 INTELLECTUAL PROPERTY.
(a) The Company has ownership or license or legal right to
use all material patent, copyright, trade secret and trademark rights known by
it to be necessary to the conduct of the business of the Company as now
conducted (collectively, "Intellectual Property") other than Intellectual
Property generally available on commercial terms from other sources.
(b) All material licenses or other material agreements
under which (i) the Company is granted rights in Intellectual Property, other
than Intellectual Property generally available on commercial terms from other
sources, and (ii) the Company has granted rights to others in Intellectual
Property owned or licensed by the Company, are in full force and effect and, to
the knowledge of the Company, there is no material default by the Company or any
other party thereto.
(c) The Company believes it has taken all steps required
in accordance with sound business practice and business judgment to establish
and preserve its ownership of all material copyright, trade secret and other
proprietary rights with respect to its products and technology.
4.
<PAGE> 6
(d) To the knowledge of the Company, the present business,
activities and products of the Company do not infringe any intellectual property
of any other person, except where such infringement would not, individually or
in the aggregate, have a Material Adverse Effect on the Company. Except as
described in the Company's SEC Documents, no proceeding charging the Company
with infringement of any adversely held Intellectual Property has been filed. To
the knowledge of the Company, the Company is not making unauthorized use of any
confidential information or trade secrets of any person. To the Company's
knowledge, the activities of the Company or any of its employees on behalf of
the Company do not violate any agreements or arrangements known to the Company
which any such employees have with other persons, if any.
4.9 FINANCIAL STATEMENTS. The financial statements of the Company
and the related notes contained in the Company's SEC Documents present fairly,
in accordance with generally accepted accounting principles, the financial
position of the Company as of the dates indicated, and the results of its
operations and cash flows for the periods therein specified. Such financial
statements (including the related notes) have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods therein specified, except as disclosed in the Company's
SEC Documents.
4.10 NO MATERIAL ADVERSE CHANGE. Except as disclosed in the
Company's press releases or other proprietary information provided to the
Investor in contemplation of this Offering, since September 30, 1999, there has
not been (i) any obligation, direct or contingent, that is material to the
Company, incurred by the Company, except obligations incurred in the ordinary
course of business, (ii) any dividend or distribution of any kind declared, paid
or made on the capital stock of the Company, (iii) any loss or damage (whether
or not insured) to the physical property of the Company which has been sustained
which, individually or in the aggregate, has a Material Adverse Effect; or (iv)
any other event or change that, individually or in the aggregate, would have a
Material Adverse Effect.
4.11 NASDAQ COMPLIANCE. The Company's Common Stock is registered
pursuant to Section 12(g) of the Exchange Act and, as of the date hereof, is
listed on The Nasdaq National Market (the "Nasdaq Stock Market"), and the
Company has taken no action designed to, or likely to have the effect of,
terminating the registration of the Common Stock under the Exchange Act or
delisting the Common Stock from the Nasdaq Stock Market.
4.12 REPORTING STATUS. The Company has filed in a timely manner
all documents that the Company was required to file under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), during the 12 months
preceding the date of this Agreement. The following documents complied in all
material respects with the SEC's requirements as of their respective filing
dates, and the information contained therein as of the date thereof did not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein in
light of the circumstances under where they were made not misleading:
(a) The Company's Annual Report on Form 10-K for the year
ended December 31, 1998 (the "10-K");
5.
<PAGE> 7
(b) The Company's Quarterly Reports on Form 10-Q for each
of the quarters ended March 31, 1999, June 30, 1999 and September 30, 1999; and
(c) All other documents, if any, filed by the Company with
the Securities and Exchange Commission since December 31, 1998 pursuant to the
reporting requirements of the Exchange Act.
4.13 LISTING. The Company shall comply with all requirements of
the National Association of Securities Dealers, Inc. with respect to the
issuance of the Shares and the listing thereof on the Nasdaq Stock Market.
4.14 FOREIGN CORRUPT PRACTICES. Neither the Company nor, to the
knowledge of the Company, any agent or other person acting on behalf of the
Company, have (i) directly or indirectly, used any corporate funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to
foreign or domestic political activity, (ii) made any unlawful payment to
foreign or domestic government officials or employees or to foreign or domestic
political parties or campaigns from corporate funds, (iii) failed to disclose
fully any contribution made by the Company or made by any person acting on its
behalf and of which the Company is aware in violation of law or (iv) violated in
any material respect any provision of the Foreign Corrupt Practices Act of 1977,
as amended.
4.15 NO MANIPULATION OF STOCK. The Company has not taken and will
not, in violation of applicable law, take, any action designed to or that might
reasonably be expected to cause or result in unlawful manipulation of the price
of the Common Stock to facilitate the sale or resale of the Shares.
4.16 NO MATERIAL SUBSIDIARIES. The Company has no subsidiaries
that, individually or in the aggregate, conduct any material business activities
or have any material assets or liabilities (whether fixed or contingent).
4.17 LEGAL OPINION. The Company shall cause to be delivered to
the Investors by counsel to the Company a legal opinion pertaining to the
availability of an exemption from the registration provisions of the Securities
Act.
4.18 OTHER AGREEMENTS. In the event that more than one Investor
participates in the Offering, each Stock Purchase Agreement between the Company
and each Investor shall contain substantially identical terms. In the event that
any Stock Purchase Agreement between the Company and another Investor in this
Offering shall contain terms more favorable to such Investor than provided
herein, after taking into account any other consideration provided, this
Agreement shall be amended to reflect those more favorable terms.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE INVESTOR.
5.1 The Investor represents and warrants to, and covenants with,
the Company that: (i) the Investor is an "accredited investor" as defined in
Regulation D under the Securities Act and the Investor is also knowledgeable,
sophisticated and experienced in making, and is qualified to make decisions with
respect to, investments in shares presenting an investment
6.
<PAGE> 8
decision like that involved in the purchase of the Shares, including investments
in securities issued by the Company and investments in comparable companies, and
has requested, received, reviewed and considered all information it deemed
relevant in making an informed decision to purchase the Shares; (ii) the
Investor is acquiring the number of Shares set forth on the Signature Page
hereto in the ordinary course of its business and for its own account for
investment only and with no present intention of distributing any of such Shares
or any arrangement or understanding with any other persons regarding the
distribution of such Shares; (iii) the Investor will not, directly or
indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit
any offers to buy, purchase or otherwise acquire or take a pledge of) any of the
Shares except in compliance with the Securities Act, applicable state securities
laws and the respective rules and regulations promulgated thereunder; (iv) the
Investor has answered all questions on the Signature Page hereto and the
Investor Questionnaire attached hereto as Exhibit B for use in preparation of
the Registration Statement and the answers thereto are true and correct in all
material respects as of the date hereof and will be true and correct in all
material respects as of the Closing Date; (v) the Investor will notify the
Company immediately of any material change in any of such information referred
to in the preceding clause (iv) until such time as the Investor has sold all of
its Shares or until the Company is no longer required to keep the Registration
Statement effective; and (vi) the Investor has, in connection with its decision
to purchase the number of Shares set forth on the signature page hereto, relied
only upon the Company Information provided to the Investor by the Company in
contemplation of this offering and the representations and warranties of the
Company contained herein. Investor understands that its acquisition of the
Shares has not been registered under the Securities Act of 1933, as amended (the
"Securities Act"), or registered or qualified under any state securities law in
reliance on specific exemptions therefrom, which exemptions may depend upon,
among other things, the bona fide nature of the Investor's investment intent as
expressed herein. Investor has completed or caused to be completed and delivered
to the Company the Investor Questionnaire attached hereto Exhibit B, which
questionnaire is true and correct in all material respects.
5.2 The Investor acknowledges, represents and agrees that no
action has been or will be taken in any jurisdiction outside the United States
by the Company or the Placement Agent that would permit an offering of the
Shares, or possession or distribution of offering materials in connection with
the issue of the Shares, in any jurisdiction outside the United States where
action for that purpose is required. Each Investor outside the United States
will comply with all applicable laws and regulations in each foreign
jurisdiction in which it purchases, offers, sells or delivers Shares or has in
its possession or distributes any offering material, in all cases at its own
expense. The Placement Agents have not been authorized to make any
representation or use any information in connection with the issue, placement,
purchase and sale of the Shares.
5.3 The Investor hereby covenants with the Company not to make
any sale of the Shares without complying in all material respects with the
provisions of this Agreement, including Section 7.2 hereof, and, if applicable,
without effectively causing the prospectus delivery requirement under the
Securities Act to be satisfied, and the Investor acknowledges that the
certificates evidencing the Shares will be imprinted with a legend that
prohibits their transfer except in accordance therewith. The Investor
acknowledges that there may occasionally be times when the Company, based on the
advice of its counsel, determines that it must suspend the use of the Prospectus
forming a part of the Registration Statement (as defined herein) until such time
as
7.
<PAGE> 9
an amendment to the Registration Statement has been filed by the Company and
declared effective by the SEC or until the Company has amended or supplemented
such Prospectus.
5.4 The Investor further represents and warrants to, and
covenants with, the Company that (i) the Investor 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) this
Agreement constitutes a valid and binding obligation of the Investor enforceable
against the Investor 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 Investors
herein may be legally unenforceable.
5.5 Other than in a transaction exempt from registration under
the Securities Act, Investor will not, prior to the effectiveness of the
Registration Statement, sell, offer to sell, solicit offers to buy, dispose of,
loan, pledge or grant any right with respect to (collectively, a "Disposition"),
the Common Stock of the Company, nor will Investor engage in any hedging or
other transaction which is designed to or could reasonably be expected to lead
to or result in a Disposition of Common Stock of the Company by the Investor or
any other person or entity. Such prohibited hedging or other transactions would
include, without limitation, effecting any short sale or having in effect any
short position (whether or not such sale or position is against the box and
regardless of when such position was entered into) or any purchase, sale or
grant of any right (including, without limitation, any put or call option) with
respect to the Common Stock of the Company or with respect to any security
(other than a broad-based market basket or index) that includes, relates to or
derives any significant part of its value from the Common Stock of the Company.
5.6 The Investor understands that nothing in this Agreement or
any other materials presented to the Investor in connection with the purchase
and sale of the Shares constitutes legal, tax or investment advice. The Investor
has consulted such legal, tax and investment advisors as it, in its sole
discretion, has deemed necessary or appropriate in connection with its purchase
of Shares.
6. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
Notwithstanding any investigation made by any party to this Agreement or by the
Placement Agents, all covenants, agreements, representations and warranties made
by the Company and the Investor herein shall survive the execution of this
Agreement, the delivery to the Investor of the Shares being purchased and the
payment therefor.
7. REGISTRATION OF THE SHARES; COMPLIANCE WITH THE SECURITIES ACT.
7.1 REGISTRATION PROCEDURES AND EXPENSES. The Company shall:
(a) subject to receipt of necessary information from the
Investors, prepare and file with the SEC, as soon as practicable, but in no
event later than thirty (30) days
8.
<PAGE> 10
after the Closing Date, a registration statement on Form S-3 (the "Registration
Statement") to enable the resale of the Shares by the Investors from time to
time through the automated quotation system of the Nasdaq Stock Market or in
privately-negotiated transactions; provided, however, that in the even Form S-3
is not available to the Company at any time after the date of this Agreement,
the Company shall file such other form as may be available if holders who hold
Shares with a market value of at least One Million Dollars ($1,000,000) deliver
a written request to the Company that the Company do so, where such market value
is determined as of the date of such written request. Any such registration
statement filed pursuant to the above provision shall be considered a
"Registration Statement" for purposes of Agreement.
(b) use its reasonable efforts, subject to receipt of
necessary information from the Investors, to cause the Registration Statement to
become effective as soon as practicable, and shall use its best efforts, subject
to receipt of necessary information from the Investors, to cause the
Registration Statement to become effective not later than one hundred twenty
(120) days after the Closing Date. In the event such Registration Statement is
not effective at the expiration of such 120-day period, the Company shall
continue to use all reasonable commercial efforts to cause it to become
effective until it becomes effective.
(c) prepare and file with the SEC such amendments and
supplements to the Registration Statement and the Prospectus used in connection
therewith as may be necessary to keep the Registration Statement current and
effective for a period not exceeding, with respect to each Investor's Shares
purchased hereunder, the earlier of (i) the second anniversary of the Closing
Date, (ii) the date on which the Investor may sell all Shares then held by the
Investor without restriction under Rule 144(k) of the Securities Act or (iii)
such time as all Shares purchased by such Investor in this Offering have been
sold pursuant to a registration statement.
(d) furnish to the Placement Agents and to the Investor
with respect to the Shares registered under the Registration Statement such
number of copies of the Registration Statement, Prospectuses and Preliminary
Prospectuses in conformity with the requirements of the Securities Act and such
other documents as they may reasonably request, in order to facilitate the
public sale or other disposition of all or any of the Shares by the Investor,
provided, however, that the obligation of the Company to deliver copies of
Prospectuses or Preliminary Prospectuses to the Investor shall be subject to the
receipt by the Company of reasonable assurances from the Investor that the
Investor 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 Investor, provided, however,
that the Company shall not be required to qualify to do business or consent to
service of process generally in any jurisdiction in which it is not now so
qualified or has not so consented;
(f) bear all expenses in connection with the procedures in
paragraph (a) through (e) of this Section 7.1 and the registration of the Shares
pursuant to the Registration Statement; and
9.
<PAGE> 11
(g) advise the Investors, promptly after it shall receive
notice or obtain knowledge of the issuance of any stop order by the SEC delaying
or suspending the effectiveness of the Registration Statement or of the
initiation of any proceeding for that purpose; and it will promptly use its
commercially reasonable efforts to prevent the issuance of any stop order or to
obtain its withdrawal at the earliest possible moment if such stop order should
be issued.
It shall be a condition precedent to the obligations of the Company to
take any action pursuant to this Section 7.1 that the Investor shall furnish to
the Company such information regarding itself, the Shares to be sold by
Investor, and the intended method of disposition of such securities as shall be
reasonably required to effect the registration of the Shares.
The Company understands that the Investor disclaims being an
underwriter, but the Investor being deemed an underwriter by the SEC shall not
relieve the Company of any obligations it has hereunder, provided, however, that
if the Company receives notification from the SEC that the Investor is deemed an
underwriter, then the period by which the Company is obligated to submit an
acceleration request to the SEC shall be extended to the earlier of (i) the 90th
day after such SEC notification, or (ii) 120 days after the initial filing of
the Registration Statement with the SEC.
7.2 TRANSFER OF SHARES AFTER REGISTRATION; SUSPENSION.
(a) The Investor agrees that it will not effect any
Disposition of the Shares or its right to purchase the Shares that would
constitute a sale within the meaning of the Securities Act except (i) as
contemplated in the Registration Statement referred to in Section 7.1 and as
described below, or (ii) in a transaction exempt from registration under the
Securities Act, and that it will promptly notify the Company of any changes in
the information set forth in the Registration Statement regarding the Investor
or its plan of distribution.
(b) Subject to paragraph (c) below (if applicable), the
Company shall: (i) if deemed necessary by the Company, prepare and file from
time to time with the SEC a post-effective amendment to the Registration
Statement or a supplement to the related Prospectus or a supplement or amendment
to any document incorporated therein by reference or file any other required
document so that such Registration Statement will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
so that, as thereafter delivered to purchasers of the Shares being sold
thereunder, such Prospectus will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading; (ii) provide the Investor copies of any documents
filed pursuant to Section 7.2(b)(i); and (iii) inform each Investor that the
Company has complied with its obligations in Section 7.2(b)(i) (or that, if the
Company has filed a post-effective amendment to the Registration Statement which
has not yet been declared effective, the Company will notify the Investor to
that effect, will use its reasonable efforts to secure the effectiveness of such
post-effective amendment as promptly as possible and will promptly notify the
Investor pursuant to Section 7.2(b)(i) hereof when the amendment has become
effective).
10.
<PAGE> 12
(c) Subject to paragraph (d) below, in the event: (i) of
any request by the SEC or any other federal or state governmental authority
during the period of effectiveness of the Registration Statement for amendments
or supplements to a Registration Statement or related Prospectus or for
additional information; (ii) of the issuance by the SEC or any other federal or
state governmental authority of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that purpose;
(iii) of the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the
Shares for sale in any jurisdiction or the initiation of any proceeding for such
purpose; or (iv) of any event or circumstance which necessitates the making of
any changes in the Registration Statement or Prospectus, or any document
incorporated or deemed to be incorporated therein by reference, so that, in the
case of the Registration Statement, it will not contain any untrue statement of
a material fact or any omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, and that in
the case of the Prospectus, it will not contain any untrue statement of a
material fact or any omission to state 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; then the Company shall
deliver a certificate in writing to the Investor (the "Suspension Notice") to
the effect of the foregoing and, upon receipt of such Suspension Notice, the
Investor will refrain from selling any Shares pursuant to the Registration
Statement (a "Suspension") until the Investor's receipt of copies of a
supplemented or amended Prospectus prepared and filed by the Company, or until
it is advised in writing by the Company that the current Prospectus may be used,
and has received copies of any additional or supplemental filings that are
incorporated or deemed incorporated by reference in any such Prospectus. In the
event of any Suspension, the Company will use its reasonable efforts to cause
the use of the Prospectus so suspended to be resumed as soon as reasonably
practicable within 20 business days after delivery of a Suspension Notice to the
Investors. In addition to and without limiting any other remedies (including,
without limitation, at law or at equity) available to the Investor, the Investor
shall be entitled to specific performance in the event that the Company fails to
comply with the provisions of this Section 7.2(c).
(d) Notwithstanding the foregoing paragraphs of this
Section 7.2, the Investor shall not be prohibited from selling Shares under the
Registration Statement as a result of Suspensions on more than two occasions of
not more than 30 days each in any twelve month period, unless, in the good faith
judgment of the Company's Board of Directors, upon advice of counsel, the sale
of Shares under the Registration Statement in reliance on this paragraph 7.2(d)
would be reasonably likely to cause a violation of the Securities Act or the
Exchange Act and result in potential liability to the Company.
(e) Provided that a Suspension is not then in effect the
Investor may sell Shares under the Registration Statement, provided that it
arranges for delivery of a current Prospectus to the transferee of such Shares.
Upon receipt of a request therefor, the Company has agreed to provide an
adequate number of current Prospectuses to the Investor and to supply copies to
any other parties requiring such Prospectuses.
(f) In the event of a sale of Shares by the Investor, the
Investor must also deliver to the Company's transfer agent, with a copy to the
Company, a Certificate of
11.
<PAGE> 13
Subsequent Sale substantially in the form attached hereto as Exhibit C, so that
the shares may be properly transferred.
7.3 INDEMNIFICATION. For the purpose of this Section 7.3:
(a) the term "Selling Stockholder" shall include the
Investor and any affiliate, officer, director, employee or control person (as
defined by Section 15 of the Securities Act) of such Investor;
(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
(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.
(i) 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 (i) any untrue statement of a material fact contained in the
Registration Statement, or (ii) 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 any statement or omission in any
Prospectus that is corrected in any subsequent Prospectus that was delivered to
the Investor prior to the pertinent sale or sales by the Investor.
(ii) The Investor 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 untrue statement of a material fact contained in the Registration
Statement if such untrue statement was made in reliance upon and in conformity
with written information furnished by or on behalf of the Investor specifically
for use in preparation of the Registration Statement, and the Investor 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.
12.
<PAGE> 14
(iii) 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, but the omission to
so notify the indemnifying party will not relieve it from any liability which it
may have to any indemnified party under this Section 7.3 (except to the extent
that such omission materially and adversely affects the indemnifying party's
ability to defend such action) or from any liability otherwise than under this
Section 7.3. Subject to the provisions hereinafter stated, in case any such
action shall be brought against an indemnified person, the indemnifying person
shall be entitled to participate therein, and, to the extent that it shall elect
by written notice delivered to the indemnified party promptly after receiving
the aforesaid notice from such indemnified party, shall be entitled 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 reasonable 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
(together with appropriate local counsel) for all indemnified parties (unless in
the reasonable judgment of an indemnified party, there exists a conflict of
interest between such indemnified person and any other indemnified person, in
which case the indemnifying person shall be obligated to pay the reasonable fees
and expenses of additional counsel). In no event shall any indemnifying person
be liable in respect of any amounts paid in settlement of any action unless the
indemnifying person shall have approved the terms of such settlement; provided
that such consent shall not be unreasonably withheld. No indemnifying person
shall, without the prior written consent of the indemnified person, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified person is or could have been a party and indemnification could have
been sought hereunder by such indemnified person, unless such settlement
includes an unconditional release of such indemnified person from all liability
on claims that are the subject matter of such proceeding.
(iv) If the indemnification provided for in this
Section 7.3 is unavailable to or insufficient to hold harmless an indemnified
party under subsection (a) or (b) above in respect of any losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) referred
to therein, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is appropriate
to reflect the relative fault of the Company on the one hand and the Investors
on the other in connection with the statements or omissions or other matters
which resulted in such losses, claims, damages or liabilities (or actions in
respect thereof), as well as any other relevant equitable considerations. The
relative fault shall be determined by reference to, among other things, in the
case of an untrue statement, whether the untrue statement relates to information
supplied by the Company on the one hand or an Investor on the other and the
parties' relative intent, knowledge, access to information and
13.
<PAGE> 15
opportunity to correct or prevent such untrue statement. The Company and the
Investors agree that it would not be just and equitable if contribution pursuant
to this subsection (d) were determined by pro rata allocation (even if the
Investors were treated as one entity for such purpose) or by any other method of
allocation which does not take into account the equitable considerations
referred to above in this subsection (d). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above in this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this subsection (d), no Investor
shall be required to contribute any amount in excess of the amount by which the
gross amount received by the Investor from the sale of the Shares to which such
loss relates exceeds the amount of any damages which such Investor has otherwise
been required to pay by reason of such untrue statement. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Investors' obligations in this
subsection to contribute are several in proportion to their sales of Shares to
which such loss relates and not joint.
(v) The parties to this Agreement hereby
acknowledge that they are sophisticated business persons who were represented by
counsel during the negotiations regarding the provisions hereof including,
without limitation, the provisions of this Section 7.3, and are fully informed
regarding said provisions. They further acknowledge that the provisions of this
Section 7.3 fairly allocate the risks in light of the ability of the parties to
investigate the Company and its business in order to assure that adequate
disclosure is made in the Registration Statement as required by the Act and the
Exchange Act. The parties are advised that federal or state public policy as
interpreted by the courts in certain jurisdictions may be contrary to certain of
the provisions of this Section 7.3, and the parties hereto hereby expressly
waive and relinquish any right or ability to assert such public policy as a
defense to a claim under this Section 7.3 and further agree not to attempt to
assert any such defense.
7.4 TERMINATION OF CONDITIONS AND OBLIGATIONS. The conditions
precedent imposed by Section 5 or this Section 7 upon the transferability of the
Shares shall cease and terminate as to any particular number of the Shares when
such 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 Shares 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.
7.5 INFORMATION AVAILABLE. So long as the Registration Statement
is effective covering the resale of Shares owned by the Investor, the Company
will furnish to the Investor:
(a) as soon as practicable after it is available, one copy
of (i) its Annual Report to Stockholders (which Annual Report shall contain
financial statements audited in accordance with generally accepted accounting
principles by a national firm of certified public accountants) and (ii) if not
included in substance in the Annual Report to Stockholders, its Annual Report on
Form 10-K (the foregoing, in each case, excluding exhibits);
14.
<PAGE> 16
(b) upon the reasonable request of the Investor, all
exhibits excluded by the parenthetical to subparagraph (a)(ii) of this Section
7.5 as filed with the SEC and all other information that is made available to
shareholders; and
(c) upon the reasonable request of the Investor, an
adequate number of copies of the Prospectuses to supply to any other party
requiring such Prospectuses; and the Company, upon the reasonable request of the
Investor, will meet with the Investor or a representative thereof at the
Company's headquarters to discuss all information relevant for disclosure in the
Registration Statement covering the Shares and will otherwise cooperate with any
Investor conducting an investigation for the purpose of reducing or eliminating
such Investor's exposure to liability under the Securities Act, including the
reasonable production of information at the Company's headquarters; provided,
that the Company shall not be required to disclose any confidential information
to or meet at its headquarters with any Investor until and unless the Investor
shall have entered into a confidentiality agreement in form and substance
reasonably satisfactory to the Company with the Company with respect thereto.
8. NOTICES. All notices, requests, consents and other communications
hereunder shall be in writing, shall be mailed (A) if within domestic United
States by first-class registered or certified airmail, or nationally recognized
overnight express courier, postage prepaid, or by facsimile, or (B) if delivered
from outside the United States, by International Federal Express or facsimile,
and shall be deemed given (i) if delivered by first-class registered or
certified mail domestic, three business days after so mailed, (ii) if delivered
by nationally recognized overnight carrier, one (1) business day after so
mailed, (iii) if delivered by International Federal Express, two (2) business
days after so mailed, (iv) if delivered by facsimile, upon electric confirmation
of receipt and shall be delivered as addressed as follows:
(a) if to the Company, to:
Amylin Pharmaceuticals, Inc.
9373 Towne Centre Drive
San Diego, California 92121
Attn: Nancy K. Dahl
Vice President and General Counsel
Phone: (858) 642-7271
Telecopy: (858) 552-1939
(b) with a copy mailed to:
Cooley Godward LLP
4365 Executive Drive, Suite 1100
San Diego, CA 92121
Attn: Thomas A. Coll
Phone: (858) 550-6013
Telecopy: (858) 453-3555
15.
<PAGE> 17
(c) if to the Investor, at its address on the Signature
Page hereto, or at such other address or addresses as may have been furnished to
the Company in writing.
9. CHANGES. This Agreement may not be modified or amended except
pursuant to an instrument in writing signed by the Company and the Investor.
10. 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.
11. 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.
12. GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of California, without giving
effect to the principles of conflicts of law.
13. 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, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties.
14. CONFIDENTIAL DISCLOSURE AGREEMENT. Notwithstanding any provision of
this Agreement to the contrary, any confidential disclosure agreement previously
executed by the Company and the Investor 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.
16.
<PAGE> 18
EXHIBIT A
AMYLIN PHARMACEUTICALS, INC.
STOCK CERTIFICATE QUESTIONNAIRE
Pursuant to Section 5 of the 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 Investor 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:
A-1.
<PAGE> 19
EXHIBIT B
AMYLIN PHARMACEUTICALS, INC.
INVESTOR QUESTIONNAIRE
(ALL INFORMATION WILL BE TREATED CONFIDENTIALLY)
To: Amylin Pharmaceuticals, Inc.
This Investor Questionnaire ("Questionnaire") must be completed by each
potential investor in connection with the offer and sale of the shares of the
common stock, par value $0.001 per share, of Amylin Pharmaceuticals, Inc. (the
"Securities"). The Securities are being offered and sold by Amylin
Pharmaceuticals, Inc. (the "Corporation") without registration under the
Securities Act of 1933, as amended (the "Act"), and the securities laws of
certain states, in reliance on the exemptions contained in Section 4(2) of the
Act and on Regulation D promulgated thereunder and in reliance on similar
exemptions under applicable state laws. The Corporation must determine that a
potential investor meets certain suitability requirements before offering or
selling Securities to such investor. The purpose of this Questionnaire is to
assure the Corporation that each investor will meet the applicable suitability
requirements. The information supplied by you will be used in determining
whether you meet such criteria, and reliance upon the private offering exemption
from registration is based in part on the information herein supplied.
This Questionnaire does not constitute an offer to sell or a
solicitation of an offer to buy any security. Your answers will be kept strictly
confidential. However, by signing this Questionnaire you will be authorizing the
Corporation to provide a completed copy of this Questionnaire to such parties as
the Corporation deems appropriate in order to ensure that the offer and sale of
the Securities will not result in a violation of the Act or the securities laws
of any state and that you otherwise satisfy the suitability standards applicable
to purchasers of the Securities. All potential investors must answer all
applicable questions and complete, date and sign this Questionnaire. Please
print or type your responses and attach additional sheets of paper if necessary
to complete your answers to any item.
A. BACKGROUND INFORMATION
Name:
---------------------------------------------------------------------------
Business Address:
---------------------------------------------------------------
(Number and Street)
- --------------------------------------------------------------------------------
(City) (State) (Zip Code)
Telephone Number: ( )
------------------------------------------------------
Residence Address:
--------------------------------------------------------------
(Number and Street)
- --------------------------------------------------------------------------------
(City) (State) (Zip Code)
Telephone Number: ( )
------------------------------------------------------
If an individual:
Age: Citizenship: Where registered to vote:
------ ---------- ----------
If a corporation, partnership, limited liability company, trust or other entity:
Type of entity:
-----------------------------------------------------------------
State of formation: Date of formation:
-------------- ----------------
Social Security or Taxpayer Identification No.
----------------------------------
Send all correspondence to (check one): Residence Address
----
Business Address
----
B-1.
<PAGE> 20
B. STATUS AS ACCREDITED INVESTOR
The undersigned is an "accredited investor" as such term is defined in
Regulation D under the Act, as at the time of the sale of the Securities the
undersigned falls within one or more of the following categories (Please initial
one or more, as applicable):(1)
_____(1) a bank as defined in Section 3(a)(2) of the Act, or a savings and loan
association or other institution as defined in Section 3(a)(5)(A) of the Act
whether acting in its individual or fiduciary capacity; a broker or dealer
registered pursuant to Section 15 of the Securities Exchange Act of 1934; an
insurance company as defined in Section 2(13) of the Act; an investment company
registered under the Investment Corporation Act of 1940 or a business
development company as defined in Section 2(a)(48) of that Act; a Small Business
Investment Corporation licensed by the U.S. Small Business Administration under
Section 301(c) or (d) of the Small Business Investment Act of 1958; a plan
established and maintained by a state, its political subdivisions, or any agency
or instrumentality of a state or its political subdivisions for the benefit of
its employees, if such plan has total assets in excess of $5,000,000; an
employee benefit plan within the meaning of the Employee Retirement Income
Security Act of 1974 if the investment decision is made by a plan fiduciary, as
defined in Section 3(21) of such Act, which is either a bank, savings and loan
association, insurance company, or registered investment adviser, or if the
employee benefit plan has total assets in excess of $5,000,000 or, if a
self-directed plan, with the investment decisions made solely by persons that
are accredited investors;(1)
_____(2) a private business development company as defined in Section 202(a)(22)
of the Investment Adviser Act of 1940;
_____(3) an organization described in Section 501(c)(3) of the Internal Revenue
Code of 1986, as amended, corporation, Massachusetts or similar business trust,
or partnership, not formed for the specific purpose of acquiring the Securities
offered, with total assets in excess of $5,000,000;
_____(4) a natural person whose individual net worth, or joint net worth with
that person's spouse, at the time of such person's purchase of the Securities
exceeds $1,000,000;
_____(5) a natural person who had an individual income in excess of $200,000 in
each of the two most recent years or joint income with that person's spouse in
excess of $300,000 in each of those years and has a reasonable expectation of
reaching the same income level in the current year;
_____(6) a trust, with total assets in excess of $5,000,000, not formed for the
specific purpose of acquiring the Securities offered, whose purchase is directed
by a sophisticated person as described in Rule 506(b)(2)(ii) of Regulation D;
and
_____(7) an entity in which all of the equity owners are accredited investors
(as defined above).
- ----------
(1) As used in this Questionnaire, the term "net worth" means the excess of
total assets over total liabilities. In computing net worth for the purpose of
subsection (4), the principal residence of the investor must be valued at cost,
including cost of improvements, or at recently appraised value by an
institutional lender making a secured loan, net of encumbrances. In determining
income, the investor should add to the investor's adjusted gross income any
amounts attributable to tax exempt income received, losses claimed as a limited
partner in any limited partnership, deductions claimed for depiction,
contributions to an IRA or KEOGH retirement plan, alimony payments, and any
amount by which income from long-term capital gains has been reduced in arriving
at adjusted gross income.
B-2.
<PAGE> 21
C. REPRESENTATIONS
The undersigned hereby represents and warrants to the Corporation as follows:
1. Any purchase of the Securities would be solely for the account of the
undersigned and not for the account of any other person or with a view to any
resale, fractionalization, division, or distribution thereof.
2. The information contained herein is complete and accurate and may be
relied upon by the Corporation, and the undersigned will notify the Corporation
immediately of any material change in any of such information occurring prior to
the closing, if any, with respect to the purchase of Securities by the
undersigned or any co-purchaser.
3. There are no suits, pending litigation, or claims against the
undersigned that could materially affect the net worth of the undersigned as
reported in this Questionnaire.
4. The undersigned acknowledges that there may occasionally be times
when the Corporation, based on the advice of its counsel, determines that it
must suspend the use of the Prospectus forming a part of the Registration
Statement (as such terms are defined in the Stock Purchase Agreement to which
this Questionnaire is attached) 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 or until the Corporation has amended or
supplemented such Prospectus. The undersigned is aware that, in such event, the
Securities will not be subject to ready liquidation, and that any Securities
purchased by the undersigned would have to be held during such suspension. The
overall commitment of the undersigned to investments which are not readily
marketable is not excessive in view of the undersigned's net worth and financial
circumstances, and any purchase of the Securities will not cause such commitment
to become excessive. The undersigned is able to bear the economic risk of an
investment in the Securities.
5. In addition to reviewing the Corporation's Confidential Offering
Memorandum, the undersigned has carefully considered the potential risks
relating to the Corporation and a purchase of the Securities, and fully
understands that the Securities are speculative investments which involve a high
degree of risk of loss of the undersigned's entire investment. Among others, the
undersigned has carefully considered each of the risks described under the
heading "Risk Factors" in the Corporation's most recent annual report on Form
10-K.
IN WITNESS WHEREOF, the undersigned has executed this Questionnaire this _____
day of _____________, 2000, and declares under oath that it is truthful and
correct.
Print Name
By:
------------------------------------------
Signature
Title:
---------------------------------------
(required for any purchaser that is
a corporation, partnership, trust or
other entity)
B-3.
<PAGE> 22
EXHIBIT C
AMYLIN PHARMACEUTICALS, INC.
CERTIFICATE OF SUBSEQUENT SALE
ChaseMellon Shareholder Services
RE: Sale of Shares of Common Stock of Amylin Pharmaceuticals, Inc.
(the "Company") pursuant to the Company's Prospectus dated
_______________, 2000 (the "Prospectus")
Dear Sir/Madam:
The undersigned hereby certifies, in connection with the sale of shares
of Common Stock of the Company included in the table of Selling Shareholders in
the Prospectus, that the undersigned has sold the Shares pursuant to the
Prospectus and in a manner described under the caption "Plan of Distribution" in
the Prospectus and that such sale complies with all applicable securities laws,
including, without limitation, the Prospectus delivery requirements of the
Securities Act of 1933, as amended.
Selling Shareholder (the beneficial owner):
-----------------------------
Record Holder (e.g., if held in name of nominee):
-----------------------
Restricted Stock Certificate No.(s):
------------------------------------
Number of Shares Sold:
--------------------------------------------------
Date of Sale:
-----------------------------------------------------------
In the event that you receive a stock certificate(s) representing more
shares of Common Stock than have been sold by the undersigned, then you should
return to the undersigned a newly issued certificate for such excess shares in
the name of the Record Holder and BEARING A RESTRICTIVE LEGEND. Further, you
should place a stop transfer on your records with regard to such certificate.
Very truly yours,
By:
-------------------------------------
Print Name:
-----------------------------
Title:
----------------------------------
Dated:
-------------------
cc: Legal Department
Amylin Pharmaceuticals, Inc.
9373 Towne Centre Drive
San Diego, California 92121
<PAGE> 23
SCHEDULE OF PURCHASERS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
COMMON STOCK TO BE ISSUED
STOCKHOLDER FOR INVESTMENT
- --------------------------------------------------------------------------------
<S> <C>
Allen Andersson 1,333,334
Ralph M. D'Annucci 50,000
Clipperbay & Co., as Custodian for SMALLCAP 1,845,833
World Fund, Inc.
Rescueboat & Co., as Custodian for The 3,000,000
Growth Fund of America, Inc.
Pirate Ship & Co., as Custodian for Invesco 325,000
Global Health Sciences Fund
SeaLion & Co., as Custodian for Invesco 295,000
Health Sciences Fund
Above Anchor & Co., as Custodian for Invesco 8,000
VIF - Health Sciences Fund
"Roytor & Co.", in Trust for State Street 40,000
Trust Co. Canada Fund #ZM 75, as Custodian
for AIM Funds Management Inc., on behalf of
AIM Global Health Sciences Class of AIM
Global Fund Inc.
"Roytor & Co.", in Trust for State Street 82,000
Trust Co. Canada Fund #KG 56, as Custodian
for AIM Funds Management Inc., on behalf of
AIM Global Health Sciences Fund
Deerfield Partners L.P. 740,000
Deerfield International Limited 260,000
Rumsfeld Family Trust 10,417
Donald H. Rumsfeld 10,417
MCP Global Corp. Ltd. 100,000
United Capital Management Inc. 100,000
Deltec Asset Management Corporation 50,000
Narragansett I, LP 60,833
Narragansett Offshore, Ltd. 22,500
TOTAL 8,333,334
</TABLE>
<PAGE> 1
EXHIBIT 10.44
*** TEXT OMITTED AND FILED SEPARATELY
CONFIDENTIAL TREATMENT REQUESTED
UNDER 17 C.F.R. SECTIONS 200.80(b)(4),
200.83 AND 240.24b-2
AGREEMENT
THIS AGREEMENT is made by and among Ortho Biotech, a New Jersey
corporation, having a principal place of business at Route 202 South, Raritan,
New Jersey 08869-0602 ("Ortho Biotech"), Amylin Pharmaceuticals, Inc., a
Delaware Corporation having a principal place of business at 9373 Towne Centre
Drive, San Diego, California 92121 ("Amylin") and Bachem California, a
California corporation, having a principal place of business at 3132 Kashiwa
Street, Torrance, California 90505 ("Bachem"). References to any of Amylin or
Ortho Biotech, or Bachem includes reference to their respective Affiliates.
WHEREAS, Bachem previously manufactured for Amylin a compound referred
to as pramlintide (also known as AC-137).
WHEREAS, Amylin and LifeScan, Inc., an Affiliate of Ortho Biotech, have
entered in to a Collaboration Agreement dated June 20, 1995, under which they
are jointly developing and commercializing pramlintide.
WHEREAS, Ortho Biotech, on behalf of Johnson and Johnson, wishes to
engage Bachem to manufacture validation lots and commercial supplies of
pramlintide in connection with the joint development and commercialization of
pramlintide by Amylin and LifeScan, Inc., pursuant to the Collaboration
Agreement.
WHEREAS, Bachem now desires to manufacture for Ortho Biotech pramlintide
for use by Amylin and Ortho Biotech as validation batches for regulatory
registration in connection with pramlintide and to also produce for Ortho
Biotech commercial supplies of pramlintide; and
<PAGE> 2
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein, Bachem, Ortho Biotech and Amylin
agree as follows:
1. Definitions
As used in this Agreement, the following words and phrases shall have
the following meanings:
1.1 "Affiliate" of a party hereto means any entity which directly or
indirectly, through one or more intermediaries, controls, is controlled by or is
under common control with such party.
1.2 "Commercial Lots" shall mean those lots described in Paragraph
2.2.
1.3 "Effective Date" means the later date of execution written on the
execution page of this Agreement.
1.4 "FDA" means the United States Food and Drug Administration and
any successor entity.
1.5 "Product" means the bulk form of pramlintide (also known as
AC--137) which meets the Product Specifications.
1.6 "Product Specifications" means the written specifications for
Product set forth in Exhibit 1 as amended from time to time pursuant to
Paragraph 3.1.
1.7 "Validation Lots" shall man those lots described in Paragraph
2.2.
2
<PAGE> 3
2. Purchase and Sale of Product
2.1 Bachem agrees to manufacture and supply to Ortho Biotech and Ortho
Biotech agrees to purchase a total of at least [...***...] of bulk Product
using the optimized process described in the Batch Production Records that
resulted from the production of the qualification batches under the Materials
Purchase Contract No. 151 dated September 24, 1996 between Amylin and Bachem.
Manufacture is to start in [...***...] and continue through the year
[...***...].
2.2 Bachem agrees to manufacture and supply the following quantities of
Product at the following times:
A total of [...***...] over the period [...***...] in
accordance with the schedule below:
VALIDATION LOTS
[...***...] [...***...] lots no later than [...***...]
COMMERCIAL LOTS
[...***...] [...***...] lots by [...***...] pursuant
to an issued Purchase Order.
[...***...] [...***...] lots at a rate of approximately
every [...***...] pursuant to an issued
Purchase Order.
3 * CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 4
[...***...] [...***...] lots at a rate of approximately
every [...***...] in the year [...***...]
pursuant to AN issued Purchase Order.
Purchase Orders will be issued at least six months in advance of the delivery
date for the individual Purchase Orders.
2.3 The price for the Product shall be [...***...](gross weight)
F.O.B. Bachem's manufacturing facility in Torrance, California.
2.4 Ortho Biotech agrees to participate with Bachem in the investment
of [...***...] for plant and equipment needed to assure timely manufacture and
delivery of Product pursuant to this Agreement, with title to all improvements
and equipment to remain with Bachem. Total investment costs for Ortho Biotech is
[...***...] of which [...***...] has already been paid prior to the Effective
Date, of which [...***...] shall become due and payable within thirty (30) days
of the Effective Date of the Agreement and the remaining [...***...] shall be
due and payable in the second quarter of 1997 and no later than the end of the
second quarter. Bachem agrees to invest the remaining [...***...]. Such monies
will be used to make the specific plant investments and to purchase the
equipment listed in Exhibit 2 attached hereto. Bachem represents and warrants
that all investments listed in Exhibit 2 in the plant and equipment are
necessary to produce Product, will be used on a priority basis for manufacture
of the Product and will be used to manufacture the [...***...] quantities of
Product described in Paragraph 2.1. Bachem further represents and warrants that
no additional capital investment will be necessary on the part of Ortho Biotech
to enable Bachem to produce the specified quantities at the times specified in
Paragraph 2.2 and that Bachem shall make all other necessary capital investments
to timely produce and deliver the quantities of Product
4 * CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 5
specified in Paragraph 2.2. Finally, Bachem represents and warrants that, after
the supply of the Validation Batches, a dedicated lab and production section
will be established and used for the supply of all Commercial Batches.
2.5 Any federal, state, county or municipal sales or use tax, excise
or similar charge, or other tax assessment (other than that assessed against
income), license fee or other charge lawfully assessed or charged on the
manufacture, sale or transportation of Product sold pursuant to this Agreement
shall be paid by Ortho Biotech, provided evidence of such charge is provided to
Ortho Biotech in writing.
3. Manufacture of Product
3.1 Bachem shall promptly advise Ortho Biotech and Amylin of any
process changes proposed by Bachem for the manufacture of Product. Product
Specifications may be modified from time to time by written agreement of the
parties without the necessity of amending this Agreement. However, no changes in
the Product Specifications will be made unless Ortho Biotech, Amylin and Bachem
have agreed to such changes in writing prior to adoption of modified Product
Specifications.
3.2 Bachem shall test or cause to be tested each lot of Product
before delivery as directed by Ortho Biotech. Each test shall set forth the
items tested, specifications and test results in a certificate of analysis for
each lot delivered to Ortho Biotech and Amylin under this Agreement. Bachem
shall send such certificate of analysis together with a certificate of
compliance to Ortho Biotech along with the delivery of Product. Ortho Biotech is
entitled to rely on such certificates for all purposes of this Agreement.
5
<PAGE> 6
3.3 Bachem shall permit Ortho Biotech and Amylin access during
reasonable business hours and after reasonable notice to those areas of Bachem's
manufacturing facilities where Product is manufactured, stored and handled and
to manufacturing records of Product manufactured by Bachem so that Ortho Biotech
and/or Amylin may perform a quality assurance audit of such facilities and
activities. Use of all information gained in the course of audits is restricted
to the purpose of Quality Assurance. Likewise, Bachem shall grant similar access
to governmental regulatory agencies upon reasonable notice so that such agencies
can perform inspections of its facilities.
3.4 Each party shall promptly advise the others of any safety or
toxicity problem of which such party becomes aware regarding the Product.
4. Acceptance of Product
4.1 Not later than 90 days after receipt of each shipment of Product
sold hereunder, Ortho Biotech shall test and examine such material for
compliance with the Product Specifications, any damage, defects or shortage. If
Ortho Biotech believes that any such shipment does not comply with the Product
Specifications or is otherwise deficient, Ortho Biotech shall promptly, but not
later than ninety (90) days after receipt of the shipment, notify Bachem and,
(if appropriate) send a sample of the shipment to Bachem. If Bachem is satisfied
that the relevant shipment does not comply with such specifications or is
deficient, Ortho Biotech shall dispose of the noncomplying shipment as Bachem
shall lawfully direct and at Bachem's sole cost and expense and Bachem shall
upon request from Ortho Biotech replace at Ortho Biotech's and Amylin's option
the shipment or remedy the deficiency promptly. If Bachem should deny that the
relevant shipment does not comply with such specifications or is deficient or
should admit such
6
<PAGE> 7
noncompliance or deficiency but deny that it is at fault, either Bachem or Ortho
Biotech may submit a sample of the relevant shipment and other relevant
information to an independent expert agreed upon by the parties, and the
decision of this independent expert shall be final and binding upon the parties.
The fees of such expert shall be borne by the losing party. Failure of Ortho
Biotech to notify Bachem of a claim, noncompliance or deficiency as set forth
herein shall constitute acceptance of such shipment.
4.2 If there is subsequently found to be a defect in any shipment of
Product, which could not reasonably be expected to have been found by diligent
and adequate inspection by Ortho Biotech pursuant to its obligation under this
article, (a "Hidden Defect"), Ortho Biotech and Bachem shall enter into
discussions in good faith as to the handling and disposal of the defective
consignment, having due regard to where responsibility for such defect lies.
5. Shipment and Delivery
5.1 Bachem shall prepare Product for shipment and arrange for
shipment of Product at a location designated in writing by Ortho Biotech.
Shipment terms are F.O.B. Bachem's manufacturing facility. All charges for
packing, hauling, storage, bar coding, and transportation to point of delivery
are included in the purchase price unless otherwise agreed to by the parties.
Bachem shall pay all delivery charges in excess of any delivery charges that
Ortho Biotech have agreed to pay herein. All shipments must be accompanied by a
packing slip which describes the articles, states the purchase order number and
shows the shipment's destination. Bachem agrees to promptly forward the original
bill of lading or other shipping receipt for each shipment in accordance with
Ortho Biotech' s instructions.
7
<PAGE> 8
5.2 Each delivery of Product shall be governed by the terms of this
Agreement, and none of the conflicting terms or conditions of Ortho Biotech's
purchase order form or Bachem's purchase order form, acknowledgment or invoice
form shall be applicable, except those specifying special shipping instructions
and invoice information.
6. Invoice
Bachem shall invoice Ortho Biotech with a single invoice upon
delivery of each lot of Product at an address to be specified by Ortho Biotech
in writing. Ortho Biotech shall pay Bachem net the earlier of ninety (90) days
from the date of their receipt of invoice or Ortho Biotech's acceptance of the
lot, provided the Product is not rejected as described in Paragraph 4.1.
7. Term and Termination
7.1 This Agreement shall commence on the Effective Date and shall
terminate on the date on which the last shipment of Product has been delivered,
accepted and paid for by Ortho Biotech, provided, however, that Paragraph 4.2
shall survive any such expiration of the Agreement.
7.2 This Agreement may be terminated as follows:
(a) Any party may terminate this Agreement immediately upon the
bankruptcy or insolvency of another party;
(b) Any party may terminate this Agreement by giving the other
parties thirty (30) days' prior written notice upon the breach of any material
provision of this Agreement by another party if the breach is not cured within
such ninety (90)day notice period. Failure to supply all quantities of Product
ordered on the
8
<PAGE> 9
dates specified in an issued Purchase Order shall be considered a material
breach.
(c) Ortho Biotech may terminate this Agreement by giving
Bachem thirty (30) days' prior written notice in each of the following
situations: (i) upon notice by the FDA that Bachem is not an approved commercial
supplier of Product or failure of Bachem to successfully complete its
Pre-Approval Inspection (PAI), (ii) the FDA notifies Amylin that it will not
approve the NDA directed to the Product or it is not approved by [...***...],
(iii) Amylin withdraws the NDA directed to the Product or (iv) Ortho Biotech
withdraws the Product from the market. If Ortho Biotech terminates this
Agreement under any of 7.2(c) (ii), (iii) or (iv), then Ortho Biotech agrees to
reimburse Bachem for a portion of its investment costs for plant and equipment,
as follows:
If Ortho Biotech has purchased less then [...***...] of Product
(including the Validation Batches), then Ortho Biotech will
reimburse Bachem for [...***...] of the investment costs,
If Ortho Biotech has purchased at least [...***...] but less then
[...***...] of Product (including the Validation Batches), then
Ortho Biotech will reimburse Bachem for [...***...] of the
investment costs.
If Ortho Biotech terminates this Agreement under any of
Paragraphs 7.2(c) (ii), (iii) or (iv), Ortho shall compensate Bachem for its
out-of-pocket costs associated with any work in progress.
9 * CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 10
7.3 Termination, expiration, cancellation or abandonment of this
Agreement through any means or for any reason shall not relieve the parties of
any obligation accruing prior thereto and shall be without prejudice to the
rights and remedies of either party with respect to any antecedent breach of any
of the provisions of this Agreement.
8. Warranties
8.1 Bachem warrants that all Product delivered to Ortho Biotech and
pursuant to this Agreement will at the time of such delivery not be adulterated
or misbranded within the meaning of the Federal Food, Drug and Cosmetic Act, as
amended, or within the meaning of any applicable state or municipal law in which
the definitions of adulteration or misbranding are substantially the same as
those contained in the Federal Food, Drug and Cosmetic Act, as such Act and such
laws are constituted and effective at the time of delivery and will not be an
article which may not, under the provisions of Sections 404, 505 of 512 of such
Act, be introduced into interstate commerce. Bachem further warrants that
Product delivered to Ortho Biotech pursuant to this Agreement shall conform when
delivered to the Product Specifications and shall be in compliance with
applicable laws and regulations. Bachem represents and warrants that it shall
comply with all present and future statutes, laws, ordinances and regulations
relating to the manufacture, assembly and supply of the Products being provided
hereunder, including, without limitation, those enforced by the United States
Food and Drug Administration (including compliance with current good
manufacturing practices). BACHEM MAKES NO OTHER WARRANTIES, EXPRESSED OR
IMPLIED, WITH RESPECT TO PRODUCT. ALL OTHER WARRANTIES, EXPRESSED OR IMPLIED,
INCLUDING WITHOUT LIMITATION, THE IMPLIED WARRANTIES OR MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE ARE HEREBY DISCLAIMED BY BACHEM.
10
<PAGE> 11
9. Indemnification
9.1 Ortho Biotech shall defend, indemnify and hold Bachem and its
Affiliates and their respective employees, servants and agents harmless against
any liability, judgment, demand, action, suit, loss, damage, cost and other
expense (including reasonable attorney's fees) ("Liability") resulting from any
third party claims made or proceedings brought against Bachem to the extent such
Liability arises from (i) Ortho Biotech's negligence or willful act or omission
in the testing, use, manufacture, promotion, marketing, sale, distribution,
packaging, labeling, handling, or storage of Product, or (ii) Ortho Biotech's
material breach of this Agreement.
9.2 Bachem shall defend, indemnify and hold Ortho Biotech and Amylin
and their Affiliates and their respective employees, servants and agents
harmless against any liability resulting from any third party claims made or
proceedings brought against Ortho Biotech and/or Amylin to the extent that such
liability arises from (i) Bachem's negligence or willful act or omission in the
manufacture, storage or delivery of Product; (ii) Bachem's material breach of
this Agreement; (iii) Bachem's breach of any warranty set forth in Article 8 or
(iv) any infringement set forth in Paragraph 8.1.
9.3 Each indemnified party agrees to give the indemnifying party
prompt written notice of any matter upon which such indemnified party intends to
base a claim for indemnification (an "Indemnity Claim") under Article 9. The
indemnifying party shall have the right to participate jointly with the
indemnified party in the indemnified party's defense, settlement or other
disposition of any Indemnity Claim. With respect to any Indemnity Claim relating
solely to the payment of money damages and which could not result in the
indemnified party's becoming subject to injunctive or other equitable relief or
otherwise adversely affect
11
<PAGE> 12
the business of the indemnified party in any manner, and as to which the
indemnifying party shall have acknowledged in writing the obligation to
indemnify the indemnified party hereunder, the indemnifying party shall have the
sole right to defend, settle or otherwise dispose of such Indemnity Claim, on
such terms as the indemnifying party, in its sole discretion, shall deem
appropriate, provided that the indemnifying party shall provide reasonable
evidence of its ability to pay any damages claimed and with respect to any such
settlement shall have obtained the written release of the indemnified party from
the Indemnity Claim. The indemnifying party shall obtain the written consent of
the indemnified party, which shall not be unreasonably withheld, prior to
ceasing to defend, settling or otherwise disposing of any Indemnity Claim if as
a result thereof the indemnified party would become subject to injunctive or
other equitable relief or the business of the indemnified party would be
adversely affected in any manner.
10. Insurance
Bachem agrees to procure and maintain in full force and effect
during the term of this Agreement valid and collectible insurance policies in
connection with its activities as contemplated hereby. Upon Ortho Biotech's
request, Bachem shall provide to Ortho Biotech a certificate of coverage or
other written evidence reasonably satisfactory to Bachem of such insurance
coverage.
11. Confidential Information
Confidential Information will be as defined by and treated in
accordance with the Confidential Disclosure Agreement among Amylin, Johnson &
Johnson and Bachem dated September 1, 1995, a copy of which is attached hereto
as Exhibit 3, which shall remain in full force and effect during the term of
this Agreement.
12
<PAGE> 13
12. Force Majeure
If the performance by either party of any obligation under this
Agreement, other than the payment of money, is prevented or impaired by Force
Majeure for any cause beyond the reasonable control of the defaulting party,
such party shall be excused from performance so long as such situation continues
to prevent or impair performance, provided the party claiming such excuse shall
have promptly notified the other party of the existence, nature, duration and
other details of such cause and shall at all times use its reasonable efforts
consistent with its normal business practices to resume a complete performance.
If either party anticipates that a Force Majeure may occur, that party shall
notify the other immediately and explain the nature, details and expected
duration thereof.
The affected party will advise the other from time to time as to the
progress in remedying the situation and as to the time when the affected party
expects to resume its obligations and shall notify the other as to the
expiration of any Force Majeure as soon as the affected party knows the date
thereof.
"Force Majeure" shall mean an event beyond the reasonable control of
a party including, but not limited to, a breakdown of machinery or equipment,
fire, flood, sabotage, shipwreck, embargo, strike, explosion, labor trouble,
accident, riot, act of governmental authority (including, without limitation,
acts relating to raw material or product allocation), acts of God, acts of war
and delays or failures in obtaining materials, supplies, equipment or
transportation. Quantities affected by a Force Majeure shall be eliminated from
this Agreement without liability.
In the event of a Force Majeure affecting Bachem, Bachem may prorate
and allocate manufacturing capacity (always with the understanding that Bachem
shall have a dedicated lab for the
13
<PAGE> 14
manufacture of Product for Ortho Biotech) among its Affiliates, its then current
contract customers and in such manner as may be deemed fair and reasonable based
upon purchases of products over the past year.
Notwithstanding the occurrence of a Force Majeure Event, if Bachem
shall be unable to supply Products in such quantities as Ortho Biotech shall
request and in compliance with the delivery periods set forth in this Agreement,
Ortho Biotech shall be permitted (with no obligation to Bachem) to obtain
Products from another source, and Ortho Biotech shall thereafter have no
obligation to purchase Products from Bachem until any contractual obligations
that Ortho Biotech has assumed in connection with obtaining a substitute supply
of Products shall have terminated. Ortho Biotech shall have no obligation to
affirmatively terminate any such contractual arrangements.
13. Notices
All notices hereunder shall be in writing and shall be delivered
personally, mailed by overnight delivery, registered or certified mail, postage
prepaid, or given by facsimile to the following addresses of the respective
parties:
If to Ortho Biotech: Attn: David E. Williams
Ortho Biotech
Route 202 South
Raritan, NJ 08869--0602
Telefax Number: (908) 526--4503
If to Amylin: Attn: Bradford Duft
Amylin Pharmaceuticals, Inc.
9373 Towne Centre Drive
San Diego, CA 92121
Telefax No.: (619) 552--2212
14
<PAGE> 15
If to Bachem: Bachem California
3132 Kashiwa Street
Torrance, CA 90505
Attn: Jose de Chastonay
Telefax No: 310/530--1571
14. Binding Effect
This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective assigns and successors in interest.
15. Applicable Law
This Agreement shall be construed, interpreted and governed by the
laws of New York.
16. Alternative Dispute Resolution
Any controversy or claim arising out or relating to this Agreement,
or the breach thereof, shall be settled by the alternative dispute resolution
procedure described in Exhibit 4.
17. Assignment
Neither party shall assign this Agreement or any part thereof
without the prior written consent of the other party; provided, however, that
either party, without such consent, may assign or sell the same in connection
with the transfer or sale of substantially its entire business to which this
Agreement pertains or in the event of its merger or consolidation with another
company. Any permitted assignee shall assume all obligations of its assignor
under this Agreement. No assignment shall relieve any party of responsibility
for the performance of any accrued obligation which
15
<PAGE> 16
such party then has hereunder. Notwithstanding the foregoing, Ortho Biotech may
assign this Agreement to Amylin and Amylin may assign this Agreement to Ortho
Biotech.
18. Entire Agreement
This Agreement constitutes the entire agreement between the parties
concerning the subject matter hereof and supersedes all written or oral prior
agreements or understandings with respect thereto.
19. Severability
This Agreement is subject to the restrictions, limitations, terms
and conditions of all applicable governmental regulations, approvals and
clearances. If any term or provision of this Agreement shall for any reason be
held invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other term or provision
hereof, and this Agreement shall be interpreted and construed as if such term or
provision, to the extent the same shall have been held to be invalid, illegal or
unenforceable, had never been contained herein.
20. Waiver -- Modification of Agreement
No waiver or modification of any of the terms of this Agreement
shall be valid unless in writing and signed by authorized representatives of
both parties hereto. Failure by either party to enforce any rights under this
Agreement shall not be construed as a waiver of such rights nor shall a waiver
by either party in one or more instances be construed as constituting a
continuing waiver or as a waiver in other instances.
16
<PAGE> 17
21. Publicity
In the absence of specific agreement between the parties, neither
party shall originate any publicity, news release or other public announcement,
written or oral, whether to the public press, to stockholders or otherwise
relating to this Agreement or to performance hereunder, save only such
announcement as in the opinion of legal counsel to the party making such
announcement is required by law to be made.
22. Exhibits
All Exhibits referenced herein are hereby made a part of this
Agreement.
23. Counterparts
This Agreement may be executed in any number of separate
counterparts, each of which shall be deemed to be an original, but which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives on the later date written
below.
ORTHO BIOTECH BACHEM CALIFORNIA
By: By Peter Grogg
------------------------------- -------------------------------
Signature: /s/ DAVID E. WILLIAMS Signature: /s/ PETER GROGG
------------------------ ------------------------
Title: V.P. Operations Title: Chairman of the Board
---------------------------- ---------------------------
Date: 7/1/97 Date: 7/2/97
----------------------------- -----------------------------
17
<PAGE> 18
Only as to the Provisions in which Amylin is specifically mentioned or that
relate to the supply of Validation lots.
AMYLIN PHARMACEUTICALS, INC.
By: R.A. Kenley
-------------------------------
Signature: /s/ R.A. KENLEY
------------------------
Title: VP of Product Dev.
----------------------------
Date: 2 Jul 97
-----------------------------
18
<PAGE> 19
EXHIBIT "1"
SPECIFICATIONS FOR CGMP PRAMLINTIDE
[...***...]
* CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 20
APPENDIX I to EXHIBIT 1
Specifications for CGMP Pramlintide
[...***...]
* CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 21
Exhibit 2
Capital Investments
[...***...]
* CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 22
EXHIBIT 3
C O N F I D E N T I A L
CONFIDENTIAL DISCLOSURE AGREEMENT
THIS AGREEMENT is entered into as of September 1, 1995, by and
between AMYLIN PHARMACEUTICALS, INC., a Delaware corporation, having a place of
business at 9373 Towne Centre Drive, Suite 250, San Diego, California 92121
("AMYLIN"); BACHEM CALIFORNIA, a California corporation having a place of
business at 3132 Kashiwa Street, Torrance, California 90505 ("BACHEM"); and
JOHNSON & JOHNSON, a New Jersey corporation having a place of business at One
Johnson & Johnson Plaza, New Brunswick, New Jersey 08933 ("J&J"). The term "J&J"
also includes wholly owned subsidiaries of Johnson & Johnson.
RECITALS
WHEREAS, AMYLIN has made and continues to make developments
relating to: therapy and diagnosis of Type I and Type II diabetes mellitus and
other metabolic disorders, and compounds, procedures and processes related
thereto, including developments relating to pramlintide (AC-137);
WHEREAS, BACHEM has made and continues to make developments
relating to the manufacture and/or processing of pramlintide;
WHEREAS, J&J has made and continues to make developments relating
to the manufacture and processing of peptides;
WHEREAS, AMYLIN, BACHEM and J&J each desire to exchange certain
information relating to the developments made by each other in order to evaluate
their mutual interest therein;
WHEREAS each party appreciates that the other parties have
expended money and effort to establish a proprietary position with respect to
the developments they have made and that each party considers its developments
and information pertaining thereto to be its confidential property; and
WHEREAS AMYLIN, BACHEM and J&J are willing to reveal to one other
certain information relating to these developments on a confidential basis:
NOW, THEREFORE, in consideration of the foregoing, and of the
mutual covenants, terms and conditions hereinafter expressed, AMYLIN, BACHEM and
J&J agree as follows:
1. "Confidential Information" shall mean information relating to
the above-captioned developments including, where appropriate and without
limitation, any information, patent disclosures, patent applications,
structures, models, techniques, processes, compositions, compounds and
apparatuses relating to
<PAGE> 23
Confidential Disclosure Agreement CONFIDENTIAL
AMYLIN PHARMACEUTICALS, INC.,
BACHEM CALIFORNIA and
JOHNSON & JOHNSON
September 1, 1995
the same disclosed by AMYLIN, BACHEM or J&J to another party to this Agreement
("Recipient") or obtained by Recipient through observation or examination of
information or developments, but only to the extent that such information is
maintained as confidential by AMYLIN, BACHEM or J&J, respectively, and is
identified or marked as "confidential." To be considered "Confidential
Information" under this Agreement, information disclosed in writing must be
marked confidential and information disclosed in other forms (for example orally
or visually) must be summarized in writing and marked "confidential" and
provided by the disclosing party to the Recipient within a reasonable time after
initial disclosure.
2. The parties each agree to disclose Confidential Information to
the other(s), which, in each of their sole discretion, is reasonably necessary
to permit the other(s) to evaluate their interest as described above.
3. The parties each agree that the other parties are the owners
of their respective Confidential Information and that they will not disclose any
other party's Confidential Information to third parties, and agree not to use
any other party's Confidential Information at any time except for the purposes
of evaluation noted above; provided, however, AMYLIN, BACHEM and J&J shall have
no liability to one other with respect to use or disclosure to others not
parties to this Agreement of such information as Recipient can establish by
written documentation to:
a. have been publicly known prior to disclosure of such
information by AMYLIN, BACHEM or J&J to Recipient; or
b. have become publicly known, without fault on the part of
Recipient, subsequent to disclosure of such information to
Recipient; or
c. have been otherwise known by Recipient prior to
communication by AMYLIN, BACHEM or J&J to Recipient of such
information; or
d. have been received by Recipient at any time from a source
other than AMYLIN, BACHEM or J&J, lawfully having possession
of such information who is under no obligation to any other
party with respect to such information at the time of
disclosure.
4. AMYLIN, BACHEM and J&J each agree that any disclosure of the
Confidential Information within their
2
<PAGE> 24
Confidential Disclosure Agreement CONFIDENTIAL
AMYLIN PHARMACEUTICALS, INC.,
BACHEM CALIFORNIA and
JOHNSON & JOHNSON
September 1, 1995
organizations will only be such as is reasonably necessary to their evaluation
and will only be to such employees who are bound by written agreements with
AMYLIN, BACHEM, or J&J, respectively, to maintain the Confidential Information
in confidence.
5. Recipient agrees to promptly return all tangible items
relating to the Confidential Information of AMYLIN, BACHEM and/or J&J, including
all written materials, photographs, models, compounds, compositions and the like
made available or supplied to Recipient, and all copies thereof, upon the
request of the party who supplied the Confidential Information (except for a
single copy thereof which may be retained in the legal files of Recipient for
the sole purpose of determining the scope of the obligations incurred under this
Agreement). Upon request of the party who supplied the Confidential Information,
Recipient further agrees to identify those persons to whom the Confidential
Information that is the subject of this Agreement was disclosed.
6. In the event that Recipient is requested or is required by
deposition, interrogatories, requests for information, documents or admissions,
subpoenas, civil investigative demands or similar process, to disclose any
Confidential Information provided by AMYLIN, BACHEM or J&J, it is agreed that
Recipient will provide AMYLIN, BACHEM or J&J, respectively, with a notice of
such request(s) immediately, but in no event later than two (2) business days
after receipt of such request, so that AMYLIN, BACHEM or J&J, respectively, may
seek an appropriate protective order and/or waive Recipient's obligation to
comply with the requirements of Section 3 hereof. It is further agreed that if,
in the absence of either a protective order or the receipt of a waiver
hereunder, within two (2) business days prior to the time Recipient is required
to disclose Confidential Information or else stand liable for contempt or suffer
other censure or penalty, Recipient may disclose such Confidential Information
without liability under Section 3. AMYLIN, BACHEM or J&J, respectively, and
Recipient will fully cooperate with each other in connection with efforts to
obtain any such order or other remedy.
7. This Agreement shall not be construed to grant any license or
other rights except as specified herein.
8. The obligations of each party under this Agreement shall
continue for a period of five (5) years from the date of disclosure.
9. This Agreement may not be assigned by any party.
3
<PAGE> 25
Confidential Disclosure Agreement CONFIDENTIAL
AMYLIN PHARMACEUTICALS, INC.,
BACHEM CALIFORNIA and
JOHNSON & JOHNSON
September 1, 1995
10. AMYLIN, BACHEM and J&J each warrant that they believe
themselves to be the owners of the Confidential Information supplied by them,
but make no other warranty relating to the Confidential Information or the use
to be made thereof by Recipient, and disclaim all implied warranties.
11. Each party's evaluation of Confidential Information shall be
at its own risk and each party agrees to hold harmless and to indemnify the
other parties against any and all claims, judgments, costs, awards, expenses
(including reasonable attorneys' fees), and liabilities of every kind arising
from any use made of Confidential Information received from another party.
12. No party shall be permitted to use the name of another party
in any publicity, advertising or public announcement concerning this Agreement
or the subject matter hereof without the prior express written consent of the
other party.
13. This Agreement sets forth the entire agreement between the
parties relating to the subject matter of this Agreement, and fully supersedes
any and all prior and contemporaneous agreements or understandings between the
parties pertaining to the subject matter hereof.
14. This Agreement may not be amended, supplemented or otherwise
modified except by an instrument in writing signed by all parties.
15. The failure of any party to insist upon strict performance of
any provision of this Agreement or to exercise any right hereunder shall not
constitute a waiver of that provision of or right under this Agreement or of any
other provision of or right under this Agreement.
16. If any provision of this Agreement is declared invalid,
illegal or unenforceable, such provision shall be severed and all remaining
provisions shall continue in full force and effect.
17. This Agreement shall be construed and enforced in accordance
with the laws of the State of California (except its choice of law rules), and
the parties hereby submit to the jurisdiction and venue of the California
courts, both state and federal.
4
<PAGE> 26
Confidential Disclosure Agreement CONFIDENTIAL
AMYLIN PHARMACEUTICALS, INC.,
BACHEM CALIFORNIA and
JOHNSON & JOHNSON
September 1, 1995
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed in triplicate counterpart original by their duly authorized
representatives as of the day and year above written. Any and all Confidential
Information disclosed prior to the effective date of this Agreement shall be
deemed to fall within the scope of this Agreement.
AGREED AND ACCEPTED: AGREED AND ACCEPTED:
AMYLIN BACHEM
AMYLIN PHARMACEUTICALS, INC. BACHEM CALIFORNIA
By:____________________________ By:___________________________________
Bradford J. Duft, Esq. (signature)
Vice President and
General Counsel Name:_________________________________
(type or print)
Title:________________________________
AGREED AND ACCEPTED:
J&J
Johnson & Johnson
By:____________________________
(Signature)
Name:__________________________
(type or print)
Title:_________________________
5
<PAGE> 27
Exhibit 4
Alternative Dispute Resolution
The parties recognize that a bona fide dispute as to certain matters may
arise from time to time during the term of this Agreement which relates to
either party's rights and/or obligations. To have such a dispute resolved by
this Alternative Dispute Resolution ("ADR") provision, a party first must send
written notice of the dispute to the other party for attempted resolution by
good faith negotiations between their respective presidents (or their
equivalents) of the affected subsidiaries, divisions, or business units within
twenty-eight (28) days after such notice is received (all references to "days"
in this ADR provision are to calendar days).
If the matter has not been resolved within twenty-eight (28) days of the
notice of dispute, or if the parties fail to meet within such twenty-eight (28)
days, either party may initiate an ADR proceeding s provided herein. The parties
shall have the right to be represented by counsel in such a proceeding.
1. To begin an ADR proceeding, a party shall provide written notice to
the other party of the issues to be resolved by ADR. Within fourteen (14) days
after its receipt of such notice, the other party may, by written notice to the
party initiating the ADR, add additional issues to be resolved within the same
ADR.
2. Within twenty-one (21) days following receipt of the original ADR
notice, the parties shall select a mutually acceptable neutral to preside in the
resolution of any disputes in this ADR proceeding. If the parties are unable to
agree on a mutually acceptable neutral within such period, either party may
request the President of the CPR Institute for Dispute Resolution ("CPR"), 366
Madison Avenue, 14th Floor, New York, New York 10017, or its
-1-
<PAGE> 28
successor organization or, if neither exists a similar type organization to
select a neutral pursuant to the following procedures--
(a) The CPR shall submit to the parties a list of not less than
five (5) candidates within fourteen (14) days after receipt of the request,
along with a Curriculum Vitae for each candidate. No candidate shall be an
employee, director, or shareholder of either party or any of their subsidiaries
or affiliates.
(b) Such list shall include a statement of disclosure by each
candidate of any circumstances likely to affect his or her impartiality.
(c) Each party shall number the candidates in order of
preference (with the number one (1) signifying the greatest preference) and
shall deliver the list to the CPR within seven (7) days following receipt of the
list of candidates. If a party believes a conflict of interest exists regarding
any of the candidates, that party shall provide a written explanation of the
conflict to the CPR along with its list showinq its order of preference for the
candidates. Any party failing to return a list of preferences on time shall be
deemed to have no order of preference.
(d) If the parties collectively have identified fewer than three
(3) candidates deemed to have conflicts, the CPR immediately shall designate as
the neutral the candidate for whom the parties collectively have indicated the
greatest preference. If a tie should result between two candidates, the CPR may
designate either candidate. If the parties collectively have identified three
(3) or more candidates deemed to have conflicts, the CPR shall review the
explanations regarding conflicts and, in its sole discretion, may either (1)
immediately designate as
-2-
<PAGE> 29
the neutral the candidate for whom the parties collectively have indicated the
greatest preference, or (ii) issue a new list of not less than five (5)
candidates, in which case the procedures set forth in Sections 2(a) - 2(d) shall
be repeated.
3. No earlier than twenty-eight (28) days or later than fifty--six (56)
days after selection, the neutral shall hold a hearing to resolve each of the
issues identified by the parties. The ADR proceeding shall take place at a
location agreed upon by the parties. If the parties cannot agree, the neutral
shall designate a location other than the principal place of business of either
party or any of their subsidiaries or affiliates.
4. At least seven (7) days prior to the hearing, each party shall submit
the following to the other party and the neutral:
a) a copy of all exhibits on which such party intends to rely in
any oral or written presentation to the neutral;
(b) a list of any witnesses such party intends to call at the
hearing, and a short summary of the anticipated testimony of each witness;
(c) a proposed ruling on each issue to be resolved, together
with a request for a specific damage award or other remedy for each issue. The
proposed rulings and remedies shall not contain any recitation of the facts or
any legal arguments and shall not exceed one (1) page per issue.
(d) a brief in support of such party's proposed rulings and
remedies, provided that the brief shall not exceed twenty (20) pages with at
least 12 point type, courier font and margins not less than 1 inch top, bottom
and sides. This page limitation shall apply regardless of the number of issues
raised in the ADR proceeding.
-3-
<PAGE> 30
Depositions shall be limited to 3 depositions per party with each
deposition not to exceed 10 hours. Interrogatories shall be limited to 10
questions (including all subparts to questions) for each party. Production of
documents shall be limited to the extent the neutral in his/her sole discretion
feels is reasonable and necessary. No other discovery shall be permitted unless
authorized by the neutral.
5. The hearing shall be conducted on four (4) consecutive days or less
and shall be governed by the following rules:
(a) Each party shall be entitled to twelve (12) hours of hearing
time to present its case. The neutral shall determine whether each party has had
the twelve (12) hours to which it is entitled.
(b) Each party shall be entitled, but not required, to make an
opening statement, to present regular and rebuttal testimony, documents or other
evidence, to cross-examine witnesses, and to make a closing argument.
Cross--examination of witnesses shall occur immediately after their direct
testimony, and cross-examination time shall be charged against the party
conducting the cross--examination;
(c) The party initiating the ADR shall begin the hearing and, if
it chooses to make an opening statement, shall address not only issues it raised
but also any issues raised by the responding party. The responding party, if it
chooses to make an opening statement, also shall address all issues raised in
the ADR. Thereafter, the presentation of regular and rebuttal testimony and
documents, other evidence, and closing arguments shall proceed in the same
sequence;
(d) Settlement negotiations, including any statements made
therein, shall not be admissible under any circumstances.
-4-
<PAGE> 31
Affidavits prepared for purposes of the ADR hearing also shall, however, be
admissible. As to the admission of evidence, the neutral shall apply the Federal
Rules of Evidence to evidentiary issues and shall have the sole discretion
regarding the admissibility of evidence according to the Federal Rules of
Evidence.
6. Within seven (7) days following completion of the hearing, each party
may submit to the other party and the neutral a post-hearing brief in support of
its proposed rulings and remedies, provided that such brief shall not contain or
discuss any new evidence and shall not exceed ten (10) pages with the same
requirements as specified in 4(d) herein. This page limitation shall apply
regardless of the number of issues raised in the ADR proceeding.
7. The neutral shall rule on each disputed issue within fourteen (14)
days following completion of the hearing. Such ruling shall adopt in its
entirety the proposed ruling and remedy of one of the parties on each disputed
issue but may adopt one party's proposed rulings and remedies on some issues and
the other party's proposed rulings and remedies on other issues. The neutral
shall not issue any written opinion or otherwise explain the basis of the
ruling.
8. The neutral is empowered to award any remedy allowed by law,
including money damages, prejudqement interest and attorneys fees, and to grant
final, complete, interim, or interlocutory relief, including injunctive relief.
Notwithstanding the foregoing, punitive or treble damages may not be awarded.
9. The neutral shall be paid a reasonable fee plus expenses. These fees
and expenses, along with the reasonable legal fees
-5-
<PAGE> 32
and expenses of the prevailing party (including all expert witness fees and
expenses), the fees and expenses of a court reporter, and any expenses for a
hearing room, shall be paid as follows:
(a) If the neutral rules in favor of one party on all disputed
issues in the ADR, the losing party shall pay one hundred percent (100%) of such
fees and expenses.
(b) If the neutral rules in favor of one party on some issues
and the other party on other issues, the neutral shall issue with the rulings a
written determination as to how such fees and expenses shall be allocated
between the parties. The neutral shall allocate fees and expenses in-a way that
bears a reasonable relationship to the outcome of the ADR, with the party
prevailing on more issues, or on issues of greater value or gravity, recovering
a relatively larger share of its legal fees and expenses.
10. The rulings of the neutral and the allocation of fees and expenses
shall be binding, non-reviewable, and non--appealable, and may be entered as a
final judgment in any court having jurisdiction,
11. Except as required by law, the existence of the dispute, any
settlement negotiations, the ADR hearing, any submissions (including exhibits,
testimony, proposed rulings, and briefs), and the ruling shall be deemed
Confidential Information. The neutral shall have the authority to impose
sanctions for unauthorized disclosure of Confidential Information.
-6-
<PAGE> 1
EXHIBIT 10.45
*** TEXT OMITTED AND FILED SEPARATELY
CONFIDENTIAL TREATMENT REQUESTED
UNDER 17 C.F.R. SECTIONS 200.80(b)(4),
200.83 AND 240.24b-2
CONFIDENTIAL
ASSIGNMENT AND AMENDMENT AGREEMENT
This Assignment and Amendment Agreement is made and entered as of
September 9, 1998 (the "Effective Date"), by and among Amylin Pharmaceuticals,
Inc., having a principal place of business at 9373 Towne Centre Drive, San
Diego, California, 92121 ("Amylin"); Bachem California, having a principal place
of business at 3132 Kashiwa Street, Torrance, California, 90505 ("Bachem");
Ortho-Biotech Inc., having a principal place of business at U.S. Route 202
South, Raritan, New Jersey, 08869 ("Ortho-Biotech").
WHEREAS, Amylin, Bachem and Ortho-Biotech entered into an Agreement
dated July 2, 1997 directed to the manufacturing and supply of pramlintide (the
"Supply Agreement");
WHEREAS, Amylin and Lifescan Inc., an affiliate of Ortho-Biotech entered
into a Collaboration Agreement effective as of June 20, 1995 which agreement was
amended by Letter Agreements dated August 2, 1996 and March 27, 1997 (together
the "Collaboration Agreement");
WHEREAS, Lifescan has provided notice of termination to Amylin of the
Collaboration Agreement pursuant to its terms and such termination is to become
effective in August;
WHEREAS, as a result of such notice of termination, Ortho-Biotech wishes
to assign rights and obligations under the Supply Agreement to Amylin and Amylin
wishes to accept such assignment; and
WHEREAS, the parties to the Supply Agreement wish to make certain
amendments to the Supply Agreement including but not limited to change of the
delivery schedule and changes in the termination provisions.
NOW, THEREFORE, in consideration of the following premises and terms and
conditions set forth hereinafter, the parties agree as follows:
1
<PAGE> 2
Bachem California CONFIDENTIAL
ASSIGNMENT AND AMENDMENT AGREEMENT
September 9, 1998
1. Pursuant to Paragraph 17 of the Supply Agreement, Ortho-Biotech
hereby assigns to Amylin, and Amylin hereby accepts from Ortho-Biotech, all
rights and obligations of Ortho-Biotech under the Supply Agreement, with the
exception that Ortho-Biotech remains a party to the Supply Agreement with
respect to the three (3) Validation Lots described in Paragraph 2.2 of the
Supply Agreement. For example, such Validation Lots will be delivered to
Ortho-Biotech and will be paid for by Ortho-Biotech.
2. The assignment in Section 1 of this Agreement is not intended to, and
it is hereby agreed that it does not, expressly or by implication, affect the
rights or obligations of the parties accrued prior to the Effective Date. Bachem
consents to such assignment.
3. In the Definitions article of the Supply Agreement, add a definition
which reads as follows: "Major Market Country" means any of France, Germany,
Great Britain, Italy, Japan or the United States."
4. In paragraph 2.2 of the Supply Agreement, change the schedule recited
therein to the following schedule:
A total of [...***...] over the period [...***...] in accordance with
the schedule below:
VALIDATION LOTS
[...***...] [...***...] lots no later than [...***...],
pursuant to an issued Purchase Order, a
copy of which is attached hereto as
Exhibit 3.
COMMERCIAL LOTS
[...***...] [...***...] lots by end of [...***...]
pursuant to a Purchase Order issued on or
before [...***...].
2 * CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 3
Bachem California CONFIDENTIAL
ASSIGNMENT AND AMENDMENT AGREEMENT
September 9, 1998
[...***...] [...***...] lot delivered by [...***...]
pursuant to a Purchase Order issued on or
before [...***...].
[...***...] lots delivered at a rate of
approximately every [...***...] in
[...***...] beginning after [...***...]
pursuant to a Purchase Order issued on or
before [...***...].
[...***...] [...***...] gram lots delivered at a rate
of approximately every [...***...] in the
year [...***...] pursuant to a Purchase
Order issued on or before [...***...].
2001.
[...***...] [...***...] gram lots delivered at a rate
of approximately every [...***...] in the
year [...***...] pursuant to a Purchase
Order issued on or before [...***...].
5. Delete the following from paragraph 2.2 of the Supply Agreement:
"Purchase Orders will be issued at least six months in advance of the delivery
date for the individual purchase orders."
6. Purchase Order No [...***...], issued by Ortho-Biotech to Bachem for
[...***...] of Product is hereby cancelled in its entirety.
3 * CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 4
Bachem California CONFIDENTIAL
ASSIGNMENT AND AMENDMENT AGREEMENT
September 9, 1998
7. Replace paragraph 3.2 of the Supply Agreement with the following:
3.2 On or before the date specified for delivery of each lot,
Bachem shall deliver samples (in sample sizes specified by Amylin) of
such lot of Product to Amylin for testing ("Testing Samples"). The
Testing Samples will be prepared and packed by Bachem in accordance with
Amylin SOP-373-038 and SOP-373-015. If such lot is accepted by Amylin in
accordance with Paragraph 4.1, Bachem shall deliver the remainder of
such lot of Product ("Commercial Material") to a carrier specified by
Amylin for shipment to the location(s) specified by Amylin. Each lot of
Commercial Material will be packed by Bachem in accordance with Amylin
SOP-373-015.
8. Paragraph 4.1, lines 1-2 of the Supply Agreement: Replace "each
shipment of Product sold hereunder" with "Testing Samples for each lot of
Product." Throughout the remainder of Paragraph 4.1, replace "shipment" with
"lot."
9. Paragraph 6, line 2 of the Supply Agreement: Replace "lot of Product"
with "Testing Samples for each lot of Product."
10. In paragraph 7.2(c) of the Supply Agreement, substitute the first
paragraph which ends with the word "follows:" with the following:
Amylin may terminate this Agreement by giving Bachem thirty (30) days
prior written notice in each of the following situations: (i) upon
notice from the FDA that Bachem is not an approved commercial supplier
of Product or failure of Bachem to successfully complete its
pre-approval inspection (PAI), (ii) as a consequence of clinical trial
results obtained, Amylin determines in its sole discretion that the
quantities of Product specified in the Agreement are not needed by
Amylin, (iii) the FDA notifies Amylin that it will not approve the NDA
directed to the Product or it is not approved by [...***...], (iv)
Amylin withdraws the NDA directed to the Product or (v) Amylin withdraws
the Product from the market. Notwithstanding the foregoing, termination
as a consequence of clinical trial results under paragraph 7.2(c)(ii)
will not relieve Amylin of its obligation to accept and pay for
quantities of material previously ordered
4 * CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 5
Bachem California CONFIDENTIAL
ASSIGNMENT AND AMENDMENT AGREEMENT
September 9, 1998
pursuant issued purchase orders. If Amylin terminates this Agreement
under any of 7.2(c)(ii), (iii), (iv) or (v), then Amylin agrees to
reimburse Bachem for a portion of its investment cost for plant and
equipment, as follows:
11. In paragraph 7.2(c) of the Supply Agreement, substitute the last
paragraph with the following two paragraphs:
If Amylin terminates this Agreement under any of Paragraphs
7.2(c)(ii), (iii), (iv) or (v), Amylin shall compensate Bachem for its
out-of-pocket costs associated with any work in progress, including
expenses for raw materials purchased and prepared to support up to the
next twelve months of production in accordance with the schedule set
forth in paragraph 2.2.
Notwithstanding 7.2(c)(ii), in the event that, as a consequence
of clinical trial results obtained, Amylin determines in its sole
discretion that the quantities of Product specified in the Agreement are
not needed by Amylin, but that some quantities of Product are needed by
Amylin, the parties shall negotiate in good faith to modify Paragraph
2.2 (quantities and delivery dates), rather than terminate the
Agreement.
12. In paragraph 15, line 2 of the Supply Agreement: replace "New York"
with "California."
13. At the end of the Supply Agreement, add new Article 24 which reads
as follows:
24. Assurance of Payment. Concurrently with the signing of the
Assignment and Amendment Agreement by all parties, Amylin agrees to
deposit [...***...], which represents [...***...] of the maximum
termination fee due under paragraph 7.2(c), into Escrow or other
arrangement or instrument which has a similar degree of surety (e.g., an
irrevocable letter of credit). The amount in escrow (or similar
arrangement or instrument) shall be adjusted upward or downward as
follows. On or before [...***...], Amylin agrees to add [...***...],
5 * CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 6
Bachem California CONFIDENTIAL
ASSIGNMENT AND AMENDMENT AGREEMENT
September 9, 1998
Concurrently with the issuance of the first purchase order for delivery
of Product in [...***...]or thereafter, Amylin will add [...***...],
which represents the approximate cost of raw materials and work in
progress for one [...***...] lot of Product. After the purchase of
[...***...] of Product under this Agreement, the amount in escrow (or
similar arrangement or instrument) shall be reduced by [...***...].
After the purchase of [...***...] of Product under this Agreement, the
amount in escrow (or similar arrangement or instrument) shall be reduced
by an additional [...***...]. All interest or other income, if any,
arising from the amount in escrow (or similar arrangement or instrument)
shall be paid to Amylin. Notwithstanding the foregoing, this Paragraph
24 shall remain in effect only until marketing approval is obtained for
pramlintide in a Major Market Country. After receipt of marketing
approval for pramlintide in a Major Market Country, any and all funds
then in escrow (or similar arrangement or instrument) will be returned
to Amylin, and Amylin will have no obligation to deposit any further
amount into escrow (or similar arrangement or instrument). Additionally,
in the event Amylin and Bachem believe that a normal and customary
business relationship exists between the parties, the parties will
discontinue the escrow-type arrangement described in this Paragraph 24.
14. Add a new Exhibit 3 (Purchase Order) to the Supply Agreement, which
is attached hereto as Exhibit A to this Assignment and Amendment and
incorporated herein by this reference.
15. Replace the current Exhibit 1 to the Supply Agreement (Product
Specifications) with the revised Exhibit 1 to the Supply Agreement which is
attached hereto as Exhibit B to this Assignment and Amendment Agreement and
incorporated herein by this reference.
16. Replace the current Exhibit 4 to the Supply Agreement (Alternative
Dispute Resolution Procedure) with the revised Exhibit 4 to the Supply Agreement
which is attached as Exhibit C to this Assignment and Amendment Agreement and
incorporated herein by this reference.
6 * CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 7
17. This Assignment and Amendment Agreement shall be construed,
interpreted and governed by the laws of the State of California.
ORTHO-BIOTECH, INC.
By: /s/ DAVID E. WILLIAMS
-------------------------------
Title: Vice President - Operations
----------------------------
Date: June 4, 1999
-----------------------------
AMYLIN PHARMACEUTICALS, INC.
By: /s/ JOSEPH C. COOK, JR.
-------------------------------
Title: Chairman & CEO
----------------------------
Date: 11 June 1999
-----------------------------
BACHEM CALIFORNIA
By: /s/ JOSE DE CHASTONAY
-------------------------------
Title: President
----------------------------
Date: 11 June 1999
-----------------------------
7
<PAGE> 8
Bachem California CONFIDENTIAL
ASSIGNMENT AND AMENDMENT AGREEMENT
September 9, 1998
EXHIBIT A
TO
ASSIGNMENT AND AMENDMENT AGREEMENT
EXHIBIT 3 TO SUPPLY AGREEMENT
PURCHASE ORDER
[...***...]
8 * CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 9
Bachem California CONFIDENTIAL
ASSIGNMENT AND AMENDMENT AGREEMENT
September 9, 1998
EXHIBIT B
TO
ASSIGNMENT AND AMENDMENT AGREEMENT
EXHIBIT 1 TO SUPPLY AGREEMENT
SPECIFICATIONS
[...***...]
9 * CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 10
EXHIBIT C
TO
ASSIGNMENT AND AMENDMENT AGREEMENT
EXHIBIT 4 TO SUPPLY AGREEMENT
ALTERNATIVE DISPUTE RESOLUTION PROCEDURE
1. Any dispute between the parties regarding payment obligations shall
be resolved by arbitration pursuant to the rules of the American Arbitration
Association and the California Code of Civil Procedure, except as provided
herein. There shall be three arbitrators, at least one of which shall be
knowledgeable in protein chemistry and the manufacture of peptides, and at least
one of which shall be knowledgeable in United States Food and Drug
Administration requirements for the clinical testing of new chemical entities
prior to licensure. Any claim for payment must be asserted to the other party
within 90 days and a demand for arbitration filed with the American Arbitration
Association within one year of the date the claim arises. The arbitration
hearing shall be held within six months after the demand is filed. Discovery in
accordance with California Code of Civil Procedure shall be allowed and any
dispute shall be resolved by a telephone conference or in person by an attorney
arbitrator (who may but need not be one of the three arbitrators deciding the
claim) designated by the American Arbitration Association.
2. The arbitration hearing shall be held in San Diego, California.
Either party may petition the Court to confirm the award of the arbitration, and
upon confirmation judgement shall be entered with the same force and effect as a
judgment in a civil action.
10
<PAGE> 1
EXHIBIT 10.46
*** TEXT OMITTED AND FILED SEPARATELY
CONFIDENTIAL TREATMENT REQUESTED
UNDER 17 C.F.R. SECTIONS 200.80(b)(4),
200.83 AND 240.24b-2
PRAMLINTIDE REPURCHASE AGREEMENT
This Pramlintide Repurchase Agreement (the "Agreement") is made and
entered into as of September 16, 1998, by and between Amylin Pharmaceuticals,
Inc., a Delaware corporation having a place of business at 9373 Towne Centre
Drive, San Diego, CA 92121 ("AMYLIN") and Ortho-Biotech, Inc., a New Jersey
corporation having a place of business at U.S. Route 202, Raritan, NJ 08869
("ORTHO-BIOTECH"). AMYLIN and ORTHO-BIOTECH are sometimes referred to herein
individually as a "Party" and collectively as the "Parties," and all references
to AMYLIN and ORTHO-BIOTECH shall include their respective Affiliates. Johnson &
Johnson, a New Jersey corporation having a place of business at One Johnson &
Johnson Plaza, New Brunswick, New Jersey, ("J&J") is a party to this Agreement
as a guarantor of the performance under this Agreement by ORTHO-BIOTECH and all
of the Affiliates of ORTHO-BIOTECH.
WHEREAS, AMYLIN and LifeScan, an Affiliate of J&J, entered into a
Collaboration Agreement effective as of June 20, 1995 which agreement was
amended by letter agreements dated August 2, 1996 and March 27, 1997 (together
the "Collaboration Agreement"), and J&J guaranteed the performance of LifeScan,
its subsidiary, under the Collaboration Agreement.
WHEREAS, LifeScan provided notice of termination to AMYLIN of the
Collaboration Agreement pursuant to its terms and such termination became
effective in August 1998;
WHEREAS, as a result of such notice of termination, AMYLIN,
ORTHO-BIOTECH and J&J are making a transition to the point in time when LifeScan
will no longer be collaborating with Amylin; and
WHEREAS, as part of this transition, ORTHO-BIOTECH has ordered or will
order and purchase certain amounts of Pramlintide from third party vendors, and
AMYLIN desires that ORTHO-BIOTECH place in ORTHO-BIOTECH's inventory such
amounts of Pramlintide that ORTHO-BIOTECH has ordered or will order, for
possible future purchase by AMYLIN.
1
<PAGE> 2
NOW, THEREFORE, in consideration of the following premises and terms and
conditions set forth hereinafter, the Parties agree as follows:
ARTICLE I
DEFINITIONS
The following terms shall have the following meanings as used in this
Agreement:
1.1 "Affiliate" means an entity that, directly or indirectly, through
one or more intermediaries, controls, is controlled by or is under common
control with a Party.
1.2 "Inventory Carrying Cost" means the carrying cost payable by AMYLIN
to ORTHO-BIOTECH, covering the period beginning when any Pramlintide is
delivered to ORTHO-BIOTECH and ending when all Pramlintide Inventory has been
repurchased by AMYLIN under the terms of this Agreement or until such time as
AMYLIN advises ORTHO-BIOTECH in writing in accordance with this Agreement that
it will not purchase such Pramlintide Inventory. The Inventory Carrying Cost
will be equal to the value of portion of Pramlintide Inventory in question
multiplied by the number of years and portions thereof such Pramlintide
Inventory was stored by ORTHO-BIOTECH multiplied by the Inventory Interest Rate.
1.3 "Inventory Interest Rate" means average five year U.S. Treasury Note
rate, as quoted in Federal Reserve Statistical Release H.15 on the first day of
the month in which all or a portion of the Pramlintide Inventory is purchased by
Amylin plus [...***...].
1.4 "Major Company" means a third party company whose total revenue
exceeds [...***...] in the most recently completed fiscal year for which audited
financial statements are publicly available as reported in such financial
statements, or if not publicly available, as appropriately provided by such
third party company.
1.5 "Pramlintide" means 25,28,29Pro-h-amylin acetate, as described and
claimed in U.S. Patent No. 5,686,411, and identified by the USAN Council by the
following chemical names:
1) 25-L-proline-28-L-proline-29-L-prolineamylin (human) acetate
(salt)
2 * CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 3
2) L-lysyl-L-cysteinyl-L-asparaginyl-L-threonyl-L-alanyl-L-threonyl
-L-cysteinyl-L-alanyl-L-threonyl-L-glutaminyl-L-arginyl-L-leucyl
-L-alanyl-L-asparaginyl-L-phenylalanyl-L-leucyl-L-valyl
-L-histidyl-L-seryl-L-seryl-L-asparaginyl-L-asparaginyl
-L-phenylalanylgly cyl-L-prolyl-L-isoleucyl-L-leucyl-L-prolyl
-L-prolyl-L-threonyl-L-asparaginyl-L-valylglycyl-L-seryl
-L-asparaginyl-L-threonyl-L-tyrosinamide, cyclic
(2-7)-disulfide, acetate (salt), hydrate
1.6 "Pramlintide Inventory" means any and all Pramlintide manufactured
and delivered to ORTHO-BIOTECH pursuant to the [...***...] Purchase Order, the
[...***...] Purchase Order or the [...***...] Purchase Order (as these terms are
defined below), which has been accepted by AMYLIN, paid for by and delivered to
ORTHO-BIOTECH, and stored in inventory at ORTHO-BIOTECH.
1.7 "Regulatory Approval" means all approvals, registrations or
authorizations (including pricing and reimbursement approvals) of any regulatory
agency, department, bureau or other governmental entity, necessary for the
commercial sale of Pramlintide in a regulatory jurisdiction.
ARTICLE II
PURCHASE OF PRAMLINTIDE BY ORTHO-BIOTECH
2.1 [...***...] Purchase Order. ORTHO-BIOTECH has issued a purchase
order to [...***...] for [...***...] of Pramlintide at a price of [...***...]
per gram for with delivery scheduled for October 1998 to January 1999 (the
"[...***...] Purchase Order,"),
2.2 [...***...]Purchase Order. ORTHO-BIOTECH has issued or will issue a
purchase order to [...***...] for [...***...] of Pramlintide at a price of
[...***...] per gram with delivery scheduled for September to December, 1998
(the "[...***...] Purchase Order").
2.3 [...***...] Purchase Order. ORTHO-BIOTECH has issued or will issue a
purchase order to [...***...] for [...***...] of Pramlintide at a price of
[...***...] per gram, [...***...]
3 * CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 4
with delivery scheduled for December 1988 ("the [...***...] Purchase
Order").
2.4 Acceptance or Rejection by AMYLIN. AMYLIN agrees that Pramlintide
ordered pursuant to the [...***...] Purchase Order, the [...***...]
Purchase Order and/or the [...***...] Purchase Order will be tested by AMYLIN
after it is manufactured and will either be accepted or rejected by AMYLIN
pursuant the terms of the [...***...] Purchase Order, [...***...] Supply
Agreement as amended, and the [...***...] Purchase Order and the [...***...], as
appropriate.
2.5 Payment by ORTHO-BIOTECH. ORTHO-BIOTECH agrees to pay for and take
delivery of the Pramlintide ordered pursuant to the [...***...] Purchase Order,
the [...***...] Purchase Order, the [...***...] Purchase Order and the
[...***...], upon acceptance by AMYLIN of the Pramlintide ordered thereunder.
ARTICLE III
REPURCHASE OF PRAMLINTIDE INVENTORY BY AMYLIN
3.1 Placement of Pramlintide in Inventory. Once Pramlintide ordered
pursuant to the [...***...] Purchase Order, the [...***...] Purchase Order
and/or the [...***...] Purchase Order is accepted by AMYLIN, AMYLIN will
promptly notify ORTHO-BIOTECH, and, after receiving such notification from
AMYLIN, ORTHO-BIOTECH agrees to purchase, take delivery and ownership of such
Pramlintide and place such Pramlintide in its inventory and store the
Pramlintide at a temperature of -20 (degree)C to -70 (degree)C in the original
unopened containers as received from the manufacturer and in accordance with
Current Good Manufacturing Practices ("Approved Storage Conditions").
3.2 Repurchase of Pramlintide Inventory. AMYLIN will repurchase
Pramlintide Inventory from ORTHO-BIOTECH in accordance with this Agreement.
AMYLIN's purchase of Pramlintide Inventory shall be unconditional (except as
provided in this Section 3.2) and in particular, if the Pramlintide Inventory no
longer meets applicable specifications at the time AMYLIN is obligated to
purchase it, AMYLIN shall nevertheless be obligated to purchase the Pramlintide
Inventory, unless AMYLIN can demonstrate that the reason that the Pramlintide no
longer meets Specifications is solely due to ORTHO-BIOTECH's failure to store
the Pramlintide in accordance with Approved Storage Conditions. Moreover, if all
or part of the Pramlintide Inventory does not meet applicable
4 * CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 5
specifications due to ORTHO-BIOTECH's failure to store the Pramlintide in
accordance with Approved Storage Conditions, AMYLIN's sole and exclusive remedy
shall be to cancel its purchase obligations for such Pramlintide Inventory
hereunder. AMYLIN agrees and acknowledges that it shall be obligated to purchase
the Pramlintide Inventory even if the specifications for Pramlintide change
between now and the time for purchase for any reason, including but not limited
to pursuant to a regulatory requirement.
3.3 Repurchase Price. The price that AMYLIN will pay to ORTHO-BIOTECH
for the Pramlintide Inventory it purchases hereunder shall be the same price
that ORTHO-BIOTECH paid to the supplier under the applicable [...***...]
Purchase Order, [...***...] Purchase Order or [...***...] Purchase Order, as the
case may be, plus the Inventory Carrying Cost applicable to such Pramlintide
Inventory.
3.4 Time of Repurchase. The Pramlintide Inventory will be purchased and
paid for in full by AMYLIN, including applicable Inventory Carrying Cost, on the
first-to-occur of any of the following (a) - (d):
(a) AMYLIN executes any agreement with a Major Company relating to
the development, commercialization and/or sale of Pramlintide. In this event,
payment will be made to ORTHO-BIOTECH for all Pramlintide Inventory on or before
[...***...] or the date of the first filing of an application for Regulatory
Approval for Pramlintide, whichever occurs first, provided, however, that if the
agreement with a Major Company is not entered into until after [...***...], then
payment will be made upon execution of such agreement with a Major Company by
AMYLIN.
(b) AMYLIN requests in writing, ORTHO-BIOTECH to fill-finish some or
all of the Pramlintide Inventory by placing it in vials and/or cartridges, or
requests ORTHO-BIOTECH to transfer it to a third party for further processing.
The quantity of Pramlintide to be fill-finished or transferred, must be paid for
in full (including applicable Inventory Carrying Costs) before ORTHO-BIOTECH is
obligated to fill-finish or transfer it. In all cases, AMYLIN must order
quantities of Pramlintide Inventory to be fill-finished to correspond to entire
containers so that no containers holding Pramlintide Inventory need be opened by
ORTHO-BIOTECH.
(c) AMYLIN receives Regulatory Approval for the sale of Pramlintide
in any of the United States, France, Germany, Great Britain, Italy, or
5 * CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 6
Japan, in which case AMYLIN agrees to purchase all Pramlintide Inventory within
ninety (90) days of such Regulatory Approval.
(d) Completion of a transaction or series of transactions in which a
third party acquires or becomes the beneficial owner of (i) more than
[...***...] of the outstanding voting securities of AMYLIN or the surviving
entity, whether by merger, consolidation, reorganization, tender offer, or
similar means, (ii) all or substantially all of the assets of AMYLIN, or (iii)
all or substantially all of the assets of AMYLIN which are directed to its
business relating to Pramlintide. Provided, however, that if the third party has
total revenue that is less than [...***...] in the most recently completed
fiscal year for which audited financial statements are publicly available as
reported in such financial statements, or if not publicly available, as
appropriately provided by such third party, the percentage of outstanding voting
securities referred to in this Section 3.4(d)(i) shall be [...***...] rather
than [...***...].
If none of the events (a) - (d) occurs, AMYLIN will have no obligation to
purchase Pramlintide Inventory from ORTHO-BIOTECH, however, Section 3.6 will
apply in the case of bankruptcy of AMYLIN.
3.5 Deferral of Repurchase. Notwithstanding the provisions of Section
3.4 (a), prior to executing any agreement with a Major Company, Amylin may
request Ortho-Biotech to defer in whole or in part the requirement for AMYLIN to
repurchase the Pramlintide Inventory at the time of the execution of the
agreement with the Major Company. Amylin together with its request, agrees to
provide Ortho-Biotech with justification in writing for deferring in whole or in
part such repurchase. Upon receiving such a request, Ortho-Biotech shall
promptly consider such request. Promptly after considering such request,
Ortho-Biotech shall inform Amylin of its decision of whether or not to accept or
reject Amylin's request. A decision to reject Amylin's request may be for any
reasonable business reason including but not limited to Ortho-Biotech's belief
that Amylin and/or the Major Company is capable of repurchasing the Pramlintide
Inventory at the time the agreement between Amylin and the Major Company is to
be executed, provided, however, the basis for a rejection of the Amylin request
cannot be solely to remove the cost of the Pramlintide Inventory from
Ortho-Biotech's or Johnson & Johnson's balance sheet. Ortho-Biotech shall,
however, have no obligation to provide Amylin the reason for its decision to
accept or reject Amylin's request to defer the repurchase.
6 * CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 7
3.6 Bankruptcy. In the event of the commencement of bankruptcy
proceedings of AMYLIN or its successor company or upon entering into
receivership for protection against its creditors by AMYLIN or its successor
company, ORTHO-BIOTECH shall become a creditor for an amount equal to the price
ORTHO-BIOTECH has paid for Pramlintide Inventory plus applicable Inventory
Carrying Costs.
3.7 Payment and Delivery. Upon payment in full of the price for all or
some of the Pramlintide inventoried by ORTHO-BIOTECH, ORTHO-BIOTECH agrees to
deliver to AMYLIN the quantity of Pramlintide Inventory so paid for by AMYLIN.
3.8 Shipment. ORTHO-BIOTECH shall prepare the Pramlintide Inventory
being purchased by AMYLIN for pick-up at ORTHO-BIOTECH's loading dock. Shipment
terms are F.O.B. ORTHO-BIOTECH's loading dock. All charges for packing, hauling,
storage, bar-coding and transportation to the point of delivery are included in
the purchase price unless otherwise agreed to by the parties.
ARTICLE IV
DISPUTE RESOLUTION
4.1 Alternative Dispute Resolution. Any dispute, controversy or claim
arising out of or relating to the validity, construction, enforceability or
performance of this Agreement, including disputes relating to alleged breach or
to termination of this Agreement, shall be settled by binding Alternative
Dispute Resolution ("ADR") in the manner described below:
(a) If a party intends to begin an ADR to resolve a dispute, such
Party shall provide written notice (the "ADR Request") to the other Party
informing such other Party of such intention and the issues to be resolved.
(b) Within ten (10) business days after the receipt of the ADR
Request, the other Party may, by written notice to the counsel for the Party
initiating ADR, add additional issues to be resolved.
4.2 Arbitration Procedure. The ADR shall be conducted pursuant to
ENDISPUTE Rules A and C, attached hereto as Exhibit A, except as otherwise
provided hereinafter.
7
<PAGE> 8
(a) Arbitrator. The arbitration shall be conducted by one arbitrator
("the Panel"). The Panel shall be selected from a pool of retired federal judges
to be presented to the Parties by ENDISPUTE.
(b) Proceedings. The time periods set forth in the ENDISPUTE rules
shall be followed, unless a Party can demonstrate to the Panel that the
complexity of the issues or other reasons warrant the extension of one or more
of the time periods. In such case, the Panel may extend such time periods, but
in no event shall the time periods be extended so that the ADR proceeding
extends more than one (1) year from its beginning to the Panel's decision. The
Panel shall not award punitive damages to either Party and the Parties shall be
deemed to have waived any right to such damages. The Panel shall, in rendering
its decision, apply the substantive law of the State of Delaware, except that
the interpretation of and enforcement of this Article shall be governed by the
Federal Arbitration Act. The Panel shall apply the Federal Rules of Evidence to
the hearing. The proceeding shall take place in New Brunswick, New Jersey if
requested and begun by AMYLIN and in San Diego, California if requested and
begun by ORTHO-BIOTECH. The Panel will determine the specific location within
New Brunswick or San Diego. The fees of the Panels and ENDISPUTE shall be paid
by the losing Party which shall be designated by the Panel. If the Panel is
unable to designate a losing party, it shall so state and the fees shall be
split equally between the Parties.
(c) Award. The Panel is empowered to award any remedy allowed by
law, including money damages, consequential damages, prejudgment interest and
attorneys' fee, and to grant final, complete, interim, or interlocutory relief,
including injunctive relief. Notwithstanding the foregoing, punitive damages may
not be awarded.
(d) Costs. Except as set forth in Section 4.2(c), above, each Party
shall bear its own legal fees.
(e) Confidentiality. The ADR proceeding shall be confidential and
the Panel shall issue appropriate protective orders to safeguard each Party's
confidential information. Except as required by law, no Party shall make (or
instruct the Panel to make) any public announcement with respect to the
proceedings or decision of the Panel without prior written consent of each other
Party. The existence of any dispute submitted to ADR, and the award, shall be
kept in confidence by the Parties and the Panel, except as required in
connection with the enforcement of such award or as otherwise required by
applicable law.
8
<PAGE> 9
4.4 Survivability. Any duty to arbitrate under this Agreement shall
remain in effect and enforceable after termination of the contract for any
reason.
ARTICLE V
MISCELLANEOUS
5.1 Assignment.
(a) Either Party may assign any of its rights or obligations under
this Agreement to any Affiliates, and AMYLIN may assign any of its rights or
obligations under this Agreement to a company with which it executes an
agreement relating to the development, commercialization and/or sale of
Pramlintide; provided, however, that such assignment shall not relieve the
assigning Party of its responsibilities for performance of its obligations under
this Agreement, including, but not limited to, in the case of AMYLIN the
obligation to purchase and pay for the Pramlintide pursuant to the terms of this
Agreement.
(b) This Agreement shall be binding upon and inure to the benefit of
the successors and permitted assigns of the Parties. Any assignment not in
accordance with this Agreement shall be void.
5.2 Consents Not Unreasonably Withheld. Whenever provision is made in
this Agreement for either Party to secure the consent or approval of the other,
that consent or approval shall not unreasonably be withheld, and whenever in
this Agreement provision is made for one Party to object to or disapprove a
matter, such objection or disapproval shall not unreasonably be exercised.
5.3 Further Actions. Each Party agrees to execute, acknowledge and
deliver such further instruments, and to do all such other acts, as may be
necessary or appropriate in order to carry out the purposes and intent of this
Agreement.
5.4 Notices. All notices hereunder shall be in writing and shall be
deemed given if delivered personally or by facsimile transmission (receipt
verified), telexed, mailed by registered or certified mail (return receipt
requested), postage prepaid, or sent by express courier service, to the Parties
at the following addresses
9
<PAGE> 10
(or at such other address for a party as shall be specified by like notice;
provided, that notices of a change of address shall be effective only upon
receipt thereof.
If to AMYLIN,
addressed to: Amylin Pharmaceuticals, Inc.
9373 Towne Centre Drive
San Diego, CA 92121
Attention: Chief Executive Officer
Telephone: (619) 552-2200
Facsimile: (619) 552-2211
With a copy to: Amylin Pharmaceuticals, Inc.
9373 Towne Centre Drive
San Diego, CA 92121
Attention: General Counsel
Telephone: (619) 552-2200
Facsimile: (619) 552-1936
If to ORTHO-BIOTECH,
addressed to: Office of General Counsel
Johnson & Johnson
One Johnson & Johnson Plaza
New Brunswick, NJ 08933
Telephone: (908) 524-2485
Facsimile: (908) 524-2788
5.5 Waiver. Except as specifically provided for herein, the waiver from
time to time by either of the Parties of any of their rights or their failure to
exercise any remedy shall not operate or be construed as a continuing waiver of
same or of any other of such Party's rights or remedies provided in this
Agreement.
5.6 Severability. If any term, covenant or condition of this Agreement
or the application thereof to any Party or circumstance shall, to any extent, be
held to be invalid or unenforceable, then (i) the remainder of this Agreement,
or the application of such term, covenant or condition to Parties or
circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected thereby and each term, covenant or condition of this
Agreement shall be valid and be enforced to the fullest extent permitted by law;
and (ii) the Parties hereto covenant and agree to renegotiate any such term,
covenant or application thereof in good faith in order to provide a reasonably
acceptable alternative to the term, covenant or condition of this Agreement or
the application thereof that is invalid or
10
<PAGE> 11
unenforceable, it being the intent of the Parties that the basic purposes of
this Agreement are to be effectuated.
5.7 Ambiguities. Ambiguities, if any, in this Agreement shall not be
construed against any Party, irrespective of which Party may be deemed to have
authored the ambiguous provision.
5.8 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
5.9 Entire Agreement. This Agreement sets forth all the covenants,
promises, agreements, warranties, representations, conditions and understandings
between the Parties hereto and supersede and terminate all prior agreements and
understanding between the Parties pertaining to the subject matter of this
Agreement. There are no covenants, promises, agreements, warranties,
representations conditions or understandings, either oral or written, between
the Parties pertaining to such subject matter other than as set forth herein and
therein. No subsequent alteration, amendment, change or addition to this
Agreement, shall be binding upon the Parties hereto unless reduced to writing
and signed by the respective authorized officers of the Parties.
5.10 Liability. Neither Party shall be liable to the other Party to this
Agreement for any incidental or consequential damages.
IN WITNESS WHEREOF, the Parties have executed this Agreement in
duplicate originals by their proper officers as of the date and year first above
written.
AMYLIN PHARMACEUTICALS, INC. ORTHO-BIOTECH, INC.
By: /s/ JOSEPH C. COOK, JR. By: David E. Williams
------------------------------- -------------------------------
Name: Joseph C. Cook, Jr. Name: /s/ DAVID E. WILLIAMS
----------------------------- -----------------------------
Title: Chairman & CEO Title: V.P. Operations
---------------------------- ----------------------------
Date: 9/25/98 Date: 9/17/98
----------------------------- -----------------------------
11
<PAGE> 12
Johnson & Johnson hereby acknowledges and agrees to the provisions of this
Agreement in its entirety.
JOHNSON & JOHNSON
By: Peter T. Tattle
-------------------------------
Name: /s/ PETER T. TATTLE
------------------------------
Title: Company Group Chairman
----------------------------
Date: 9-17-98
-----------------------------
12
<PAGE> 1
EXHIBIT 10.47
*** TEXT OMITTED AND FILED SEPARATELY
CONFIDENTIAL TREATMENT REQUESTED
UNDER 17 C.F.R. SECTIONS 200.80(b)(4),
200.83 AND 240.24b-2
AMYLIN PHARMACEUTICALS, INC.
AND
CP PHARMACEUTICALS LIMITED
----------------
MANUFACTURING
AGREEMENT
<PAGE> 2
THIS Manufacturing Agreement ("Agreement") is made effective as of the 28th day
of April, 1999 by and between Amylin Pharmaceuticals, Inc., a Delaware
corporation having its principal place of business at 9373 Towne Centre Drive,
San Diego, California 92121 USA (hereinafter referred to as "AMYLIN") and CP
Pharmaceuticals Limited having its registered office at Ash Road North, Wrexham
Industrial Estate, Wrexham, LL13 9UF, United Kingdom (hereinafter referred to as
"CP"). AMYLIN and CP are sometimes referred to as "Parties" and all references
to AMYLIN and CP shall include their respective Affiliates.
WITNESSETH
WHEREAS, CP and AMYLIN previously entered into a Manufacturing Development
Agreement dated 7. August 1996, as amended by Amendment No. 1 dated 18.
September 1998 (effective as of 7. August 1996) (hereinafter the "Development
Agreement") under which CP agreed to perform fill-finish manufacture of
pramlintide in cartridge presentation for use in clinical investigations and for
validation batches for ultimate commercial sale;
WHEREAS, AMYLIN wishes to engage CP to manufacture commercial supplies of
Pramlintide Injection Product (defined below) in connection with the
commercialization of pramlintide by AMYLIN, beginning in 2000 after the
manufacture of the last lot of pramlintide for cartridge presentation
manufactured pursuant to the Development Agreement; and
WHEREAS, CP previously made various capital investments in facilities planned to
be used for the fill/finish manufacture of pramlintide, and AMYLIN wishes to
reimburse CP for a portion of such previous capital investments, as set forth
herein.
NOW, THEREFORE, the Parties agree as follows:
ARTICLE I - DEFINITIONS
For the purpose of this Agreement, the terms set forth in this Article shall
have the following meanings (save where inconsistent with the context)
respectively.
1.1 "ACTIVE RAW MATERIAL" means the proprietary peptide pramlintide acetate, in
bulk powder form, but does not include any other raw materials.
1
<PAGE> 3
1.2 "AFFILIATE" means an entity that, directly or indirectly, is a holding
company or subsidiary of, or a subsidiary of the holding company of, AMYLIN or
CP (as the case may be) and "holding company" and "subsidiary" shall bear their
respective meanings in section 736 of the Companies Act 1985.
1.3 "BATCH" means the quantity of units of the Pramlintide Injection Product
produced from a single homogeneous mix.
1.4 "BATCH RECORD" means CP's documented procedures for, and report on,
compounding, filling, testing, labeling and packaging Active Raw Material and
excipient into the Pramlintide Injection Product including, but not limited to,
completed dispensing, compounding, in-process testing, inspection, packaging and
labeling documentation, certificates of analysis, bills of material and all
deviation reports.
1.5 "CGMP" means the part of quality assurance which ensures that medicinal
products are consistently produced and controlled to the quality standards
appropriate to their intended use, the principles and guidelines of which are
specified in Chapter II of European Commission Directive 91/356/EEC and in the
United States Code of Federal Regulations Parts 210 and 211.
1.6 "COMPONENTS" means any and all primary packaging materials (e.g.,
cartridges, seals and bungs) needed to produce the Pramlintide Injection
Product.
1.7 "EQUIPMENT" means the equipment detailed in Appendix 1 (incorporated herein
by this reference) purchased by AMYLIN for use by CP in manufacturing
Pramlintide Injection Product under the Development Agreement and this
Agreement. In the event AMYLIN purchases additional equipment for use by CP,
Appendix 1 may be amended, as appropriate, to include such additional equipment.
1.8 "EXCIPIENTS" means any and all raw materials other than Active Raw Material
needed to produce Pramlintide Injection Product.
1.9 "FACILITY" means CP's sterile manufacturing facility at its premises at
Wrexham, including the Suite.
1.10 "MANUFACTURING PROCESS" means any and all specifications, compositions,
identities and quantities of materials, formulas, methods, techniques,
processes, procedures and quality control necessary or relevant for manufacture
of the Pramlintide Injection Product.
2
<PAGE> 4
1.11 "PRAMLINTIDE INJECTION PRODUCT" means the finished dosage form of inactive
excipient and Active Raw Material for injection in cartridge presentation in
accordance with the Specifications defined hereinafter.
1.12 "QUALIFIED PERSON" means a person who is registered and named as a
Qualified Person as defined under the provisions of European Commission
Directive 75/319/EEC.
1.13 "REGULATORY APPROVAL" means any approval, product license, registration or
authorization of any federal or state regulatory agency, department, bureau or
other governmental entity, sufficient for the manufacture, use, storage, import,
export, transport and sale of pramlintide in a regulatory jurisdiction.
1.14 "SPECIFICATIONS" means the specifications for Pramlintide Injection Product
and the procedures for its manufacture set out in the Technical Agreement.
1.15 "SUITE" means the part of the Facility consisting of Rooms G87, G88, G89
and G90 of Building 04 which was constructed by CP using [...***...] in capital
investments and is planned to be used for the manufacture of Pramlintide
Injection Product foR AMYLIN.
1.16 "TECHNICAL AGREEMENT" means the September 16, 1998 Technical Agreement
between AMYLIN and CP setting out or otherwise identifying the specification of
and technical terms and conditions for the production of the Pramlintide
Injection Product as set out in Appendix 2, which is incorporated herein by this
reference, or such modification thereof which is agreed to in writing by the
parties.
1.17 "WORK IN PROGRESS" means all materials consumed, and all materials made in
the course of the manufacture of Pramlintide Injection Product, beginning when
Active Raw Material is dispensed for compounding and ending with release by a
Qualified Person of the Pramlintide Injection Product.
Headings in this Agreement are for convenience only and shall not affect its
construction.
3 * CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 5
ARTICLE II - SUPPLY OF PRODUCT
2.1 PURCHASE AND SUPPLY. AMYLIN agrees to purchase and CP agrees to supply
Pramlintide Injection Product for commercial sale upon the terms and conditions
of this Agreement.
(a) Subject to the terms and conditions of this Agreement, CP agrees to
manufacture and supply to AMYLIN, and AMYLIN agrees to purchase from CP, at
least [...***...] of AMYLIN's aggregate requirements of Pramlintide Injection
Product worldwide (but excluding its requirements of Pramlintide Injection
Product in [...***...].
(b) CP shall have the right to appoint independent auditors and for
those independent auditors to examine the books records and invoices of AMYLIN
relating to its forecasts for, orders for and sales of Pramlintide Injection
Product to ensure compliance with Paragraphs 2.1 (a), 2.4 and 2.5 not more than
once every twelve months, such right to be exercisable during normal business
hours and on giving to AMYLIN reasonable notice.
2.2 PRICE. The price for the Pramlintide Injection Product shall be calculated
in accordance with Appendix 3, which is incorporated herein by this reference.
2.3 SUPPLY OF RAW MATERIALS.
(a) AMYLIN shall supply CP, free of charge, freight and duties prepaid
and with transportation insurance paid by AMYLIN with the amounts of Active Raw
Material sufficient to enable CP to manufacture the quantities ordered by AMYLIN
of Pramlintide Injection Product and AMYLIN shall ensure that such Active Raw
Material is supplied sufficiently in advance of its use by CP that CP can comply
with its obligations under this Agreement. Each shipment of Active Raw Material
will be accompanied by a certificate of analysis indicating the peptide content
or pramlintide content of such Active Raw Material and shall be properly
packaged. CP will verify the quantity and identity of Active Raw Material
according to methods approved by AMYLIN and shall inspect Active Raw Material in
accordance with CP inspection procedures for incoming materials. CP shall inform
AMYLIN within fifteen (15) working days of receipt of any discrepancies in
quantity or identity testing of Active Raw Material discovered by CP or of any
damage to the Active Raw Material received (e.g., damaged or cracked
containers). Any rejected Active Raw Material will be returned at AMYLIN's
expense and direction. AMYLIN shall notify CP annually of the approximate
replacement cost of the Active Raw Material.
4 * CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 6
(b) CP will order all Components and Excipients sufficiently in advance
of their use by CP from vendors mutually agreed on by AMYLIN and CP. CP will not
change the vendors of, or the acceptance criteria for, such Components and
Excipients without the prior written approval of AMYLIN. CP will inspect the
Components and Excipients in accordance with CP's inspection procedures for
incoming materials.
(c) CP shall report monthly to AMYLIN on the levels of stock of Active
Raw Material held by CP.
2.4 LONG RANGE FORECAST. By 1. December 1999, AMYLIN agrees to provide CP with
an estimated forecast of its requirements from CP of the Pramlintide Injection
Product for the years 2000-2004. This five-year estimate (the "Long Range
Forecast") will be updated annually by 30. May of each succeeding year. This
estimated Long Range Forecast is not a firm order, is not binding and is to be
used by CP for planning and scheduling purposes only.
2.5 CURRENT FORECASTS.
(a) Within 30 days of the first filing for Regulatory Approval, AMYLIN
shall provide CP with an initial written forecast of the quantities of and
delivery dates for Pramlintide Injection Product estimated to be ordered by
AMYLIN for delivery in each of the following four calendar quarters ("Initial
Current Forecast"). It is understood by the Parties that due to the unique
aspects of initial launch of a product, the Initial Current Forecast is an
estimate only and is binding only to the extent that AMYLIN has issued one or
more purchase orders ("Firm Purchase Orders") for quantities identified in the
Initial Current Forecast.
(b) Within 30 days of the receipt of first Regulatory Approval and on
the first of each month thereafter, AMYLIN shall provide CP with a written
rolling 12-month forecast ("Current Forecast") of the quantities of and delivery
dates for the Pramlintide Injection Product estimated to be ordered for delivery
during such 12-month period (Months 1-12). The quantities stated in the Current
Forecast for Months 1-3 are firm in the sense that AMYLIN is required to issue
one or more purchase orders ("Firm Purchase Orders") for such quantities and CP
is obligated to manufacture such quantities for AMYLIN. Unless otherwise agreed
in writing by the Parties, the total quantity estimated by AMYLIN for delivery
during Months 4-6 of the Current Forecast would be within plus or minus
[...***...] of the total quantity estimated by AMYLIN for delivery during Months
1-3. Unless otherwise agreed in writing by the Parties, the total quantity
estimated for delivery
5 * CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 7
during Months 7-9 of the Current Forecast would be within plus or minus
[...***...] of the total quantity estimated for delivery during Months 1-3. For
example, if the first Current Forecast is as follows: Month 1: 10.000 units,
Month 2: 10,000 units, Month 3: 10,000 units, then the total quantity estimated
for delivery during Months 4-6 of the Current Forecast would be within plus or
minus [...***...] of 30,000 units (i.e., between [...***...] units and
[...***...] units, and the total quantity estimated for delivery during Months
7-9 of the Current Forecast would be within plus or minus [...***...] of 30,000
units (i.e., between [...***...] units and [...***...] units). If the second
Current Forecast is as follows: Month 1: 10,000 units. Month 2: 10,000 units,
Month 3: 15,000 units, then the total quantity estimated for delivery during
Months 4-6 would be within plus or minus [...***...] of 35,000 units (i.e.,
between [...***...] units and [...***...] units), and the total quantity
estimated for delivery during Months 7-9 would be within plus or minus
[...***...] of 35,000 units (i.e., between [...***...] units and [...***...]
units). Notwithstanding the foregoing, CP will endeavor to supply Pramlintide
Injection Product in excess of that forecast in accordance with this Paragraph
2.5 if AMYLIN so requests, but CP is under no obligation to do so, AMYLIN being
aware of CP's production capacity for Pramlintide Injection Product and CP's
available labour and other resources.
(c) CP and AMYLIN may modify the Initial Current Forecast algorithm or
the Current Forecast algorithm by mutual written agreement in the event that
uncertainties in predicting product launch quantities or other special
circumstances require different algorithms.
2.6 ORDERS. At least six (6) months before the first specified delivery date,
AMYLIN shall place its first Firm Purchase Order for delivery of Pramlintide
Injection Product during the first 3 months of the initial Current Forecast.
After the first Firm Purchase Order, AMYLIN shall place each Firm Purchase Order
for delivery at least three (3) months before the first specified delivery date
for such Firm Purchase Order. CP will endeavor to supply Pramlintide Injection
Product in excess of that ordered in accordance with this Paragraph 2.6 if
AMYLIN so requests, but CP is under no obligation to do so, AMYLIN being aware
of CP's production capacity for Pramlintide Injection Product and CP's available
labour and other resources.
2.7 FORM OF ORDER. AMYLIN's orders shall be made pursuant to written Firm
Purchase Orders which shall provide for delivery dates in accordance with
Paragraphs 2.5 and 2.6. Each Firm Purchase Order shall be for one or more
Batches (but not part of a Batch). No terms contained in any purchase order,
order acknowledgment or similar standardized form shall be construed to amend or
6 * CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 8
modify the terms of this Agreement and, in the event of any conflict, this
Agreement shall prevail unless otherwise expressly agreed in writing by AMYLIN
and CP.
2.8 DELIVERY AND TITLE
(a) CP agrees to deliver Pramlintide Injection Product ordered in
accordance with Paragraphs 2.2, 2.6 and 2.7 on the dates specified in AMYLIN's
purchase orders. Delivery of Pramlintide Injection Product to AMYLIN shall be
deemed to have taken place upon issuance by CP to AMYLIN of a certificate of
analysis for such Batch of Pramlintide Injection Product.
(b) Title to the Pramlintide Injection Product, and all Active Raw
Material contained therein, shall at all times remain with AMYLIN.
(c) Notwithstanding that title to all Pramlintide Injection Product and
Active Raw Material remains with AMYLIN, and regardless of whether delivery of
Pramlintide Injection Product to AMYLIN, as defined in Paragraph 2.8 (a), has
occurred, CP shall bear all risk to, or loss of, and shall insure all
Pramlintide Injection Product, until transfer by CP to a carrier for shipment as
directed by AMYLIN.
2.9 INVOICES AND PAYMENT.
(a) CP shall be entitled to invoice AMYLIN for payment for a Batch of
Pramlintide Injection Product upon delivery to AMYLIN in accordance with
Paragraph 2.8(a).
(b) AMYLIN shall make payment on invoices (including value added tax, if
any, due thereon) by telegraphic transfer in pounds sterling to the account
number [...***...] (or such other account as CP shall notify to AMYLIN) not
later than fifteen (15) days after AMYLIN's acceptance of the Batch covered by
such receipt. All payments shall be made without deduction set off or
counterclaim unless AMYLIN and CP otherwise expressly agree.
(c) No terms contained in any invoice shall be construed to amend or
modify the terms of this Agreement and, in the event of any conflict, this
Agreement shall prevail unless otherwise expressly agreed in writing by AMYLIN
and CP.
7 * CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 9
2.10 FAILURE TO PAY ON THE DUE DATE.
If any sum payable under this Agreement is not paid on the due date for
payment the party in default shall pay interest on such sum at [...***...] per
annum above the base rate from time to time of Lloyds Bank Plc from the due date
until payment (whether before or after judgment) such interest to accrue on a
daily basis provided that this right shall not prejudice any other right or
remedy in respect of any such sum.
2.11 ACCEPTANCE OR REJECTION OF PRAMLINTIDE INJECTION PRODUCT.
(a) CP shall provide AMYLIN with a copy of all relevant documentation,
including the certificate of analysis, required to be provided to AMYLIN under
the Technical Agreement. AMYLIN shall have thirty (30) days from receipt of such
documentation to accept or reject such Batch of the Pramlintide Injection
Product. AMYLIN may reject a Batch of the Pramlintide Injection Product only if
such Batch does not meet Specifications or if the Batch Record documentation
deviates from the Batch manufacturing instructions (and such deviation has not
been agreed to in writing by AMYLIN). Failure of AMYLIN to reject a Batch of the
Pramlintide Injection Product in the manner set forth above within thirty (30)
days of receipt of such documentation shall constitute acceptance thereof.
(b) Should AMYLIN reject any Batch of the Pramlintide Injection Product
pursuant to Paragraph 2.11(a) and CP agree that such rejection is justified, CP
shall not charge AMYLIN for such Batch and shall not make any charge for profit
for the subsequent Batch of Pramlintide Injection Product delivered to AMYLIN
and CP shall have no further liability to AMYLIN in respect of such Batch.
(C) Should AMYLIN reject any Batch pursuant to Paragraph 2.11(a) and CP,
after good faith negotiation, fail to agree that such rejection is justified,
the Parties shall mutually agree on an independent third party to evaluate all
documentation of testing relating to such Batch of the Pramlintide Injection
Product and other relevant information developed by both Parties relating
thereto to ascertain whether the rejection is justified. If the third party
determines that AMYLIN's rejection is justified, CP shall pay for the costs of
the independent third party's review and CP shall not charge AMYLIN for the
costs of such Batch and shall not make any charge for profits for the subsequent
Batch of Pramlintide
8 * CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 10
Injection Product delivered to AMYLIN and CP shall have no further liability to
AMYLIN in respect of such Batch. If the third party determines that AMYLIN's
rejection is not justified, AMYLIN shall pay for the costs of the independent
third party's review, AMYLIN shall pay CP for such Batch, and CP shall have no
further liability to AMYLIN.
2.12 HIDDEN DEFECT. If within twelve (12) months of the date of delivery of a
Batch of Pramlintide Injection Product it is found that such Batch of
Pramlintide Injection Product has not been manufactured to Specification and
this could not reasonably be expected to have been found by diligent and
adequate inspection by AMYLIN pursuant to its obligations under this Article II,
(a "Hidden Defect"), CP and AMYLIN shall enter into discussions in good faith as
to the handling and disposal of the defective shipment, having due regard to
where responsibility for such defect lies. CP's liability in this case shall be
limited as set out in Paragraph 6.2(b).
2.13 RIGHT TO FINANCIAL AUDIT BY AMYLIN. AMYLIN shall have the right to appoint
independent auditors and for those independent auditors to examine the books,
records and invoices of CP relating to its overheads and cost of capital to
ensure compliance with the pricing schedule for Pramlintide Injection Product as
defined in Appendix 3 not more than once every twelve months, such right to be
exercisable during normal business hours and on giving to CP reasonable notice.
2.14 STORAGE OF PRAMLINTIDE INJECTION PRODUCT BY CP. Upon AMYLIN's request, and
subject to the availability of suitable storage facilities at CP's Facility, CP
agrees to store released, accepted Pramlintide Injection Product at its
facilities under the conditions specified in the Technical Agreement. Title to
any such stored Pramlintide Injection Product will remain with AMYLIN. CP will
bear the risk of loss of any such stored Pramlintide Injection Product, however,
CP reserves the right to be reimbursed by AMYLIN for any additional insurance
required to insure stored Pramlintide Injection Product. AMYLIN agrees to
reimburse CP for its out-of-pocket costs for such storage.
2.15 PACKAGING OF PRAMLINTIDE INJECTION PRODUCT BY CP.
At AMYLIN's option and upon AMYLIN's request, CP agrees to label and/or
package Pramlintide Injection Product manufactured under this Agreement, subject
to agreement by CP and AMYLIN on terms and conditions for such labeling and
packaging as set forth in a separate written agreement.
9
<PAGE> 11
ARTICLE III - MANUFACTURE
3.1 MANUFACTURE TO SPECIFICATIONS. CP will manufacture and package the
Pramlintide Injection Product in Batches which conform to the Specifications and
the Technical Agreement.
3.2 CGMP MANUFACTURE. CP will carry out all manufacturing, labeling, packaging,
storage and quality control operations in accordance with CGMP. CP will maintain
an appropriate manufacturing authorization and thus maintain adequate premises,
equipment, knowledge, and experienced and competent personnel to perform the
work in compliance with CGMP. CP will refrain from any activity which to its
knowledge adversely affects the quality of the Pramlintide Injection Product.
3.3 QUALITY AUDIT. AMYLIN may, at periodic intervals, audit the CP operation to
ensure that the principles of CGMP are followed. CP, on being given reasonable
notice, will permit AMYLIN nominees, for the purpose of quality audit, all
reasonable access to its manufacturing, warehousing, packaging and laboratory
areas, during normal business hours. Reasonable access to documentation and
reference materials relating to the Pramlintide Injection Product shall also be
granted to AMYLIN during audit (but this shall not be used for the purposes of
verifying financial information available to AMYLIN's independent auditors under
Paragraph 2.13). CP will rectify any deficiencies noted during the course of
audit by AMYLIN but if AMYLIN requires CP to implement changes over and above
CGMP, this shall fall within Paragraph 3.10.
3.4 NO CHANGES IN SPECIFICATIONS. No changes may be made to the Specifications
for Pramlintide Injection Product unless they are agreed in writing by CP and
AMYLIN before implementation of such changes. AMYLIN agrees to inform CP
promptly of all new methods of testing or analysis relating to the Pramlintide
Injection Product to the extent that it is aware of such and is permitted to
disclose such.
3.5 NO THIRD PARTY MANUFACTURE. CP shall not pass details of any manufacturing,
assembly or quality control operations which are exclusive to the Pramlintide
Injection Product to a third party without the written permission of AMYLIN. CP
will not sub contract any work without prior evaluation by, and written
permission from AMYLIN.
3.6 MANUFACTURING PROBLEMS. AMYLIN shall ensure that CP is promptly made aware
of any problems associated with the Pramlintide Injection Product, or
10
<PAGE> 12
its manufacturing, packaging or testing procedures which might pose a hazard to
CP premises, equipment, personnel, other materials or other products. CP shall
ensure that AMYLIN is promptly made aware of any problems encountered by CP in
manufacturing or testing the Pramlintide Injection Product.
3.7 MANUFACTURING AUTHORIZATION. CP will maintain its manufacturing
authorization to cover the manufacture of Pramlintide Injection Product.
3.8 REGULATORY INSPECTIONS. CP agrees to inform AMYLIN in writing in advance of
any proposed inspection by regulatory agencies of the Facility, including the
Suite after the Suite has been commissioned and brought into use for manufacture
of products, and CP agrees to inform AMYLIN of the outcome of inspections by
regulatory agencies of the Facility insofar as such outcome relates to the
manufacture of Pramlintide Injection Product. At AMYLIN's request CP will
co-operate in the investigation of any query or complaint by such regulatory
agencies concerning the Pramlintide Injection Product.
3.9 QUALIFICATION/VALIDATION OF PROCESS CHANGES. CP will ensure that appropriate
qualification/validation data are generated in accordance with the Technical
Agreement.
3.10 COSTS OF PROCESS CHANGES. The cost for any changes to the process resulting
from a request from CP shall be to the account of CP. The cost for any changes
to the process resulting from a request from AMYLIN shall be to the account of
AMYLIN.
3.11 COMPLIANCE WITH LAWS. CP shall observe and comply with all applicable laws
and regulations in the United Kingdom in respect of the manufacture of the
Pramlintide Injection Product in the United Kingdom or, if CP manufactures
Pramlintide Injection Product in a country other than the United Kingdom, then
with all applicable laws and regulations in such country in respect of the
manufacture of Pramlintide Injection Product. CP shall maintain all regulatory
files, government permits and licenses required in the United Kingdom (or if it
manufactures in another country, as aforesaid, required in that other country of
manufacture) including, but not limited to, health, safety and environmental
permits for the conduct of the activities and procedures that CP undertakes
pursuant to this Agreement at no cost to AMYLIN. In no event shall CP be forced
to maintain its Facility or manufacture the Pramlintide Injection Product in a
manner which violates the said applicable laws and regulations.
11
<PAGE> 13
3.12 WASTE. AMYLIN and CP will establish waste and yield targets for the Active
Raw Material and waste targets for the Components and Excipients consistent with
the controls of waste and yield for CP's manufacture of its own products. CP
shall then work towards meeting those targets and shall, at all times during the
commercial supply of Pramlintide Injection Product, work to improve Batch
yields.
3.13 TECHNICAL SUPPORT. AMYLIN shall extend reasonable technical assistance to
CP relating to the manufacture of Pramlintide Injection Product and AMYLIN shall
bear all expenses for extending such technical assistance to CP.
ARTICLE IV - FACILITIES
4.1 EQUIPMENT The Equipment has been purchased by Amylin and will remain the
property of AMYLIN.
4.2 MAINTENANCE OF EQUIPMENT. CP will maintain the Equipment at its cost and
expense to a maintenance schedule agreed between AMYLIN and CP. AMYLIN shall be
responsible for the cost of any repairs and parts associated therewith that are
other than the responsibility of CP under the agreed maintenance schedule,
except in the case wherein the repair results from CP's failure to conduct
maintenance in accordance with the said schedule or is a result of CP's
negligence in running or maintaining the Equipment. CP will be responsible for
coordinating all manufacturer warranty repairs required (and available under
such manufacturer's warranty) of such Equipment. If CP uses the Equipment (or
any part of it) to manufacture product for a third party's or for CP's own
products, CP shall ensure that product contact parts on the Equipment are
dedicated to Pramlintide Injection Product and not used in the manufacture of
the third party or CP's own product.
4.3 CAPITAL INVESTMENTS.
(a) AMYLIN agrees to reimburse CP for certain capital investments made
by CP in the Suite in the total amount of [...***...], as follows: (i) On or
before 30. June 1999, AMYLIN will pay CP [...***...]; (ii) On or before 30. June
2000, AMYLIN will pay CP [...***...]; (iii) On or before 30. June 2001, AMYLIN
will pay CP [...***...]; and (iv) Beginning 1. January 2001, AMYLIN will pay CP
[...***...].
12 * CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 14
(b) If CP uses the Suite for manufacture of products for itself or for a
third party, then CP will provide a credit to Amylin of [...***...] per unit of
such products. Such credit will be applied to the [...***...] amount described
in Paragraph 4.3(a), payable by Amylin to CP at a rate of [...***...] per
cartridge unit manufactured by CP for Amylin if the [...***...] amount has not
yet been fully paid by Amylin.
4.4 INSURANCE.
(a) CP will carry adequate insurance to cover material loss or damage to
the Equipment, the cost of which insurance may be recharged to AMYLIN. If the
Equipment is used to manufacture for a third party or CP's own products, such
cost of insurance will be pro rated on a time basis. Upon request by CP, AMYLIN
shall notify CP of the value of the Equipment.
(b) In the event there is loss or damage to the Equipment, CP shall be
at liberty to claim under its insurance policy in respect of the Equipment to
the full reinstatement value of the Equipment and AMYLIN shall give CP all
reasonable assistance in such claim. CP shall not be liable to AMYLIN for any
delay in producing Pramlintide Injection Product or for any delay in repairing,
replacing or reinstating the Equipment or any part thereof in these
circumstances but CP shall be responsible for ordering any replacement Equipment
or parts in these circumstances using the said insurance proceeds but to the
extent these proceeds are insufficient or to the extent that the loss or damage
is not covered by the insurance policy the replacement equipment or parts shall
be at the cost of AMYLIN. However, in the event that loss or damage to the
Equipment occurs whilst the Equipment is being used to manufacture third party
or CP's own product or that loss or damage to the Equipment occurs as a result
of the willful misconduct or negligence of CP, CP shall look to the third party
or CP's own funds, as the case may be, and not to AMYLIN in the event the
insurance proceeds are insufficient or the insurance policy does not cover the
loss or damage.
4.5 USE OF EQUIPMENT The Equipment (or part of it) may be used by CP to
manufacture product other than Pramlintide Injection Product for third parties
or for CP's own products provided that AMYLIN has consented in writing (such
consent not to be unreasonably withheld or delayed) to the manufacture of such
other product using the Equipment. AMYLIN shall at all times keep confidential
the identity of any third party and the third party's or CP's own product for
which any consent under this Paragraph 4.4 is sought and AMYLIN shall, without
13 * CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 15
prejudice to the generality of the foregoing, enter into a confidentiality
agreement with CP in the like terms to CP's obligations of confidentiality to
the relevant third party.
4.6 FACILITY STANDARDS. CP agrees to maintain the Facility in a manner so as to
meet FDA, MCA, IKS and European Directive standards for approvability. Any
Facility alterations or changes requested by AMYLIN that exceed the FDA, MCA,
IKS and/or European Directive standards which CP agrees shall be carried out
(such agreement not to be unreasonably withheld) shall be at AMYLIN's sole cost.
ARTICLE V - TRANSFER OF MANUFACTURING PROCESS
5.1 It is understood and agreed by AMYLIN and CP that AMYLIN itself and/or a
third party may at some point in time manufacture the Pramlintide Injection
Product for commercial supply using the Manufacturing Process. Upon request by
AMYLIN and provided that this Agreement is either terminated under Paragraphs
8.1, 8.2 (if terminated by AMYLIN but not if terminated by CP), 8.3 or 8.4 (b),
or if CP is unable to supply Pramlintide Injection Product due to CP (but not
AMYLIN) being the subject of a force majeure event as more particularly defined
in Paragraph 11.3, CP agrees to disclose and transfer to AMYLIN or to a third
party such of the Manufacturing Process as is necessary to enable AMYLIN and/or
such third party to manufacture the Pramlintide Injection Product, according to
the then current Manufacturing Process being used by CP.
5.2 To facilitate the transfer of such Manufacturing Process in accordance with
Paragraphs 5.1, CP agrees to provide to AMYLIN or the relevant third party
training on-site (at AMYLIN's or third party's premises) for the manufacture of
the Pramlintide Injection Product for an appropriate period such training
including but not limited to, on-site instruction by CP knowledgeable personnel
provided such individuals are still employed by CP and provided that this does
not unduly prejudice CP's continuing operations. The party receiving training
shall reimburse CP at CP's full daily charge out rate for the personnel
providing such training and for travel and living expenses of CP employees
during the time that they are engaged in the training. Provisions of this
Article V shall survive for 24 months only following termination or expiration
of this Agreement, except in the case of termination of this Agreement by CP as
a result of material breach by AMYLIN under Paragraph 8.2 or AMYLIN's insolvency
under Paragraph 8.3 where this provision shall not survive such termination.
14
<PAGE> 16
ARTICLE VI - INDEMNITY AND LIABILITY
6.1 AMYLIN INDEMNIFICATION. AMYLIN shall defend, indemnify and hold harmless CP,
its officers, agents and employees from any loss, claim, action, damage, expense
or liability, including defense costs and attorneys' fees ("Claim") arising out
of or related to any act, omission, fact, matter or thing which is other than
CP's liability in accordance with Paragraphs 6.2, 6.3 and 6.4, including,
without prejudice to the generality of the foregoing:
(a) the handling, possession or use of Active Raw Material prior to its
delivery to CP pursuant to Paragraph 2.3(a);
(b) infringement of a third party's intellectual property rights
relating to pramlintide as a result of CP's manufacture and/or storage of the
Pramlintide Injection Product hereunder;
(c) any hazard to CP's employees or former employees caused by or
arising from or as a consequence of the manufacturing and/or storage by CP of
the Pramlintide Injection Product which hazard had not been disclosed to CP in
writing; and
(d) damage to Pramlintide Injection Product after delivery to a carrier
in accordance with AMYLIN's instructions.
6.2 CP LIABILITY. CP shall have no liability to AMYLIN in respect of any loss
damage or destruction relating to the Active Raw Material prior to the same
being delivered to CP's premises. CP's liability in relation to loss damage or
destruction relating to Active Raw Material shall commence upon receipt by CP of
the relevant Active Raw Material. If thereafter any Active Raw Material or Work
in Progress is destroyed, damaged or lost or if there is loss or damage to or
destruction of Pramlintide Injection Product prior to delivery to AMYLIN then
CP's liability shall be limited as follows:
(a) in the event of loss or damage to or destruction of Active Raw
Material prior to such Active Raw Material becoming Work in Progress (and other
than as a result of an Insured Event) CP's liability shall be limited to
[...***...] per incident;
15 * CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 17
(b) in the event of loss or damage to or destruction of Work in Progress
or Pramlintide Injection Product such that the same fails to comply with
Specifications ("Failed Product") (other than as a result of an Insured Event)
CP's liability shall be limited to making no charge for the Failed Product and
to making at no charge for profit the subsequent Batch of Pramlintide Injection
Product delivered to AMYLIN. In the event of loss or damage to or destruction of
only part of a Batch of Pramlintide Injection Product or Work in Progress, CP's
liability for the Failed Product and making at no charge for profit the
subsequent Batch of Pramlintide Injection Product delivered to AMYLIN shall be
pro rata to the amount of the Failed Product so lost damaged or destroyed;
(c) In the event of loss or damage to or destruction of Active Raw
Material, Work in Progress or Pramlintide Injection Product and the same being
an Insured Event, CP's liability shall be limited to the lower of the actual
cost of Active Raw Material, Work in Progress or finished Pramlintide Injection
Product and the insurance proceeds recovered in respect thereof (provided always
that this limit shall never be lower than the amount of liability CP would bear
if the loss damage or destruction fell within Paragraphs 6.2(a) or (b) and was
not an Insured Event);
(d) For the purpose of this Paragraph 6.2 an "Insured Event" means an
act or occurrence which is insured against by CP and under which insurers accept
liability (including for the loss or damage to or destruction of Active Raw
Material, Work in Progress and/or Pramlintide Injection Product, as the case may
be) and have paid insurance proceeds to CP therefor.
(e) CP shall in no circumstances other than those set out in Paragraphs
6.2(a) to (d) inclusive be liable to AMYLIN for any other direct loss or for any
indirect or consequential loss or damage including, without limitation, loss of
profit, loss of goodwill and/or loss of business opportunity, whether arising in
contract, tort or otherwise .
6.3 CP shall have no liability to any third party for any loss or damage which
may be suffered or incurred by that third party in relation to Pramlintide
Injection Product (unless CP has manufactured a Batch of Pramlintide Injection
Product which fails to meet Specifications and such third party suffers loss or
damage to property (other than intellectual property) or person as a result of
CP's failure to manufacture the Batch to Specifications) and AMYLIN shall
defend, indemnify and hold harmless CP, its officers, agents and employees from
any loss, claim, action, damage, exposure or liability including defense costs
and attorneys' fees arising out of or related to any such third party claims.
16
<PAGE> 18
6.4 Nothing in Paragraph 6.2 or 6.3 shall limit CP's liability in respect of
death or personal injury caused by CP's negligence.
6.5 In the event CP is seeking indemnification under Article VI, it shall inform
AMYLIN of a Claim as soon as reasonably practicable after it receives notice of
the Claim, shall permit AMYLIN to assume direction and control of the defense of
the Claim (including the right to settle the claim solely for monetary
consideration), and shall cooperate as requested in the defense of the Claim.
6.6 The Parties acknowledge the limitations on CP's liability in this Article VI
are reasonable having regard to the price to be charged per cartridge of
Pramlintide Injection Product and the basis upon which such price is calculated.
ARTICLE VII - CONFIDENTIALITY
CP acknowledges that AMYLIN will supply information regarding this Agreement in
confidence and CP agrees to keep such information confidential in accordance
with the terms of the 8. February 1996 Confidential Disclosure Agreement between
AMYLIN, CP and Johnson & Johnson and the 18. September 1998 Confidential
Disclosure Agreement between AMYLIN and CP, with the exception that CP may
disclose such confidential information in confidence to its holding company, CP
Pharmaceuticals (Holdings) Ltd., on whom such obligations of confidentiality
apply.
ARTICLE VIII - TERM AND TERMINATION
8.1 TERM. Subject to the provisions of Paragraphs 8.2, 8.3, 8.4 and 8.5, this
Agreement shall be effective for a period of [...***...] from the date first
given above written and shall continue thereafter from year to year unless
terminated by AMYLIN or CP upon at least [...***...] prior written notice given
to the other at any time after the expiry of [...***...] from the date first
given above.
8.2 BREACH. If AMYLIN or CP is in material adverse breach of this Agreement, and
a cure of such breach has not occurred during a period of sixty (60) days
following receipt of notice thereof by the non-breaching party, the
non-breaching party may terminate this Agreement by a written notice to the
party in breach upon expiration of such sixty (60)-day period.
17 * CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 19
8.3 BANKRUPTCY. Either AMYLIN or CP may terminate this Agreement forthwith by
written notice to the other if the other compounds or makes arrangements with
its creditors or becomes subject to an administration or goes into liquidation
other than for the purpose of a bona fide reconstruction or has a receiver,
liquidator, administrator, or administrative receiver appointed over any of its
property or assets or anything analogous to this occurs in any jurisdiction.
8.4 AMYLIN TERMINATION.
(a) In the event that AMYLIN makes a good faith determination that it
will not continue with development or marketing of the Pramlintide Injection
Product and for that reason wishes to terminate this Agreement or the
Pramlintide Injection Product is no longer being developed or marketed for
whatever reason, then AMYLIN may, with thirty (30) days prior written notice,
terminate this Agreement.
(b) In the event that AMYLIN enters into a collaboration, licensing or
other similar type of written agreement regarding the development and/or
commercialization of pramlintide, and AMYLIN's collaboration partner or licensee
wishes to perform fill/finish manufacture of Pramlintide Injection Product,
Amylin may, with [...***...] prior written notice, terminate this Agreement.
8.5 CONSEQUENCES OF TERMINATION.
(a) On termination of this Agreement under Paragraphs 8.1, 8.2 (AMYLIN's
breach only), 8.3 (AMYLIN's bankruptcy only) or 8.4(a), AMYLIN shall remain
liable to pay for and shall pay for all Pramlintide Injection Product for which
AMYLIN has issued a Firm Purchase Order which is accepted by AMYLIN (whether
acceptance occurs before or after the date of termination or expiration).
(b) On termination of this Agreement under Paragraph 8.4(b) only, AMYLIN
shall remain liable to pay for and shall pay for all Pramlintide Injection
Product for which AMYLIN has issued a Firm Purchase Order which is accepted by
AMYLIN (whether acceptance occurs before or after the date of termination or
expiration) and, within sixty (60) days of the effective date of termination
under Paragraph 8.4(b), AMYLIN shall make a termination payment to CP which
shall be calculated in relation to the unexpired term of this Agreement. The
termination payment shall be [...***...] reduced by the cumulative profit to CP
(as calculated in accordance with Appendix 3) from Pramlintide Injection Product
under this
18 * CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 20
Agreement. Additionally, within such 60 days of effective date of termination,
AMYLIN will pay to CP the unpaid balance, if any, of the total [...***...] due
under Paragraph 4.3(a), reduced by [...***...] per unit of products manufactured
by CP using the Suite, whether such products are manufactured by CP for itself
or for a third party.
(c) On termination of this agreement under Paragraphs 8.1, 8.4(a) or
8.4(b) each party shall be obligated during the applicable termination notice
period to perform all of its obligations under this Agreement.
(d) Upon expiration or termination of this Agreement in accordance with
its terms, AMYLIN shall offer the Equipment for sale to CP by notice in writing
stating the price which AMYLIN wishes to obtain for the Equipment. Unless the
parties have reached agreement on the price for the Equipment within three (3)
months of such expiration or termination, AMYLIN shall be obliged to remove the
Equipment from the Facility. AMYLIN shall not remove the Equipment other than in
accordance with timing (as to dates and hours) agreed with CP (and CP shall
agree removal within 9 months after the expiry of the said 3 months) and so far
as practicable without causing CP loss of business or goodwill due to down time
of CP's Facility. AMYLIN shall bear the full cost of removal and shall be
responsible for leaving the Facility in good order and for making good any
damage caused by or arising out of such removal.
(e) On termination of this Agreement under Paragraph 8.4(a) only, AMYLIN
agrees to pay CP within sixty (60) days of the termination date the sum of
[...***...] less any sum already paid to CP in accordance with Paragraph 4.3.
(f) For the avoidance of doubt, Paragraph 8.5 shall survive termination
of this Agreement.
ARTICLE IX - OWNERSHIP OF TECHNOLOGY
9.1 SOLE INVENTIONS. Each party shall solely own, and shall alone have the right
to apply for patents and inventor's certificates within and outside the United
States on any invention, method process or know-how which is conceived solely by
such party's employees or consultants.
9.2 JOINT INVENTIONS. Inventions jointly made by employees or consultants of
AMYLIN and CP ("Joint Inventions") shall be jointly owned by AMYLIN and CP. The
law of joint ownership of inventions of the United States shall apply to
19 * CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 21
joint ownership of any patent claiming a Joint Invention outside of the United
States. Where appropriate, the Parties may engage outside counsel agreeable to
both Parties (the costs of which shall be borne equally by the Parties) to
represent them jointly in the prosecution of patent applications and the
maintenance of patents with respect to Joint Inventions.
9.3 MUTUAL GRANT OF AUTHORITY. Should either Party not wish to file, prosecute,
maintain or issue a patent application or maintain a patent covering such
Party's Joint Invention, then such Party shall grant any necessary authority to
the other Party to file, prosecute, maintain and issue such a patent application
or maintain such a patent, all at the expense of the Party requesting that such
filing be made or action be taken.
9.4 ASSISTANCE WITH PATENT PROTECTION. Upon request, AMYLIN and CP shall each
provide the other with reasonable assistance in obtaining patents and, if
necessary, enforcing patent rights. To that end, each Party agrees to assist the
other in executing, verifying and delivering such documents and performance of
such acts as may be reasonably requested by the other Party in applying for,
obtaining, perfecting, evidencing, sustaining or enforcing the other Party's
rights in sole inventions, or Joint Inventions. The Party requesting such
assistance shall reimburse the assisting party for all reasonable out-of-pocket
expenses incurred and provide reasonable compensation for time spent in
providing such assistance.
ARTICLE X - RELATIONSHIP OF THE PARTIES
It is not the intent of the Parties to form any partnership or joint venture
with each other. Each Party shall, in relation to its obligations hereunder, act
as an independent contractor, and nothing in this Agreement shall be construed
to give the other Party the power or authority to act for, bind, or commit the
other Party in any way whatsoever.
ARTICLE XI - FORCE MAJEURE
11.1 If the performance by a Party of any obligation under this Agreement, other
than the payment of money, is prevented, delayed or impaired by Force Majeure
for any cause beyond the reasonable control of the defaulting Party, such Party
shall be excused from performance so long as such situation continues to prevent
delay or impair performance, provided the Party claiming such excuse shall have
promptly notified the other Party of the existence, nature, and potential
duration of
20
<PAGE> 22
such cause and shall at all times use its reasonable efforts consistent with its
normal business practices to resume a complete performance.
11.2 The affected Party will advise the other Party from time to time as to the
progress in remedying the situation and as to the time when the affected Party
reasonably expects to resume its obligations and shall notify the others as to
the expiration of any Force Majeure as soon as the affected Party knows the date
thereof.
11.3 "Force Majeure" shall mean an event beyond the reasonable control of a
Party including, but not limited to, a breakdown of machinery or equipment,
failure of mains water, gas or electricity, fire, flood, sabotage, shipwreck,
embargo, explosion, accident, strike, lockout or other industrial dispute,
whether or not relating to that Party's workforce, riot, act of governmental
authority (including, without limitation, acts relating to raw material or
product allocation), acts of God and acts of war. Quantities affected by a Force
Majeure shall be eliminated from this Agreement without liability.
11.4 If a Force Majeure event occurs, and if CP shall be unable to supply
Pramlintide Injection Product for commercial use in such quantities as AMYLIN
shall have ordered and in compliance with the delivery periods set forth in this
Agreement and the Force Majeure is an event which hinders prevents or delays CP
from performing its responsibilities under this Agreement, CP and AMYLIN will
consult with each other to determine what measures to take to solve the supply
problem with the understanding that it may be necessary for AMYLIN to obtain
supply from a third party. In these circumstances AMYLIN shall however, be
permitted (with no obligation to CP) to obtain Pramlintide Injection Product
from another source, and require CP to transfer Manufacturing Process and
provide the training required in accordance with and as described in Article V,
but AMYLIN shall use its best endeavors to negotiate a short term contract with
this source. AMYLIN shall thereafter have no obligation to purchase Pramlintide
Injection Product from CP until the contractual obligations with this source
that AMYLIN has assumed in connection with obtaining this substitute supply of
Product shall have terminated whereupon AMYLIN shall order Pramlintide Injection
Product from CP (provided CP is no longer affected by force majeure).
21
<PAGE> 23
ARTICLE XII - CHANGES
AMYLIN's personnel may, from time to time, render assistance or give technical
advice to, or effect an exchange of information with CP's personnel in a liaison
effort concerning the work hereunder. However, such exchange of information or
advice shall not vest CP with authority to change the work hereunder or the
provisions of this Agreement, nor shall any change in the work or provisions of
this Agreement be binding on AMYLIN unless effected as a modification in
accordance with the terms of this Agreement
ARTICLE XIII - REPRESENTATIONS AND WARRANTIES
13.1 MANUFACTURING WARRANTY. CP warrants that the Pramlintide Injection Product
manufactured by CP pursuant to this Agreement shall be manufactured in
accordance with the Specifications and CGMP. CP shall notify AMYLIN immediately
of any test failures noted in the manufacture of the Pramlintide Injection
Product.
13.2 DEBARMENT. CP represents and warrants that it does not now and will not in
the future use in any capacity the services of any person debarred under
subsection (a) or (b) of 21 U.S.C.ss.335a.
13.3 LEGAL AND BINDING. This Agreement is a legal and valid obligation binding
upon CP and AMYLIN and enforceable in accordance with its terms. The execution,
delivery and performance of this Agreement by CP and AMYLIN does not conflict
with any agreement, instrument or understanding, oral or written, to which
either of them is a party or by which either of them is bound, or violate any
law or regulation of any court, governmental body or administrative or other
agency having jurisdiction over either of them.
ARTICLE XIV - TRADEMARKS AND LABELING
14.1 TRADEMARK. Nothing in this Agreement gives CP the right to use any AMYLIN
trademark and CP does not obtain any right, title or interest in any AMYLIN
trademark by virtue of this Agreement or the performance of services hereunder.
22
<PAGE> 24
14.2 CP TRADEMARK. Nothing in this Agreement gives AMYLIN the right to use any
CP trademark or logo and AMYLIN does not obtain any right, title or interest in
any CP trademark or logo by virtue of this Agreement or the performance of
obligations hereunder.
14.3 LABELING. CP shall not affix to the Pramlintide Injection Product any
label, stamp or other mark identifying CP as the source of the Pramlintide
Injection Product, except as requested by AMYLIN in writing and approved by CP
or as required by law. Upon request by AMYLIN, CP shall affix to the label for
Pramlintide Injection Product appropriate patent marking, as instructed by
AMYLIN.
XV - NOTICES
Any notices required or permitted hereunder shall be in writing and shall be
deemed given as of the date it is (a) delivered by hand, or (b) received by
mail, postage prepaid, or (c) received by facsimile, and addressed to the Party
to receive such notice at the following addresses:
To AMYLIN: Amylin Pharmaceuticals, Inc.
9373 Towne Center Drive
San Diego, California 92121
USA
Facsimile no: 001 619-552-1936
Attention: Nancy K. Dahl
Vice President and General Counsel
To CP: CP Pharmaceuticals Limited
Ash Road North
Wrexham Industrial Estate
Wrexham, LL13 9 UF
United Kingdom
Facsimile no. 011 44 1978 660130
Attention: A.H. Coveney
Company Secretary
The address and/or facsimile number to which notices should be delivered may be
changed from time to time by notice to the other Party as provided in this
Article XV.
23
<PAGE> 25
ARTICLE XVI - ENTIRE AGREEMENT
This Agreement together with all Appendices (including without prejudice to the
generality of the foregoing, the Technical Agreement) the 8. February 1996
Confidential Disclosure Agreement between AMYLIN, CP and Johnson & Johnson, and
the 9. September 1998 Confidential Disclosure Agreement between AMYLIN and CP,
constitute the entire agreement between the Parties hereto relating to the
subject matter hereof and no modification, change or amendment to this Agreement
shall be binding upon AMYLIN or CP except in writing of subsequent date signed
by an authorized officer or representative of each of the Parties hereto. Each
Party acknowledges that in entering into this Agreement it is not relying upon
any representation, warranty, promise or assurance made or given by the other
Party, whether or not in writing, at any time prior to the execution of this
Agreement, which is not set out expressly in this Agreement, provided that this
shall not exclude any liability which either party would otherwise have to the
other in respect of any statements made fraudulently by that party prior to the
date of this Agreement.
ARTICLE XVII - ASSIGNMENT
17.1 This Agreement shall not be assigned or transferred by CP to any other
person, firm, company or corporation without the prior written consent of AMYLIN
(such consent not to be unreasonably withheld) and subject to the terms that
AMYLIN may impose.
17.2 AMYLIN may, without CP's consent, assign its rights and obligations under
this Agreement to a partner for the development and/or commercialization of
pramlintide or to a successor in interest to all or substantially all of
AMYLIN's business relating to pramlintide. Any other assignment by AMYLIN of its
rights and obligations under this Agreement is subject to the prior written
consent of CP (such consent not to be unreasonably withheld).
ARTICLE XVIII - DISPUTE RESOLUTION
18.1 Any dispute or claim arising out of this Agreement or relating to the
validity, construction, enforceability or performance of this Agreement
including disputes relating to an alleged breach or to termination of this
Agreement and whether during the term of this Agreement or afterwards shall be
dealt with in accordance with the procedure set out in this Article XVIII.
24
<PAGE> 26
18.2 A dispute or claim under this clause shall be resolved as follows:
(a) by referral in the first instance to the Contracts Manager of CP and
the Senior Director, Product Development of AMYLIN.
(b) if a dispute is not resolved within 14 days of its referral under
paragraph 18.2(a) then by referral to the decision of the Chief Executive
Officer of CP and the Chief Executive Officer of AMYLIN.
18.3 If any dispute is not resolved within 21 days of its referral pursuant to
paragraph 18.2 (b) or any extension of time agreed between the parties in
writing then it shall be finally resolved by a court in accordance with
Paragraph 18.4.
18.4 This Agreement shall in the case of a dispute initiated by AMYLIN be
construed in accordance with English law and in the case of a dispute initiated
by CP be construed in accordance with the laws of the State of California, and
both parties submit to the jurisdiction of the respective courts.
ARTICLE XIX - VISITORS' INSURANCE
If either Party is required to enter premises owned, leased, occupied by or
under the control of the other Party during the performance of this Agreement,
the visiting Party shall indemnify and hold harmless the visited party, its
officers and employees, from any loss, cost, damage, expense or liability by
reason of property damage or personal injury, including death, of whatsoever
nature or kind arising out or as a result of such performance, whether arising
out of actions of the Party or of its employees. However, the visited Party will
remain liable for its negligence, if any. AMYLIN and CP shall each maintain such
insurance cover as is legally required in relation to industrial accidents at
its premises.
ARTICLE XX - NO WAIVER OF CONDITIONS
Failure by AMYLIN or CP to insist on strict performance with respect to any
particular provision of this Agreement shall not operate or be construed as a
continuing waiver of same or as a waiver of any other provisions of the
Agreement.
25
<PAGE> 27
ARTICLE XXI - SEVERABILITY
If any provision of this Agreement is declared invalid, illegal or
unenforceable, such provision shall be severed and all remaining provisions
shall continue in full force and effect.
AMYLIN PHARMACEUTICALS, INC. CP PHARMACEUTICALS LIMITED
By: /s/ NANCY K. DAHL By: /s/ C. SAVAGE
------------------------------- -------------------------------
Title: V.P. and General Counsel Title: Chief Executive
---------------------------- ----------------------------
Date: April 28, 1999 Date: 28 April 1999
----------------------------- -----------------------------
By: /s/ JOSEPH C. COOK
-------------------------------
Joseph C. Cook, Jr.
Chairman and Chief Executive Officer
Date: April 28, 1999
-----------------------------
26
<PAGE> 28
APPENDIX 1
EQUIPMENT
[...***...]
* CONFIDENTIAL TREATMENT REQUESTED
27
<PAGE> 29
APPENDIX 2
TECHNICAL AGREEMENT
[...***...]
29 * CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 30
APPENDIX 3
PRICING MECHANISM
[...***...]
30 * CONFIDENTIAL TREATMENT REQUESTED
<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. 33-32894 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; (Form
S-8 No. 33-82965) pertaining to the 1991 Option Plan and the Employee Stock
Purchase Plan of Amylin Pharmaceuticals, Inc. of our report dated February 22,
2000, 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, 1999, filed with the Securities and Exchange Commission.
Ernst & Young LLP
San Diego, California
March 24, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND THE CONSOLIDATED STATEMENT OF OPERATIONS AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 8,171,000
<SECURITIES> 14,332,000
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 23,334,000
<PP&E> 6,973,000
<DEPRECIATION> 6,045,000
<TOTAL-ASSETS> 26,442,000
<CURRENT-LIABILITIES> 5,975,000
<BONDS> 0
0
0
<COMMON> 54,000
<OTHER-SE> (26,454,000)
<TOTAL-LIABILITY-AND-EQUITY> 26,422,000
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 27,101,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,678,000
<INCOME-PRETAX> (30,564,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (30,564,000)
<EPS-BASIC> 0.73
<EPS-DILUTED> 0.73
</TABLE>
