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<SEC-DOCUMENT>0001095811-01-001972.txt : 20010409
<SEC-HEADER>0001095811-01-001972.hdr.sgml : 20010409
ACCESSION NUMBER: 0001095811-01-001972
CONFORMED SUBMISSION TYPE: 10-K405
PUBLIC DOCUMENT COUNT: 4
CONFORMED PERIOD OF REPORT: 20001231
FILED AS OF DATE: 20010330
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: AMYLIN PHARMACEUTICALS INC
CENTRAL INDEX KEY: 0000881464
STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834]
IRS NUMBER: 330266089
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 10-K405
SEC ACT:
SEC FILE NUMBER: 000-19700
FILM NUMBER: 1588527
BUSINESS ADDRESS:
STREET 1: 9373 TOWNE CENTRE DR
CITY: SAN DIEGO
STATE: CA
ZIP: 92121
BUSINESS PHONE: 6195522200
MAIL ADDRESS:
STREET 1: 9373 TOWNE CENTRE DR
CITY: SAN DIEGO
STATE: CA
ZIP: 92121
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K405
<SEQUENCE>1
<FILENAME>a69957e10-k405.txt
<DESCRIPTION>FORM 10-K405 PERIOD ENDED DECEMBER 31, 2000
<TEXT>
<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
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, 2000
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)
<TABLE>
<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)
</TABLE>
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 2, 2001 was $395,044,000.*
The number of shares outstanding of the Registrant's Common Stock was
63,469,176 as of March 2, 2001.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Definitive Proxy Statement to be filed with the
Securities and Exchange Commission (the "Commission") pursuant to Regulation 14A
in connection with the 2001 Annual Meeting of Stockholders to be held on May 24,
2001 (the "2001 Annual Meeting") are incorporated herein by reference into Part
III of this Report. Such Definitive Proxy Statement will be filed with the
Commission not later than 120 days after December 31, 2000.
- ---------------
* Excludes the Common Stock held by executive officers, directors and
stockholders whose beneficial ownership exceeds 5% of the Common Stock
outstanding at March 2, 2001. 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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<PAGE> 2
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. We assume no obligation
to update any forward looking statement.
PART I
ITEM 1. BUSINESS
Amylin Pharmaceuticals, Inc.
Amylin Pharmaceuticals, Inc is engaged in the discovery, development and
commercialization 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 submitted a New Drug Application for SYMLIN to the
FDA in December 2000 and this application was filed for review by the FDA in
January 2001. We anticipate submitting a Marketing Approval Application for
SYMLIN to European regulatory authorities in the second quarter of 2001.
We are developing our second drug candidate, AC2993, for the treatment of
type 2 diabetes. AC2993, which is our code name for synthetic exendin-4, is
currently in Phase 2 clinical studies. Exendin-4 is a naturally occurring
peptide originally isolated from the salivary secretions of the Gila monster.
Our third drug candidate, AC3056, is a compound in-licensed from Aventis
Pharma (formerly Hoechst Marion Roussel). We filed an Investigational New Drug
Application for AC3056 with the FDA in June 2000 and commenced Phase 1 clinical
trials shortly thereafter. We are evaluating AC3056 for potential utility in the
treatment of metabolic disorders relating to cardiovascular disease.
In May 2000, we entered into a collaboration agreement with Alkermes, Inc.,
a company specializing in the development of products based on proprietary drug
delivery technologies, for the development, manufacture and commercialization of
an injectable long-acting formulation of AC2993, or AC2993 LAR, with the goal of
developing a formulation that would enable a once a month administration of
AC2993. In March 2001, Alkermes commenced a Phase 1 study of AC2993 LAR in
Europe, which we are funding.
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.
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<PAGE> 3
Amylin has been shown in animal studies to function as a neuroendocrine
hormone. It is secreted into peripheral circulation but exerts its effects
through interactions with selective binding sites in the brain. Interactions
with these selective binding sites lead to multiple actions involved in the
regulation of nutrient uptake. These actions include inhibiting the release of
glucagon, a glucose-elevating hormone, 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 food intake. Inhibiting glucagon
release and slowing of the emptying of the stomach are actions of amylin that
have been demonstrated to occur in humans.
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 people, approximately 3.5 million had type 1
diabetes, and approximately 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 among people with diabetes 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 even with
available drug therapies such as insulin, 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
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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 at least one daily insulin injection. We estimate that
this group is made up of 8.2 million people in North America and Europe, based
on published and proprietary estimates. Within this population group,
approximately 1.9 million people (23%) have type 1 diabetes, and the remaining
6.3 million (77%) 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 United States to explore the effects of SYMLIN administration
(in addition to insulin) for one year on metabolic control in people with
diabetes. 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.
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<PAGE> 5
Second Set of Phase 3 Clinical Studies: Studies IB and IIB
In October 1998, we 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
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 one-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 one-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.
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In a separate open-label clinical use study in the United States 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.
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.
We submitted a NDA for SYMLIN to the FDA in December 2000 and the NDA was
accepted for review by the FDA in January 2001. We anticipate filing the
Marketing Approval Application for SYMLIN to European regulatory authorities in
the second quarter of 2001.
AC2993 (synthetic exendin-4)
AC2993 (synthetic exendin-4) is a 39-amino acid peptide that exhibits
several anti-diabetic actions of the mammalian hormone glucagon-like peptide
(GLP-1). Unlike GLP-1, AC2993 has demonstrated to have 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
5
<PAGE> 7
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 Phase 1 safety and
tolerability study of AC2993 conducted in the United Kingdom. In that study,
0.01 to 0.30 microgram per kilogram of AC2993 was 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
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 in the United States in people with type
2 diabetes. In April 1999, we announced results from that single-blind,
dose-rising, placebo-controlled study, which 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 also 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.
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<PAGE> 8
In June 2000, we announced positive preliminary results from a Phase 2 dose
frequency study of AC2993. Results from this study showed that AC2993, when
administered at each of the different dosing frequencies tested, lowered blood
glucose. In this double-blind, placebo-controlled, cross-over study, twelve
subjects with type 2 diabetes received a daily dose of AC2993 totaling 0.2
micrograms per kilogram with injection frequencies of one, two and four times a
day. All three injection frequencies resulted in lower 24-hour mean plasma
glucose concentrations compared to placebo. Reductions in plasma glucose were
greater with increased frequency of administration of AC2993. The reductions in
plasma glucose observed in this study were similar in magnitude to those
reported in previous studies of AC2993.
In November 2000, we announced the initiation of a Phase 2 study of AC2993
to examine the effect of AC2993 on glucose control in over 100 subjects with
type 2 diabetes not achieving adequate blood glucose target levels with their
current oral agent therapies. In this 28-day, placebo-controlled, randomized,
multicenter study, the addition of AC2993 to subjects' current treatment regimen
of oral agents will be compared to oral agent therapy alone. Data from this
study are expected to be available in the second quarter of 2001. Results from
this study, if positive, should provide needed data to initiate our first Phase
3 trial for AC2993, planned for the second half of 2001.
AC3056
We are currently evaluating AC3056, a compound we in-licensed from Aventis
Pharma (formerly Hoechst Marion Roussel), for potential utility in the treatment
of metabolic disorders relating to 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. An investigational new drug
application was submitted to the FDA in April 2000 and the first Phase 1 safety
and tolerability study was initiated in June 2000.
In October 2000, we announced the successful completion of this first Phase
1 study of AC3056. In this single-dose, double-blind, placebo-controlled study,
26 healthy subjects received an oral formulation of AC3056 over a range of
doses. Peak plasma levels of AC3056 observed in this clinical study were
comparable to levels necessary to exhibit vascular protective properties in
preclinical studies. No safety concerns were noted. We believe these encouraging
results support the continuation of the AC3056 Phase 1 program.
AC2993 LAR
In May 2000, we signed an agreement with Alkermes, Inc. for the
development, manufacture and commercialization of an injectable long-acting
formulation of AC2993. This development program utilizes Alkermes' patented and
proprietary Medisorb(R) injectable sustained release drug delivery technology.
Based upon results obtained from initial feasibility studies, the goal of the
work under this agreement is to develop a formulation that would allow
once-a-month administration of AC2993 for the treatment of type 2 diabetes.
Under the terms of the agreement, Alkermes has granted us an exclusive,
worldwide license to their formulation technology for the development of
injectable sustained release formulations of exendins, such as AC2993, and other
related compounds that we may develop. Amylin will be responsible for conducting
clinical trials, securing regulatory approvals and marketing on a worldwide
basis and Alkermes will be responsible for continuing to support development
efforts and manufacturing any products commercialized as a result of the
agreement. In exchange, Alkermes will receive funding for research and
development and milestone payments comprised of cash and warrants for our common
stock upon achieving certain development and commercialization goals. Alkermes
will also receive a combination of royalty payments and manufacturing fees based
on any future product sales.
In October 2000, we announced the successful completion of the feasibility
stage of development work and the initiation of additional preclinical work to
support AC2993 LAR human clinical studies. In March 2001, we commenced the first
Phase 1 study of AC2993 LAR. We are funding this study which Alkermes is
conducting in Europe.
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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.
Johnson & Johnson
From June 1995 to August 1998, we collaborated with Johnson & Johnson 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 bears an interest at a rate of 9.0% and the total amount owed
as of December 31, 2000 was $40.5 million. Additionally, as of December 31, 2000
we owed Johnson & Johnson approximately $14.7 million for our share of
pre-launch marketing expenses. As of December 31, 2000 the total principal and
interest due to Johnson & Johnson was approximately $55.2 million. In
conjunction with the development loan facility, we 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. The development loan is due in June 2005 and the
pre-marketing loan is due in June 2010. The repayment of these obligations may
be accelerated in the event that we enter into certain specified change in
control transactions, specified types of agreements for SYMLIN or certain types
of financing arrangements subsequent to the FDA's approval of the SYMLIN NDA.
Aventis Pharma
In March 1997, we 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, we received exclusive
worldwide rights to AC3056, which we are currently evaluating 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.
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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 15, 2001, we owned or held exclusive rights to 32 issued U.S.
patents and 28 pending U.S. applications. We have a total of 8 pending and 16
issued U.S. patents relevant to the development and commercialization of SYMLIN.
We have a total of 13 pending and one issued US patent relevant to the
development and commercialization of AC2993. We have also 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; (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 regarding AC3056, Aventis Pharma has supplied AC3056
manufactured in accordance with current good manufacturing practices for our
initial Phase 1 clinical studies. We are currently evaluating potential
manufacturers for AC3056.
COMMERCIAL OPERATIONS
In June 2000, we announced our intention to build our own core commercial
team to focus on the development and execution of our commercial strategies. In
December 2000, we announced our plan for the commercialization of SYMLIN
including the expansion of our Clinical Affairs department to support additional
medical education activities. The commercialization plan is designed to enable
us to perform sales and marketing activities for SYMLIN in the United States,
pending FDA approval. This plan was partially based on available data that
indicates the target market for SYMLIN is highly concentrated. Accordingly, we
anticipate that a sales organization of approximately 150 representatives would
be sufficient to effectively call on the major potential prescribers of SYMLIN
in the United States. We are also continuing discussions with companies that we
believe may add value to our commercialization efforts for SYMLIN in the United
States, as well as in Europe, Japan and other markets.
To date, we have assembled a team of approximately 25 employees dedicated
to carrying out the commercialization plans for SYMLIN, if approved by the FDA.
This team includes leadership of the following internal functions: sales, sales
operations, marketing, training, medical education, medical affairs, regulatory
affairs, manufacturing and distribution logistics. Members of this team have
extensive industry experience from a wide range of large and small companies and
have substantial experience in the field of
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<PAGE> 11
diabetes as well as in launching and marketing pharmaceutical products. Their
activities have been focused on developing the plans for commercializing SYMLIN
and on preparations for the scale up of our organization that will be required
to perform sales and marketing activities if the drug candidate is approved.
Certain pre-launch programs have also been initiated. These focus largely on
educational programs regarding the activity of amylin, the naturally occurring
hormone, and its relative deficiency in people with diabetes who use insulin. We
also plan to have a presence at several major medical meetings this year.
A key element of our commercial plan is the staged hiring of key personnel
in the areas described above and deferral of costs, where possible, until the
FDA completes its review of the SYMLIN NDA. Our ongoing efforts are intended to
prepare the organization to be able to quickly and efficiently commence the
commercialization of SYMLIN, if approved.
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.
COMPETITION
Our target population for SYMLIN is people with diabetes whose therapy
includes at least one daily injection of insulin. This population includes all
people with type 1 diabetes and those people with type 2
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<PAGE> 12
diabetes whose disease has progressed to a point at which they require at least
one insulin injection. 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, metformin, acarbose, repaglinide, miglitol, metiglinide 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 2, 2001, Amylin had 151 full-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 sales,
marketing and 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)(3).................. Director
Vaughn D. Bryson(1)(3)....................... Director
Ginger L. Graham(2)(3)....................... Director
Howard E. Greene, Jr.(2)(3).................. Director
Vaughn M. Kailian(2)(3)...................... Director
Jay S. Skyler, M.D.(3)....................... Director
Daniel M. Bradbury........................... Executive Vice President
Julia R. Brown............................... Executive Vice President
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., Ph.D................... Vice President of Clinical Research
Nancy K. Dahl................................ Vice President and General Counsel
Mark G. Foletta.............................. Vice President of Finance, Chief Financial
Officer 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.
(3) Member of the Nominating Committee.
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 an officer of Mountain Ventures, Inc., a member, with Mr. Bryson, of Life
Science Advisors, LLC and Cambrian Associates, LLC and a founder of Clinical
Products, Inc. Mr. Cook retired as a Group Vice President of Eli Lilly & Company
in 1993 after more than 28 years of service. 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 and Nominating Committees. He has been a managing member of Domain
Associates, L.L.C., a venture capital investment firm, since 1985. Domain
Associates manages Domain Partners II, L.P., Domain Partners III, L.P., Domain
Partners IV, L.P. and Domain Partners V, L.P. and is an advisor to 3i
Biosciences Trust Plc. 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. 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. BRYSON has served as a director since July 1999 and serves on the
Compensation and Nominating Committees. 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 & Company'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 and, with Mr.
Cook, a member of Life Science Advisors, LLC. He also serves as a director for
the following publicly traded companies: Ariad Pharmaceuticals, Chiron
Corporation, Atherogenics, Inc. and Quintiles Transnational Corp. Mr. Bryson
received a B.S. in Pharmacy from the University of North Carolina and completed
the Sloan Program at the Stanford University Graduate School of Business.
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MS. GRAHAM has served as a director since November 1995 and serves on the
Audit and Nominating Committees. Since February 2000, Ms. Graham has served as
Group Chairman, Office of the President for Guidant Corporation, a medical
device company which includes Advanced Cardiovascular Systems ("ACS") and
Devices for Vascular Intervention. From 1995 to 2000, Ms. Graham served as
President of the Vascular Intervention Group of Guidant Corporation. She has
also served as President and Chief Executive Officer of ACS since January 1993.
Prior to joining ACS, she held various positions with Eli Lilly & Company from
1979 to 1992, including sales, marketing and strategic planning positions. She
serves as Chairman of the Board and sits on the Executive Committee for the
California Healthcare Institute, on the Advisory Board of the California
Institute for Federal Policy Research and on the Board of Directors of COR
Therapeutics, Inc. She is also a member of the Committee 200. Ms. Graham
received an M.B.A. from Harvard University.
MR. GREENE is a co-founder of Amylin and has served as a director since our
inception in September 1987. Mr. Greene serves on the Audit and Nominating
Committees. Mr. Greene is an entrepreneur who has participated in the founding
and/or management of eleven medical technology companies over a 22 year period,
including three as Chief Executive Officer. From September 1987 to July 1996 Mr.
Greene served as our Chief Executive Officer. He was a full time employee of
Amylin from September 1989 until September 1996, and a half-time employee and
Chairman of the 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 & Company 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 Epimmune,
Inc., 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 and Nominating Committees. 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.
DR. SKYLER has served as a director since August 1999 and serves on the
Nominating Committee. 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 Diabetes Prevention
Trial in Type 1 Diabetes. Dr. Skyler has served as President of the American
Diabetes Association, and as 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. Dr. Skyler serves on the Board of Directors of Minimed, Inc. He
received his M.D. from Jefferson Medical College, and completed postdoctoral
studies at Duke University Medical Center.
DR. BARON has served as Vice President of Clinical Research since 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 ("NIH") MERIT award recipient. Dr. Baron
is currently Principal Investigator for several diabetes studies, including the
Early Diabetes
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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, one of our executive officers, has served as Executive Vice
President since June 2000. He previously served as Senior Vice President of
Corporate Development from April 1998 to June 2000 and as Vice President of
Marketing from June 1995 to April 1998. From July 1994 to May 1995, Mr. Bradbury
held the position of Director of Marketing, Amylin Europe Limited. Prior to
joining the Company, Mr. Bradbury was employed by SmithKline Beecham
Pharmaceuticals from September 1984 to July 1994, where he held a number of
positions, most recently as Associate Director, Anti-Infectives in the Worldwide
Strategic Product Development Division. 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.
MS. BROWN, one of our executive officers, joined Amylin as Executive Vice
President in June 2000. Prior to joining Amylin, Ms. Brown was Executive Vice
President of Dura Pharmaceuticals. Ms. Brown also spent over 25 years with Eli
Lilly. With Eli Lily, she held progressively more senior sales and marketing
roles in the pharmaceutical division. She served as Vice President of Worldwide
Marketing for Hybritech, and as Vice President of IVAC Corporation and General
Manager of its Vital Signs Division. Ms. Brown is a member of the board of
directors of Oridigm Corporation. She is a graduate of Louisiana Tech University
where she studied microbiology and biochemistry.
MR. BROWN, one of our executive officers, has served as Senior Vice
President of Operations since March 2000. Mr. Brown previously served as Vice
President of Operations from October 1998 to March 2000, and as Senior Director,
Information Technology from May 1994 to October 1998. Prior to joining the
Company, from 1989 to 1993, Mr. Brown was Director, Information Systems, Europe,
based in London, England for Eli Lilly. From 1988 to 1989, Mr. Brown was
Director, Information Systems for the Medial 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 an M.B.A. in Operations Research from
Drexel University.
DR. DATA, one of our executive officers, has served as Senior Vice
President of Regulatory Affairs and Quality Assurance 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.
MS. DAHL, one of our executive officers, 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 December
1996 to November 1998, Ms. Dahl held the position of Associate General Counsel,
and from May 1993 to December 1996, she served as Senior Attorney. 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.
MR. FOLETTA, one of our executive officers, has served as Vice President of
Finance and Chief Financial Officer since March 31, 2000. Mr. Foletta previously
served as Principal, Triton Group Management, Inc. from 1997 to 2000. From 1986
to 1997, Mr. Foletta held a number of management positions with Intermark, Inc.
and Triton Group Ltd., the most recent of which was Senior Vice President, Chief
Financial Officer and Corporate Secretary. From 1982 to 1986, Mr. Foletta was
with Ernst & Young, most recently serving as an
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Audit Manager. Mr. Foletta earned his B.A. in Business Economics from the
University of California, Santa Barbara in 1982 and received his California CPA
accreditation in 1985.
DR. KOLTERMAN, one of our executive officers, 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 Diabetes Control and Complications Trial Study
Group at the time of its completion in 1993 and presently serves as a member of
the Epidemiology of Diabetes Intervention and Complications Study. He is also a
past-President of the California Affiliate of the American Diabetes Association.
Dr. Kolterman earned an M.D. from Stanford University School of Medicine.
DR. YOUNG has served as Vice President of Research since October 1998 and
as Vice President of Physiology since January 1994. From 1989 to 1993 he held a
number of positions in our Physiology Department, most recently as Principal
Scientist and Senior Director of Physiology. Prior to joining Amylin in 1989,
Dr. Young was a lecturer in the Department of Physiology at the University of
Auckland, New Zealand and a part-time general medical practitioner. From 1984 to
1987, Dr. Young was a Clinical Research Scientist at the National Institutes of
Health in Phoenix, Arizona, where he studied insulin resistance and diabetes. He
received his M.B., Ch.B. (M.D.) and his Ph.D. in Physiology from the University
of Auckland, New Zealand.
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
15
<PAGE> 17
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 product candidates.
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, ongoing or planned clinical studies that will cause us or regulatory
authorities to delay or suspend our ongoing clinical studies delay or suspend
planned clinical studies, or delay the analysis of data from our completed or
ongoing clinical studies. If the results of our ongoing and planned clinical
studies for our product candidates are not available when we expect or if we
encounter any delay in the analysis of data from our clinical studies:
- we may be unable to commence Phase 3 studies of AC2993;
- we may be unable to commence Phase 2 studies of AC3056;
- we may be unable to commence Phase 2 studies of AC2993 LAR;
- 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 candidate subject to delay in clinical studies or delay in
regulatory filing.
Any of the following could delay the completion of our ongoing and planned
clinical studies:
- delays in enrolling volunteers;
- lower than anticipated retention rate of volunteers in a trial;
- negative results of clinical studies; or
- serious side effects experienced by study participants relating to the
drug candidate.
EVEN IF WE OBTAIN INITIAL REGULATORY APPROVAL FOR SYMLIN, 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
16
<PAGE> 18
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.
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, AC2993 or any other product
candidate to the market, we cannot assure that the products will be considered
cost effective and that reimbursement will be available or will be sufficient to
allow us to sell the products 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 OUR STOCK.
We must continue to find sources of capital in order to complete the
development and commercialization of our product candidates, including SYMLIN,
AC2993, AC3056 and AC2993 LAR. Our future capital requirements will depend on
many factors, including:
- our receipt and timing of regulatory approvals for the marketing of
SYMLIN;
- the time and costs involved in obtaining regulatory approvals for any of
our product candidates;
- the costs of manufacturing for any of our product candidates;
- our ability to effectively market, sell and distribute SYMLIN, subject to
obtaining regulatory approvals;
- our ability to establish one or more marketing, distribution or other
commercialization arrangements for SYMLIN;
- 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 existing 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;
17
<PAGE> 19
- 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, 2000, the total principal and interest due to Johnson &
Johnson was approximately $55.2 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 may not have the financial
resources to continue research and development of SYMLIN, or any of our other
product candidates and we could curtail or cease our operations, which would
adversely affect the value of our stock.
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, 2000, we had an accumulated deficit of approximately
$336 million. We expect to incur significant additional operating losses over
the next few 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 product candidates. We may never become profitable. If we become
profitable, we may not remain profitable.
AMYLIN HAS NOT PREVIOUSLY SOLD, MARKETED OR DISTRIBUTED A PRODUCT AND MAY NOT BE
ABLE TO SUCCESSFULLY COMMERCIALIZE SYMLIN.
Amylin has not previously sold, marketed or distributed a product. While we
are currently in the process of creating a commercial team to carry out market
planning, logistics management and sales and marketing functions for SYMLIN, we
may be unable to successfully hire and retain key sales and marketing personnel
that we will need in order to effectively manage and carry out the
commercialization of SYMLIN. Even if we manage to hire and retain necessary
personnel, we may be unable to implement our sales, marketing, and distribution
strategies effectively or profitably. In addition, while our commercialization
plan provides for the staged hiring of sales and marketing personnel and
deferral of costs, where possible, until the approvability of SYMLIN is
determined, in the event that SYMLIN is not approved for marketing by the FDA,
we will have incurred significant expenses that will not be recoverable.
OUR ABILITY TO ENTER INTO THIRD PARTY RELATIONSHIPS IS IMPORTANT TO OUR
SUCCESSFUL DEVELOPMENT AND COMMERCIALIZATION OF SYMLIN AND OUR POTENTIAL
PROFITABILITY.
We do not currently plan to sell, market or distribute any of our products
outside the United States independently. To market any of our products in the
United States or elsewhere, we must obtain access to sales and marketing forces
with technical expertise and with supporting distribution capability in the
relevant geographic territory. With respect to sales, marketing and distribution
outside the United States, we believe that we will likely need to enter into
marketing and distribution arrangements with third parties for SYMLIN or find a
corporate partner who can provide support for commercialization of SYMLIN. We
may also enter into similar arrangements with third parties for the
commercialization of SYMLIN within the United States.
We may not be able to enter into marketing and distribution arrangements or
find a corporate partner for SYMLIN. If we are not able to enter into a
marketing or distribution arrangement or find a corporate partner who can
provide support for commercialization of SYMLIN, we may not be able to
successfully perform these marketing or distribution activities. Moreover, any
new marketer or distributor or corporate partner for SYMLIN may not establish
adequate sales and distribution capabilities or gain market acceptance for our
products, if any.
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<PAGE> 20
WE DO NOT MANUFACTURE OUR OWN PRODUCT CANDIDATES AND MAY NOT BE ABLE TO OBTAIN
ADEQUATE SUPPLIES, WHICH COULD CAUSE DELAYS OR REDUCE PROFIT MARGINS.
The manufacturing of sufficient quantities of new drug candidates is a time
consuming and complex process. We currently have no facilities for the
manufacture of SYMLIN, AC2993, AC3056 or AC2993 LAR. We currently rely on third
parties to manufacture our product candidates, including SYMLIN.
We work with three contract suppliers who have the capabilities for the
commercial manufacture of bulk SYMLIN. We currently rely on one manufacturer for
dosage form SYMLIN in vials, one manufacturer for dosage form SYMLIN in
cartridges and one manufacturer of pens for delivery of SYMLIN in cartridges.
These manufacturers 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 bulk SYMLIN, dosage form SYMLIN or pens. Therefore, we may not be
able to obtain supplies of products with acceptable quality, 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, or are otherwise
unable to deliver, bulk SYMLIN, dosage form SYMLIN or pens for the delivery of
SYMLIN, we may need to engage another manufacturer. The cost and time to
establish manufacturing facilities would be substantial. As a result, using a
new manufacturer could disrupt our ability to supply SYMLIN and/or reduce our
profit margins. Any delay or disruption in the manufacturing of bulk SYMLIN,
dosage form SYMLIN or pens for delivery of SYMLIN could harm our ability to
generate product sales, harm our reputation and 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, AC3056,
and AC2993 LAR are at an early stage. Any additional product candidates will
require significant research, development, preclinical and clinical 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.
As of March 2, 2000, we owned or held exclusive rights to 32 issued United
States patents and approximately 28 pending United States patent applications.
Of these issued patents and patent applications, we have a total of 16 issued
United States patents and 8 pending applications that we believe are relevant to
the development and commercialization of SYMLIN and one issued US patent and 13
pending applications that we believe are relevant to the development and
commercialization of AC2993 or AC2993 LAR. 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
19
<PAGE> 21
for any of its inventions, we may have to participate in interference
proceedings declared by the United States 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
- 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.
There are many companies that are seeking to develop products and therapies
for the treatment of diabetes and other metabolic disorders. 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 it is possible 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
20
<PAGE> 22
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 and product distribution
efficiency and sales and marketing capabilities, areas in which Amylin has
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 product
candidates, 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 product candidates 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.
OUR FUTURE SUCCESS DEPENDS ON OUR ABILITY TO RETAIN OUR CHIEF EXECUTIVE OFFICER
AND OTHER KEY EXECUTIVES AND TO ATTRACT, RETAIN AND MOTIVATE QUALIFIED
PERSONNEL.
We are highly dependent on Joseph C. Cook, Jr., our Chairman and Chief
Executive Officer, and the other principal members of our executive and
scientific teams, the loss of whose services might impede the achievement of our
research, development and commercialization objectives. Recruiting and retaining
qualified sales, marketing and scientific personnel, will also be critical to
our success. Although we believe we will be successful in attracting and
retaining skilled and experienced sales, marketing and 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 for
similar personnel. We also experience competition for the hiring of scientific
personnel from universities and research institutions. 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
21
<PAGE> 23
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 approximately 7.4 million 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.
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. 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 of regulatory approval of SYMLIN, we expect that we may
continue to experience volatility of our stock price throughout 2001. 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;
- our ability to successfully implement our commercialization strategy for
SYMLIN;
- fluctuations in our operating results;
22
<PAGE> 24
- developments in our relationships with third party manufacturers of our
products and other parties who provide services to us;
- 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
Our administrative offices and research laboratories are located in San
Diego, California. As of March 2, 2001, we occupy an aggregate of 53,237 square
feet of office and laboratory space. Our leases on these properties expire in
July and August 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> 25
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>
2000
Fourth Quarter........................................... $12.69 $ 6.50
Third Quarter............................................ 18.13 10.31
Second Quarter........................................... 17.44 7.50
First Quarter............................................ 18.38 7.50
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
</TABLE>
The last reported sale price of our common stock on the Nasdaq National
Market on March 2, 2001 was $9.625. As of March 2, 2001, there were
approximately 942 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.
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<PAGE> 26
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" and the Consolidated Financial Statements and related notes included
elsewhere in this annual report on Form 10-K.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------
2000 1999 1998 1997 1996
--------- --------- --------- --------- ---------
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS OF OPERATIONS
DATA:
Revenues under collaborative
agreements........................... $ -- $ -- $ 16,236 $ 42,609 $ 35,803
--------- --------- --------- --------- ---------
Expenses:
Research and development............. 33,807 19,181 53,597 82,281 64,998
General and administrative........... 10,716 7,920 10,191 15,592 10,420
--------- --------- --------- --------- ---------
44,523 27,101 63,788 97,873 75,418
Net interest income (expense).......... 480 (3,463) (3,546) 637 1,828
--------- --------- --------- --------- ---------
Net loss............................... (44,043) (30,564) (51,098) (54,627) (37,787)
Dividends paid on preferred stock...... -- 335 -- -- --
--------- --------- --------- --------- ---------
Net loss available to common
stockholders......................... $ (44,043) $ (30,899) $ (51,098) $ (54,627) $ (37,787)
========= ========= ========= ========= =========
Net loss per common share -- basic and
diluted.............................. $ (0.71) $ (0.73) $ (1.49) $ (1.70) $ (1.31)
========= ========= ========= ========= =========
Shares used in calculating of net loss
per share -- basic and diluted....... 61,644 42,271 34,325 32,156 28,745
CONSOLIDATED BALANCE SHEETS DATA:
Cash, cash equivalents and short-term
investments.......................... $ 82,899 $ 22,503 $ 10,789 $ 52,748 $ 62,123
Working capital........................ 78,380 17,359 5,192 31,303 46,691
Total assets........................... 90,635 26,422 18,823 65,338 73,533
Long-term obligations.................. 52,103 46,847 44,089 36,980 6,335
Accumulated deficit.................... (335,772) (291,729) (260,830) (209,732) (155,105)
Total stockholders' equity (deficit)... 31,286 (26,400) (31,462) 4,649 48,534
</TABLE>
25
<PAGE> 27
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
Amylin Pharmaceuticals, Inc. is engaged in the discovery, development and
commercialization of drug candidates for the treatment of metabolic disorders.
In December 2000, the Company submitted a New Drug Application ("NDA") to
the United States Food and Drug Administration ("FDA") for approval to market
SYMLIN, the Company's lead diabetes drug candidate, which is targeted for people
with diabetes that use insulin. The Company's second drug candidate, AC2993
(synthetic exendin-4) is in Phase 2 clinical studies and is targeted for people
with type 2 diabetes. The Company's third drug candidate, AC3056, is a compound
that was in-licensed from Aventis Pharma (formerly Hoechst Marion Roussel).
AC3056 is in Phase 1 clinical studies and is being evaluated for potential
utility in the treatment of metabolic disorders relating to cardiovascular
disease. In May 2000, the Company entered into a collaboration agreement with
Alkermes, Inc., a company specializing in the development of products based on
proprietary drug delivery technologies, for the development, manufacture and
commercialization of an injectable long acting formulation of AC2993, or AC2993
LAR, with the goal of developing a product that would enable a once a month
administration of AC2993. This program entered Phase 1 evaluation in March 2001.
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 earlier SYMLIN collaborative agreements and from interest
income. Amylin currently has no product sales and has not received any revenues
from the sale of its drug candidates. The Company has been unprofitable since
inception and expects to incur additional operating losses for the next few
years. As of December 31, 2000, the Company's accumulated deficit was
approximately $336 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. 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. Johnson & Johnson terminated the
collaboration agreement effective in August 1998. As a result of Johnson &
Johnson's withdrawal, they relinquished all rights to share in any SYMLIN
profits and all product and other rights associated with SYMLIN and related
compounds have reverted to Amylin.
Following the termination of the Johnson & Johnson collaboration agreement,
Amylin significantly reduced its workforce and operating expenses. In March
1999, the Company raised $15 million in a private placement of shares of Series
A Preferred Stock from a select group of investors, $6.7 million of which was
invested by Amylin board members and their affiliated funds. The Series A
Preferred Stock automatically converted to 12.6 million shares of common stock
in September 1999. In October 1999, the Company raised $18.5 million in a
private placement of shares of common stock from a select group of institutional
and private investors, predominately those investors who participated in the
March 1999 financing. The Company reported positive Phase 3 clinical data in
August 1999 for SYMLIN for people with type 2 diabetes who use insulin and in
November 1999 for people with type 1 diabetes.
In late 1999, the Company began a judicious ramp-up of its internal
workforce and its external contractors to enable the Company to prepare for a
number of activities, including the filing of the NDA, the submission to the
European regulatory authorities, the planned commercialization of SYMLIN
(pending FDA approval) and the continued research and development of the
Company's other drug candidates, including AC2993, AC3056 and AC2993 LAR.
In February 2000, the Company completed a private sale of common stock to
select institutional and individual investors generating net proceeds of
approximately $95.7 million.
26
<PAGE> 28
RESULTS OF OPERATIONS
Revenue
The Company recognized no revenues in 2000 or 1999. Revenues were $16.2
million in 1998 and were pursuant to the collaboration agreement with Johnson &
Johnson that terminated in August of that year.
Operating Expenses
Total operating expenses were $44.5 million in 2000, $27.1 million in 1999
and $63.8 million in 1998. Research and development expenses were $33.8 million
in 2000, $19.2 million in 1999 and $53.6 million in 1998. The increase in
research and development expenses in 2000 compared to 1999 reflects primarily
external costs associated with the preparation of the SYMLIN NDA, increased
development costs associated with AC2993 and AC3056, development costs
associated with the AC2993 LAR program commenced in 2000 and an increase in the
number of employees. The reduction in 1999 compared to 1998 was primarily a
result of reductions in work force and corresponding reductions in other
operating expenses in 1998 and 1999 following the Johnson & Johnson withdrawal.
General and administrative expenses were $10.7 million in 2000, $7.9
million in 1999 and $10.2 million in 1998. The increase in 2000 compared to 1999
reflects an increase in the number of employees to support the higher level of
activity at the Company, costs associated with the use of consultants and the
commencement of the establishment of a commercial organization in the second
half of 2000. The decrease in 1999 compared to 1998 was primarily the result of
reductions in work force in 1998 as described above. The Company had 128, 52 and
42 full-time employees at December 31, 2000, 1999 and 1998, respectively.
Other Income and Expense
Interest and other income is principally comprised of interest income from
investment of cash reserves. Interest and other income was $6.5 million in 2000,
$2.2 million in 1999 and $1.4 million in 1998. The significant increase in 2000
compared to 1999 is as a result of higher overall cash reserves available for
investment following the private sale of common stock in February 2000. The
increase in 1999 as compared to 1998 reflects higher cash balances in 1999 as a
result of the financing activity in 1999.
Interest and other expense is primarily comprised of interest expense
resulting from long-term debt obligations, principally debt to Johnson & Johnson
incurred pursuant to the terms of the earlier collaboration agreement. The
collaboration agreement provided for a $30.6 million advance under a development
loan facility and advances of $10.9 million under a pre-launch marketing expense
facility. In conjunction with the borrowing under the development loan facility,
the Company also issued warrants to Johnson & Johnson to purchase 1,530,950
shares of Amylin common stock. The estimated value of the warrants is being
amortized to interest expense over the life of the development loan. The loan
agreement also provides that accrued and unpaid interest is added to principal
annually under the development loan facility and quarterly under the pre-launch
marketing expense facility. As of December 31, 2000, 1999 and 1998, the total
principal and interest due to Johnson and Johnson was approximately $55.2
million, $50.6 million and $46.5 million, respectively. The Company has also
used equipment debt financing and capital leases to acquire certain laboratory
and office equipment. The amounts owed under these obligations were $1.6
million, $2.7 million and $6.0 million at December 31, 2000, 1999 and 1998,
respectively. Interest and other expense was $6.1 million in 2000, $5.7 million
in 1999 and $5.0 million in 1998.
Net Loss
The net loss for the year ended December 31, 2000 was $44.0 million
compared to $30.6 million in 1999 and $51.1 million in 1998. The increase in net
loss in 2000 compared to 1999 reflects the increases in operating expenses and
interest and other expense discussed above, slightly offset by the increase in
interest and other income. The decrease in net loss in 1999 as compared to 1998
was primarily due to significant reductions in work force in late 1998 and
significantly reduced operating expenses in 1999. This decrease in net loss in
1999 occurred despite $16.2 million of collaboration revenue in 1998 that was
not repeated in 1999.
27
<PAGE> 29
Amylin expects to incur operating losses over the next few years due to
continuing expenses associated with its research and development programs,
including the preparation of a European regulatory submission for SYMLIN, the
clinical development of AC2993, AC3056 and AC2993 LAR, research, preclinical
development and potential clinical testing of additional product candidates, and
related general and administrative support.
LIQUIDITY AND CAPITAL RESOURCES
Since inception, the Company has financed its operations primarily through
private placements of common stock and preferred stock, public offerings of
common stock, reimbursement of SYMLIN development expenses through the
collaboration with Johnson & Johnson, and other debt financings.
At December 31, 2000 the Company had $82.9 million in cash, cash
equivalents and short-term investments as compared to $22.5 million at December
31, 1999. In February 2000, the Company raised net proceeds of approximately
$95.7 million in a private sale of newly issued common stock to select
institutional and individual investors.
As of December 31, 2000, the Company owes Johnson & Johnson approximately
$55.2 million pursuant to debt incurred in connection with the collaboration
agreement that terminated in 1998. Repayment obligations on this debt commence
in June 2005, however, repayment may be accelerated in the event that the
Company enters into certain specified change in control transactions, specified
types of agreements for SYMLIN or certain types of financing arrangements
subsequent to approval of the SYMLIN NDA by the FDA. Additionally, the Company
owes $1.6 million pursuant to equipment financing which is payable in equal
monthly installments through December 2003.
The Company used cash of $35.6 million, $23.1 million and $54.5 million
from its operating activities in the years ended December 31, 2000, 1999 and
1998, respectively. The Company's investing activities used $64.4 million and
$10.1 million in the years ended December 31, 2000 and 1999, respectively, and
provided $4.2 million in 1998. Investing activities in all three years consisted
primarily of purchases and sales of short-term investments, but also included
purchases of laboratory and office equipment and changes in patents, partially
offset by proceeds from the sale of assets. Financing activities provided $98.1
million, $32.5 million and $12.3 million in the years ended December 31, 2000,
1999 and 1998, respectively. These amounts consisted primarily of sales of
common and preferred stock, partially offset by principal payments on notes
payable and capital lease obligations.
The Company expects its use of cash to increase moderately in the first
half of 2001 in preparation for the commercialization of SYMLIN and as a result
of continued progress of the Company's other development programs, principally
AC2993. In the second half of 2001, cash expenditures are expected to increase
at a higher rate. However, the more significant cash expenses associated with
the hiring and deployment of a SYMLIN sales force and expanded clinical programs
are subject to the approval of the SYMLIN NDA by the FDA and positive data from
ongoing clinical trials.
The Company intends to use its existing financial resources for the
continued development, registration and preparation for commercialization of
SYMLIN, for the AC2993, AC3056 and AC2993 LAR development programs, including
clinical trials, and for other general corporate purposes. Research and
development expenses will include costs of supplying materials for and/or
conducting clinical trials. The amounts actually expended for these purposes may
vary significantly depending upon numerous factors, including the progress of
research and development programs, the results of preclinical and clinical
studies, the timing of regulatory submissions and approvals, if any,
technological advances, determinations as to commercial potential of the
Company's compounds, and the status of competitive products. Expenditures will
also depend upon the availability of additional sources of funds, the
establishment of commercial or collaborative arrangements with other companies,
and other factors.
The Company does 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
28
<PAGE> 30
activities. Operating losses may fluctuate from quarter to quarter as a result
of differences in the timing of expenses incurred and revenues recognized.
The Company's future capital requirements will depend on many factors,
including the timing and costs involved in obtaining regulatory approvals for
SYMLIN, whether regulatory approvals for the marketing of SYMLIN are received,
the ability and extent to which the Company establishes commercialization
arrangements for SYMLIN and AC2993, the ability to progress with other ongoing
and new preclinical studies and clinical trials, the extent of these preclinical
and clinical studies, scientific progress in the Company's other 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.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company invests its excess cash primarily in U.S. government
securities, asset-backed securities and debt instruments of financial
institutions and corporations with strong credit ratings. These instruments have
various short term maturities. The Company does not utilize derivative financial
instruments, derivative commodity instruments or other market risk sensitive
instruments, positions or transactions in any material fashion. Accordingly, the
Company believes that, while the instruments held are subject to changes in the
financial standing of the issuer of such securities, Amylin is 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. The debt is not subject to significant
swings in valuation as interest rates on the Company's debt approximate current
interest rates. A hypothetical 1% adverse move in interest rates along the
entire interest rate yield curve would not materially affect the fair value of
our financial instruments that are exposed to changes in 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.
29
<PAGE> 31
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 2001 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 2001 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 2001 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 2001 annual meeting.
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 DESCRIPTION
-------- ------- -----------
<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.
(19) 3.3 Certificate of Amendment of Amended and Restated Certificate
of Incorporation of the Registrant.
(21) 3.4 Amendment to Amended and Restated Bylaws.
4.1 Reference is made to Exhibits 3.1 - 3.4.
(20) 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.
</TABLE>
30
<PAGE> 32
<TABLE>
<CAPTION>
EXHIBIT EXHIBIT
FOOTNOTE NUMBER DESCRIPTION
-------- ------- -----------
<S> <C> <C>
(22) 4.3 Form of Stock Purchase Agreement dated October 6, 1999
between the Registrant and purchasers of the Registrant's
Common Stock.
(22) 4.4 Warrant Agreement dated December 8, 1999 issued by the
Registrant to 1149336 Ontario, Inc.
(23) 4.5 Form of Stock Purchase Agreement dated February 18, 2000
between the Registrant and purchasers of the Registrant's
Common Stock.
4.6 Warrant Agreement dated October 17, 2000 issued by the
Registrant to Alkermes Controlled Therapeutics II, Inc.
(1) 10.1 Form of Indemnity Agreement entered into between the
Registrant and its directors and officers.+
(21) 10.2 Registrant's 1991 Stock Option Plan, as amended (the "Option
Plan").+
(7) 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.+
(17) 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.
(21) 10.9 Registrant's Non-Employee Directors Stock Option Plan
(the"Directors' Plan").+
(3) 10.10 Form of Nonstatutory Stock Option Agreement under the
Directors' Plan.+
(4) 10.11 Sublease Agreement, dated September 1, 1994, between the
Registrant and ORINCON Corporation.
(4) 10.12 Loan Agreement, dated July 5, 1994, and related Note and
Credit Terms and Conditions Agreement between the Registrant
and Imperial Bank.
(4) 10.13 Phantom Stock Unit Agreement, dated January 4, 1995, between
the Registrant and Farview Management Co., L.P.+
(5)(6) 10.14 Collaboration Agreement, dated June 20, 1995 between the
Registrant and LifeScan, Inc.
(5)(6) 10.15 Stock Purchase Agreement, dated June 20, 1995 between the
Registrant and Johnson & Johnson Development Corporation.
(5)(6) 10.16 Loan and Security Agreement, dated June 20, 1995 between the
Registrant and Johnson & Johnson.
(7) 10.17 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)(9) 10.18 Patent and Technology License Agreement, Consulting
Agreement and Nonstatutory Stock Option Agreement dated
October 1, 1996, between the Registrant and Dr. John Eng.
(8)(9) 10.19 Collaborative Research and Assignment Agreement dated
October 15, 1996, among the Registrant, London Health
Sciences Centre and Dr. John Dupre.
(10) 10.20 Amendment dated January 15, 1997 to the Consulting
Agreement, dated June 15, 1995, between the Registrant and
Joseph C. Cook, Jr.+
</TABLE>
31
<PAGE> 33
<TABLE>
<CAPTION>
EXHIBIT EXHIBIT
FOOTNOTE NUMBER DESCRIPTION
-------- ------- -----------
<S> <C> <C>
(10) 10.21 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.
(11)(12) 10.22 Collaboration Agreement between the Registrant and Hoechst
Marion Roussel Dated March 31, 1997.
(11)(12) 10.23 License and Option Agreement between the Registrant and
Hoechst Marion Roussel Dated March 31, 1997.
(21) 10.24 Registrant's Directors' Deferred Compensation Plan.+
(13) 10.25 Warrant Agreement between the Registrant and the Medical
Research Council dated May 9, 1997.
(13) 10.26 Promissory Note dated September 30, 1997 issued by the
Registrant to Johnson & Johnson.
(13) 10.27 Warrant Agreement between the Registrant and Johnson &
Johnson dated September 30, 1997.
(14) 10.28 Amendment dated September 1, 1996 to Option Agreements
between the Registrant and Howard E. Greene, Jr.+
(14) 10.29 Credit Agreement and related Note between the Registrant and
Imperial Bank dated January 15, 1998.
(15) 10.30 Employee Phantom Stock Salary Deferral Plan (the "Deferral
Plan").+
(15) 10.31 Form of Deferred Compensation Agreement under the Deferral
Plan.+
(16) 10.32 Employment Agreement dated March 25, 1998, between the
Registrant and Joseph C. Cook, Jr.+
(17) 10.33 Special Form of Incentive Stock Option Agreement under the
Option Plan of the Registrant.+
(18) 10.34 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.
(18) 10.35 Stock Option Agreement dated March 25, 1998 between the
Registrant and Joseph C. Cook, Jr.+
(18) 10.36 Stock Option Agreement dated October 23, 1998 between the
Registrant and Joseph C. Cook, Jr.+
(20) 10.37 Form of Special Bonus Award for Supplemental Incentive Bonus
Program.+
(23)(25) 10.38 Agreement, dated July 2, 1997, by and among the Registrant
and Ortho-Biotech and Bachem California.
(23)(25) 10.39 Assignment and Amendment Agreement, dated September 9, 1998,
by and among the Registrant and Bachem California and
Ortho-Biotech.
(23)(25) 10.40 Pramlintide Repurchase Agreement, dated September 16, 1998,
between the Registrant and Ortho-Biotech.
(23)(25) 10.41 Manufacturing Agreement, dated April 28, 1999, between the
Registrant and CP Pharmaceuticals Limited.
(24)(26) 10.42 Development and License Agreement dated May 15, 2000 between
the Registrant and Alkermes Controlled Therapeutics II, Inc.
10.43 2001 Equity Incentive Plan and related forms.+
23.1 Consent of Ernst & Young LLP, Independent Auditors.
24.1 Power of Attorney. Reference is made to page 35.
</TABLE>
32
<PAGE> 34
- ---------------
+ Indicates management or compensatory plan or arrangement required to be
identified pursuant to Item 14(c).
(1) Filed as an exhibit to the Registrant's Registration Statement on Form S-1
(No. 33-44195) or amendments thereto and incorporated herein by reference.
(2) Certain confidential portions deleted pursuant to Order Granting
Application Under the Securities Act of 1933 and Rule 406 Thereunder
Respecting Confidential Treatment dated January 17, 1992.
(3) Filed as an exhibit to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1993.
(4) Filed as an exhibit to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994.
(5) Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1995.
(6) 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.
(7) Filed as an exhibit to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995.
(8) Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1996.
(9) 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.
(10) Filed as an exhibit to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996.
(11) Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1997.
(12) 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.
(13) Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1997.
(14) Filed as an exhibit to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1997.
(15) 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.
(16) 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.
(17) Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1998.
(18) Filed as an exhibit to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1998.
(19) 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.
(20) Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1999.
(21) Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1999.
33
<PAGE> 35
(22) Filed as an exhibit to the Registrant's Registration Statement (No.
333-87033) or amendments thereto and incorporated herein by reference.
(23) Filed as an exhibit to Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1999.
(24) Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended June 30, 2000.
(25) 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 22, 2000.
(26) 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 October 18, 2000.
34
<PAGE> 36
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
AMYLIN PHARMACEUTICALS, INC.
By: /s/ JOSEPH C. COOK, JR.
------------------------------------
Joseph C. Cook, Jr.
Chairman of the Board
and Chief Executive Officer
Date: March 30, 2001
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Joseph C. Cook, Jr. and Mark G. Foletta,
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 30, 2001
- ----------------------------------------------------- and Chief Executive Officer
Joseph C. Cook, Jr. (Principal Executive Officer)
/s/ JAMES C. BLAIR Director March 30, 2001
- -----------------------------------------------------
James. C. Blair, Ph.D.
/s/ VAUGHN D. BRYSON Director March 30, 2001
- -----------------------------------------------------
Vaughn D. Bryson
/s/ GINGER L. GRAHAM Director March 30, 2001
- -----------------------------------------------------
Ginger L. Graham
/s/ HOWARD E. GREENE, JR. Director March 30, 2001
- -----------------------------------------------------
Howard E. Greene, Jr.
/s/ VAUGHN M. KAILIAN Director March 30, 2001
- -----------------------------------------------------
Vaughn M. Kailian
/s/ JAY S. SKYLER Director March 30, 2001
- -----------------------------------------------------
Jay S. Skyler, M.D.
/s/ MARK G. FOLETTA Vice President of Finance and March 30, 2001
- ----------------------------------------------------- Chief Financial Officer
Mark G. Foletta (Principal Financial and
Accounting Officer)
</TABLE>
35
<PAGE> 37
INDEX TO CONSOLIDATED FINANCIAL STATEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Ernst & Young LLP, Independent Auditors........... F-2
Consolidated Balance Sheets as of December 31, 2000 and
1999...................................................... F-3
Consolidated Statements of Operations for the years ended
December 31, 2000, 1999 and 1998.......................... F-4
Consolidated Statements of Stockholders' Equity (Deficit)
for the years ended December 31, 2000, 1999 and 1998...... F-5
Consolidated Statements of Cash Flows for the years ended
December 31, 2000, 1999 and 1998.......................... F-6
Notes to Consolidated Financial Statements.................. F-7
</TABLE>
F-1
<PAGE> 38
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, 2000 and 1999, and the related
consolidated statements of operations, stockholders' equity (deficit), and cash
flows for each of the three years in the period ended December 31, 2000. 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 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, 2000 and 1999 and the consolidated results
of its operations and its cash flows for each of the three years in the period
ended December 31, 2000, in conformity with accounting principles generally
accepted in the United States.
/s/ ERNST & YOUNG LLP
San Diego, California
February 9, 2001
F-2
<PAGE> 39
AMYLIN PHARMACEUTICALS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
2000 1999
--------- ---------
<S> <C> <C>
Current assets:
Cash and cash equivalents................................. $ 6,265 $ 8,171
Short-term investments.................................... 76,634 14,332
Other current assets...................................... 2,727 831
--------- ---------
Total current assets.............................. 85,626 23,334
Property and equipment, net................................. 1,999 928
Patents and other assets, net............................... 3,010 2,160
--------- ---------
$ 90,635 $ 26,422
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable and accrued liabilities.................. $ 6,706 $ 4,860
Current portion of notes payable.......................... 540 1,115
--------- ---------
Total current liabilities......................... 7,246 5,975
Note payable and capital lease obligations.................. 1,080 1,620
Note payable to Johnson & Johnson........................... 51,023 45,227
Commitments and contingencies
Stockholders' equity (deficit):
Preferred stock, $.001 par value, 7,500 shares authorized,
none issued and outstanding at December 31, 2000 and
1999, respectively..................................... -- --
Common stock, $.001 par value, 100,000 shares authorized,
63,383 and 53,972 issued and outstanding at December
31, 2000 and 1999, respectively........................ 63 54
Additional paid-in capital................................ 367,022 265,983
Accumulated deficit....................................... (335,772) (291,729)
Deferred compensation..................................... (307) (653)
Accumulated other comprehensive income (loss)............. 280 (55)
--------- ---------
Total stockholders' equity (deficit).............. 31,286 (26,400)
--------- ---------
$ 90,635 $ 26,422
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE> 40
AMYLIN PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
2000 1999 1998
-------- -------- --------
<S> <C> <C> <C>
Revenues under collaborative agreement..................... $ -- $ -- $ 16,236
-------- -------- --------
Expenses:
Research and development................................. 33,807 19,181 53,597
General and administrative............................... 10,716 7,920 10,191
-------- -------- --------
44,523 27,101 63,788
-------- -------- --------
Loss from operations....................................... (44,523) (27,101) (47,552)
Interest and other income.................................. 6,532 2,215 1,424
Interest and other expense................................. (6,052) (5,678) (4,970)
-------- -------- --------
Net loss................................................... (44,043) (30,564) (51,098)
Dividends paid on preferred stock.......................... -- 335 --
-------- -------- --------
Net loss available to common stockholders.................. $(44,043) $(30,899) $(51,098)
======== ======== ========
Net loss per share -- basic and diluted.................... $ (0.71) $ (0.73) $ (1.49)
======== ======== ========
Weighted average shares -- basic and diluted............... 61,644 42,271 34,325
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE> 41
AMYLIN PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1998, 1999 AND 2000
(IN THOUSANDS)
<TABLE>
<CAPTION>
ACCUMULATED
PREFERRED STOCK COMMON STOCK ADDITIONAL OTHER
--------------- --------------- PAID-IN ACCUMULATED DEFERRED COMPREHENSIVE
SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT COMPENSATION INCOME (LOSS)
------ ------ ------ ------ ---------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1997......... -- $ -- 32,394 $33 $215,245 $(209,732) $ (893) $ (4)
Comprehensive income (loss):
Net loss........................... -- -- -- -- -- (51,098) -- --
Unrealized gain on
available-for-sale securities.... -- -- -- -- -- -- -- 6
Comprehensive loss................. -- -- -- -- -- -- -- --
Issuance of common stock upon
exercise of options.............. -- -- 130 -- 549 -- -- --
Issuance of common stock for
employer 401(k) match............ -- -- 81 -- 458 -- -- --
Issuance of common stock for other
employee benefit plans........... -- -- 121 -- 438 -- -- --
Issuance of common stock in private
placement........................ -- -- 4,000 4 12,730 -- -- --
Deferred compensation related to
stock options.................... -- -- -- -- 337 -- (337) --
Amortization of deferred
compensation..................... -- -- -- -- -- -- 802 --
---- ---- ------ --- -------- --------- ------ ----
Balance at December 31, 1998......... -- -- 36,726 37 229,757 (260,830) (428) 2
Comprehensive income (loss):
Net loss........................... -- -- -- -- -- (30,564) -- --
Unrealized loss on
available-for-sale securities.... -- -- -- -- -- -- -- (57)
Comprehensive loss................. -- -- -- -- -- -- -- --
Issuance of preferred stock........ 125 1 -- -- 15,000 -- -- --
Conversion of preferred stock into
common stock..................... (125) (1) 12,500 13 -- (13) -- --
Dividends paid on preferred stock
in shares of common stock........ -- -- 94 -- 322 (322) -- --
Issuance of common stock upon
exercise of options.............. -- -- 685 1 1,104 -- -- --
Issuance of common stock for
employer 401(k) match............ -- -- 167 -- 108 -- -- --
Issuance of common stock for other
employee benefit plans........... -- -- 52 -- 54 -- -- --
Stock based compensation........... -- -- 48 -- 56 -- -- --
Issuance of common stock in private
placement........................ -- -- 3,700 3 18,480 -- -- --
Deferred compensation related to
stock options.................... -- -- -- -- 990 -- (990) --
Amortization of deferred
compensation..................... -- -- -- -- -- -- 765 --
Issuance of warrants............... -- -- -- -- 112 -- -- --
---- ---- ------ --- -------- --------- ------ ----
Balance at December 31, 1999......... -- -- 53,972 54 265,983 (291,729) (653) (55)
Comprehensive income (loss):
Net loss........................... -- -- -- -- -- (44,043) -- --
Unrealized gain on
available-for-sale securities.... -- -- -- -- -- -- -- 335
Comprehensive loss................. -- -- -- -- -- -- -- --
Issuance of common stock upon
exercise of options and
warrants......................... -- -- 1,026 1 3,297 -- -- --
Issuance of common stock for
employer 401(k) match............ -- -- 20 -- 195 -- -- --
Issuance of common stock for other
employee benefit plans........... -- -- 32 -- 224 -- -- --
Stock based compensation........... -- -- -- -- 508 -- -- --
Issuance of common stock in private
placement offering............... -- -- 8,333 8 95,723 -- -- --
Deferred compensation related to
stock options.................... -- -- -- -- 821 -- (821) --
Amortization of deferred
compensation..................... -- -- -- -- -- -- 1,167 --
Issuance of warrants............... -- -- -- -- 271 -- -- --
---- ---- ------ --- -------- --------- ------ ----
Balance at December 31, 2000......... -- $ -- 63,383 $63 $367,022 $(335,772) $ (307) $280
==== ==== ====== === ======== ========= ====== ====
<CAPTION>
TOTAL
STOCKHOLDERS'
EQUITY
(DEFICIT)
-------------
<S> <C>
Balance at December 31, 1997......... $ 4,649
Comprehensive income (loss):
Net loss........................... (51,098)
Unrealized gain on
available-for-sale securities.... 6
--------
Comprehensive loss................. (51,092)
Issuance of common stock upon
exercise of options.............. 549
Issuance of common stock for
employer 401(k) match............ 458
Issuance of common stock for other
employee benefit plans........... 438
Issuance of common stock in private
placement........................ 12,734
Deferred compensation related to
stock options.................... --
Amortization of deferred
compensation..................... 802
--------
Balance at December 31, 1998......... (31,462)
Comprehensive income (loss):
Net loss........................... (30,564)
Unrealized loss on
available-for-sale securities.... (57)
--------
Comprehensive loss................. (31,621)
Issuance of preferred stock........ 15,000
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
Issuance of common stock for
employer 401(k) match............ 108
Issuance of common stock for other
employee benefit plans........... 54
Stock based compensation........... 56
Issuance of common stock in private
placement........................ 18,483
Deferred compensation related to
stock options.................... --
Amortization of deferred
compensation..................... 765
Issuance of warrants............... 112
--------
Balance at December 31, 1999......... (26,400)
Comprehensive income (loss):
Net loss........................... (44,043)
Unrealized gain on
available-for-sale securities.... 335
--------
Comprehensive loss................. (43,708)
Issuance of common stock upon
exercise of options and
warrants......................... 3,298
Issuance of common stock for
employer 401(k) match............ 195
Issuance of common stock for other
employee benefit plans........... 224
Stock based compensation........... 508
Issuance of common stock in private
placement offering............... 95,731
Deferred compensation related to
stock options.................... --
Amortization of deferred
compensation..................... 1,167
Issuance of warrants............... 271
--------
Balance at December 31, 2000......... $ 31,286
========
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE> 42
AMYLIN PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------
2000 1999 1998
--------- -------- --------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net loss.................................................. $ (44,043) $(30,564) $(51,098)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization........................... 740 1,424 2,696
Deferred revenue........................................ -- -- (6,357)
Amortization of deferred compensation................... 1,167 765 802
Stock based compensation................................ 508 56 --
Amortization of debt discount........................... 1,198 1,198 1,198
Issuance of warrants.................................... 271 112 --
Accrued interest added to note payable.................. 4,598 4,019 7,707
Changes in operating assets:
Accounts payable and accrued liabilities............. 1,846 543 (11,802)
Other assets and other, net.......................... (1,856) (620) 2,330
--------- -------- --------
Net cash used in operating activities........... (35,571) (23,067) (54,524)
INVESTING ACTIVITIES:
Purchases of short-term investments....................... (500,535) (22,260) (2,158)
Sales and maturities of short-term investments............ 438,568 10,090 5,995
Proceeds from sale of Cabrillo Laboratories assets........ -- 2,100 --
Sales (purchases) of equipment, net....................... (1,664) 215 318
Increase in patents....................................... (782) (241) --
--------- -------- --------
Net cash provided by (used in) investing activities....... (64,413) (10,096) 4,155
FINANCING ACTIVITIES:
Proceeds from issuance of common stock, net............... 99,253 19,642 13,721
Proceeds from issuance of preferred stock, net............ -- 15,000 --
Principal payments on capital leases and equipment notes
payable................................................. (1,175) (2,095) (1,468)
--------- -------- --------
Net cash provided by financing activities................. 98,078 32,547 12,253
--------- -------- --------
Decrease in cash and cash equivalents..................... (1,906) (616) (38,116)
Cash and cash equivalents at beginning of year............ 8,171 8,787 46,903
--------- -------- --------
Cash and cash equivalents at end of year.................. $ 6,265 $ 8,171 $ 8,787
========= ======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid............................................. $ 189 $ 290 $ 411
========= ======== ========
NON-CASH TRANSACTION:
Conversion of preferred stock and dividend to common
stock................................................... $ -- $ 12,594 $ --
========= ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE> 43
AMYLIN PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and business activity
Amylin Pharmaceuticals, Inc. (the "Company" or "Amylin") was incorporated
in Delaware on September 29, 1987. Amylin is engaged in the discovery,
development and commercialization of drug candidates for the treatment of
metabolic disorders. The Company's lead drug candidate, SYMLIN(TM) (pramlintide
acetate), is currently under review by the Food and Drug Administration ("FDA")
as a potential treatment for people with diabetes who use insulin. The New Drug
Application ("NDA") for SYMLIN was submitted in December 2000 and was accepted
for filing by the FDA in January 2001. The SYMLIN regulatory submission process
for Europe is underway, with a filing expected in the second quarter of 2001.
The Company's second diabetes drug candidate, AC2993, is in Phase 2 evaluation
for the treatment of type 2 diabetes, and a long acting release formulation,
AC2993 LAR, is in Phase 1 evaluation. The Company's third drug candidate,
AC3056, is currently in Phase 1 evaluation as a potential treatment for
metabolic disorders relating to cardiovascular disease. The Company has adopted
a commercialization plan for SYMLIN that includes establishment of an internal
commercial organization. The Company continues to evaluate arrangements with
companies that may add value to its commercialization efforts for SYMLIN in the
U.S. as well as in Europe, Japan and other markets.
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 original 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. Financial instruments that potentially subject the company to
significant credit risk consist principally of cash equivalents and short-term
investments.
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
F-7
<PAGE> 44
AMYLIN PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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.
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, 2000.
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 capitalized.
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, 2000 and 1999 was $614,000 and
$477,000, respectively. Capitalized 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
Basic and diluted net loss applicable to common stock per share is computed
using the weighted average number of common shares outstanding during the
periods. Common stock equivalents from stock options and warrants are excluded
from the calculation of diluted loss per share for all periods presented because
the effect is antidilutive.
Stock based compensation
The Company has elected to follow Accounting Principles Board Opinion No.
25, Accounting for Stock Issued to Employees ("APB 25") and related
Interpretations 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 the unvested
portion of options granted to non-employees are periodically remeasured and
amortization is adjusted accordingly.
In March 2000, the Financial Accounting Standards Board (the "FASB") issued
FASB Interpretation No. 44, Accounting for Certain Transactions Involving Stock
Compensation, an interpretation of APB 25 ("FIN 44" or the "Interpretation").
The Interpretation, which has been adopted prospectively as of July 1, 2000,
requires that stock options that have been modified to reduce the exercise price
be accounted for as variable. Management believes the Company's accounting for
its stock options is in compliance with the
F-8
<PAGE> 45
AMYLIN PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
guidelines provided in FIN 44 and, therefore, the adoption of FIN 44 did not
affect the Company's results of operations.
Foreign currency translation
Assets and liabilities of foreign operations where the functional currency
is other than the U.S. dollar are translated at fiscal year-end rates of
exchange, and the related revenue and expense amounts are translated at the
average rates of exchange during the fiscal year. Gains and losses resulting
from translating foreign currency financial statements resulted in an immaterial
impact to the Company's financial statements for the years ended December 31,
2000 and 1999.
Comprehensive income
SFAS No. 130, Reporting Comprehensive Income 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.
Effect of new accounting standards
The FASB, has issued SFAS No. 133, Accounting for Derivative Instruments
and Hedging Activities, which establishes accounting and reporting standards for
derivative instruments and hedging activities. The Statement will require the
recognition of all derivatives on the consolidated balance sheet at fair value.
The FASB subsequently delayed implementation of the standard for the financial
years beginning after June 15, 2000. The Company expects to adopt the new
Statement effective January 1, 2001. The impact on the consolidated financial
statements is not expected to be material.
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.
Reclassifications
Certain amounts in prior year financial statements have been reclassified
to conform to the current year presentation.
F-9
<PAGE> 46
AMYLIN PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. INVESTMENTS
The following is a summary of short-term investments as of December 31,
2000 and 1999 (in thousands).
<TABLE>
<CAPTION>
AVAILABLE-FOR-SALE SECURITIES
----------------------------------------------
GROSS GROSS
UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
DECEMBER 31, 2000
U.S. Treasury securities and obligations of U.S.
government agencies.................................. $44,105 $175 $ (7) $44,273
Asset backed securities................................ 18,710 22 -- 18,732
Corporate and other debt securities.................... 13,539 90 -- 13,629
------- ---- ---- -------
Total........................................ $76,354 $287 $ (7) $76,634
======= ==== ==== =======
DECEMBER 31, 1999
U.S. Treasury securities and obligations of U.S.
government agencies.................................. $11,925 $ -- $(75) $11,850
Asset backed securities................................ 1,482 1 (2) 1,481
Other debt securities.................................. 1,001 -- -- 1,001
------- ---- ---- -------
Total........................................ $14,408 $ 1 $(77) $14,332
======= ==== ==== =======
</TABLE>
The gross realized gains on sales of available-for-sale securities totaled
$150,000 and $1,000 and the gross realized losses totaled $7,000 and $2,000 for
the years ended December 31, 2000 and 1999, respectively. Approximately $28.0
million, $44.6 million and $4.0 million mature in 2001, 2002 and thereafter
respectively.
3. OTHER FINANCIAL INFORMATION
Property and equipment consists of the following (in thousands):
<TABLE>
<CAPTION>
AT DECEMBER 31,
------------------
2000 1999
------- -------
<S> <C> <C>
Office equipment and furniture........................... $ 2,155 $ 5,510
Laboratory equipment..................................... 1,621 1,451
Leasehold improvements................................... 603 12
------- -------
4,379 6,973
Less accumulated depreciation and amortization........... (2,380) (6,045)
------- -------
$ 1,999 $ 928
======= =======
</TABLE>
Accounts payable and accrued liabilities consist of the following (in
thousands):
<TABLE>
<CAPTION>
AT DECEMBER 31,
----------------
2000 1999
------ ------
<S> <C> <C>
Accounts payable........................................... $1,873 $ 359
Deferred compensation...................................... 538 631
Accrued employee benefits.................................. 671 419
Other accrued liabilities.................................. 3,624 3,451
------ ------
$6,706 $4,860
====== ======
</TABLE>
F-10
<PAGE> 47
AMYLIN PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4. DEBT AND LEASE COMMITMENTS
In 1996, the Company entered into a master line of credit agreement to
provide up to $5 million of net financing for standard equipment. The
outstanding loan balance was paid in full in October 2000. While outstanding,
the credit agreement provided the lender with a security interest in all
equipment financed under the line.
In November 1997, the Company entered into a financing agreement to provide
up to $2.7 million of financing for equipment purchases. As of December 31,
2000, the Company had an outstanding loan balance of $1,620,000. The Company
makes monthly payments of principal and interest and the loan is due in full in
December 2003. Monthly interest payments are calculated based on prime plus 0.5%
(approximately 10% at December 31, 2000) of the outstanding principal balance.
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 remaining outstanding balance should the Company's cash
and investment balances fall below $10 million. Maturities of this debt
arrangement are $540,000 in each of the years ending December 31, 2001, 2002,
and 2003.
The Company also leases its facilities under operating 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.
Minimum future annual obligations for operating leases for years ending
after December 31, 2000 are as follows (in thousands):
<TABLE>
<S> <C>
2001........................................................ $1,443
2002........................................................ 1,500
2003........................................................ 1,558
2004........................................................ 1,151
------
Total minimum lease payments...................... $5,652
======
</TABLE>
Rent expense for 2000, 1999, and 1998, was $1,138,000, $961,000, and
$2,402,000, respectively.
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 into an agreement
pursuant to which Magellan agreed to perform a portion of the Company's future
product development services.
5. NOTE PAYABLE TO JOHNSON & JOHNSON AND RELATED COMMITMENTS
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 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.
The collaboration terminated in August 1998 and 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 August 2000, Johnson &
Johnson's ownership interest in the Company fell below 5% and they are no longer
considered a related party.
In conjunction with the collaboration, the Company received proceeds of
approximately $30.6 million from a draw down under a development loan facility.
This facility bears interest at the rate of 9.0%,
F-11
<PAGE> 48
AMYLIN PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
compounded annually. At December 31, 2000, the amount owed under this facility
was approximately $40.5 million. In conjunction with the development loan
borrowing, the Company issued warrants to Johnson & Johnson to purchase
1,530,950 shares of the Company's Common stock with a fixed exercise price of
$12 per share and a 10-year exercise period. As of December 31, 2000, the
Company also owed Johnson & Johnson approximately $14.7 million for its share of
pre-launch marketing expenses. The pre-marketing loan facility bears interest at
prime plus 0.5%, 10% at December 31, 2000, compounded quarterly. As of December
31, 2000, the total principal and interest due to Johnson & Johnson was
approximately $55.2 million. The amount presented in the consolidated balance
sheet of $51.0 million is net of a debt discount of $4.2 million, which
represents the unamortized portion of the value assigned to the warrants issued
to Johnson & Johnson. The Company believes that the carrying value of this note
approximates fair value as the note is at prevailing market interest rates. The
development and marketing loans are secured by the Company's issued patents and
patent applications relating to amylin, including those relating to SYMLIN. The
development loan is due in June 2005 and the pre-marketing loan is due in June
2010. The repayment of these obligations may be accelerated in the event that
the Company enters into certain specified change in control transactions,
specified types of agreements for SYMLIN or certain types of financing
arrangements subsequent to the FDA's approval of the SYMLIN NDA.
In September 1998, Amylin entered into a repurchase agreement with
Ortho-Biotech, Inc., an affiliate of Johnson & Johnson, which provided for the
possible future purchase by Amylin of certain bulk quantities of SYMLIN
previously purchased by Johnson & Johnson from third party vendors during the
collaboration agreement. Johnson & Johnson purchased the bulk SYMLIN from
certain suppliers based upon agreed upon prices. The repurchase price shall be
the same price paid by Johnson & Johnson to the suppliers plus a carrying cost
equivalent to the five-year U.S. Treasury Note rate plus 3%. Amylin must
repurchase the bulk SYMLIN in full on the first to occur of certain events,
including the execution of an agreement with a major pharmaceutical company
relating to the development, commercialization and/or sale of SYMLIN, receipt of
regulatory approval for the sale of SYMLIN, or a change of control of Amylin. As
of December 31, 2000, Ortho-Biotech had purchased inventory under this agreement
totaling $8.4 million, and the repurchase cost to Amylin was approximately $9.7
million.
In September 1998, the Company entered into an agreement with
Ortho-Biotech, Inc. and a drug manufacturer for the assignment of the rights and
obligations of Ortho-Biotech to purchase quantities of bulk SYMLIN from this
manufacturer under a July 1997 agreement among Amylin, Ortho-Biotech and the
manufacturer. Pursuant to this agreement, this manufacturer has agreed to supply
certain quantities of bulk 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 million in favor of the manufacturer which is secured by an equal
deposit included in short-term investments at December 31, 2000.
6. STOCKHOLDERS' EQUITY
Stock Purchase Plan
In November 1991, the Company adopted the Employee Stock Purchase Plan (the
"Stock Purchase Plan"), under which 600,000 shares of common stock may be issued
to eligible employees, including Officers. The price of common stock issued
under the Stock 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,
2000, approximately 507,000 shares of common stock had been issued under the
plan.
F-12
<PAGE> 49
AMYLIN PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Stock Options Plans
Under the Company's 1991 Stock Option Plan (the "1991 Plan"), 7.8 million
shares of common stock were reserved for issuance upon exercise of options
granted to employees and consultants of the Company. The 1991 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.
In December 2000, the Company implemented the Company's 2001 Equity
Incentive Plan (the "2001 Plan"), which provides for an additional 4 million
shares of common stock reserved for issuance upon exercise of options granted to
employees and consultants of the Company. The 2001 Plan was approved at a
special meeting of stockholders in January 2001. The exercise price of incentive
stock options may not be less than 100% of the fair market value of the stock
subject to the option on the date of the grant and, in some cases, may not be
less than 110% of such fair market value. The exercise price of nonstatutory
options may not be less than 85% of the fair market value of the stock on the
date of the grant and, in some cases, may not be less than 100% of such fair
market value.
Under the Company's Non-Employee Directors' Stock Option Plan (the
"Directors' Plan"), 450,000 shares of common stock are reserved for issuance
upon exercise of nonqualified stock options granted to Non-Employee Directors of
the Company.
The following table summarizes option activity for all of the option plans
(in thousands):
<TABLE>
<CAPTION>
SHARES WEIGHTED AVERAGE
UNDER OPTION EXERCISE PRICE
------------ ----------------
<S> <C> <C>
Outstanding at December 31, 1997................ 5,363 $ 7.91
Granted....................................... 3,364 2.54
Exercised..................................... (169) 4.32
Cancelled..................................... (2,591) 8.67
------ ------
Outstanding at December 31, 1998................ 5,967 4.65
Granted....................................... 1,241 2.04
Exercised..................................... (688) 1.60
Cancelled..................................... (1,952) 5.49
------ ------
Outstanding at December 31, 1999................ 4,568 4.10
Granted....................................... 2,179 12.40
Exercised..................................... (913) 2.88
Cancelled..................................... (156) 6.75
------ ------
Outstanding at December 31, 2000................ 5,678 $ 7.10
====== ======
</TABLE>
F-13
<PAGE> 50
AMYLIN PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
At December 31, 2000, approximately 3,986,000 shares remained available for
grant or sale under the Company's stock options plans. Following is a further
breakdown of the options outstanding as of December 31, 2000 (in thousands):
<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 - $ 0.781 806 7.98 $ 0.54 627 $ 0.47
$ 0.875 - $ 2.656 927 7.74 2.16 587 2.27
$ 2.719 - $ 4.500 666 4.64 4.17 599 4.26
$ 4.563 - $10.250 1,406 7.52 7.59 726 6.45
$10.438 - $17.313 1,873 7.99 13.04 503 11.61
----- ---- ------ ----- ------
$ 0.313 - $17.313 5,678 7.44 $ 7.10 3,042 $ 4.83
===== ==== ====== ===== ======
</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 2000, 1999, and 1998, respectively:
risk-free interest of 5.50%, 6.00%, and 5.50%; dividend yield of 0%; volatility
factors of the expected market price of the Company's common stock of 132%,
221%, and 74% 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 (in thousands):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
2000 1999 1998
-------- -------- --------
<S> <C> <C> <C>
Adjusted pro forma net loss........................ $(49,546) $(32,258) $(52,713)
Adjusted pro forma net loss per share.............. $ (0.80) $ (0.76) $ (1.54)
</TABLE>
The weighted-average fair value of options granted during 2000, 1999, and
1998, was $11.94, $2.01, and $1.66, respectively.
Stock Warrants
In May 1997, in conjunction with an amendment to a License Agreement, the
Company issued warrants to the licensor to purchase 20,000 shares of the
Company's common stock with a fixed exercise price of $11.375 per share and a
10-year exercise period. The Company determined that the value of this warrant
was not material.
In September 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
"Note Payable to Johnson & Johnson and Related Commitments"). The estimated fair
value of the warrants was $8.1 million and this amount is being amortized over
the life of the development loan.
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 $0.97 per share or convert this warrant
into shares equal to the value of this warrant as determined per the Services
Agreement. The Company valued the warrant under the Black-Scholes methodology at
$55,000, which was expensed in 1999 as an additional cost of the transaction.
This warrant was exercised in September 2000.
F-14
<PAGE> 51
AMYLIN PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
In December 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 $3.31 per share and a 3-year
exercise period. The Company valued the warrant under the Black-Scholes
methodology at $57,000, which was expensed in 1999 as an additional cost of the
transaction.
In October 2000, in conjunction with a development, manufacture and
commercialization agreement the Company issued warrants to a collaborative
partner to purchase 25,000 shares of the Company's common stock with a fixed
exercise price of $10.55 per share which expires in October 2007. The Company
valued the warrant under the Black-Scholes methodology at $271,000, which amount
was expensed in 2000 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, 2000 (in thousands):
<TABLE>
<S> <C>
Employee Stock Option Plans................................. 9,271
Employee Stock Purchase Plan................................ 93
Directors Plan.............................................. 392
Warrants.................................................... 1,586
------
11,342
======
</TABLE>
Issuance of Preferred and 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 12.6 million shares of
common stock on September 2, 1999.
In October 1999, the Company raised $18.5 million in a private placement of
3.7 million 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.
In February 2000, the Company completed a private stock offering to select
institutional and individual investors of 8.3 million shares of common stock at
a price of $12.00 per share. Net proceeds from this transaction were
approximately $95.7 million.
7. COLLABORATIVE AGREEMENTS
On May 15, 2000, the Company signed an agreement with Alkermes, Inc., a
company specializing in the development of products based on proprietary drug
delivery technologies, for the development, manufacture and commercialization of
an injectable long-acting formulation of AC2993, or AC2993 LAR, with the goal of
developing a product that would allow a once a month administration of AC2993.
Under the terms of the agreement, Alkermes has granted the Company an
exclusive, worldwide license to its Medisorb(R) technology for the development
and commercialization of injectable sustained release formulations of exendins,
such as AC2993, and other related compounds that Amylin may develop. In
exchange, Alkermes will receive funding for research and development and
milestone payments comprised of cash and warrants to purchase the Company's
common stock upon achieving specified development and commercialization goals.
Alkermes will also receive a combination of royalty payments and manufacturing
fees based on any future product sales.
F-15
<PAGE> 52
AMYLIN PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8. INCOME TAXES
Significant components of Amylin's deferred tax assets as of December 31,
2000 and 1999 are shown below (in thousands). A valuation allowance of $142.6
million of which $20.3 million is related to 2000 changes, has been recognized
as of December 31, 2000 to offset the deferred tax assets, as realization of
such assets in the future is uncertain.
<TABLE>
<CAPTION>
2000 1999
--------- ---------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards................... $ 112,540 $ 99,500
Research and development credits................... 16,052 13,608
Capitalized research expenses...................... 13,795 9,125
Other.............................................. 182 60
--------- ---------
Total deferred tax assets.................. 142,569 122,293
Valuation allowance for deferred tax assets.......... (142,569) (122,293)
--------- ---------
Net deferred tax assets.............................. $ -- $ --
========= =========
</TABLE>
At December 31, 2000, Amylin had Federal net operating loss carryforwards
of approximately $310 million, California net operating loss carryforwards of
approximately $32.6 million and foreign tax net operating loss carryforwards of
approximately $7.6 million. 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 begin
to expire in 2002 unless previously utilized. The California tax loss
carryforwards will continue to expire in 2001. The Company also has Federal
research and development tax credit carryforwards of $12.9 million and
California research and development tax credit carryforwards of $4.8 million,
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 tax loss
carryforwards.
F-16
<PAGE> 53
AMYLIN PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9. QUARTERLY FINANCIAL DATA (UNAUDITED)
The following financial information reflects all normal recurring
adjustments which are, in the opinion of management, necessary for a fair
statement of the results of the interim periods. Summarized quarterly data for
fiscal 2000 and 1999 are as follows (in thousands, except per share data):
<TABLE>
<CAPTION>
FOR THE QUARTERS ENDED
---------------------------------------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
-------- -------- ------------ -----------
<S> <C> <C> <C> <C>
FISCAL 2000:
Loss from operations......................... $(8,963) $(10,854) $(10,829) $(13,877)
Net loss..................................... (9,536) (10,635) (10,026) (13,846)
Net loss applicable to common stock.......... (9,536) (10,635) (10,026) (13,846)
Basic and diluted net loss per share(1)...... (0.17) (0.17) (0.16) (0.22)
FISCAL 1999:
Loss from operations......................... $(5,354) $ (5,632) $ (6,043) $(10,072)
Net loss..................................... (6,631) (6,693) (6,820) (10,420)
Net loss applicable to common stock.......... (6,631) (6,897) (6,951) (10,420)
Basic and diluted net loss per share(1)...... (0.18) (0.18) (0.17) (0.19)
</TABLE>
- ---------------
(1) Net loss per share is computed independently for each of the quarters
presented. Therefore, the sum of the quarterly per-share calculations will
not necessarily equal the annual per-share calculation.
F-17
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.6
<SEQUENCE>2
<FILENAME>a69957ex4-6.txt
<DESCRIPTION>EXHIBIT 4.6
<TEXT>
<PAGE> 1
EXHIBIT 4.6
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS. THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT
BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THESE SECURITIES UNDER THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
REGISTRATION IS NOT REQUIRED AND THAT AN APPLICABLE EXEMPTION IS AVAILABLE.
WARRANT TO PURCHASE
25,000 SHARES OF COMMON STOCK OF
AMYLIN PHARMACEUTICALS, INC.
(Void after October 17, 2007)
This certifies that Alkermes Controlled Therapeutics Inc. II, a
Pennsylvania corporation, or its permitted assigns (the "Holder"), for value
received, is entitled to purchase from AMYLIN PHARMACEUTICALS, INC., a Delaware
corporation (the "Company"), having a place of business at 9373 Towne Centre
Drive, San Diego, California 92121, Twenty-five Thousand (25,000) fully paid and
nonassessable shares of the Company's Common Stock ("Stock") for cash at a price
of $10.55 per share (the "Stock Purchase Price") at any time or from time to
time on or after October 17, 2000 and up to and including 5:00 p.m. (Pacific
time) on October 17, 2007, such day being referred to herein as the "Expiration
Date," upon surrender to the Company at its principal office (or at such other
location as the Company may advise the Holder in writing) of this Warrant
properly endorsed with the Form of Subscription attached hereto as Addendum A
duly filled in and signed and upon payment in cash or by check of the aggregate
Stock Purchase Price for the number of shares for which this Warrant is being
exercised determined in accordance with the provisions hereof. The Stock
Purchase Price and the number of shares purchasable hereunder are subject to
adjustment as provided in Section 3 of this Warrant.
This Warrant is subject to the following terms and conditions:
1. EXERCISE; ISSUANCE OF CERTIFICATES; PAYMENT FOR SHARES.
1.1 GENERAL. This Warrant is exercisable at the option of the
holder of record hereof at any time or from time to time on or after October 17,
2000 and up to and including the Expiration Date for all or any part of the
shares of Stock (but not for a fraction of a share) which may be purchased
hereunder. The Company agrees that the shares of Stock purchased under this
Warrant shall be and are deemed to be issued to the Holder hereof as the record
owner of such shares as of the close of business on the date on which this
Warrant shall have been surrendered,
1
<PAGE> 2
properly endorsed, the completed, executed Form of Subscription delivered and
payment made for such shares. Certificates for the shares of Stock so purchased,
together with any other securities or property to which the Holder hereof is
entitled upon such exercise, shall be delivered to the Holder hereof by the
Company at the Company's expense within a reasonable time after the rights
represented by this Warrant have been so exercised. In case of a purchase of
less than all the shares which may be purchased under this Warrant, the Company
shall cancel this Warrant and execute and deliver a new Warrant or Warrants of
like tenor for the balance of the shares purchasable under the Warrant
surrendered upon such purchase to the Holder hereof within a reasonable time.
Each stock certificate so delivered shall be in such denominations of Stock as
may be requested by the Holder hereof and shall be registered in the name of
such Holder.
Notwithstanding anything to the contrary contained in this Section 1,
the Holder shall either (i) exercise this Warrant in full by paying to the
Company, by cash or check, an amount equal to the aggregate Stock Purchase Price
of the shares being purchased, or (ii) convert this Warrant into shares equal to
the value (as determined below) of this Warrant by surrender of this Warrant a
the principal office of the Company together with the Form of Subscription in
which event the Company shall issue to the Holder a number of shares of Common
Stock computed using the following formula:
X = Y (A-B)
-------
A
<TABLE>
<S> <C>
Where: X = the number of shares of Common Stock to be issued to the Holder
Y = the number of shares of Common Stock under this Warrant
A = the fair market value of one share of Common Stock (at the date
of such surrender)
B = the Stock Purchase Price (as adjusted to the date of such surrender)
</TABLE>
As used herein, current fair market value of Common Stock shall mean
with respect to each share of Common Stock the closing price of the Company's
Common Stock as quoted on the Nasdaq Stock Market, or, if on any day the Common
Stock is not so listed, the average of the highest bid and the lowest asked
price on such day in the domestic over-the-counter market as reported by the
National Quotation Bureau, Incorporated, or any similar successor organization,
in each case averaged over a period of 15 trading days consisting of the day as
of which the current fair market value of Common Stock is being determined and
the 14 consecutive trading days prior to such day. If at any time the Common
Stock is not listed on any securities exchange or quoted in the over-the-counter
market, the current fair market value of Common Stock shall be used for the
calculation of A above, and shall be determined in good faith by the Board of
Directors of the Company.
2. SHARES TO BE FULLY PAID; RESERVATION OF SHARES. The Company covenants
and agrees that all shares of Stock which may be issued upon the exercise of the
rights represented by this Warrant will, upon issuance, be duly authorized,
validly issued, fully paid and nonassessable and free from all preemptive rights
of any shareholder and free of all taxes, liens and charges
2
<PAGE> 3
with respect to the issue thereof. The Company further covenants and agrees that
during the period within which the rights represented by this Warrant may be
exercised, the Company will at all times have authorized and reserved, for the
purpose of issue or transfer upon exercise of the subscription rights evidenced
by this Warrant, a sufficient number of shares of authorized but unissued Stock,
or other securities and property, when and as required to provide for the
exercise of the rights represented by this Warrant. The Company will take all
such action as may be necessary to assure that such shares of Stock may be
issued as provided herein without violation of any applicable law or regulation,
or of any requirements of any domestic securities exchange upon which the Stock
may be listed; provided, however, that the Company shall not be required to
effect a registration under Federal or State securities laws with respect to
such exercise. The Company will not take any action which would result in any
adjustment of the Stock Purchase Price (as defined in Section 3 hereof) if the
total number of shares of Stock issuable after such action upon exercise of all
outstanding warrants, together with all shares of Stock then issuable upon
exercise of all options and upon the conversion of all convertible securities
then outstanding, would exceed the total number of shares of Stock then
authorized by the Company's Certificate of Incorporation.
3. ADJUSTMENT OF STOCK PURCHASE PRICE AND NUMBER OF Shares. The Stock
Purchase Price and the number of shares purchasable upon the exercise of this
Warrant shall be subject to adjustment from time to time upon the occurrence of
certain events described in this Section 3. Upon each adjustment of the Stock
Purchase Price, the Holder of this Warrant shall thereafter be entitled to
purchase, at the Stock Purchase Price resulting from such adjustment, the number
of shares obtained by multiplying the Stock Purchase Price in effect immediately
prior to such adjustment by the number of shares purchasable pursuant hereto
immediately prior to such adjustment, and dividing the product thereof by the
Stock Purchase Price resulting from such adjustment.
3.1 SUBDIVISION OR COMBINATION OF STOCK. In case the Company
shall at any time subdivide its outstanding shares of Stock into a greater
number of shares, the Stock Purchase Price in effect immediately prior to such
subdivision shall be proportionately reduced, and conversely, in case the
outstanding shares of Stock of the Company shall be combined into a smaller
number of shares, the Stock Purchase Price in effect immediately prior to such
combination shall be proportionately increased.
3.2 DIVIDENDS IN STOCK, OTHER STOCK, PROPERTY, RECLASSIFICATION.
If at any time or from time to time all holders of shares of the Company's
Common Stock (or any shares of stock or other securities at the time receivable
upon the exercise of this Warrant) shall have received or become entitled to
receive, without payment therefor:
(A) Stock or any shares of stock or other securities
which are at any time directly or indirectly convertible into or exchangeable
for Stock, or any rights or options to subscribe for, purchase or otherwise
acquire any of the foregoing by way of dividend or other distribution, or
3
<PAGE> 4
(B) Stock or additional stock or other securities or
property (including cash) by way of spin-off, split-up, reclassification,
combination of shares or similar corporate rearrangement, (other than shares of
Stock issued as a stock-split, adjustments in respect of which shall be covered
by the terms of Section 3.1 above), then and in each such case, the Holder
hereof shall, upon the exercise of this Warrant, be entitled to receive, in
addition to the number of shares of Stock receivable thereupon, and without
payment of any additional consideration therefor, the amount of stock and other
securities and property which such Holder would hold on the date of such
exercise had he been the holder of record of such Stock as of the date on which
holders of Stock received or became entitled to receive such shares or all other
additional stock and other securities and property.
3.3 REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER OR
SALE. If any capital reorganization of the capital stock of the Company, or any
consolidation or merger of the Company with another corporation, or the sale of
all or substantially all of its assets to another corporation shall be effected
in such a way that holders of Stock shall be entitled to receive stock,
securities, or other assets or property, then, as a condition of such
reorganization, reclassification, consolidation, merger or sale, lawful and
adequate provisions shall be made whereby the Holder hereof shall thereafter
have the right to purchase and receive (in lieu of the shares of the Stock of
the Company immediately theretofore purchasable and receivable upon the exercise
of the rights represented hereby) such shares of stock, securities or other
assets or property as may be issued or payable with respect to or in exchange
for a number of outstanding shares of such Stock equal to the number of shares
of such stock immediately theretofore purchasable and receivable upon the
exercise of the rights represented hereby. In any reorganization described
above, appropriate provision shall be made with respect to the rights and
interests of the Holder of this Warrant to the end that the provisions hereof
(including, without limitation, provisions for adjustments of the Stock Purchase
Price and of the number of shares purchasable and receivable upon the exercise
of this Warrant) shall thereafter be applicable, as nearly as may be, in
relation to any shares of stock, securities or assets thereafter deliverable
upon the exercise hereof.
3.4 NOTICE OF ADJUSTMENT. Upon any adjustment of the Stock
Purchase Price or any increase or decrease in the number of shares purchasable
upon the exercise of this Warrant, the Company shall give written notice
thereof, by first class mail, postage prepaid, addressed to the registered
Holder of this Warrant at the address of such Holder as shown on the books of
the Company. The notice shall be signed by the Company's chief financial officer
and shall state the Stock Purchase Price resulting from such adjustment and the
increase or decrease, if any, in the number of shares purchasable at such price
upon the exercise of this Warrant, setting forth in reasonable detail the method
of calculation and the facts upon which such calculation is based.
3.5 OTHER NOTICES. If at any time:
(A) the Company shall declare any cash dividend upon its
Common Stock;
4
<PAGE> 5
(B) the Company shall declare any dividend upon its
Common Stock payable in stock or make any special dividend or other distribution
to the holders of its Common Stock;
(C) the Company shall offer for subscription pro rata to
the holders of its Common Stock any additional shares of stock of any class or
other rights;
(D) there shall be any capital reorganization or
reclassification of the capital stock of the Company; or consolidation or merger
of the Company with, or sale of all or substantially all of its assets to,
another corporation; or
(E) there shall be a voluntary or involuntary
dissolution, liquidation or winding-up of the Company;
then, in any one or more of said cases, the Company shall give, by first class
mail, postage prepaid, addressed to the Holder of this Warrant at the address of
such Holder as shown on the books of the Company, (a) at least 20 days' prior
written notice of the date on which the books of the Company shall close or a
record shall be taken for such dividend, distribution or subscription rights or
for determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up, and (b) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation, winding-up or pro-rata
subscription, at least 20 days' prior written notice of the date when the same
shall take place; provided, however, that the Holder shall make a best efforts
attempt to respond to such notice as early as possible after the receipt
thereof. Any notice given in accordance with the foregoing clause (a) shall also
specify, in the case of any such dividend, distribution or subscription rights,
the date on which the holders of Common Stock shall be entitled thereto. Any
notice given in accordance with the foregoing clause (b) shall also specify the
date on which the holders of Stock shall be entitled to exchange their Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation,
winding-up, or conversion, as the case may be.
4. ISSUE TAX. The issuance of certificates for shares of Stock upon the
exercise of the Warrant shall be made without charge to the Holder of the
Warrant for any issue tax (other than any applicable income taxes) in respect
thereof; provided, however, that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the issuance and
delivery of any certificate in a name other than that of the then Holder of the
Warrant being exercised.
5. CLOSING OF BOOKS. The Company will at no time close its transfer
books against the transfer of any warrant or of any shares of Stock issued or
issuable upon the exercise of any warrant in any manner which interferes with
the timely exercise of this Warrant.
6. NO VOTING OR DIVIDEND RIGHTS; LIMITATION OF LIABILITY. Nothing
contained in this Warrant shall be construed as conferring upon the Holder
hereof the right to vote or to consent or to receive notice as a shareholder of
the Company or any other matters or any rights whatsoever as a shareholder of
the Company. No dividends or interest shall be payable or
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<PAGE> 6
accrued in respect of this Warrant or the interest represented hereby or the
shares purchasable hereunder until, and only to the extent that, this Warrant
shall have been exercised. No provisions hereof, in the absence of affirmative
action by the Holder to purchase shares of Stock, and no mere enumeration herein
of the rights or privileges of the Holder hereof, shall give rise to any
liability of such Holder for the Stock Purchase Price or as a shareholder of the
Company, whether such liability is asserted by the Company or by its creditors.
7. WARRANTS TRANSFERABLE. Subject to compliance with applicable federal
and state securities laws, this Warrant and all rights hereunder are
transferable, in whole, without charge to the Holder hereof (except for transfer
taxes), upon surrender of this Warrant properly endorsed. Each taker and holder
of this Warrant, by taking or holding the same, consents and agrees that this
Warrant, when endorsed in blank, shall be deemed negotiable, and that the Holder
hereof, when this Warrant shall have been so endorsed, may be treated by the
Company, at the Company's option, and all other persons dealing with this
Warrant as the absolute owner hereof for any purpose and as the person entitled
to exercise the rights represented by this Warrant, or to the transfer hereof on
the books of the Company any notice to the contrary notwithstanding; but until
such transfer on such books, the Company may treat the registered owner hereof
as the owner for all purposes.
8. MODIFICATION AND WAIVER. This Warrant and any provision hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the Company and the Holder.
9. NOTICES. Any notice, request or other document required or permitted
to be given or delivered to the Holder hereof or the Company shall be delivered
or shall be sent by certified mail, postage prepaid, to each such holder at its
address as shown on the books of the Company or to the Company at the address
indicated therefor in the first paragraph of this Warrant or such other address
as either may from time to time provide to the other.
10. BINDING EFFECT ON SUCCESSORS. This Warrant shall be binding upon any
corporation succeeding the Company by merger, consolidation or acquisition of
all or substantially all of the Company's assets. All of the obligations of the
Company relating to the Stock issuable upon the exercise of this Warrant shall
survive the exercise and termination of this Warrant. All of the covenants and
agreements of the Company shall inure to the benefit of the successors and
assigns of the Holder hereof.
11. DESCRIPTIVE HEADINGS AND GOVERNING LAW. The description headings of
the several sections and paragraphs of this Warrant are inserted for convenience
only and do not constitute a part of this Warrant. This Warrant shall be
construed and enforced in accordance with, and the rights of the parties shall
be governed by, the laws of the State of Delaware without regard to conflict of
laws principles.
12. LOST WARRANTS. The Company represents and warrants to the Holder
hereof that upon receipt of evidence reasonably satisfactory to the Company of
the loss, theft, destruction, or mutilation of this Warrant and, in the case of
any such loss, theft or destruction, upon receipt of an indemnity reasonably
satisfactory to the Company, or in the case of any such mutilation upon
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<PAGE> 7
surrender and cancellation of such Warrant, the Company, at its expense, will
make and deliver a new Warrant, of like tenor, in lieu of the lost, stolen,
destroyed or mutilated Warrant.
13. FRACTIONAL SHARES. No fractional shares shall be issued upon
exercise of this Warrant. The Company shall, in lieu of issuing any fractional
share, pay the holder entitled to such fraction a sum in cash equal to such
fraction multiplied by the then effective Stock Purchase Price.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its officers, thereunto duly authorized as of the 17th day of
October, 2000.
AMYLIN PHARMACEUTICALS, INC.,
a Delaware corporation
By:
-------------------------------------
Joseph C. Cook, Jr.
Chief Executive Officer and
Chairman of the Board of Directors
7
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.43
<SEQUENCE>3
<FILENAME>a69957ex10-43.txt
<DESCRIPTION>EXHIBIT 10.43
<TEXT>
<PAGE> 1
EXHIBIT 10.43
AMYLIN PHARMACEUTICALS, INC.
2001 EQUITY INCENTIVE PLAN
ADOPTED DECEMBER 14, 2000, AMENDED FEBRUARY 8, 2001
APPROVED BY STOCKHOLDERS JANUARY 25, 2001
TERMINATION DATE: DECEMBER 13, 2010
1. PURPOSES.
(a) ELIGIBLE STOCK AWARD RECIPIENTS. The persons eligible to receive
Stock Awards are the Employees, Directors and Consultants of the Company and its
Affiliates.
(b) AVAILABLE STOCK AWARDS. The purpose of the Plan is to provide a means
by which eligible recipients of Stock Awards may be given an opportunity to
benefit from increases in value of the Common Stock through the granting of the
following Stock Awards: (i) Incentive Stock Options, (ii) Nonstatutory Stock
Options, (iii) stock bonuses and (iv) rights to acquire restricted stock.
(c) GENERAL PURPOSE. The Company, by means of the Plan, seeks to retain
the services of the group of persons eligible to receive Stock Awards, to secure
and retain the services of new members of this group and to provide incentives
for such persons to exert maximum efforts for the success of the Company and its
Affiliates.
2. DEFINITIONS.
(a) "AFFILIATE" means any parent corporation or subsidiary corporation of
the Company, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f), respectively, of the Code.
(b) "ANNUAL MEETING" means the annual meeting of the stockholders of the
Company.
(c) "BOARD" means the Board of Directors of the Company.
(d) "CODE" means the Internal Revenue Code of 1986, as amended.
(e) "COMMITTEE" means a committee of one or more members of the Board
appointed by the Board in accordance with subsection 3(c).
(f) "COMMON STOCK" means the common stock of the Company.
(g) "COMPANY" means Amylin Pharmaceuticals, Inc., a Delaware corporation.
(h) "CONSULTANT" means any person, including an advisor, whether an
individual or an entity, (i) engaged by the Company or an Affiliate to render
consulting or advisory services
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and who is compensated for such services or (ii) who is a member of the Board of
Directors of an Affiliate. However, a person shall not be deemed a "Consultant"
by reason of such person's service as a Director and/or payments of director's
fees to such person.
(i) "CONTINUOUS SERVICE" means that the Participant's service with the
Company or an Affiliate, whether as an Employee, Director or Consultant, is not
interrupted or terminated. A Participant's Continuous Service shall not be
deemed to have terminated by reason of a change in the capacity in which such
Participant renders service to the Company or an Affiliate as an Employee,
Consultant or Director or a change in the entity for which such Participant
renders such service, provided that there is otherwise no interruption or
termination of such Participant's Continuous Service. For example, a change in
status from an employee of the Company to a consultant of an Affiliate or a
Director will not constitute an interruption of Continuous Service. The Board or
the chief executive officer of the Company, in that party's sole discretion, may
determine whether Continuous Service shall be considered interrupted in the case
of any leave of absence approved by that party, including sick leave, military
leave or any other personal leave.
(j) "COVERED EMPLOYEE" means the chief executive officer and the four (4)
other highest compensated officers of the Company for whom total compensation is
required to be reported to stockholders under the Exchange Act, as determined
for purposes of Section 162(m) of the Code.
(k) "DIRECTOR" means a member of the Board of Directors of the Company.
(l) "DISABILITY" means the permanent and total disability of a person
within the meaning of Section 22(e)(3) of the Code.
(m) "EMPLOYEE" means any person employed by the Company or an Affiliate.
A person shall not be deemed an Employee by reason of such person's service as a
Director and/or payments of director's fees to such person.
(n) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
(o) "FAIR MARKET VALUE" means, as of any date, the value of the Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or traded on the Nasdaq National Market or the Nasdaq SmallCap Market,
the Fair Market Value of a share of Common Stock shall be the closing sales
price for such stock (or the closing bid, if no sales were reported) as quoted
on such exchange or market (or the exchange or market with the greatest volume
of trading in the Common Stock) on the last market trading day prior to the day
of determination, as reported in The Wall Street Journal or such other source as
the Board deems reliable.
(ii) In the absence of such markets for the Common Stock, the Fair
Market Value shall be determined in good faith by the Board.
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(p) "INCENTIVE STOCK OPTION" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(q) "NON-EMPLOYEE DIRECTOR" means a Director who either (i) is not a
current employee or officer of the Company or its parent or a subsidiary, does
not receive compensation (directly or indirectly) from the Company or its parent
or a subsidiary for services rendered as a consultant or in any capacity other
than as a Director (except for an amount as to which disclosure would not be
required under Item 404(a) of Regulation S-K promulgated pursuant to the
Securities Act ("Regulation S-K")), does not possess an interest in any other
transaction as to which disclosure would be required under Item 404(a) of
Regulation S-K and is not engaged in a business relationship as to which
disclosure would be required under Item 404(b) of Regulation S-K; or (ii) is
otherwise considered a "non-employee director" for purposes of Rule 16b-3.
(r) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify
as an Incentive Stock Option.
(s) "OFFICER" means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(t) "OPTION" means an Incentive Stock Option or a Nonstatutory Stock
Option granted pursuant to the Plan.
(u) "OPTION AGREEMENT" means a written agreement between the Company and
an Optionholder evidencing the terms and conditions of an individual Option
grant. Each Option Agreement shall be subject to the terms and conditions of the
Plan.
(v) "OPTIONHOLDER" means a person to whom an Option is granted pursuant
to the Plan or, if applicable, such other person who holds an outstanding
Option.
(w) "OUTSIDE DIRECTOR" means a Director who either (i) is not a current
employee of the Company or an "affiliated corporation" (within the meaning of
Treasury Regulations promulgated under Section 162(m) of the Code), is not a
former employee of the Company or an "affiliated corporation" receiving
compensation for prior services (other than benefits under a tax qualified
pension plan), was not an officer of the Company or an "affiliated corporation"
at any time and is not currently receiving direct or indirect remuneration from
the Company or an "affiliated corporation" for services in any capacity other
than as a Director or (ii) is otherwise considered an "outside director" for
purposes of Section 162(m) of the Code.
(x) "PARTICIPANT" means a person to whom a Stock Award is granted
pursuant to the Plan or, if applicable, such other person who holds an
outstanding Stock Award.
(y) "PLAN" means this Amylin Pharmaceuticals, Inc. 2001 Equity Incentive
Plan.
(z) "RULE 16b-3" means Rule 16b-3 promulgated under the Exchange Act or
any successor to Rule 16b-3, as in effect from time to time.
(aa) "SECURITIES ACT" means the Securities Act of 1933, as amended.
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(bb) "STOCK AWARD" means any right granted under the Plan, including an
Option, a stock bonus and a right to acquire restricted stock.
(cc) "STOCK AWARD AGREEMENT" means a written agreement between the
Company and a holder of a Stock Award evidencing the terms and conditions of an
individual Stock Award grant. Each Stock Award Agreement shall be subject to the
terms and conditions of the Plan.
(dd) "TEN PERCENT STOCKHOLDER" means a person who owns (or is deemed to
own pursuant to Section 424(d) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or of any of its Affiliates.
3. ADMINISTRATION.
(a) ADMINISTRATION BY BOARD. The Board shall administer the Plan unless
and until the Board delegates administration to a Committee, as provided in
subsection 3(c).
(b) POWERS OF BOARD. The Board shall have the power, subject to, and
within the limitations of, the express provisions of the Plan:
(i) To determine from time to time which of the persons eligible
under the Plan shall be granted Stock Awards; when and how each Stock Award
shall be granted; what type or combination of types of Stock Award shall be
granted; the provisions of each Stock Award granted (which need not be
identical), including the time or times when a person shall be permitted to
receive Common Stock pursuant to a Stock Award; and the number of shares of
Common Stock with respect to which a Stock Award shall be granted to each such
person.
(ii) To construe and interpret the Plan and Stock Awards granted
under it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Stock Award Agreement,
in a manner and to the extent it shall deem necessary or expedient to make the
Plan fully effective.
(iii) To amend the Plan or a Stock Award as provided in
Section 12.
(iv) Generally, to exercise such powers and to perform such acts
as the Board deems necessary or expedient to promote the best interests of the
Company which are not in conflict with the provisions of the Plan.
(c) DELEGATION TO COMMITTEE.
(i) GENERAL. The Board may delegate administration of the Plan to
a Committee or Committees of one (1) or more members of the Board, and the term
"Committee" shall apply to any person or persons to whom such authority has been
delegated. If administration is delegated to a Committee, the Committee shall
have, in connection with the administration of the Plan, the powers theretofore
possessed by the Board, including the power to delegate to a subcommittee any of
the administrative powers the Committee is authorized to exercise (and
references in this Plan to the Board shall thereafter be to the Committee or
subcommittee), subject, however, to such resolutions, not inconsistent with the
provisions of the
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<PAGE> 5
Plan, as may be adopted from time to time by the Board. The Board may abolish
the Committee at any time and revest in the Board the administration of the
Plan.
(ii) COMMITTEE COMPOSITION WHEN COMMON STOCK IS PUBLICLY TRADED.
Notwithstanding any contrary provision of subparagraph 3(c)(i) of this Plan, at
such time as the Common Stock is publicly traded, in the discretion of the
Board, a Committee may consist solely of two or more Outside Directors, in
accordance with Section 162(m) of the Code, and/or solely of two or more
Non-Employee Directors, in accordance with Rule 16b-3. Within the scope of such
authority, the Board or the Committee may (1) delegate to a committee of one or
more members of the Board who are not Outside Directors the authority to grant
Stock Awards to eligible persons who are either (a) not then Covered Employees
and are not expected to be Covered Employees at the time of recognition of
income resulting from such Stock Award or (b) not persons with respect to whom
the Company wishes to comply with Section 162(m) of the Code and/or (2) delegate
to a committee of one or more members of the Board who are not Non-Employee
Directors the authority to grant Stock Awards to eligible persons who are not
then subject to Section 16 of the Exchange Act.
(iii) STOCK AWARDS AT LESS THAN ONE HUNDRED PERCENT OF FAIR MARKET
VALUE. Notwithstanding the foregoing, to the extent that any Nonstatutory Stock
Option or restricted stock award is granted with an exercise and/or purchase
price, as applicable, below one hundred percent (100%) of Fair Market Value,
such award must be granted by the Board or, in the case of an award to an
Officer, by the Company's Compensation Committee.
(d) EFFECT OF BOARD'S DECISION. All determinations, interpretations and
constructions made by the Board in good faith shall not be subject to review by
any person and shall be final, binding and conclusive on all persons.
4. SHARES SUBJECT TO THE PLAN.
(a) SHARE RESERVE. An aggregate of four million (4,000,000) shares of
Common Stock shall initially be authorized for issuance pursuant to Stock
Awards; provided, however, such aggregate number shall increase automatically
without further Board action or stockholder approval, as and to the extent that
options to purchase Common Stock issued under the Company's 1991 Stock Option
Plan (the "1991 Plan") expire, terminate or otherwise cancel prior to exercise
following the date the Plan is approved by the Board, by the number of shares
underlying such expired, terminated or canceled options issued under the 1991
Plan, subject to a maximum increase of five million two hundred seventy-five
thousand six hundred eighty-nine (5,275,689) shares. Accordingly, subject to the
provisions of Section 11 relating to adjustments upon changes in Common Stock,
the Common Stock that may be issued pursuant to Stock Awards shall not exceed in
the aggregate nine million two hundred seventy-five thousand six hundred
eighty-nine (9,275,689) shares of Common Stock.
(b) REVERSION OF SHARES TO THE SHARE RESERVE. If any Stock Award shall
for any reason expire or otherwise terminate, in whole or in part, without
having been exercised in full, the shares of Common Stock not acquired under
such Stock Award shall revert to and again become available for issuance under
the Plan.
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(c) SOURCE OF SHARES. The shares of Common Stock subject to the Plan may
be unissued shares or reacquired shares, bought on the market or otherwise.
5. ELIGIBILITY.
(a) ELIGIBILITY FOR SPECIFIC STOCK AWARDS. Incentive Stock Options may be
granted only to Employees. Stock Awards other than Incentive Stock Options may
be granted to Employees, Directors and Consultants.
(b) TEN PERCENT STOCKHOLDERS. A Ten Percent Stockholder shall not be
granted an Incentive Stock Option unless the exercise price of such Option is at
least one hundred ten percent (110%) of the Fair Market Value of the Common
Stock at the date of grant and the Option is not exercisable after the
expiration of five (5) years from the date of grant.
(c) SECTION 162(m) LIMITATION. Subject to the provisions of Section 11
relating to adjustments upon changes in the shares of Common Stock, no Employee
shall be eligible to be granted Options covering more than one million
(1,000,000) shares of Common Stock during any calendar year.
(d) CONSULTANTS. A Consultant shall not be eligible for the grant of a
Stock Award if, at the time of grant, a Form S-8 Registration Statement under
the Securities Act ("Form S-8") is not available to register either the offer or
the sale of the Company's securities to such Consultant because of the nature of
the services that the Consultant is providing to the Company, or because the
Consultant is not a natural person, or as otherwise provided by the rules
governing the use of Form S-8, unless the Company determines both (i) that such
grant (A) shall be registered in another manner under the Securities Act (e.g.,
on a Form S-3 Registration Statement) or (B) does not require registration under
the Securities Act in order to comply with the requirements of the Securities
Act, if applicable, and (ii) that such grant complies with the securities laws
of all other relevant jurisdictions.
6. OPTION PROVISIONS.
Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. All Options shall be separately
designated Incentive Stock Options or Nonstatutory Stock Options at the time of
grant, and, if certificates are issued, a separate certificate or certificates
will be issued for shares of Common Stock purchased on exercise of each type of
Option. The provisions of separate Options need not be identical, but each
Option shall include (through incorporation of provisions hereof by reference in
the Option or otherwise) the substance of each of the following provisions:
(a) TERM. Subject to the provisions of subsection 5(b) regarding Ten
Percent Stockholders, no Incentive Stock Option shall be exercisable after the
expiration of ten (10) years from the date it was granted.
(b) EXERCISE PRICE OF AN INCENTIVE STOCK OPTION. Subject to the
provisions of subsection 5(b) regarding Ten Percent Stockholders, the exercise
price of each Incentive Stock Option shall be not less than one hundred percent
(100%) of the Fair Market Value of the Common Stock subject to the Option on the
date the Option is granted. Notwithstanding the
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<PAGE> 7
foregoing, an Incentive Stock Option may be granted with an exercise price lower
than that set forth in the preceding sentence if such Option is granted pursuant
to an assumption or substitution for another option in a manner satisfying the
provisions of Section 424(a) of the Code.
(c) EXERCISE PRICE OF A NONSTATUTORY STOCK OPTION. The exercise price of
each Nonstatutory Stock Option shall be not less than eighty-five percent (85%)
of the Fair Market Value of the Common Stock subject to the option on the date
the option is granted; provided, however, that not more than five percent (5%)
of the shares reserved for issuance under the Plan pursuant to subsection 4(a)
herein shall be granted pursuant to options or restricted stock awards having an
exercise and/or purchase price, as applicable, that is less than one hundred
percent (100%) of the Fair Market Value of the Common Stock subject to such
option or restricted stock award on the date such award is granted and/or at the
time the purchase is consummated, as the case may be. Notwithstanding the
foregoing, a Nonstatutory Stock Option may be granted with an exercise price
lower than that set forth in the preceding sentence if such Option is granted
pursuant to an assumption or substitution for another option in a manner
satisfying the provisions of Section 424(a) of the Code.
(d) CONSIDERATION. The purchase price of Common Stock acquired pursuant
to an Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised or (ii) at
the discretion of the Board at the time of the grant of the Option (or
subsequently in the case of a Nonstatutory Stock Option) (1) by delivery to the
Company of other Common Stock, (2) according to a deferred payment or other
similar arrangement with the Optionholder or (3) in any other form of legal
consideration that may be acceptable to the Board. Unless otherwise specifically
provided in the Option, the purchase price of Common Stock acquired pursuant to
an Option that is paid by delivery to the Company of other Common Stock
acquired, directly or indirectly from the Company, shall be paid only by shares
of the Common Stock of the Company that have been held for more than six (6)
months (or such longer or shorter period of time required to avoid a charge to
earnings for financial accounting purposes). At any time that the Company is
incorporated in Delaware, payment of the Common Stock's "par value," as defined
in the Delaware General Corporation Law, shall not be made by deferred payment.
In the case of any deferred payment arrangement, interest shall be
compounded at least annually and shall be charged at the market rate of interest
necessary to avoid a charge to earnings for financial accounting purposes.
(e) TRANSFERABILITY OF AN INCENTIVE STOCK OPTION. Pursuant to provisions
of the Code, an Incentive Stock Option shall not be transferable except by will
or by the laws of descent and distribution and shall be exercisable during the
lifetime of the Optionholder only by the Optionholder. Notwithstanding the
foregoing, in the event of the Optionholder's divorce, upon receipt of proof of
such divorce, the Board in its discretion may, but shall have no obligation to,
amend the terms of an Incentive Stock Option to provide for either (i) the
transfer of the beneficial ownership of all or a portion of the Incentive Stock
Option to the Optionholder's former spouse, or (ii) the transfer of all or a
portion of the Incentive Stock Option, provided that the transferred Option
shall be deemed a Nonstatutory Stock Option to the extent required by applicable
law. In addition to the foregoing, the Optionholder may, by
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<PAGE> 8
delivering written notice to the Company, in a form satisfactory to the Company,
designate a third party who, in the event of the death of the Optionholder,
shall thereafter be entitled to exercise the Option.
(f) TRANSFERABILITY OF A NONSTATUTORY STOCK OPTION. A Nonstatutory Stock
Option shall be transferable to the extent provided in the Option Agreement. If
the Nonstatutory Stock Option does not provide for transferability, then the
Nonstatutory Stock Option shall not be transferable except by will or by the
laws of descent and distribution and shall be exercisable during the lifetime of
the Optionholder only by the Optionholder. Notwithstanding the foregoing, the
Optionholder may, by delivering written notice to the Company, in a form
satisfactory to the Company, designate a third party who, in the event of the
death of the Optionholder, shall thereafter be entitled to exercise the Option.
(g) VESTING GENERALLY. The total number of shares of Common Stock subject
to an Option may, but need not, vest and therefore become exercisable in
periodic installments that may, but need not, be equal. The Option may be
subject to such other terms and conditions on the time or times when it may be
exercised (which may be based on performance or other criteria) as the Board may
deem appropriate. The vesting provisions of individual Options may vary. The
provisions of this subsection 6(g) are subject to any Option provisions
governing the minimum number of shares of Common Stock as to which an Option may
be exercised.
(h) TERMINATION OF CONTINUOUS SERVICE. In the event an Optionholder's
Continuous Service terminates (other than upon the Optionholder's death or
Disability), the Optionholder may exercise his or her Option (to the extent that
the Optionholder was entitled to exercise such Option as of the date of
termination) but only within such period of time as is determined by the Board
(but in no event later than the expiration of the term of such Option as set
forth in the Option Agreement). In the case of an Incentive Stock Option, to the
extent the Board intends that the Option remain an Incentive Stock Option, such
period of time shall not exceed three (3) months from the date of termination.
If, after termination, the Optionholder does not exercise his or her Option
within the time specified in the Option Agreement, the Option shall terminate.
(i) EXTENSION OF TERMINATION DATE. An Optionholder's Option Agreement may
also provide that if the exercise of the Option following the termination of the
Optionholder's Continuous Service (other than upon the Optionholder's death or
Disability) would be prohibited at any time solely because the issuance of
shares of Common Stock would violate the registration requirements under the
Securities Act, then the Option shall terminate on the earlier of (i) the
expiration of the term of the Option set forth in subsection 6(a) or (ii) the
expiration of a period of three (3) months after the termination of the
Optionholder's Continuous Service during which the exercise of the Option would
not be in violation of such registration requirements.
(j) DISABILITY OF OPTIONHOLDER. In the event that an Optionholder's
Continuous Service terminates as a result of the Optionholder's Disability, the
Optionholder may exercise his or her Option (to the extent that the Optionholder
was entitled to exercise such Option as of the date of termination), but only
within such period of time ending on the earlier of (i) the date twelve (12)
months following such termination (or such longer or shorter period specified in
the Option Agreement) or (ii) the expiration of the term of the Option as set
forth in the Option
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Agreement. If, after termination, the Optionholder does not exercise his or her
Option within the time specified herein, the Option shall terminate.
(k) DEATH OF OPTIONHOLDER. In the event (i) an Optionholder's Continuous
Service terminates as a result of the Optionholder's death or (ii) the
Optionholder dies within the period (if any) specified in the Option Agreement
after the termination of the Optionholder's Continuous Service for a reason
other than death, then the Option may be exercised (to the extent the
Optionholder was entitled to exercise such Option as of the date of death) by
the Optionholder's estate, by a person who acquired the right to exercise the
Option by bequest or inheritance or by a person designated to exercise the
Option upon the Optionholder's death pursuant to subsection 6(e) or 6(f), but
only within the period ending on the earlier of (1) the date twelve (12) months
following the date of death (or such longer or shorter period specified in the
Option Agreement) or (2) the expiration of the term of such Option as set forth
in the Option Agreement. If, after death, the Option is not exercised within the
time specified herein, the Option shall terminate.
(l) EARLY EXERCISE. The Option may, but need not, include a provision
whereby the Optionholder may elect at any time before the Optionholder's
Continuous Service terminates to exercise the Option as to any part or all of
the shares of Common Stock subject to the Option prior to the full vesting of
the Option. Any unvested shares of Common Stock so purchased may be subject to a
repurchase option in favor of the Company or to any other restriction the Board
determines to be appropriate.
7. PROVISIONS OF STOCK AWARDS OTHER THAN OPTIONS.
(a) STOCK BONUS AWARDS. Each stock bonus agreement shall be in such form
and shall contain such terms and conditions as the Board shall deem appropriate.
The terms and conditions of stock bonus agreements may change from time to time,
and the terms and conditions of separate stock bonus agreements need not be
identical, but each stock bonus agreement shall include (through incorporation
of provisions hereof by reference in the agreement or otherwise) the substance
of each of the following provisions:
(i) CONSIDERATION. A stock bonus may be awarded in consideration
for past services actually rendered to the Company or an Affiliate for its
benefit.
(ii) VESTING. Shares of Common Stock awarded under the stock bonus
agreement may, but need not, be subject to a share repurchase option in favor of
the Company in accordance with a vesting schedule to be determined by the Board.
(iii) TERMINATION OF PARTICIPANT'S CONTINUOUS SERVICE. In the
event a Participant's Continuous Service terminates, the Company may reacquire
any or all of the shares of Common Stock held by the Participant which have not
vested as of the date of termination under the terms of the stock bonus
agreement.
(iv) TRANSFERABILITY. Rights to acquire shares of Common Stock
under the stock bonus agreement shall be transferable by the Participant only
upon such terms and conditions as are set forth in the stock bonus agreement, as
the Board shall determine in its
9
<PAGE> 10
discretion, so long as Common Stock awarded under the stock bonus agreement
remains subject to the terms of the stock bonus agreement.
(v) LIMITATION ON NUMBER OF SHARES. Subject to the provisions of
Section 11 relating to adjustments upon changes in the shares of Common Stock,
the Company shall not grant Stock Awards under this subsection 7(a) covering
more than one million (1,000,000) shares of Common Stock in the aggregate.
(b) RESTRICTED STOCK AWARDS. Each restricted stock purchase agreement
shall be in such form and shall contain such terms and conditions as the Board
shall deem appropriate. The terms and conditions of the restricted stock
purchase agreements may change from time to time, and the terms and conditions
of separate restricted stock purchase agreements need not be identical, but each
restricted stock purchase agreement shall include (through incorporation of
provisions hereof by reference in the agreement or otherwise) the substance of
each of the following provisions:
(i) PURCHASE PRICE. The purchase price under each restricted stock
purchase agreement shall be such amount as the Board shall determine and
designate in such restricted stock purchase agreement. The purchase price shall
not be less than eighty-five percent (85%) of the Common Stock's Fair Market
Value on the date such award is made or at the time the purchase is consummated;
provided, however, that not more than five percent (5%) of the shares reserved
for issuance under the Plan pursuant to subsection 4(a) herein shall be granted
pursuant to options or restricted stock awards having an exercise and/or
purchase price, as applicable, that is less than one hundred percent (100%) of
the Fair Market Value of the Common Stock subject to such option or restricted
stock award on the date such award is granted and/or at the time the purchase is
consummated, as the case may be.
(ii) CONSIDERATION. The purchase price of Common Stock acquired
pursuant to the restricted stock purchase agreement shall be paid either: (i) in
cash at the time of purchase; (ii) at the discretion of the Board, according to
a deferred payment or other similar arrangement with the Participant; or (iii)
in any other form of legal consideration that may be acceptable to the Board in
its discretion; provided, however, that at any time that the Company is
incorporated in Delaware, then payment of the Common Stock's "par value," as
defined in the Delaware General Corporation Law, shall not be made by deferred
payment.
(iii) VESTING. Shares of Common Stock acquired under the
restricted stock purchase agreement may, but need not, be subject to a share
repurchase option in favor of the Company in accordance with a vesting schedule
to be determined by the Board.
(iv) TERMINATION OF PARTICIPANT'S CONTINUOUS SERVICE. In the event
a Participant's Continuous Service terminates, the Company may repurchase or
otherwise reacquire any or all of the shares of Common Stock held by the
Participant which have not vested as of the date of termination under the terms
of the restricted stock purchase agreement.
(v) TRANSFERABILITY. Rights to acquire shares of Common Stock
under the restricted stock purchase agreement shall be transferable by the
Participant only upon such terms and conditions as are set forth in the
restricted stock purchase agreement, as the Board shall
10
<PAGE> 11
determine in its discretion, so long as Common Stock awarded under the
restricted stock purchase agreement remains subject to the terms of the
restricted stock purchase agreement.
8. COVENANTS OF THE COMPANY.
(a) AVAILABILITY OF SHARES. During the terms of the Stock Awards, the
Company shall keep available at all times the number of shares of Common Stock
required to satisfy such Stock Awards.
(b) SECURITIES LAW COMPLIANCE. The Company shall seek to obtain from each
regulatory commission or agency having jurisdiction over the Plan such authority
as may be required to grant Stock Awards and to issue and sell shares of Common
Stock upon exercise of the Stock Awards; provided, however, that this
undertaking shall not require the Company to register under the Securities Act
the Plan, any Stock Award or any Common Stock issued or issuable pursuant to any
such Stock Award. If, after reasonable efforts, the Company is unable to obtain
from any such regulatory commission or agency the authority which counsel for
the Company deems necessary for the lawful issuance and sale of Common Stock
under the Plan, the Company shall be relieved from any liability for failure to
issue and sell Common Stock upon exercise of such Stock Awards unless and until
such authority is obtained.
(c) CANCELLATION AND RE-GRANT OF OPTIONS. The Board shall not have the
authority to effect, at any time, without stockholder approval, either (1) the
repricing of any outstanding Options under the Plan and/or (2) the cancellation
of any outstanding Options under the Plan and the grant in substitution therefor
of new Options under the Plan covering the same or different numbers of shares
of Common Stock.
9. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of Common Stock pursuant to Stock Awards shall
constitute general funds of the Company.
10. MISCELLANEOUS.
(a) ACCELERATION OF EXERCISABILITY AND VESTING. The Board shall have the
power to accelerate the time at which a Stock Award may first be exercised or
the time during which a Stock Award or any part thereof will vest in accordance
with the Plan, notwithstanding the provisions in the Stock Award stating the
time at which it may first be exercised or the time during which it will vest.
(b) STOCKHOLDER RIGHTS. No Participant shall be deemed to be the holder
of, or to have any of the rights of a holder with respect to, any shares of
Common Stock subject to such Stock Award unless and until such Participant has
satisfied all requirements for exercise of the Stock Award pursuant to its
terms.
(c) NO EMPLOYMENT OR OTHER SERVICE RIGHTS. Nothing in the Plan or any
instrument executed or Stock Award granted pursuant thereto shall confer upon
any Participant any right to continue to serve the Company or an Affiliate in
the capacity in effect at the time the Stock Award was granted or shall affect
the right of the Company or an Affiliate to terminate (i) the
11
<PAGE> 12
employment of an Employee with or without notice and with or without cause, (ii)
the service of a Consultant pursuant to the terms of such Consultant's agreement
with the Company or an Affiliate or (iii) the service of a Director pursuant to
the Bylaws of the Company or an Affiliate, and any applicable provisions of the
corporate law of the state in which the Company or the Affiliate is
incorporated, as the case may be.
(d) INCENTIVE STOCK OPTION $100,000 LIMITATION. To the extent that the
aggregate Fair Market Value (determined at the time of grant) of Common Stock
with respect to which Incentive Stock Options are exercisable for the first time
by any Optionholder during any calendar year (under all plans of the Company and
its Affiliates) exceeds one hundred thousand dollars ($100,000), the Options or
portions thereof which exceed such limit (according to the order in which they
were granted) shall be treated as Nonstatutory Stock Options.
(e) INVESTMENT ASSURANCES. The Company may require a Participant, as a
condition of exercising or acquiring Common Stock under any Stock Award, (i) to
give written assurances satisfactory to the Company as to the Participant's
knowledge and experience in financial and business matters and/or to employ a
purchaser representative reasonably satisfactory to the Company who is
knowledgeable and experienced in financial and business matters and that he or
she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Stock Award; and (ii) to
give written assurances satisfactory to the Company stating that the Participant
is acquiring Common Stock subject to the Stock Award for the Participant's own
account and not with any present intention of selling or otherwise distributing
the Common Stock. The foregoing requirements, and any assurances given pursuant
to such requirements, shall be inoperative if (1) the issuance of the shares of
Common Stock upon the exercise or acquisition of Common Stock under the Stock
Award has been registered under a then currently effective registration
statement under the Securities Act or (2) as to any particular requirement, a
determination is made by counsel for the Company that such requirement need not
be met in the circumstances under the then applicable securities laws. The
Company may, upon advice of counsel to the Company, place legends on stock
certificates issued under the Plan as such counsel deems necessary or
appropriate in order to comply with applicable securities laws, including, but
not limited to, legends restricting the transfer of the Common Stock.
(f) WITHHOLDING OBLIGATIONS. To the extent provided by the terms of a
Stock Award Agreement, the Participant may satisfy any federal, state or local
tax withholding obligation relating to the exercise or acquisition of Common
Stock under a Stock Award by any of the following means (in addition to the
Company's right to withhold from any compensation paid to the Participant by the
Company) or by a combination of such means: (i) tendering a cash payment; (ii)
authorizing the Company to withhold shares of Common Stock from the shares of
Common Stock otherwise issuable to the Participant as a result of the exercise
or acquisition of Common Stock under the Stock Award, provided, however, that no
shares of Common Stock are withheld with a value exceeding the minimum amount of
tax required to be withheld by law; or (iii) delivering to the Company owned and
unencumbered shares of Common Stock.
12
<PAGE> 13
11. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) CAPITALIZATION ADJUSTMENTS. If any change is made in the Common Stock
subject to the Plan, or subject to any Stock Award, without the receipt of
consideration by the Company (through merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Company), the Plan will be appropriately
adjusted in the class(es) and maximum number of securities subject to the Plan
pursuant to subsection 4(a), the maximum number of securities subject to award
to any person pursuant to subsection 5(c), and the maximum number of securities
subject to award pursuant to subsection 7(a)(v), and the outstanding Stock
Awards will be appropriately adjusted in the class(es) and number of securities
and price per share of Common Stock subject to such outstanding Stock Awards.
The Board shall make such adjustments, and its determination shall be final,
binding and conclusive. (The conversion of any convertible securities of the
Company shall not be treated as a transaction "without receipt of consideration"
by the Company.)
(b) DISSOLUTION OR LIQUIDATION. In the event of a dissolution or
liquidation of the Company, then all outstanding Stock Awards shall terminate
immediately prior to such event.
(c) ASSET SALE, MERGER, CONSOLIDATION OR REVERSE MERGER. In the event of
(i) a sale, lease or other disposition of all or substantially all of the assets
of the Company, (ii) a merger or consolidation in which the Company is not the
surviving corporation or (iii) a reverse merger in which the Company is the
surviving corporation but the shares of Common Stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise (individually, a "Corporate
Transaction"), then any surviving corporation or acquiring corporation shall
assume any Stock Awards outstanding under the Plan or shall substitute similar
stock awards (including an award to acquire the same consideration paid to the
stockholders in the Corporate Transaction for those outstanding under the Plan).
In the event any surviving corporation or acquiring corporation refuses to
assume such Stock Awards or to substitute similar stock awards for those
outstanding under the Plan, then with respect to Stock Awards held by
Participants whose Continuous Service has not terminated, the vesting of such
Stock Awards (and, if applicable, the time during which such Stock Awards may be
exercised) shall be accelerated in full, and the Stock Awards shall terminate if
not exercised (if applicable) at or prior to the Corporate Transaction. With
respect to any other Stock Awards outstanding under the Plan, such Stock Awards
shall terminate if not exercised (if applicable) prior to the Corporate
Transaction.
12. AMENDMENT OF THE PLAN AND STOCK AWARDS.
(a) AMENDMENT OF PLAN. The Board at any time, and from time to time, may
amend the Plan. However, except as provided in Section 11 relating to
adjustments upon changes in Common Stock, no amendment shall be effective unless
approved by the stockholders of the Company to the extent stockholder approval
is necessary to satisfy the requirements of Section 422 of the Code, Rule 16b-3
or any Nasdaq or securities exchange listing requirements.
13
<PAGE> 14
(b) STOCKHOLDER APPROVAL. The Board may, in its sole discretion, submit
any other amendment to the Plan for stockholder approval, including, but not
limited to, amendments to the Plan intended to satisfy the requirements of
Section 162(m) of the Code and the regulations thereunder regarding the
exclusion of performance-based compensation from the limit on corporate
deductibility of compensation paid to certain executive officers.
(c) CONTEMPLATED AMENDMENTS. It is expressly contemplated that the Board
may amend the Plan in any respect the Board deems necessary or advisable to
provide eligible Employees with the maximum benefits provided or to be provided
under the provisions of the Code and the regulations promulgated thereunder
relating to Incentive Stock Options and/or to bring the Plan and/or Incentive
Stock Options granted under it into compliance therewith.
(d) NO IMPAIRMENT OF RIGHTS. Rights under any Stock Award granted before
amendment of the Plan shall not be impaired by any amendment of the Plan unless
(i) the Company requests the consent of the Participant and (ii) the Participant
consents in writing.
(e) AMENDMENT OF STOCK AWARDS. The Board at any time, and from time to
time, may amend the terms of any one or more Stock Awards; provided, however,
that the rights under any Stock Award shall not be impaired by any such
amendment unless (i) the Company requests the consent of the Participant and
(ii) the Participant consents in writing.
13. TERMINATION OR SUSPENSION OF THE PLAN.
(a) PLAN TERM. The Board may suspend or terminate the Plan at any time.
Unless sooner terminated, the Plan shall terminate on the day before the tenth
(10th) anniversary of the date the Plan is adopted by the Board or approved by
the stockholders of the Company, whichever is earlier. No Stock Awards may be
granted under the Plan while the Plan is suspended or after it is terminated.
(b) NO IMPAIRMENT OF RIGHTS. Suspension or termination of the Plan shall
not impair rights and obligations under any Stock Award granted while the Plan
is in effect except with the written consent of the Participant.
14. EFFECTIVE DATE OF PLAN.
The Plan shall become effective as determined by the Board, but no Stock
Award shall be exercised (or, in the case of a stock bonus, shall be granted)
unless and until the Plan has been approved by the stockholders of the Company,
which approval shall be within twelve (12) months before or after the date the
Plan is adopted by the Board.
15. CHOICE OF LAW.
The law of the State of California shall govern all questions concerning
the construction, validity and interpretation of this Plan, without regard to
such state's conflict of laws rules.
14
<PAGE> 15
AMYLIN PHARMACEUTICALS, INC.
2001 EQUITY INCENTIVE PLAN
STOCK OPTION AGREEMENT
(INCENTIVE STOCK OPTION OR NONSTATUTORY STOCK OPTION)
Pursuant to your Stock Option Grant Notice ("Grant Notice") and this
Stock Option Agreement, Amylin Pharmaceuticals, Inc. (the "Company") has granted
you an option under its 2001 Equity Incentive Plan (the "Plan") to purchase the
number of shares of the Company's Common Stock indicated in your Grant Notice at
the exercise price indicated in your Grant Notice. Defined terms not explicitly
defined in this Stock Option Agreement but defined in the Plan shall have the
same definitions as in the Plan.
The details of your option are as follows:
1. VESTING. Subject to the limitations contained herein, your option will
vest as provided in your Grant Notice, provided that vesting will cease upon the
termination of your Continuous Service.
2. NUMBER OF SHARES AND EXERCISE PRICE. The number of shares of Common
Stock subject to your option and your exercise price per share referenced in
your Grant Notice may be adjusted from time to time for Capitalization
Adjustments, as provided in the Plan.
3. EXERCISE PRIOR TO VESTING ("EARLY EXERCISE"). If permitted in your
Grant Notice (i.e., the "Exercise Schedule" indicates that "Early Exercise" of
your option is permitted) and subject to the provisions of your option, you may
elect at any time that is both (i) during the period of your Continuous Service
and (ii) during the term of your option, to exercise all or part of your option,
including the nonvested portion of your option; provided, however, that:
(a) a partial exercise of your option shall be deemed to cover
first vested shares of Common Stock and then the earliest vesting installment of
unvested shares of Common Stock;
(b) any shares of Common Stock so purchased from installments that
have not vested as of the date of exercise shall be subject to the purchase
option in favor of the Company as described in the Company's form of Early
Exercise Stock Purchase Agreement;
(c) you shall enter into the Company's form of Early Exercise
Stock Purchase Agreement with a vesting schedule that will result in the same
vesting as if no early exercise had occurred; and
(d) if your option is an incentive stock option, then, as provided
in the Plan, to the extent that the aggregate Fair Market Value (determined at
the time of grant) of the shares of Common Stock with respect to which your
option plus all other incentive stock options you hold are exercisable for the
first time by you during any calendar year (under all plans of the Company and
its Affiliates) exceeds one hundred thousand dollars ($100,000), your option(s)
or
1.
<PAGE> 16
portions thereof that exceed such limit (according to the order in which they
were granted) shall be treated as nonstatutory stock options.
4. METHOD OF PAYMENT. Payment of the exercise price is due in full upon
exercise of all or any part of your option. You may elect to make payment of the
exercise price in cash or by check or in any other manner PERMITTED BY YOUR
GRANT NOTICE, which may include one or more of the following:
(a) In the Company's sole discretion at the time your option is
exercised and provided that at the time of exercise the Common Stock is publicly
traded and quoted regularly in The Wall Street Journal, pursuant to a program
developed under Regulation T as promulgated by the Federal Reserve Board that,
prior to the issuance of Common Stock, results in either the receipt of cash (or
check) by the Company or the receipt of irrevocable instructions to pay the
aggregate exercise price to the Company from the sales proceeds.
(b) Provided that at the time of exercise the Common Stock is
publicly traded and quoted regularly in The Wall Street Journal, by delivery of
already-owned shares of Common Stock either that you have held for the period
required to avoid a charge to the Company's reported earnings (generally six
months) or that you did not acquire, directly or indirectly from the Company,
that are owned free and clear of any liens, claims, encumbrances or security
interests, and that are valued at Fair Market Value on the date of exercise.
"Delivery" for these purposes, in the sole discretion of the Company at the time
you exercise your option, shall include delivery to the Company of your
attestation of ownership of such shares of Common Stock in a form approved by
the Company. Notwithstanding the foregoing, you may not exercise your option by
tender to the Company of Common Stock to the extent such tender would violate
the provisions of any law, regulation or agreement restricting the redemption of
the Company's stock.
(c) Pursuant to the following deferred payment alternative:
(i) Not less than one hundred percent (100%) of the
aggregate exercise price, plus accrued interest, shall be due (i) on the date
designated by the Company in its sole and absolute discretion but not to exceed
four (4) years from date of exercise, or (ii) at the Company's election, upon
termination of your Continuous Service.
(ii) Interest shall be compounded at least annually and
shall be charged at the market rate of interest necessary to avoid a charge to
earnings for financial accounting purposes.
(iii) At any time that the Company is incorporated in
Delaware, payment of the Common Stock's "par value," as defined in the Delaware
General Corporation Law, shall be made in cash and not by deferred payment.
(iv) In order to elect the deferred payment alternative,
you must, as a part of your written notice of exercise, give notice of the
election of this payment alternative and, in order to secure the payment of the
deferred exercise price to the Company hereunder, if the Company so requests,
you must tender to the Company a promissory note and a security agreement
covering the purchased shares of Common Stock, both in form and substance
2.
<PAGE> 17
satisfactory to the Company, or such other or additional documentation as the
Company may request.
5. WHOLE SHARES. You may exercise your option only for whole shares of
Common Stock.
6. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the contrary
contained herein, you may not exercise your option unless the shares of Common
Stock issuable upon such exercise are then registered under the Securities Act
or, if such shares of Common Stock are not then so registered, the Company has
determined that such exercise and issuance would be exempt from the registration
requirements of the Securities Act. The exercise of your option must also comply
with other applicable laws and regulations governing your option, and you may
not exercise your option if the Company determines that such exercise would not
be in material compliance with such laws and regulations.
7. TERM. You may not exercise your option before the commencement of its
term or after its term expires. The term of your option commences on the Date of
Grant and expires upon the EARLIEST of the following:
(a) three (3) months after the termination of your Continuous
Service for any reason other than your Disability or death, provided that if
during any part of such three- (3-) month period your option is not exercisable
solely because of the condition set forth in the preceding paragraph relating to
"Securities Law Compliance," your option shall not expire until the earlier of
the Expiration Date or until it shall have been exercisable for an aggregate
period of three (3) months after the termination of your Continuous Service;
(b) twelve (12) months after the termination of your Continuous
Service due to your Disability;
(c) twelve (12) months after your death if you die either during
your Continuous Service or within three (3) months after your Continuous Service
terminates;
(d) the Expiration Date indicated in your Grant Notice; or
(e) the day before the tenth (10th) anniversary of the Date of
Grant.
If your option is an incentive stock option, note that, to obtain the
federal income tax advantages associated with an "incentive stock option," the
Code requires that at all times beginning on the date of grant of your option
and ending on the day three (3) months before the date of your option's
exercise, you must be an employee of the Company or an Affiliate, except in the
event of your death or Disability. The Company has provided for extended
exercisability of your option under certain circumstances for your benefit but
cannot guarantee that your option will necessarily be treated as an "incentive
stock option" if you continue to provide services to the Company or an Affiliate
as a Consultant or Director after your employment terminates or if you otherwise
exercise your option more than three (3) months after the date your employment
terminates.
3.
<PAGE> 18
8. EXERCISE.
(a) You may exercise the vested portion of your option (and the
unvested portion of your option if your Grant Notice so permits) during its term
by delivering a Notice of Exercise (in a form designated by the Company)
together with the exercise price to the Secretary of the Company, or to such
other person as the Company may designate, during regular business hours,
together with such additional documents as the Company may then require.
(b) By exercising your option you agree that, as a condition to
any exercise of your option, the Company may require you to enter into an
arrangement providing for the payment by you to the Company of any tax
withholding obligation of the Company arising by reason of (1) the exercise of
your option, (2) the lapse of any substantial risk of forfeiture to which the
shares of Common Stock are subject at the time of exercise, or (3) the
disposition of shares of Common Stock acquired upon such exercise.
(c) If your option is an incentive stock option, by exercising
your option you agree that you will notify the Company in writing within fifteen
(15) days after the date of any disposition of any of the shares of the Common
Stock issued upon exercise of your option that occurs within two (2) years after
the date of your option grant or within one (1) year after such shares of Common
Stock are transferred upon exercise of your option.
9. TRANSFERABILITY. Your option is not transferable, except by will or by
the laws of descent and distribution, and is exercisable during your life only
by you. Notwithstanding the foregoing, by delivering written notice to the
Company, in a form satisfactory to the Company, you may designate a third party
who, in the event of your death, shall thereafter be entitled to exercise your
option.
10. OPTION NOT A SERVICE CONTRACT. Your option is not an employment or
service contract, and nothing in your option shall be deemed to create in any
way whatsoever any obligation on your part to continue in the employ of the
Company or an Affiliate, or of the Company or an Affiliate to continue your
employment. In addition, nothing in your option shall obligate the Company or an
Affiliate, their respective stockholders, Boards of Directors, Officers or
Employees to continue any relationship that you might have as a Director or
Consultant for the Company or an Affiliate.
11. WITHHOLDING OBLIGATIONS.
(a) At the time you exercise your option, in whole or in part, or
at any time thereafter as requested by the Company, you hereby authorize
withholding from payroll and any other amounts payable to you, and otherwise
agree to make adequate provision for (including by means of a "cashless
exercise" pursuant to a program developed under Regulation T as promulgated by
the Federal Reserve Board to the extent permitted by the Company), any sums
required to satisfy the federal, state, local and foreign tax withholding
obligations of the Company or an Affiliate, if any, which arise in connection
with your option.
(b) Upon your request and subject to approval by the Company, in
its sole discretion, and compliance with any applicable conditions or
restrictions of law, the Company may withhold from fully vested shares of Common
Stock otherwise issuable to you upon the
4.
<PAGE> 19
exercise of your option a number of whole shares of Common Stock having a Fair
Market Value, determined by the Company as of the date of exercise, not in
excess of the minimum amount of tax required to be withheld by law. If the date
of determination of any tax withholding obligation is deferred to a date later
than the date of exercise of your option, share withholding pursuant to the
preceding sentence shall not be permitted unless you make a proper and timely
election under Section 83(b) of the Code, covering the aggregate number of
shares of Common Stock acquired upon such exercise with respect to which such
determination is otherwise deferred, to accelerate the determination of such tax
withholding obligation to the date of exercise of your option. Notwithstanding
the filing of such election, shares of Common Stock shall be withheld solely
from fully vested shares of Common Stock determined as of the date of exercise
of your option that are otherwise issuable to you upon such exercise. Any
adverse consequences to you arising in connection with such share withholding
procedure shall be your sole responsibility.
(c) You may not exercise your option unless the tax withholding
obligations of the Company and/or any Affiliate are satisfied. Accordingly, you
may not be able to exercise your option when desired even though your option is
vested, and the Company shall have no obligation to issue a certificate for such
shares of Common Stock or release such shares of Common Stock from any escrow
provided for herein.
12. NOTICES. Any notices provided for in your option or the Plan shall be
given in writing and shall be deemed effectively given upon receipt or, in the
case of notices delivered by mail by the Company to you, five (5) days after
deposit in the United States mail, postage prepaid, addressed to you at the last
address you provided to the Company.
13. GOVERNING PLAN DOCUMENT. Your option is subject to all the provisions
of the Plan, the provisions of which are hereby made a part of your option, and
is further subject to all interpretations, amendments, rules and regulations
which may from time to time be promulgated and adopted pursuant to the Plan. In
the event of any conflict between the provisions of your option and those of the
Plan, the provisions of the Plan shall control.
5.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>4
<FILENAME>a69957ex23-1.txt
<DESCRIPTION>EXHIBIT 23.1
<TEXT>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement of
Form S-8 pertaining to the Employee Phantom Stock Salary Deferral Plan, 1991
Stock Option Plan, Non-Employee Directors' Stock Option Plan and Employee Stock
Option Plan of our report dated February 9, 2001, with respect to the
consolidated financial statements of Amylin Pharmaceuticals, Inc. included in
the Annual Report (Form 10-K) for the year ended December 31, 2000.
ERNST & YOUNG LLP
San Diego, California
March 27, 2001
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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