1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For The Quarterly Period Ended June 30,1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Commission File Number: 0-19700
AMYLIN PHARMACEUTICALS, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 33-0266089
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9373 Towne Centre Drive, San Diego, California 92121
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
(858) 552-2200
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
- --------------------------------------------------------------------------------
(Former name, former address and former
fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at June 30, 1999
----- --------------------------------
Common Stock, $.001 par value 37,267,207
2
AMYLIN PHARMACEUTICALS, INC.
TABLE OF CONTENTS
PAGE NO.
COVER PAGE.................................................. 1
TABLE OF CONTENTS........................................... 2
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Condensed Consolidated Balance Sheets as of
June 30,1999 and December 31, 1998 ................ 3
Condensed Consolidated Statements of Operations
for the three months ended June 30, 1999 and 1998 .... 4
Condensed Consolidated Statements of Operations
for the six months ended June 30, 1999 and 1998 .... 5
Condensed Consolidated Statements of Cash Flows
for the six months ended June 30, 1999 and 1998 .... 6
Notes to Condensed Consolidated Financial Statements... 7
ITEM 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations.......... *
ITEM 3.
Quantitative and Qualitative Disclosures
about Market Risk...................................... *
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings.............................. *
ITEM 2. Changes in Securities and Use of Proceeds...... *
ITEM 3. Defaults upon Senior Securities................ *
ITEM 4. Submission of Matters to a Vote of
Security Holders............................... 15
ITEM 5. Other Information........................... *
ITEM 6. Exhibits and Reports on Form 8-K .............. *
SIGNATURE................................................... 16
* No information provided due to inapplicability of item.
3
AMYLIN PHARMACEUTICALS, INC.
Condensed Consolidated Balance Sheets
June 30, December 31,
1999 1998
(unaudited)
------------- -------------
Assets
Current Assets:
Cash and cash equivalents $ 13,669,000 $ 8,787,000
Short-term investments 1,983,000 2,002,000
Other current assets 378,000 514,000
------------- -------------
Total current assets 16,030,000 11,303,000
Property and equipment, at cost:
Equipment 2,604,000 15,197,000
Leasehold improvements 12,000 3,955,000
------------- -------------
2,616,000 19,152,000
Less accumulated depreciation and amortization (1,512,000) (13,556,000)
------------- -------------
1,104,000 5,596,000
Patents and other assets, net 2,080,000 1,924,000
------------- -------------
$ 19,214,000 $ 18,823,000
============= =============
Liabilities and Stockholders' Equity (Deficit)
Current Liabilities:
Accounts payable $ 382,000 $ 2,187,000
Accrued liabilities 1,975,000 2,130,000
Accrued dividends on preferred stock 204,000 0
Current portion of obligation under capital
leases and equipment notes payable 1,365,000 1,794,000
------------- -------------
Total current liabilities 3,926,000 6,111,000
Obligation under capital leases and
equipment notes payable 2,264,000 4,164,000
Notes payable to related party, net of discount 42,596,000 40,010,000
Stockholders' equity (deficit):
Preferred stock, $.001 par value, 7,500,000 shares authorized,
125,000 issued and outstanding at June 30, 1999 -- --
Common stock, $.001 par value, 100,000,000 shares authorized,
37,267,000 and 36,726,000 issued and outstanding at
June 30, 1999 and December 31, 1998, respectively 37,000 37,000
Additional paid-in capital 245,052,000 229,757,000
Accumulated deficit (274,358,000) (260,830,000)
Deferred compensation (287,000) (428,000)
Unrealized gains/(losses) on short-term investments (16,000) 2,000
------------- -------------
Total stockholders' equity (deficit) (29,572,000) (31,462,000)
------------- -------------
$ 19,214,000 $ 18,823,000
============= =============
See accompanying notes.
4
AMYLIN PHARMACEUTICALS, INC.
Condensed Consolidated Statements of Operations
(unaudited)
Three months ended
June 30,
-----------------------------
1999 1998
------------ ------------
Revenues under collaborative agreements
from related party $ 0 $ 5,889,000
Operating Expenses:
Research and development 4,336,000 14,233,000
General and administrative 1,296,000 3,366,000
------------ ------------
5,632,000 17,599,000
------------ ------------
Loss from operations (5,632,000) (11,710,000)
Interest and other income 496,000 341,000
Interest and other expense (1,557,000) (1,378,000)
------------ ------------
Net loss (6,693,000) (12,747,000)
Accrued dividends on preferred stock 204,000 --
Net loss applicable to common stock $ (6,897,000) $(12,747,000)
============ ============
Net loss per share - basic and diluted $ (0.18) $ (0.39)
============ ============
Shares used in computing net loss per share -
basic and diluted 37,198,000 32,572,000
============ ============
See accompanying notes
5
AMYLIN PHARMACEUTICALS, INC.
Condensed Consolidated Statements of Operations
(unaudited)
Six months ended
June 30,
-----------------------------
1999 1998
------------ ------------
Revenues under collaborative agreements
from related party $ 0 $ 12,975,000
Operating Expenses:
Research and development 8,222,000 32,402,000
General and administrative 2,764,000 6,289,000
------------ ------------
10,986,000 38,691,000
------------ ------------
Loss from operations (10,986,000) (25,716,000)
Interest and other income 672,000 846,000
Interest and other expense (3,010,000) (2,696,000)
------------ ------------
Net loss (13,324,000) (27,566,000)
Accrued dividends on preferred stock 204,000 --
Net loss applicable to common stock $(13,528,000) $(27,566,000)
============ ============
Net loss per share - basic and diluted $ (0.37) $ (0.85)
============ ============
Shares used in computing net loss per share -
basic and diluted 37,011,000 32,505,000
============ ============
See accompanying notes.
6
AMYLIN PHARMACEUTICALS, INC.
Condensed Consolidated Statements of Cash Flows
(unaudited)
Six months ended
June 30,
-----------------------------
1999 1998
------------ ------------
Operating Activities:
Net loss $(13,324,000) $(27,566,000)
Adjustments to reconcile net loss to net
cash used for operating activities:
Loss on sale of fixed assets 196,000 0
Depreciation and amortization 967,000 1,734,000
Deferred revenue from related party 0 (3,287,000)
Interest added to debt 2,039,000 0
Amortization of deferred compensation 141,000 623,000
Amortization of warrants issued with debt 599,000 599,000
Changes in assets and liabilities:
Receivable from related party 0 460,000
Other current assets 136,000 559,000
Accounts payable (1,805,000) (3,687,000)
Accrued liabilities (155,000) (247,000)
------------ ------------
Net cash flows used for operating activities (11,206,000) (30,812,000)
Investing activities:
Decrease in short-term investments 0 5,848,000
Purchase/sale of equipment and leasehold improvements 0 (490,000)
Change in deposits, patents and other assets (217,000) (173,000)
Proceeds from sale of fixed assets 2,371,000 0
------------ ------------
Net cash flows provided by (used for) investing activities 2,154,000 5,185,000
Financing activities:
Issuance of notes payable 0 4,523,000
Principal payments on capital leases and
equipment notes payable (1,306,000) (845,000)
Issuance of common stock, net 240,000 1,072,000
Issuance of preferred stock 15,000,000 0
------------ ------------
Net cash flows provided by financing activities 13,934,000 4,750,000
------------ ------------
Change in cash and cash equivalents 4,882,000 (20,877,000)
Cash and cash equivalents at beginning of period 8,787,000 46,903,000
------------ ------------
Cash and cash equivalents at end of period $ 13,669,000 $ 26,026,000
============ ============
Supplemental disclosure of cash flow information:
Interest paid $ 184,000 $ 256,000
Notes assumed in sale of fixed assets $ 1,020,000 $ 0
Accrued dividends $ 204,000 $ 0
Warrants issued in sale of fixed assets $ 55,000 $ 0
See accompanying notes.
7
AMYLIN PHARMACEUTICALS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1999
(unaudited)
1. Summary of Significant Accounting Policies
Basis of Presentation
The information contained herein has been prepared in accordance with
instructions for Form 10-Q and Article 10 of Regulation S-X. The information at
June 30, 1999 is unaudited. In the opinion of management, the information
reflects all adjustments necessary to make the results of operations for the
interim periods a fair statement of such operations. All such adjustments are of
a normal recurring nature. Interim results are not necessarily indicative of
results for a full year. For more complete financial information, these
financial statements should be read in conjunction with the audited financial
statements included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1998.
Per Share Data
Basic and diluted net loss per share is computed using the weighted
average number of common shares outstanding during the periods.
Consolidation
The consolidated financial statements include the accounts of Amylin
Pharmaceuticals Inc. ("Amylin" or the "Company") and its wholly owned
subsidiary, Amylin Europe Limited. All significant intercompany transactions and
balances have been eliminated.
2. Stockholders' Equity
In March 1999, the Company completed a private stock offering of 125,000
shares of its Series A preferred stock. The proceeds to the Company from the
financing were $15.0 million. Each share of Series A preferred stock is
automatically convertible into 100 shares of common stock whenever the closing
bid price of the Company's stock remains above $2.40 per share for 30
consecutive trading days.
3. Sale of Cabrillo Laboratories Division
On April 30, 1999 Amylin entered into an agreement with Magellan
Laboratories Incorporated for the sale of the assets of the Cabrillo
Laboratories division of Amylin for which the Company received a cash payment of
$2.1 million and Magellan assumed a $1.0 million third party equipment lease.
Additionally, Amylin and Magellan entered into an agreement pursuant to which
Magellan agreed to perform a portion
8
of Amylin's future product development services. Magellan agreed to maintain
certain product development capabilities important for the preparation of
Amylin's regulatory filings for SYMLIN(TM) (pramlintide acetate). As a further
component, Amylin issued Magellan a warrant for the purchase of 50,000 shares of
the Company's common stock in exchange for a $500,000 credit for future
laboratory services to be provided by Magellan to Amylin. The warrant is
exercisable from December 1, 1999 and may be exercised up to and including
November 30, 2001. In addition, as part of the April 30, 1999 sale of the assets
of its Cabrillo Laboratories division, the Company assigned to Magellan
Laboratories its lease for the 35,500 square foot facility where its former
product development operations were located.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Except for the historical information contained herein, the discussion
in this report contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
discussed in this report due to, among other things, the results and timing of
the results of the Company's ongoing and planned clinical trials of SYMLIN(TM)
(pramlintide acetate) and AC2993 (synthetic exendin-4), the Company's ability to
raise additional capital to finance its business operations through and
following the first quarter of 2000, and the timing of filing for regulatory
approval of SYMLIN. Additional factors that could cause or contribute to such
differences include, without limitation, those discussed in the section entitled
"Liquidity and Capital Resources" herein as well as those discussed in the
Company's Annual Report on Form 10-K for the year ended December 31, 1998, under
the heading "Risk Factors."
Since its inception in September 1987, Amylin has devoted substantially
all of its resources to its research and development programs, including
research and development of SYMLIN(TM) (pramlintide acetate) and AC2993
(synthetic exendin-4). Substantially all of the Company's revenues to date have
been derived from fees and expense reimbursements under collaborative agreements
and from interest income. Amylin has no product sales and has not received any
revenues from the sale of products. The Company has been unprofitable since its
inception and expects to incur significant additional operating losses for the
next several years. As of June 30, 1999, the Company's accumulated deficit was
approximately $274 million.
The Company's Common Stock is listed for trading on the Nasdaq SmallCap
Market ("Nasdaq SmallCap"). If the Company does not meet the minimum
requirements for listing on Nasdaq SmallCap, the securities may be delisted from
Nasdaq SmallCap or the Company may be required to effect a reverse stock split
in order to maintain the listing. The Company cannot guarantee that it will be
able to maintain the listing of the Common Stock on Nasdaq SmallCap or any other
exchange.
From June 1995 to August 1998, Amylin and Johnson & Johnson collaborated
on the development and commercialization of SYMLIN. Under the Collaboration
Agreement, Johnson & Johnson made payments to Amylin totaling approximately $174
million. These payments included funding of one-half of the SYMLIN development
costs, draw downs from the
9
development loan facility under a loan and security agreement, the purchase of
$30 million of the Company's Common Stock, milestone, license and option fee
payments, and the funding of SYMLIN pre-marketing costs. The Johnson & Johnson
collaboration provided for, among other things, a fifty-fifty sharing
arrangement whereby each party would be responsible for one-half of all
development and commercialization costs and would share one-half of all profits
derived from SYMLIN. As a result of Johnson & Johnson's withdrawal from the
collaboration, Johnson & Johnson has relinquished all rights to share in any
SYMLIN profits. Following the collaboration termination in August
1998, all product and other rights associated with SYMLIN and related compounds
reverted to Amylin. Additionally, Johnson & Johnson agreed to purchase and store
certain SYMLIN bulk drug product inventory that the Company agreed to purchase
from Johnson & Johnson on the occurrence of certain future events.
Following the announcement of the termination of the Johnson & Johnson
Collaboration Agreement in March 1998, Amylin reduced the Company's workforce
and operating expenses. In October 1998, following the announcement of the
results of the Company's European/Canadian Phase 3 studies of SYMLIN, the
Company further reduced its workforce and operating expenses. As part of its
restructuring of operations, Amylin reduced the square footage occupied by the
Company's research, development and administrative staff from 45,000 square feet
to 26,500 square feet as of March 1, 1999.
The Company believes that its existing available cash, and interest
income from cash investments will permit the Company to finance its current
operations into the first quarter of 2000.
The Company is continuing to conduct two one-year US Phase 3 clinical
studies of SYMLIN. One study is in type 1 diabetes and the other is in
insulin-using type 2 diabetes. Results from these two studies are scheduled to
be announced in the second half of 1999. If results from these studies are
positive, the Company expects to complete SYMLIN regulatory filings in mid-2000
in the US and Europe for type 1 and, possibly, insulin-using type 2 diabetes.
There can be no assurance that the results of the two ongoing US Phase 3
clinical trials of SYMLIN will be favorable or sufficient to support filing for
market approval in any jurisdiction or, if they are, that additional financial
resources will be raised in the necessary time frame or on terms favorable to
the Company, if at all. If for any reason Amylin is unable to obtain additional
financing on acceptable terms, the Company will not have the financial resources
to continue the research and development, including the regulatory filing
processes, of SYMLIN or any of the Company's other product candidates through
and following the first quarter of 2000.
RESULTS OF OPERATIONS
Revenue
The Company received no collaborative revenue for the period ended June
30,1999, compared with $13.0 million received during the same period in 1998.
This reduction was due to the termination of the Company's Collaboration
Agreement with Johnson & Johnson in August 1998.
Operating Expenses
10
The Company's total operating expenses for the first six months ended
June 30, 1999 decreased to $11.0 million from $38.7 million for the same period
in 1998. Research and development expenses decreased to $8.2 million for the six
months ended June 30, 1999 as compared to $32.4 million for the same period in
1998. General and administrative expenses decreased to $2.8 million for the six
months ended June 30, 1999 as compared to $6.3 million for the same period in
1998. The decreases in these expenses were a result of the Company's effort to
reduce costs following the termination of the Company's Collaboration Agreement
with Johnson & Johnson and the cost reductions implemented following unexpected
clinical trial results on October 1998, which delayed the Company's timeline for
filing for regulatory approval for SYMLIN.
Other Income and Expense
Interest and other income is comprised of interest income from
investment of the Company's cash reserves and external services income generated
by the Company's Cabrillo division through April 30,1999. Interest and other
income was $0.7 million for the period ended June 30, 1999 as compared to $0.8
million for the same period in 1998. The decrease in interest and other income
was primarily due to lower average cash reserves available for investment.
Interest and other expense is principally comprised of interest expense
resulting from long-term debt obligations. Debt financing has been utilized by
the Company to acquire laboratory and other equipment, to fund tenant
improvements to the Company's facilities, and for other working capital
purposes. In addition, in accordance with the terms of the Collaboration
Agreement, Johnson & Johnson advanced Amylin's share of SYMLIN pre-launch
marketing expenses incurred during the term of the collaboration.
Separately, in 1997, the Company received proceeds of approximately
$30.6 million from a draw down under its Development Loan Facility with Johnson
& Johnson. The proceeds were used to fund the Company's one-half share of
development expenses for SYMLIN during that year. Both the development loan and
the pre-marketing loan were provided under the terms and conditions of the
Company's Loan Agreement with Johnson & Johnson and will be repaid with interest
over time in accordance with the terms of the Loan Agreement. The loan is
secured by the Company's issued patents and pending patent applications relating
to amylin.
In conjunction with the borrowing under the Development Loan Facility,
the Company issued warrants to Johnson & Johnson to purchase 1,530,950 shares of
the Company's common stock with a fixed exercise price of $12 per share and a
10-year exercise period. The estimated value of the warrants is being amortized
to interest expense over the life of the Development Loan Facility.
Interest and other expense increased to $3.0 million for the six months
ended June 30, 1999 from $2.7 million for the same period in 1998. The increase
in interest and other expense was primarily due to the compounding of interest
associated with the Development Loan debt, amortization of the valuation placed
on the warrants, and interest expense related to the Pre-Marketing Loan.
11
Net Loss
The net loss for the period ended June 30, 1999 was $13.5 million
compared to a net loss for the same period in 1998 of $27.6 million. The
decrease in the net loss was primarily due to the significant reductions in work
force and lower external clinical expenses.
Amylin expects to incur substantial operating losses over the next
several years due to continuing expenses associated with its research and
development programs, including clinical development of SYMLIN(TM) (pramlintide
acetate) and AC2993 (synthetic exendin-4), preclinical and potential clinical
testing of additional product candidates, and related general and administrative
support. Operating losses may fluctuate from quarter to quarter as a result of
differences in the timing of expenses incurred and revenues recognized.
LIQUIDITY AND CAPITAL RESOURCES
Since its inception, the Company has financed its operations primarily
through private placements of preferred stock, sales of common stock and
reimbursement of SYMLIN development expenses through its collaboration with
Johnson & Johnson, and debt financings.
At June 30, 1999, the Company had $15.7 million in cash, cash
equivalents and short-term investments as compared to $10.8 million at December
31, 1998. The Company invests its cash in U.S. government and other highly rated
liquid debt instruments. The Company believes that its existing cash, including
interest income from investments, should provide sufficient funds to continue
current business operations into the first quarter of 2000.
The Company intends to use its financial resources for the ongoing
development of SYMLIN, including the Phase 3 clinical trials, for its AC2993
development program, and for other general corporate purposes. As a result of
the termination of the Collaboration Agreement between the Company and Johnson
and Johnson, and following the announcement in October 1998 of unexpected
results from the Company's six-month Phase 3 European/Canadian clinical studies
of SYMLIN, resources dedicated toward the Company's other research programs have
been sharply reduced or eliminated. The Company plans to continue advancing its
research and development pipeline only as future resources permit. To the extent
that clinical trials of the Company's SYMLIN and AC2993 compounds progress as
planned, research and development expenses will include costs of supplying
materials for and/or conducting SYMLIN and AC2993 clinical trials. The amounts
actually expended for each purpose may vary significantly depending upon
numerous factors, including the progress of the Company's research and
development programs, the results of pre-clinical and clinical studies, the
timing of regulatory submissions and approvals, if any, technological advances,
determinations as to commercial potential of the Company's compounds, and the
status of competitive products. Expenditures will also depend upon the
availability of additional sources of funds, the establishment of collaborative
arrangements with other companies, and other factors.
12
The Company may not be able to generate a positive internal cash flow
for several years due to substantial additional research and development costs,
including costs related to research, pre-clinical testing, clinical trials,
manufacturing costs, and general and administrative expenses necessary to
support such activities. Operating losses in the future may fluctuate from
quarter to quarter as a result of differences in the timing of expenses incurred
and revenues recognized.
The Company cannot make any assurances that any of its drug candidates
will successfully meet any or all of their development goals. Important
technical milestones remain to be achieved before the Company can commercialize
any of its products in development. The Company's future capital requirements
will depend on many factors, including the results of its remaining one-year US
Phase 3 clinical trials of SYMLIN (scheduled to be announced during the second
half of 1999), the continued evaluation of results from its completed Phase 3
clinical trials of SYMLIN, the ability of the Company to establish one or more
development and/or commercialization collaborations for its SYMLIN and AC2993
programs, progress with its other ongoing and new pre-clinical studies and
clinical trials, the time and costs involved in obtaining regulatory approvals,
scientific progress in its research and development programs, the magnitude of
these programs, the costs involved in preparing, filing, prosecuting,
maintaining, enforcing or defending itself against patents, competing
technological and market developments, changes in collaborative relationships,
and any costs of manufacturing scale-up.
Prior to marketing, any drug developed by the Company must undergo
rigorous preclinical and clinical testing and an extensive regulatory approval
process mandated by the Food and Drug Administration (FDA) and equivalent
foreign authorities. Human clinical testing is now underway on two of the
Company's product candidates, SYMLIN and AC2993. Subject to compliance with FDA
and foreign authorities regulations, the Company continues to undertake
extensive clinical testing in an effort to demonstrate optimal dose, safety, and
efficacy for its product candidates in humans. Although the Company believes
Phase 3 clinical data from its four completed studies of SYMLIN warrant
continuing with the Phase 3 development program at this time, there can be no
assurance that the ongoing studies will confirm or improve the results of the
completed Phase 3 studies or that any of the data, past or future, will support
regulatory approval of SYMLIN.
Further testing of SYMLIN, AC2993, and the Company's other product
candidates in research or development may reveal undesirable and unintended side
effects or other characteristics that may prevent or limit their commercial use.
As is the case for any drug in clinical testing, the Company or regulatory
authorities may suspend clinical trials at any time if the patients
participating in such trials are being exposed to unacceptable health risks.
There can be no assurance that the Company will not encounter problems in
clinical trials, which will cause the Company or the regulatory authorities to
delay or suspend clinical trials. In addition, there can be no assurance that
any of the Company's products will obtain regulatory approval for any
indication. Products if any, resulting from Amylin's research and
13
development programs are not expected to be commercially available for a number
of years.
The Company believes that patent and other proprietary rights are
important to its business, and in this regard intends to file applications as
appropriate for patents covering both its products and processes. Litigation,
which could result in substantial cost to the Company, may also be necessary to
enforce patents issued to the Company. Litigation, whether or not there is any
basis for it, may also be required to determine the scope and validity of
third-party proprietary rights.
YEAR 2000 COMPLIANCE
The Year 2000 ("Y2K") issue results from computer systems and software
products being coded using two digits rather than four to define the applicable
year. The Company's computer systems and software products with embedded
technology that are time-sensitive may recognize a date as the year 1900 rather
than the year 2000 which could cause computer system failures and errors leading
to a disruption of business operations.
We have established an active program to identify and resolve Year 2000
related issues. This program includes the review and assessment of our internal
information technology as well as assessment of the Year 2000 readiness of
material third party business partners. This program consists of four phases:
inventory, risk assessment, problem resolution and contingency planning. The
first two phases have been completed, problem resolution is underway and the
Company has begun to develop its contingency plan. We expect to have all of our
internal information technology compliant by the end of the third quarter of
1999.
We have contacted our important business partners in order to assess
their progress in addressing Year 2000 issues. Information provided by them has
been used to assess their commitment to Year 2000 readiness. Based on the
information provided, the Company believes that its business partners are taking
adequate steps to ensure that their business operations will not be seriously
disrupted by Year 2000 issues. Additionally, the Company's primary computer
systems do not interface directly with those of third parties, thus providing
the Company with further confidence that its operations will not be disrupted
even if third parties fail to adequately complete their Year 2000 programs.
However, in the event that a third party cannot supply us with products or
services, the Company's results of operations could be adversely affected. For
example, the Company's research and development efforts could be interrupted,
resulting in delays in the progress of our product.
The Company's most significant potential exposure to Year 2000 problems
is related to its dependence on commercial utilities. If the Company's water and
power supply were interrupted, its research and development activities as well
as its general business operations would be seriously affected until services
could be restored or until suitable alternate sources could be secured. The
Company has not yet developed and evaluated contingency plans that could
potentially mitigate this type of disruption. During the third quarter of 1999,
14
the Company will evaluate options and determine if any of these are prudent and
affordable.
Year 2000 costs to date have been primarily related to internal
personnel costs. Total external costs to remediate Year 2000 problems are
estimated at less than $100,000. At this time, the Company has no reason to
believe that Year 2000 issues will have a material impact on it's business or
financial condition.
Part II - Other Information
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to Vote of Securities Holders
The Company's Annual Meeting of Stockholders (the "Annual Meeting") was
held on May 24, 1999. At the Annual Meeting, the stockholders of the Company (i)
elected each of the persons listed below to serve as a director of the Company
until the next annual meeting and until his or her successor is elected, (ii)
approved the Company's Employee Stock Purchase Plan, as amended, and (iii)
ratified the selection of Ernst & Young LLP as the Company's independent
auditors for the fiscal year ending December 31, 1999.
The Company had 37,166,326 shares of Common Stock and 125,000 shares of
5% Series A Convertible Preferred Stock outstanding as of March 26, 1999, the
record date for the Annual Meeting. At the Annual Meeting, holders of a total of
31,319,776 shares of Common Stock and 82,501 shares of 5% Series A Convertible
Preferred Stock were present in person or represented by proxy for Proposals 1 -
3. Each share of 5% Series A Convertible Preferred Stock outstanding is entitled
to 100 votes. The following sets forth information regarding the results of the
voting at the Annual Meeting:
Proposal 1: Election of Directors
SHARES VOTING SHARES
DIRECTOR IN FAVOR WITHHELD
- -------- ------------- -----------
Joseph C. Cook, Jr. 39,261,407 308,469
James C. Blair 39,244,092 325,784
James C. Gaither 39,265,304 313,572
15
SHARES VOTING SHARES
DIRECTOR IN FAVOR WITHHELD
- -------- ------------- -----------
Ginger L. Graham 39,161,413 408,463
Howard E. Greene, Jr. 39,241,710 328,166
Vaughn M. Kailian 39,235,727 334,149
Proposal 2: Approval of the Employee Stock Purchase Plan, as amended
Votes in Favor: 37,549,790
Votes Against: 825,737
Abstentions: 188,264
Proposal 3: Ratification of Selection of Independent Auditors
Votes in Favor: 39,321,732
Votes Against: 123,406
Abstentions: 124,728
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
Exhibit 27.1 - Financial Data Schedule.
16
AMYLIN PHARMACEUTICALS, INC.
June 30, 1999
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Amylin Pharmaceuticals, Inc.
Date: August 9, 1999 By:/s/ Joseph C. Cook, Jr.
-----------------------
Joseph C. Cook, Jr.
Chairman of the Board and
Chief Executive Officer
(on behalf of the registrant
and as the registrant's
principal financial officer)