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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
AND EXCHANGE ACT OF 1934
For The Quarterly Period Ended September 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.
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(Exact name of registrant as specified in its charter)
Delaware 33-0266089
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9373 Towne Centre Drive, San Diego, California 92121
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(Address of principal executive offices) (Zip code)
(858) 552-2200
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(Registrant's telephone number, including area code)
Not Applicable
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(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 November 12, 1999
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Common Stock, $.001 par value 53,783,441
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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
September 30, 1999 and December 31, 1998 .............. 3
Condensed Consolidated Statements of Operations for the
three months ended September 30,1999 and 1998 ......... 4
Condensed Consolidated Statements of Operations for the
nine months ended September 30, 1999 and 1998 ......... 5
Condensed Consolidated Statements of Cash Flows for the
nine months ended September 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.......... 8
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...... 14
ITEM 3. Defaults upon Senior Securities................ *
ITEM 4. Submission of Matters to a Vote of
Security Holders............................... *
ITEM 5. Other Information.............................. *
ITEM 6. Exhibits and Reports on Form 8-K .............. 15
SIGNATURE................................................... 15
* No information provided due to inapplicability of item.
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AMYLIN PHARMACEUTICALS, INC.
Condensed Consolidated Balance Sheets
September 30, December 31,
1999 1998
(unaudited) (Note 1)
-------------- -------------
Assets
Current Assets:
Cash and cash equivalents .................................................... $ 8,735,000 $ 8,787,000
Short-term investments ....................................................... 1,960,000 2,002,000
Other current assets ......................................................... 585,000 514,000
------------- -------------
Total current assets ........................................................... 11,280,000 11,303,000
Property and equipment, at cost:
Equipment .................................................................... 2,598,000 15,197,000
Leasehold improvements ....................................................... 12,000 3,955,000
------------- -------------
2,610,000 19,152,000
Less accumulated depreciation and amortization ............................... (1,640,000) (13,556,000)
------------- -------------
970,000 5,596,000
Patents and other assets, net .................................................. 2,215,000 1,924,000
------------- -------------
$ 14,465,000 $ 18,823,000
============= =============
Liabilities and Stockholders' Equity (Deficit)
Current Liabilities:
Accounts payable ............................................................. $ 643,000 $ 2,187,000
Accrued liabilities .......................................................... 2,423,000 2,130,000
Current portion of obligation under capital
leases and equipment notes payable ....................................... 1,319,000 1,794,000
------------- -------------
Total current liabilities ...................................................... 4,385,000 6,111,000
Obligation under capital leases and
equipment notes payable ..................................................... 1,977,000 4,164,000
Notes payable to related party, net of discount ................................ 43,831,000 40,010,000
Stockholders' equity (deficit):
Preferred stock, $.001 par value, 7,500,000 shares authorized
Common stock, $.001 par value, 100,000,000 shares authorized,
49,986,000 and 36,726,000 issued and outstanding at
September 30, 1999 and December 31, 1998, respectively ..................... 50,000 37,000
Additional paid-in capital ................................................... 245,657,000 229,757,000
Accumulated deficit .......................................................... (281,176,000)
Deferred compensation ........................................................ (219,000) (428,000)
Unrealized gains/(losses) on short-term investments .......................... (40,000) 2,000
------------- -------------
Total stockholders' equity (deficit) ........................................... (35,728,000) (31,462,000)
------------- -------------
$ 14,465,000 $ 18,823,000
============= =============
See accompanying notes.
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AMYLIN PHARMACEUTICALS, INC.
Condensed Consolidated Statements of Operations
(unaudited)
Three months ended
September 30,
------------------
1999 1998
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Revenues under collaborative agreements
from related party ........................ $ 0 $ 2,678,000
Operating Expenses:
Research and development .................. 4,391,000 15,414,000
General and administrative ................ 1,652,000 2,310,000
----------- ------------
6,043,000 17,724,000
----------- ------------
Loss from operations ........................ (6,043,000) (15,046,000)
Interest and other income ................... 651,000 462,000
Interest and other expense .................. (1,428,000) (1,382,000)
----------- ------------
Net loss .................................... (6,820,000) (15,966,000)
Dividends paid on preferred stock ........... 131,000 --
----------- ------------
Net loss applicable to common stock ......... $(6,951,000) $(15,966,000)
=========== ============
Net loss per share - basic and diluted ...... $ (0.17) $ (0.45)
=========== ============
Shares used in computing net loss per share -
basic and diluted ........................ 41,294,000 35,506,000
=========== ============
See accompanying notes.
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AMYLIN PHARMACEUTICALS, INC.
Condensed Consolidated Statements of Operations
(unaudited)
Nine months ended
September 30,
------------------
1999 1998
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Revenues under collaborative agreements
from related party ........................ $ 0 $ 15,653,000
Operating Expenses:
Research and development .................. 12,613,000 47,817,000
General and administrative ................ 4,416,000 8,598,000
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17,029,000 56,415,000
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Loss from operations ........................ (17,029,000) (40,762,000)
Interest and other income ................... 1,323,000 1,294,000
Interest and other expense .................. (4,438,000) (4,065,000)
------------ ------------
Net loss .................................... (20,144,000) (43,533,000)
Dividends paid on preferred stock ........... 335,000 --
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Net loss applicable to common stock ......... $(20,479,000) $(43,533,000)
============ ============
Net loss per share - basic and diluted ...... $ (0.53) $ (1.30)
============ ============
Shares used in computing net loss per share -
basic and diluted ........................ 38,453,000 33,516,000
============ ============
See accompanying notes.
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AMYLIN PHARMACEUTICALS, INC.
Condensed Consolidated Statements of Cash Flows
(unaudited)
Nine months ended
September 30,
-----------------
1999 1998
----------- -----------
Operating Activities:
Net loss ................................................. $(20,144,000) $(43,533,000)
Adjustments to reconcile net loss to net
cash used for operating activities:
Loss on sale of fixed assets ........................... 193,000 0
Depreciation and amortization .......................... 1,138,000 2,444,000
Deferred revenue from related party .................... 0 (5,934,000)
Interest added to debt ................................. 3,063,000 0
Amortization of deferred compensation .................. 209,000 698,000
Amortization of debt discount from warrants ............ 898,000 898,000
Stock Options issued for services ...................... 95,000 0
Changes in operating assets and liabilities:
Receivable from related party .......................... 0 756,000
Other current assets ................................... (71,000) 581,000
Accounts payable ....................................... (1,544,000) (2,364,000)
Accrued liabilities .................................... 293,000 (343,000)
------------ ------------
Net cash flows used for operating activities ............. (15,870,000) (46,797,000)
Investing activities:
Decrease in short-term investments ....................... (42,000) 3,849,000
Purchase of equipment and leasehold improvements ......... 0 (342,000)
Change in deposits, patents and other assets ............. (522,000) (339,000)
Proceeds from sale of fixed assets ....................... 2,401,000 0
------------ ------------
Net cash flows provided by (used for) investing activities 1,837,000 3,168,000
Financing activities:
Issuance of notes payable ................................ 0 6,850,000
Principal payments on capital leases and
equipment notes payable ............................... (1,782,000) (1,188,000)
Issuance of common stock, net ............................ 763,000 14,154,000
Issuance of convertible preferred stock .................. 15,000,000 0
------------ ------------
Net cash flows provided by financing activities ........... 13,981,000 19,817,000
------------ ------------
Change in cash and cash equivalents ....................... (52,000) (23,813,000)
Cash and cash equivalents at beginning of period .......... 8,787,000 46,903,000
------------ ------------
Cash and cash equivalents at end of period ................ $ 8,735,000 $ 23,090,000
============ ============
Supplemental disclosure of cash flow information:
Interest paid ............................................ $ 236,000 $ 411,000
Notes assumed in sale of fixed assets .................... $ 1,020,000 $ 0
Accrued dividends ........................................ $ 335,000 $ 0
Warrants issued in sale of fixed assets .................. $ 55,000 $ 0
See accompanying notes.
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AMYLIN PHARMACEUTICALS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 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
September 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. The balance sheet at December 31, 1998 has been derived
from the audited financial statements at that date but does not include all
information and footnotes required by generally accepted accounting principles
for complete financial statements. 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 was
automatically convertible into 100 shares of common stock whenever the closing
bid price of the Company's stock remained above $2.40 per share for 30
consecutive trading days. As of September 2, 1999 the preferred stock plus
accrued dividends were converted to 12.6 million shares of Common Stock.
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In October 1999, the Company completed a private placement of 3.7 million
shares of its common stock at $5.00 per share. The proceeds to the Company from
the financing were $18.5 million. This issuance brought the total number of
outstanding shares of Amylin Pharmaceuticals stock to 53.7 million shares.
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. Additionally, Amylin and Magellan entered in to an agreement
pursuant to which Magellan agreed to perform a portion 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 risks and uncertainties regarding, among other
things, the timing of filing for regulatory approvals for SYMLIN(TM)
(pramlintide acetate) and if approvals are received, time to market after
approval, the Company's burn rate and need for additional capital, the Company's
ability to consummate strategic or corporate partner transactions on favorable
terms or at all, the results of the Company's ongoing and planned clinical
studies of its product candidates, science and technology relating to the
Company's drug candidates, and the drug discovery and development process.
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 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
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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 September 30, 1999, the Company's accumulated deficit was
approximately $281 million.
From June 1995 to August 1998, Amylin and Johnson & Johnson collaborated on
the development and commercialization of SYMLIN. Under the Collaboration
Agreement, Johnson & Johnson made payments to Amylin totaling approximately $174
million. These payments included funding of one-half of the SYMLIN development
costs, draw downs from the development loan facility under a loan and security
agreement, the purchase of $30 million of the Company's Common Stock, milestone,
license and option fee payments, and the funding of SYMLIN pre-marketing costs.
The Johnson & Johnson collaboration provided for, among other things, a
fifty-fifty sharing arrangement whereby each party would be responsible for
one-half of all development and commercialization costs and would share one-half
of all profits derived from SYMLIN. As a result of Johnson & Johnson's
withdrawal from the collaboration, Johnson & Johnson has relinquished all rights
to share in any SYMLIN profits. Additionally, following the collaboration
termination in August 1998, all product and other rights associated with SYMLIN
and related compounds reverted to Amylin. However, based on the achievement of
certain milestones in commercialization of SYMLIN, the Company has agreed to
purchase from Johnson & Johnson up to $11.4 million of bulk drug product
previously purchased by Johnson & Johnson. The Company also agreed to reimburse
Johnson & Johnson for reasonable inventory carrying costs.
Following the announcement of the termination of the Johnson & Johnson
Collaboration Agreement in March 1998, Amylin reduced its 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, together with the
proceeds from its sale of common stock in October 1999, and interest income from
cash investments will permit the Company to finance its current operations into
the fourth quarter of 2000.
On August 31, 1999 the Company announced the results of a one-year study of
SYMLIN in people with type 2 diabetes who use insulin. In this study, SYMLIN
produced a statistically significant lowering of the primary glucose control
endpoint as well as a statistically significant reduction in body weight for
study participants. As observed in previous studies of SYMLIN, the glycemic
"responder" rate in the SYMLIN groups in this study was approximately twice that
of the control group. Glycemic "responders" in the SYMLIN 120 microgram twice
daily group had an average reduction in HbA(1c) of at least 1.0% from Week 13
through the end of the one-year study. On November 8, 1999, the Company
announced the results of a one-year study of SYMLIN in people with type 1
diabetes. In this study, SYMLIN also produced a statistically significant
lowering of the primary glucose control endpoint. Additionally, to better
understand the effects of SYMLIN,
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independent of the effects of insulin, a "stable insulin" group was predefined
as those participants who did not vary their insulin usage by more than 10% from
baseline. SYMLIN recipients in the "stable insulin" group achieved a reduction
in HbA(1c) of 0.7% at one year compared to placebo recipients in the "stable
insulin" group. As in the insulin-using type 2 diabetes study, approximately
twice as many SYMLIN recipients were glycemic "responders," compared to the
insulin alone group. Glycemic "responders" in the SYMLIN 60 microgram three
times daily group had an average reduction in HbA(1c) of 0.7% at one year. In
addition, overweight SYMLIN recipients lost weight while those who were
overweight in the insulin alone group gained weight. The results of both studies
are consistent with those seen in earlier SYMLIN Phase 3 clinical studies.
RESULTS OF OPERATIONS
Revenue
The Company received no collaborative revenue for the period ended
September 30,1999, compared with $15.7 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
The Company's total operating expenses for the quarter ended September 30,
1999 decreased to $6.0 million from $17.7 million for the same period in 1998.
For the nine months ended September 30, 1999, operating expenses decreased to
$17.0 million from $56.4 million for the same period in 1998. Research and
development expenses for the quarter ended September 30, 1999 decreased to $4.4
million from $15.4 million for the same period in 1998. For the nine months
ended September 30, 1999, research and development expenses decreased to $12.6
million as compared to $47.8 million for the same period in 1998. General and
administrative expenses for the quarter ended September 30, 1999 decreased to
$1.7 million from $2.3 million for the same period in 1998. For the nine months
ended September 30, 1999, general and administrative expenses decreased to $4.4
from $8.6 million for the same period in 1998. The decreases in these expenses
were a result of the Company's efforts 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 in October
1998.
Other Income and Expense
Interest and other income is comprised of interest income from investment
of the Company's cash reserves, external service income generated by the
Company's Cabrillo division through April 30,1999 and credits from Magellan
Laboratories Incorporated. Interest and other income was $1.3 million, including
$0.4 million from Magellan for the nine-month period ended September 30, 1999,
and $1.3 million for the same period in 1998.
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,
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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 $4.4 million for the nine months
ended September 30, 1999 from $4.1 million for the same period in 1998. The
increase in interest and other expense was primarily due to the compounding of
interest associated with the development loan debt, amortization of the
valuation placed on the warrants, and interest expense related to the
pre-marketing loan.
Net Loss
The net loss for the period ended September 30, 1999 was $20.5 million
compared to a net loss for the same period in 1998 of $43.5 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 few
years due to continuing expenses associated with its research and development
programs, including clinical development of SYMLIN and AC2993, 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 common and preferred stock, sales of common stock,
reimbursement of SYMLIN development expenses through its collaboration with
Johnson & Johnson and debt financings.
At September 30, 1999, the Company had $10.7 million in cash, cash
equivalents and short-term investments as compared to $10.8
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million at December 31, 1998. In October 1999, the Company raised $18.5 million
in a private placement of 3,700,000 shares of its common stock. The Company
invests its cash in U.S. government and other highly rated liquid debt
instruments. The Company believes that its existing cash, together with the
proceeds from its sale of common stock in October 1999 and interest income from
investments, should provide sufficient funds to continue current business
operations into the fourth quarter of 2000.
The Company intends to use its financial resources for the ongoing
development of SYMLIN, including submission of US and European regulatory
approval applications, 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 were sharply reduced or eliminated. The
Company plans to continue advancing its research and development pipeline as
future resources permit. To the extent that clinical trials of the Company's
AC2993 compounds progress as planned, research and development expenses will
include costs of supplying materials for and/or conducting 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.
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, pre-clinical testing, clinical trials,
manufacturing costs, costs associated with the submission of US and European
regulatory applications for SYMLIN, 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. The Company's future
capital requirements will depend on many factors, including 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 and if approved, time to market
thereafter, 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 manufacturing costs.
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Further testing of SYMLIN, AC2993, or other product candidates in research
or development may reveal undesirable and unintended side effects or other
characteristics that may prevent or limit their commercial use. As is the case
for any drug in clinical testing, the Company or regulatory authorities may
suspend clinical trials at any time if the patients participating in such trials
are being exposed to unacceptable health risks. There can be no assurance that
the Company will not encounter problems in clinical trials, which will cause the
Company or the regulatory authorities to delay or suspend clinical trials. In
addition, there can be no assurance that any of the Company's products will
obtain regulatory approval for any indication. Products if any, resulting from
Amylin's research and development programs are not expected to be commercially
available until 2001 or later.
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 issue results from computer systems and software products
being coded using two digits rather than four to define the applicable year. The
Company's computer systems and software products with embedded technology that
are time-sensitive may recognize a date as the year 1900 rather than the year
2000 which could cause computer system failures and errors leading to a
disruption of business operations.
The Company has now completed its program for identifying and resolving
Year 2000-related issues. This program involved the review and assessment of
internal information technology and appropriate corrective action where
necessary.
The Company has also contacted 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 products or
services, the Company's operations could be adversely affected resulting in
product development delays.
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
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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 limited back-up diesel power
generation capability. In the event of a power outage, the Company could operate
for approximately 24 hours before needing to refuel. The Company has received
reasonable assurances from local diesel suppliers that additional fuel will be
available if needed and therefore has decided not to stockpile diesel fuel. The
Company has an adequate water supply to operate for 30 days, if necessary.
Year 2000 costs to date have been primarily related to internal personnel
costs and external consulting costs, which have been expensed in the same fiscal
period as incurred. At this time, the Company has no reason to believe that Year
2000 issues will have a material impact on its business or financial condition.
Part II - Other Information
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
(a) In October 1999, Amylin's Board of Directors adopted an amendment to
the Company's Amended and Restated Bylaws that eliminated the ability of holders
of 10% or more of the Company's stock to call a special meeting of stockholders.
(c) On September 2, 1999, all of the outstanding shares of the Company's 5%
Series A Convertible Preferred Stock automatically converted into an aggregate
of 12,594,009 shares of common stock. The Company issued the Preferred Stock in
a private placement in March 1999.
All of the preferred stock automatically converted to common stock
following a period of 30 consecutive trading days in which the closing bid price
of the common stock was above $2.40 per share. Consistent with the Company's
agreements with the purchasers of the preferred stock, the Company paid a 5%
dividend in the form of 94,009 shares of common stock valued as of the closing
price on September 2, 1999. Appropriate legends are affixed to the stock
certificates issued in connection with the conversion and the distribution of
the dividend.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to Vote of Securities Holders
None.
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Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are included as part of this report:
Exhibit Number Description
- -------------- -----------
3.5 Amendment to Amended and Restated Bylaws of the Registrant.
10.2 Registrant's 1991 Stock Option Plan, as amended.+
10.12 Registrant's Non-Employee Directors' Stock Option Plan, as amended.+
10.34 Registrant's Directors' Deferred Compensation Plan, as amended.+
27 Financial Data Schedule
+ Indicates management or compensatory plan or arrangement to be identified
pursuant to Item 14(c).
(b) Reports on Form 8-K: None.
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: November 12, 1999 By: /s/ Joseph C. Cook, Jr.
----------------------------
Joseph C. Cook, Jr.
Chairman of the Board and
Chief Executive Officer
(on behalf of the registrant
and as the registrant's
principal financial officer)
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