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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
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(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, 2000
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 AUGUST 4, 2000
----- -----------------------------
Common Stock, $.001 par value 62,924,000
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AMYLIN PHARMACEUTICALS, INC.
TABLE OF CONTENTS
PAGE NO.
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COVER PAGE........................................................................................ 1
TABLE OF CONTENTS................................................................................. 2
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Condensed Consolidated Balance Sheets as of June 30, 2000 (unaudited) and 3
December 31, 1999......................................................................
Condensed Consolidated Statements of Operations for the three months ended
June 30, 2000 and 1999 (unaudited)..................................................... 4
Condensed Consolidated Statements of Operations for the six months ended
June 30, 2000 and 1999 (unaudited) .................................................... 5
Condensed Consolidated Statements of Cash Flows for the six months ended
June 30, 2000 and 1999 (unaudited)..................................................... 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............................. 12
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.................................... 13
ITEM 5. Other Information...................................................................... *
ITEM 6. Exhibits and Reports on Form 8-K....................................................... 14
SIGNATURE ........................................................................................ 14
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* No information provided due to inapplicability of item.
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AMYLIN PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, DECEMBER 31,
2000 1999
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(UNAUDITED) (NOTE 1)
Assets
Current Assets:
Cash and cash equivalents .................................. $ 23,511,000 $ 8,171,000
Short-term investments ..................................... 80,250,000 14,332,000
Other current assets ....................................... 1,679,000 831,000
------------- -------------
Total current assets ........................................... 105,440,000 23,334,000
Property and equipment, net .................................... 961,000 928,000
Patents and other assets, net .................................. 2,848,000 2,160,000
------------- -------------
$ 109,249,000 $ 26,422,000
============= =============
Liabilities and Stockholders' Equity (Net Capital Deficiency)
Current Liabilities:
Accounts payable ........................................... $ 931,000 $ 359,000
Accrued liabilities ........................................ 5,292,000 4,501,000
Current portion of obligation under capital
leases and equipment notes payable ....................... 826,000 1,115,000
------------- -------------
Total current liabilities ...................................... 7,049,000 5,975,000
Obligation under capital leases and equipment notes payable .... 1,350,000 1,620,000
Notes payable to related party, net of discount ................ 48,076,000 45,227,000
Stockholders' Equity (Net Capital Deficiency):
Common stock, $.001 par value, 100,000,000 shares
authorized, 62,898,000 and 53,972,000 issued and
outstanding at June 30, 2000 and December 31, 1999,
respectively ............................................... 63,000 54,000
Additional paid-in capital ................................. 365,769,000 265,983,000
Accumulated deficit ........................................ (311,900,000) (291,729,000)
Deferred compensation ...................................... (1,042,000) (653,000)
Accumulated other comprehensive loss ....................... (116,000) (55,000)
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Total stockholders' equity (net capital deficiency) ............ 52,774,000 (26,400,000)
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$ 109,249,000 $ 26,422,000
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See accompanying notes to condensed consolidated financial statements.
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AMYLIN PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED
JUNE 30,
-------------------------------
2000 1999
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Operating expenses:
Research and development ........................................ $ 8,361,000 $ 4,336,000
General and administrative ...................................... 2,493,000 1,296,000
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10,854,000 5,632,000
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Loss from operations .............................................. (10,854,000) (5,632,000)
Interest and other income ......................................... 1,707,000 496,000
Interest and other expense ........................................ (1,488,000) (1,557,000)
------------ ------------
Net loss .......................................................... (10,635,000) (6,693,000)
Accrued dividends on preferred stock .............................. -- 204,000
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Net loss applicable to common stock ............................... $(10,635,000) $ (6,897,000)
============ ============
Net loss applicable to common stock per share-- basic and diluted . $ (0.17) $ (0.18)
============ ============
Shares used in computing net loss applicable to common stock
per share-- basic and diluted ..................................... 62,845,000 37,198,000
============ ============
See accompanying notes to condensed consolidated financial statements.
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AMYLIN PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30,
2000 1999
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Operating expenses:
Research and development ........................................ $ 14,613,000 $ 8,222,000
General and administrative ...................................... 5,204,000 2,764,000
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19,817,000 10,986,000
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Loss from operations .............................................. (19,817,000) (10,986,000)
Interest and other income ......................................... 2,596,000 672,000
Interest and other expense ........................................ (2,950,000) (3,010,000)
------------ ------------
Net loss .......................................................... (20,171,000) (13,324,000)
Accrued dividends on preferred stock .............................. -- 204,000
------------ ------------
Net loss applicable to common stock ............................... $(20,171,000) $(13,528,000)
============ ============
Net loss applicable to common stock per share-- basic and diluted.. $ (0.34) $ (0.37)
============ ============
Shares used in computing net loss applicable to common stock
per share-- basic and diluted ..................................... 60,189,000 37,011,000
============ ============
See accompanying notes to condensed consolidated financial statements.
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AMYLIN PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30,
2000 1999
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Operating activities:
Net loss ............................................................... $ (20,171,000) $ (13,324,000)
Adjustments to reconcile net loss to net
cash used in operating activities:
Loss on sale of fixed assets ....................................... 196,000
Depreciation and amortization ...................................... 359,000 967,000
Stock-based compensation ........................................... 1,137,000 141,000
Amortization of debt discount from warrants ........................ 599,000 599,000
Accrued interest added to notes payable to related party .......... 2,250,000 2,039,000
Changes in operating assets and liabilities:
Other current assets ........................................... (788,000) 136,000
Accounts payable ............................................... 572,000 (1,805,000)
Accrued liabilities ............................................ 978,000 (155,000)
Patents, other assets and other, net ........................... (704,000) (217,000)
------------- -------------
Net cash flows used for operating activities ............... (15,768,000) (11,423,000)
Investing activities:
Purchases of short-term investments ................................. (365,927,000)
Sales and maturities of short-term investments ...................... 299,948,000
Sales (purchases) of fixed assets, net .............................. (314,000) 2,371,000
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Net cash flows provided by (used for) investing activities ...... (66,293,000) 2,371,000
Financing activities:
Principal payments on capital leases and equipment notes payable .... (758,000) (1,306,000)
Issuance of common stock, net ....................................... 98,159,000 240,000
Issuance of convertible preferred stock ............................. 15,000,000
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Net cash flows provided by financing activities .................. 97,401,000 13,934,000
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Change in cash and cash equivalents ..................................... 15,340,000 4,882,000
Cash and cash equivalents at beginning of period ........................ 8,171,000 8,787,000
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Cash and cash equivalents at end of period .............................. $ 23,511,000 $ 13,669,000
============= =============
Supplemental disclosure of cash flow information:
Interest paid .......................................................... $ 98,000 $ 184,000
Notes assumed upon sale of fixed assets ................................ $ 1,020,000
Accrued dividends on preferred stock.................................... $ 204,000
Warrants issued in sale of fixed assets ................................ $ 55,000
See accompanying notes to condensed consolidated financial statements.
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AMYLIN PHARMACEUTICALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
(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 as
of June 30, 2000 and for the three and six month periods ended June 30, 2000 and
June 30, 1999 are 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, 1999 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, 1999.
PER SHARE DATA
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.
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.
RECLASSIFICATIONS
Certain items in the prior year's financial statements have been
reclassified to conform with the current year presentation.
2. 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 and other income. Realized
gains and losses and declines in value judged to be "other-than-temporary" (of
which there have been none to date) on available-for-sale securities are also
included in interest and other income. The cost of securities sold is based on
the specific identification method.
3. STOCKHOLDERS' EQUITY
On February 22, 2000, the Company completed a private stock offering of
8,333,334 shares of common stock at a price of $12.00 per share. Net proceeds
from this transaction were approximately $95.7 million.
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ITEM 2. 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. Our actual results could differ materially from those discussed
in this report due to risks and uncertainties regarding, among other things, the
timing of submissions for regulatory approvals for SYMLIN(TM) (pramlintide
acetate) and, if approvals are received, time to market thereafter, our ability
to commercialize SYMLIN, our ability to enter into sales distribution, marketing
and/or corporate partnering agreements with respect to SYMLIN and AC2993
(synthetic exendin-4), and the results of our preclinical and clinical studies
of our drug candidates, including AC2993, AC2993-LAR and AC3056. 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 our Annual Report on Form 10-K
for the year ended December 31, 1999, under the heading "Risk Factors."
BACKGROUND
Amylin Pharmaceuticals, Inc. is engaged in the discovery of potential
drug candidates for the treatment of metabolic disorders.
Since our inception in September 1987, we have devoted substantially all
of our resources to research and development programs, including research and
development of SYMLIN and AC2993. Substantially all of our revenues to date have
been derived from fees and expense reimbursements under collaborative agreements
and from interest income. We have no product sales and have not received any
revenues from the sale of products. We have been unprofitable since inception
and expect to incur significant additional operating losses for at least the
next few years. As of June 30, 2000, our accumulated deficit was approximately
$312 million.
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.
The Johnson & Johnson collaboration terminated in August 1998. As a result of
Johnson & Johnson's withdrawal from the collaboration, Johnson & Johnson
relinquished all its rights to share in SYMLIN profits. Additionally, all
product and other rights associated with SYMLIN and related compounds reverted
to us.
In 1998, due to the termination of the Johnson & Johnson collaboration
and the receipt of results from clinical trials in October 1998 that were not as
expected, we significantly reduced our workforce and implemented other changes
to our operations to substantially reduce our expenses. On March 24, 1999, we
completed a $15 million private placement of shares of 5% Series A Convertible
Preferred Stock to a select group of investors. The financing was led by $6.7
million in investments by selected members of our board of directors and their
affiliated funds. On October 7, 1999, we completed an $18.5 million private
placement of shares of common stock. These funds were raised from a select group
of institutional and private investors, predominately those investors who
participated in the March 1999 financing.
In late 1999, we reported positive phase 3 clinical study results upon
completion of clinical trials for SYMLIN, our lead drug candidate for type 1 and
insulin-using type 2 diabetes. Based on the results of the clinical studies to
date, we believe we have sufficient data to support the submission of a New Drug
Application to the Food and Drug Administration and a submission to European
regulatory authorities for marketing approval.
Following the completion of the clinical studies described above, we
judiciously began a ramp-up of our internal workforce and external contractors
to prepare us for the filing of the NDA and the submission to European
regulatory authorities, the planned commercialization of SYMLIN and also to
enable us to continue research and development of our other drug candidates,
including AC2993 and AC3056.
On February 22, 2000, we completed a private placement of $100 million of
common stock sold to select institutional and other private investors,
generating net proceeds of $95.7 million.
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We have completed a detailed work plan for the SYMLIN NDA. The NDA will
include the supporting data collected from our clinical trials for the use of
SYMLIN for both type 1 and insulin-using type 2 diabetes. It will also include
supporting data for three bulk drug suppliers, two suppliers of finished dosage
products and one supplier of injector pens. Data from both pen/cartridge and
syringe/vial presentations will be included in the submission. We plan to submit
our NDA for SYMLIN in the fourth quarter of this year. We anticipate a
submission to European regulatory authorities shortly thereafter.
On May 15, 2000, we 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 Amylin 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 Amylin 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.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2000
OPERATING EXPENSES
Our total operating expenses for the quarter ended June 30, 2000
increased to $10.9 million from $5.6 million for the comparable period in 1999.
Research and development expenses for the three months ended June 30, 2000
increased to $8.4 million from $4.3 million for the same period in 1999, and
general and administrative expenses increased to $2.5 million from $1.3 million
for the comparable 1999 period.
The $4.1 million increase in research and development expenses in the
second quarter reflects almost exclusively external costs associated with our
ongoing efforts to prepare a submission to the FDA for the marketing approval of
SYMLIN and increased external development costs associated with the AC2993 and
AC3056 programs. A less significant factor is an increase in our internal
headcount as compared to the prior year to manage our higher level of activity.
The $1.2 million increase in general and administrative expenses in the
current quarter reflects both an increase in our internal headcount over the
prior year as well as costs associated with the use of consultants during the
quarter. Approximately $0.8 million of this increase represents non-cash charges
resulting from stock based compensation to consultants and deferred compensation
to directors. In 1999, at a time when cash resources were limited, we secured
the services of certain key consultants through the use of stock options that
vest over the period that the consultant provides us services. Additionally, our
directors have deferred a significant portion of their fees pursuant to a stock
based deferred compensation plan.
OTHER INCOME AND EXPENSE
Interest and other income is comprised of interest income from
investment of our cash and investments, external service income generated by our
former Cabrillo division through April 1999 and credits from Magellan
Laboratories Incorporated in connection with the sale of the Cabrillo division
to Magellan. Interest and other income was $1.7 million for the three-month
period ended June 30, 2000, compared to $0.5 million for the same period in
1999. The improvement in the current year reflects primarily investment earnings
on higher cash balances as a result of the proceeds from the February 2000
private placement of common stock.
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Interest and other expense is principally comprised of interest expense
on long-term debt obligations. In the past, we have utilized debt financing to
acquire laboratory and other equipment, to fund tenant improvements to our
facilities, and for other working capital purposes. In addition, in accordance
with the terms of the collaboration agreement, Johnson & Johnson advanced our
share of SYMLIN pre-launch marketing expenses incurred during the term of the
collaboration. Interest accrues on this loan at the prime rate and is added to
principal on a quarterly basis. Separately, in 1997, we received proceeds of
approximately $30.6 million from a draw down under our development loan facility
with Johnson & Johnson. The proceeds were used to fund our one-half share of
development expenses for SYMLIN during a portion of that year. Interest accrues
on the development loan facility at 9% and is compounded annually. Both the
pre-marketing loan and the development loan are provided for under the terms and
conditions of our loan and security agreement with Johnson & Johnson and must be
repaid with accrued interest over time in accordance with the terms of the loan
agreement. The loan is secured by our issued patents and pending patent
applications relating to the amylin hormone, including those related to SYMLIN.
Additionally, in conjunction with the borrowing under the development
loan facility, we issued warrants to Johnson & Johnson to purchase 1,530,950
shares of our common stock with a fixed exercise price of $12 per share and a
10-year exercise period. The estimated value of the warrants at the date of
issuance is being amortized to interest expense over the life of the development
loan facility.
Interest and other expense was $1.5 million for the three months ended
June 30, 2000 compared to $1.6 million for the three months ended June 30, 1999.
NET LOSS
The net loss for the quarter ended June 30, 2000 was $10.6 million
compared to a net loss of $6.7 million for the same period in 1999. The increase
in the net loss reflects the increased operating expenses discussed above,
partially offset by the improvement in interest and other income. The net loss
available to common stock was $10.6 million in the current quarter compared to
$6.9 million in the comparable 1999 period. The prior year included $0.2 million
of accrued dividends on preferred stock, which was converted to common stock in
September 1999.
We expect to incur substantial operating losses for the remainder of
2000 and at least the next few years due to continuing expenses associated with
the submission of the NDA for SYMLIN, the preparation for the commercialization
of SYMLIN, our research and development programs including the clinical
development of AC2993 and AC3056, 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.
SIX MONTHS ENDED JUNE 30, 2000
OPERATING EXPENSES
Our total operating expenses for the six months ended June 30, 2000
increased to $19.8 million from $11.0 million for the comparable period in 1999.
Research and development expenses for the six months ended June 30, 2000
increased to $14.6 million from $8.2 million for the same period in 1999, and
general and administrative expenses increased to $5.2 million from $2.8 million
for the comparable 1999 period.
The $6.4 million increase in research and development expenses in the
current six-month period is due primarily to external costs associated with our
ongoing efforts to prepare a submission to the FDA for the marketing approval of
SYMLIN and increased development costs associated with our AC2993 and AC3056
programs. The $2.4 million increase in general and administrative expenses in
the current six-month period is due the same factors that influenced similar
fluctuations in the second quarter discussed above. Approximately $1.7 million
of this increase represents non-cash charges resulting from stock-based
compensation to consultants and deferred compensation to directors.
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OTHER INCOME AND EXPENSE
Interest and other income was $2.6 million for the six-month period
ended June 30, 2000, compared to $0.7 million for the same period in 1999. The
improvement in the current year reflects investment earnings on higher cash
balances as a result of the proceeds from the February 2000 private placement of
common stock.
Interest and other expense was $3.0 million for both the six months
ended June 30, 2000 and the comparable period in 1999.
NET LOSS
The net loss for the six months ended June 30, 2000 was $20.2 million
compared to a net loss of $13.3 million for the same period in 1999. The
increase in the net loss reflects the increased operating expenses discussed
above, partially offset by the improvement in interest and other income. The net
loss applicable to common stock was $20.2 million in the current year compared
to $13.5 million in the prior year, which included $.2 million of accrued
dividends on preferred stock that was converted to common stock in September
1999.
LIQUIDITY AND CAPITAL RESOURCES
Since our inception, we have financed our operations primarily through
private placements of common and preferred stock, public offerings of common
stock, reimbursement of SYMLIN development expenses through our collaboration
with Johnson & Johnson and debt financings.
At June 30, 2000, we had approximately $103.8 million in cash, cash
equivalents and short-term investments as compared to $22.5 million at December
31, 1999. In February 2000, we completed a private placement of $100 million of
common stock sold to select institutional and other private investors,
generating net proceeds of $95.7 million.
At June 30, 2000, the total principal and interest due to Johnson &
Johnson pursuant to the loan and security agreement discussed above was
approximately $52.9 million, approximately $14.0 million of which relates to
Johnson & Johnson's share of pre-launch marketing expenses. The debt reported on
the consolidated balance sheet at June 30, 2000 of $48.1 million is net of a
debt discount of $4.8 million attributable to the warrants issued to Johnson &
Johnson.
We intend to use our financial resources for continuing costs associated
with the submission of the NDA for SYMLIN, the preparation for the planned
commercialization of SYMLIN, our research and development programs including the
clinical development of AC2993, AC2993-LAR and AC3056, and related general and
administrative support. Research and development expenses will include costs of
supplying materials for and/or conducting clinical trials. The amounts actually
expended for each purpose may vary significantly depending upon numerous
factors, including the progress of our research and development programs, the
results of preclinical and clinical studies, the timing of regulatory
submissions and approvals, technological advances, determination as to the
commercial potential of the compounds, and the status of competitive products.
Expenditures will also depend upon the availability of additional sources of
funds, the establishment of commercial or collaborative arrangements with other
companies, and other factors.
We do not expect to generate a positive internal cash flow for at least
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 administrative expenses necessary to support
such activities.
The rate at which we use our current cash balances as well as any future
capital requirements will depend on many factors, including our ability to
complete the preparation of an NDA and a European application for marketing
approval for SYMLIN, our ability to establish commercialization arrangements for
SYMLIN and our other drug candidates, our ability to progress with other ongoing
and new preclinical studies and clinical trials, the time and costs involved in
obtaining regulatory approvals, scientific progress in research and development
programs, the magnitude of these programs, the costs involved in preparing,
filing, prosecuting, maintaining, enforcing or defending against patents,
competing technological and market developments, changes in collaborative
relationships,
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and any costs of manufacturing scale-up.
Prior to marketing, potential drug candidates developed must undergo
rigorous preclinical and clinical testing and an extensive regulatory approval
process mandated by the FDA and equivalent foreign authorities. Subject to
compliance with FDA and foreign authority regulations, we continue to undertake
extensive clinical testing in an effort to demonstrate optimal dose, safety, and
efficacy for drug candidates in humans. Further testing or use of SYMLIN,
AC2993, AC3056, and our other drug candidates in research or development may
reveal undesirable and unintended side effects or other characteristics that may
prevent or limit their commercial use. As is the case for any drug in clinical
testing, we or the regulatory authorities may suspend clinical trials at any
time if the patients participating in such trials are being exposed to
unacceptable health risks. We may encounter problems in clinical trials that
would cause the regulatory authorities or us to delay or suspend clinical
trials. In addition, we may not obtain regulatory approval of any of our drug
candidates for any indication. Products, if any, resulting from our research
programs are not expected to be commercially available for a number of years.
We believe that patent and other proprietary rights are important to our
business, and in this regard we intend to file applications as appropriate for
patents covering our products and processes. Litigation, which could result in
substantial cost, may also be necessary to enforce our patents. Litigation,
whether or not there is any basis for it, may also be required to determine the
scope and validity of third-party proprietary rights.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Standards Accounting Board, or FASB, 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 our balance sheet at fair value. The FASB subsequently delayed
implementation of the standard for the financial years beginning after June 15,
2000. We expect to adopt the new Statement effective January 1, 2001. The impact
on our financial statements is not expected to be material.
In December 1999, the SEC issued Staff Accounting Bulletin ("SAB") No.
101, Revenue Recognition in Financial Statements. SAB No. 101 provides guidance
in applying generally accepted accounting principles to revenue recognition in
financial statements, including the recognition of nonrefundable up-front fees
received in conjunction with a research and development arrangement. SAB No. 101
requires that license and other up-front fees received from research
collaborators be recognized over the term of the agreement unless the fee is in
exchange for products delivered or services performed that represent the
culmination of a separate earnings process. In June 2000, SAB No. 101 was
amended to delay the implementation date to the fourth quarter of 2000 to
provide additional time to study the guidance. To the extent SAB No. 101 would
be applicable and have a material impact, the Company would implement this new
pronouncement beginning with the fourth quarter of 2000.
In March 2000, the FASB issued Interpretation No. 44 ("FIN 44"),
Accounting for Certain Transactions Involving Stock Compensation. FIN 44
clarifies certain issues in the application of Accounting Principles Board
Opinion No. 25 ("APB 25"), Accounting for Stock Issued to Employees. Among other
issues, FIN 44 clarifies (a) the definition of employee for purposes of applying
APB 25, (b) the criteria for determining whether a plan qualifies as a
non-compensatory plan, (c) the accounting consequence of various modifications
to the terms of a previously fixed stock option or award, and (d) the accounting
for an exchange of stock compensation awards in a business combination. FIN 44
is effective July 1, 2000, but certain conclusions cover specific events that
occur after either December 15, 1998, or January 12, 2000. FIN 44 is not
expected to materially impact the Company in 2000.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We invest our cash and short term investments primarily in U.S.
government securities and marketable securities of financial institutions and
corporations with strong credit ratings. These instruments have various short
term maturities. We do not utilize derivative financial instruments, derivative
commodity instruments or other market risk sensitive instruments, positions or
transactions in any material fashion. Accordingly, we believe that, while the
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instruments we hold are subject to changes in the financial standing of the
issuer of such securities, we are not subject to any material risks arising from
changes in interest rates, foreign currency exchange rates, commodity prices,
equity prices or other market changes that affect market risk sensitive
investments. Our debt is not subject to significant swings in valuation as
interest rates on our debt approximate current market interest rates.
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS
Our Annual Meeting of Stockholders was held on June 1, 2000. At the
Annual Meeting, the stockholders of the Company (i) elected each of the persons
listed below to serve as a director of Amylin until the next annual meeting or
until his/her successor is elected, (ii) approved our Non-Employee Directors'
Stock Option Plan, as amended, and (iii) ratified the selection of Ernst & Young
LLP as our independent auditors for the fiscal year ending December 31, 2000.
We had 62,713,248 shares of Common Stock outstanding as of April 3,
2000, the record date for the Annual Meeting. At the Annual Meeting, 48,588,363
shares of Common Stock were present in person or represented by proxy for the
three proposals indicated above. The following sets forth detailed information
regarding the results of the voting at the Annual Meeting:
Proposal 1: Election of Directors
SHARES VOTING SHARES
DIRECTOR IN FAVOR WITHHELD
- -------- ------------- --------
James C. Blair, Ph.D. 48,444,777 143,586
Vaughn D. Bryson 48,440,877 147,486
Joseph C. Cook, Jr. 48,444,771 143,592
Ginger L. Graham 48,442,766 145,597
Howard E. Greene, Jr. 48,383,371 204,992
Vaughn M. Kailian 48,366,066 222,297
Donald H. Rumsfeld 48,437,714 150,649
Jay S. Skyler, M.D. 48,439,672 148,691
Proposal 2: Approval of the Non-Employee Directors' Stock Option Plan, as
amended
Votes in Favor: 47,691,638
Votes Against: 764,154
Abstentions: 132,571
Proposal 3: Ratification of Selection of Independent Auditors
Votes in Favor: 48,297,602
Votes Against: 92,337
Abstentions: 198,424
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are included as part of this report:
EXHIBIT NUMBER DESCRIPTION
-------------- -----------
10.48* Development and License Agreement dated May 15, 2000 between
the Registrant and Alkermes Controlled Therapeutics Inc. II
27 Financial Data Schedule
- ------------
* The Company has requested confidential treatment with respect to certain
portions of this exhibit. Omitted portions have been filed separately with
the SEC.
(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: August 14, 2000 By: /s/ MARK G. FOLETTA
-----------------------------------------
Mark G. Foletta,
Vice President Finance and
Chief Financial Officer
(on behalf of the registrant and as the
registrant's principal financial officer)
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