-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NGQGW4CuCQsz9DX0rznIx1PvCjLQ6q/5SIpiVXTVqJLJkIEQ97pr9sGOCDwLFlLT gIvbAJRPfIylrG6agkidHQ== /in/edgar/work/0000936392-00-000422/0000936392-00-000422.txt : 20001115 0000936392-00-000422.hdr.sgml : 20001115 ACCESSION NUMBER: 0000936392-00-000422 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMYLIN PHARMACEUTICALS INC CENTRAL INDEX KEY: 0000881464 STANDARD INDUSTRIAL CLASSIFICATION: [2834 ] IRS NUMBER: 330266089 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-19700 FILM NUMBER: 762913 BUSINESS ADDRESS: STREET 1: 9373 TOWNE CENTRE DR CITY: SAN DIEGO STATE: CA ZIP: 92121 BUSINESS PHONE: 6195522200 MAIL ADDRESS: STREET 1: 9373 TOWNE CENTRE DR CITY: SAN DIEGO STATE: CA ZIP: 92121 10-Q 1 a67217e10-q.txt FORM 10-Q PERIOD END 9/30/00 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 SEPTEMBER 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 NOVEMBER 3, 2000 ----- ------------------------------- Common Stock, $.001 par value 63,242,000
=============================================================================== 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 September 30, 2000 (unaudited) and December 31, 1999 .................................................... 3 Condensed Consolidated Statements of Operations for the three months ended September 30, 2000 and 1999 (unaudited) .................................. 4 Condensed Consolidated Statements of Operations for the nine months ended September 30, 2000 and 1999 (unaudited) .................................. 5 Condensed Consolidated Statements of Cash Flows for the nine months ended September 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 ............... 13 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 ...................... * ITEM 5. Other Information ........................................................ * ITEM 6. Exhibits and Reports on Form 8-K ......................................... 13 SIGNATURE ......................................................................... 14
- ------------ * No information provided due to inapplicability of item. 2 3 AMYLIN PHARMACEUTICALS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, DECEMBER 31, 2000 1999 ------------- ------------- (UNAUDITED) (NOTE 1) Assets Current Assets: Cash and cash equivalents ................................... $ 15,283,000 $ 8,171,000 Short-term investments ...................................... 78,206,000 14,332,000 Other current assets ........................................ 2,484,000 831,000 ------------- ------------- Total current assets ............................................ 95,973,000 23,334,000 Property and equipment, net ..................................... 1,760,000 928,000 Patents and other assets, net ................................... 2,929,000 2,160,000 ------------- ------------- $ 100,662,000 $ 26,422,000 ============= ============= Liabilities and Stockholders' Equity (Net Capital Deficiency) Current Liabilities: Accounts payable ............................................ $ 1,080,000 $ 359,000 Accrued liabilities ......................................... 4,672,000 4,501,000 Current portion of obligation under capital leases and equipment notes payable ........................ 540,000 1,115,000 ------------- ------------- Total current liabilities ....................................... 6,292,000 5,975,000 Obligation under capital leases and equipment notes payable ..... 1,215,000 1,620,000 Notes payable to related party, net of discount ................. 49,527,000 45,227,000 Stockholders' Equity (Net Capital Deficiency): Common stock, $.001 par value, 100,000,000 shares authorized, 63,030,404 and 53,972,000 issued and outstanding at September 30, 2000 and December 31, 1999, respectively .... 63,000 54,000 Additional paid-in capital .................................. 366,040,000 265,983,000 Accumulated deficit ......................................... (321,926,000) (291,729,000) Deferred compensation ....................................... (617,000) (653,000) Accumulated other comprehensive income (loss) ............... 68,000 (55,000) ------------- ------------- Total stockholders' equity (net capital deficiency) ............. 43,628,000 (26,400,000) ------------- ------------- $ 100,662,000 $ 26,422,000 ============= =============
See accompanying notes to condensed consolidated financial statements. 3 4 AMYLIN PHARMACEUTICALS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED SEPTEMBER 30, ---------------------------------- 2000 1999 ------------ ------------ Operating expenses: Research and development ................................................ $ 8,730,000 $ 4,391,000 General and administrative .............................................. 2,099,000 1,652,000 ------------ ------------ 10,829,000 6,043,000 ------------ ------------ Loss from operations ...................................................... (10,829,000) (6,043,000) Interest and other income ................................................. 2,368,000 651,000 Interest and other expense ................................................ (1,565,000) (1,428,000) ------------ ------------ Net loss .................................................................. (10,026,000) (6,820,000) Accrued dividends on preferred stock ...................................... -- 131,000 ------------ ------------ Net loss applicable to common stock ....................................... $(10,026,000) $ (6,951,000) ============ ============ Net loss applicable to common stock per share -- basic and diluted ........ $ (0.16) $ (0.17) ============ ============ Shares used in computing net loss applicable to common stock per share -- basic and diluted ........................................... 62,935,000 41,294,000 ============ ============
See accompanying notes to condensed consolidated financial statements. 4 5 AMYLIN PHARMACEUTICALS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30, ---------------------------------- 2000 1999 ------------ ------------ Operating expenses: Research and development ........................................... $ 23,344,000 $ 12,613,000 General and administrative ......................................... 7,303,000 4,416,000 ------------ ------------ 30,647,000 17,029,000 ------------ ------------ Loss from operations ................................................. (30,647,000) (17,029,000) Interest and other income ............................................ 4,960,000 1,323,000 Interest and other expense ........................................... (4,511,000) (4,438,000) ------------ ------------ Net loss ............................................................. (30,198,000) (20,144,000) Accrued dividends on preferred stock ................................. -- 335,000 ------------ ------------ Net loss applicable to common stock .................................. $(30,198,000) $(20,479,000) ============ ============ Net loss applicable to common stock per share -- basic and diluted ... $ (0.49) $ (0.53) ============ ============ Shares used in computing net loss applicable to common stock per share -- basic and diluted ..................................... 61,111,000 38,453,000 ============ ============
See accompanying notes to condensed consolidated financial statements. 5 6 AMYLIN PHARMACEUTICALS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30, ------------------------------------ 2000 1999 ------------- ------------- Operating activities: Net loss ................................................................. $ (30,198,000) $ (20,144,000) Adjustments to reconcile net loss to net cash used in operating activities: Loss on sale of fixed assets ......................................... -- 193,000 Depreciation and amortization ........................................ 321,000 1,138,000 Stock-based compensation ............................................. 1,300,000 95,000 Amortization of debt discount from warrants .......................... 898,000 898,000 Accrued interest added to notes payable to related party ............. 3,402,000 3,063,000 Changes in operating assets and liabilities: Other current assets ............................................. (1,893,000) (71,000) Accounts payable ................................................. 721,000 (1,544,000) Accrued liabilities .............................................. 83,000 293,000 Patents, other assets and other, net ............................. (556,000) 209,000 ------------- ------------- Net cash flows used for operating activities ................. (25,922,000) (15,870,000) Investing activities: Purchases of short-term investments .............................. (458,816,000) (42,000) Sales and maturities of short-term investments ................... 395,065,000 (522,000) Sales (purchases) of fixed assets, net ........................... (732,000) 2,401,000 ------------- ------------- Net cash flows provided by (used for) investing activities .... (64,483,000) 1,837,000 Financing activities: Principal payments on capital leases and equipment notes payable ...... (905,000) (1,782,000) Issuance of common stock, net ......................................... 98,422,000 763,000 Issuance of convertible preferred stock ............................... -- 15,000,000 ------------- ------------- Net cash flows provided by financing activities .................... 97,517,000 13,981,000 ------------- ------------- Change in cash and cash equivalents ....................................... 7,112,000 (52,000) Cash and cash equivalents at beginning of period .......................... 8,171,000 8,787,000 ------------- ------------- Cash and cash equivalents at end of period ................................ $ 15,283,000 $ 8,735,000 ============= ============= Supplemental disclosure of cash flow information: Interest paid ............................................................ $ 145,000 $ 236,000 Notes assumed upon sale of fixed assets .................................. $ -- $ 1,020,000 Accrued dividends on preferred stock ..................................... $ -- $ 335,000 Fair value of warrants issued as consideration ........................... $ 271,000 $ 55,000
See accompanying notes to condensed consolidated financial statements. 6 7 AMYLIN PHARMACEUTICALS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 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 September 30, 2000 and for the three and nine month periods ended September 30, 2000 and September 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. 7 8 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 September 30, 2000, our accumulated deficit was approximately $322 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. 8 9 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. 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 before the end of the calendar 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. On October 17, 2000, Amylin accepted the feasibility work performed by Alkermes, triggering the requirement to make a milestone payment of $625,000 and the issuance of a warrant to Alkermes to purchase 25,000 shares of common stock at $10.55 per share. RESULTS OF OPERATIONS THREE MONTHS ENDED SEPTEMBER 30, 2000 OPERATING EXPENSES Our total operating expenses for the quarter ended September 30, 2000 increased to $10.8 million from $6.0 million for the comparable period in 1999. Research and development expenses for the three months ended September 30, 2000 increased to $8.7 million from $4.4 million for the same period in 1999, and general and administrative expenses increased to $2.1 million from $1.7 million for the comparable 1999 period. The $4.3 million increase in research and development expenses in the current quarter, as compared to the same period in 1999, reflects almost exclusively external costs associated with our ongoing efforts to prepare a submission to the FDA for the marketing approval of SYMLIN, as well as increased development costs associated with the AC2993, AC2993-LAR and AC3056 programs. A less significant factor affecting the current third quarter results was an increase in our internal headcount as compared to the prior year to manage our higher level of activity. The $0.4 million increase in general and administrative expenses in the current quarter reflects primarily an increase in our internal headcount as well as costs associated with the use of consultants. OTHER INCOME AND EXPENSE Interest and other income was $2.4 million for the three-month period ended September 30, 2000, compared to $0.7 million for the same period in 1999. This improvement in interest and other income 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. In addition, we had a non-recurring gain of $0.6 million in the current quarter associated with a sales tax refund. 9 10 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 $1.6 million for the three months ended September 30, 2000 compared to $1.4 million for the three months ended September 30, 1999. The increase in interest and other expense in the current year is the result of slightly higher Johnson & Johnson debt levels due to interest added to principal. NET LOSS The net loss for the quarter ended September 30, 2000 was $10.0 million compared to a net loss of $6.8 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 $10.0 million in the current quarter compared to $7.0 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, AC2993-LAR 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. NINE MONTHS ENDED SEPTEMBER 30, 2000 OPERATING EXPENSES Our total operating expenses for the nine months ended September 30, 2000 increased to $30.6 million from $17.0 million for the comparable period in 1999. Research and development expenses for the nine months ended September 30, 2000 increased to $23.3 million from $12.6 million for the same period in 1999, and general and administrative expenses increased to $7.3 million from $4.4 million for the comparable 1999 period. The $10.7 million increase in research and development expenses in the current nine-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, AC2993-LAR and AC3056 programs. The $2.9 million increase in general and administrative expenses in the current nine-month period is due primarily to an increase in our number of employees as well as costs associated with the use of consultants. Approximately $1.3 million of this increase represents non-cash charges resulting from stock-based compensation to consultants and deferred compensation to directors. 10 11 OTHER INCOME AND EXPENSE Interest and other income was $5.0 million for the nine-month period ended September 30, 2000, compared to $1.3 million for the same period in 1999. This improvement in interest and other income in the current year primarily 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 $4.5 million for the nine months ended September 30, 2000 and $4.4 million for the comparable period in 1999. NET LOSS The net loss for the nine months ended September 30, 2000 was $30.2 million compared to a net loss of $20.1 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 $30.2 million in the current year compared to $20.5 million in the prior year, which included $.4 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 September 30, 2000, we had approximately $93.5 million in cash, cash equivalents and short-term investments 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. Our net cash expenditures for the three months ended September 30, 2000 and the nine months ended September 30, 2000 were $9.7 million and $24.1 million, respectively. We expect the rate of these cash expenditures to grow moderately over the next four quarters as a result of the ramp-up of certain activities related to preparation for commercialization of SYMLIN, in addition to expanded development costs associated with the AC2993, AC2993-LAR and AC3056 programs. We expect these increased expenditures to be partially offset by a reduction in costs related to the SYMLIN NDA preparation due to the anticipated completion of our NDA submission before the end of the calendar year. We intend to delay the larger cash expenditures associated with the hiring and deployment of a SYMLIN sales force, whether costs to be incurred internally or as part of a strategic alliance, until receipt of approval by the Food and Drug Administration of the SYMLIN NDA. At September 30, 2000, the total principal and interest due to Johnson & Johnson pursuant to the loan and security agreement discussed above was approximately $54.0 million, approximately $14.4 million of which relates to Johnson & Johnson's share of pre-launch marketing expenses. The debt reported on the consolidated balance sheet at September 30, 2000 of $49.5 million is net of a debt discount of $4.5 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 11 12 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, 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) 12 13 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 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. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) The following exhibits are included as part of this report:
EXHIBIT NUMBER DESCRIPTION -------------- ----------- 27 Financial Data Schedule
- -------------- (b) Reports on Form 8-K: None. 13 14 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 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) EX-27 2 a67217ex27.txt FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AND THE CONSOLIDATED STATEMENT OF OPERATIONS. 9-MOS DEC-31-2000 JAN-01-2000 SEP-30-2000 15,283,000 78,206,000 0 0 0 95,973,000 3,736,000 1,976,000 100,662,000 6,292,000 0 0 0 63,000 43,566,000 100,662,000 0 0 0 0 30,647,000 0 4,511,000 (30,198,000) 0 0 0 0 0 (30,198,000) (0.49) (0.49)
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