UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

(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, 2001

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
(State or other jurisdiction of
Incorporation or organization) 33-0266089
(I.R.S. Employer
Identification No.)

9373 Towne Centre Drive, San Diego, California
(Address of principal executive offices) 92121
(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 January 10, 2002
Common Stock, $.001 par value	67,515,705

TABLE OF CONTENTS

Part I.   Financial Information
	Item 1.   Financial Statements
		Condensed Consolidated Balance Sheets
		Condensed Consolidated Statements of Operations
		Condensed Consolidated Statements of Cash Flows
		NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
	Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 3.   Quantitative and Qualitative Disclosures about Market Risk
Part II.   Other Information
	Item 1.   Legal Proceedings
SIGNATURES

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, 2001 (unaudited) and December 31, 2000		3
	Condensed Consolidated Statements of Operations for the three months ended September 30, 2001 and 2000 (unaudited)		4
	Condensed Consolidated Statements of Operations for the nine months ended September 30, 2001 and 2000 (unaudited)		5
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2001 and 2000 (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		13
ITEM 6.	Exhibits and Reports on Form 8-K		13
SIGNATURE			14

2

Part I.   Financial Information

Item 1.   Financial Statements

AMYLIN PHARMACEUTICALS, INC.

Condensed Consolidated Balance Sheets
(in thousands)

		September 30,			December 31,
		2001			2000
		(Unaudited)			(Note 1)
Assets
Current Assets:
	Cash and cash equivalents	$	40,285		$	6,265
	Short-term investments		25,525			76,634
	Other current assets		7,157			2,727
Total current assets			72,967			85,626
Property and equipment, net			3,474			1,999
Patents and other assets, net			3,498			3,010
		$	79,939		$	90,635
Liabilities and Stockholders’ Equity
Current Liabilities:
	Accounts payable and accrued liabilities	$	9,484		$	6,706
	Current portion of notes payable		540			540
Total current liabilities			10,024			7,246
Other liabilities			387			—
Other notes payable, net of current portion			675			1,080
Note payable to Johnson & Johnson, net of discount			55,515			51,023
Stockholders’ Equity:
	Common stock, $.001 par value, 200,000 shares authorized, 67,352 and 63,383 issued and outstanding at September 30, 2001 and December 31, 2000, respectively		67			63
	Additional paid-in capital		403,003			367,022
	Accumulated deficit		(389,935	)		(335,772	)
	Deferred compensation		(212	)		(307	)
	Accumulated other comprehensive income		415			280
Total stockholders’ equity			13,338			31,286
		$	79,939		$	90,635

See accompanying notes to condensed consolidated financial statements.

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AMYLIN PHARMACEUTICALS, INC.

Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)

		Three months ended
		September 30,
		2001			2000
Operating expenses:
	Research and development	$	14,225		$	8,730
	General and administrative		5,299			2,099
			19,524			10,829
Loss from operations			(19,524	)		(10,829	)
Interest and other income			1,187			2,368
Interest and other expense			(1,422	)		(1,565	)
Net loss		$	(19,759	)	$	(10,026	)
Net loss per share — basic and diluted		$	(0.29	)	$	(0.16	)
Shares used in computing net loss per share — basic and diluted			67,258			62,935

See accompanying notes to condensed consolidated financial statements.

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AMYLIN PHARMACEUTICALS, INC.

Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)

		Nine months ended
		September 30,
		2001			2000
Operating expenses:
	Research and development	$	37,485		$	23,344
	General and administrative		15,782			7,303
			53,267			30,647
Loss from operations			(53,267	)		(30,647	)
Interest and other income			3,694			4,960
Interest and other expense			(4,590	)		(4,511	)
Net loss		$	(54,163	)	$	(30,198	)
Net loss per share — basic and diluted		$	(0.83	)	$	(0.49	)
Shares used in computing net loss per share — basic and diluted			65,217			61,111

See accompanying notes to condensed consolidated financial statements.

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AMYLIN PHARMACEUTICALS, INC.

Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)

					Nine months ended
					September 30,
					2001			2000
Operating activities:
Net loss					$	(54,163	)	$	(30,198	)
Adjustments to reconcile net loss to net cash used in operating activities:
	Depreciation and amortization					895			321
	Amortization of deferred compensation					166			251
	Stock based compensation					367			1,049
	Issuance of warrants for services					411			271
	Amortization of debt discount					898			898
	Accrued interest added to notes payable					3,594			3,402
	Changes in operating assets and liabilities:
		Other current assets				(4,430	)		(1,893	)
		Accounts payable and accrued liabilities				2,778			804
		Other assets and other, net				426			(174	)
				Net cash flows used for operating activities		(49,058	)		(25,269	)
Investing activities:
	Purchases of short-term investments					(230,629	)		(458,816	)
	Sales and maturities of short-term investments					281,873			395,065
	Purchase of fixed assets					(2,211	)		(732	)
	Increase in patents					(615	)		(652	)
			Net cash flows provided by (used for) investing activities			48,418			(65,135	)
Financing activities:
	Principal payments on capital leases and notes payable					(405	)		(905	)
	Issuance of common stock, net					35,065			98,421
			Net cash flows provided by financing activities			34,660			97,516
Change in cash and cash equivalents						34,020			7,112
Cash and cash equivalents at beginning of period						6,265			8,171
Cash and cash equivalents at end of period					$	40,285		$	15,283

See accompanying notes to condensed consolidated financial statements.

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AMYLIN PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2001
(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, 2001 and for the three and nine month periods ended September 30, 2001 and September 30, 2000 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, 2000 has been derived from the audited financial statements at that date but does not include all information and footnotes required by accounting principles generally accepted in the United States 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, 2000.

     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 and its wholly owned subsidiary, Amylin Europe Limited. All significant intercompany transactions and balances have been eliminated.

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 or expense as applicable. 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 or expense as applicable. The cost of securities sold is based on the specific identification method.

3. Other current assets

     Other current assets includes primarily advances to suppliers to secure commercial grade bulk drug material. In accordance with commitments made to bulk drug suppliers and consistent with its commercialization plans, the Company has judiciously begun to procure bulk drug material to prepare for the planned commercialization of SYMLIN™ (pramlintide acetate), pending United States Food and Drug Administration (“FDA”) approval. At September 30, 2001 and December 31, 2000, other current assets include $5.6 million and $1.1 million, respectively, of advances to purchase such drug material. Realization of the value of this asset is dependent upon the regulatory approval of SYMLIN (note 7).

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4. Stockholders’ Equity

     On May 29, 2001, the Company completed the sale of approximately 4.1 million shares of common stock priced at $10.00 per share in a private placement to select institutional and individual investors (the “Private Placement”). The Private Placement included the sale of approximately 3.5 million shares of newly issued stock by the Company and 0.6 million shares by an existing stockholder. The Private Placement generated net proceeds of approximately $33.8 million for the Company.

5. Comprehensive Income

     Statement of Financial Accounting Standards No. 130, Reporting Comprehensive Income (“SFAS 130”), requires reporting and displaying comprehensive income (loss) and its components, which, for the Company, includes net loss and unrealized gains and losses on investments. In accordance with SFAS 130, the accumulated balance of other comprehensive income is disclosed as a separate component of stockholders’ equity. For the nine months ended September 30, 2001 and 2000, the comprehensive loss consisted of:

		Nine months ended
		September 30,
		2001			2000
Net loss		$	(54,163	)	$	(30,198	)
Other comprehensive income:
	Unrealized gain on investments:		135			123
Comprehensive loss		$	(54,028	)	$	(30,075	)

6. Class Action Lawsuit

     On August 9, 2001, plaintiff Eric W. Peters, on behalf of himself and purportedly on behalf of a class of Company stockholders, filed a complaint in the United States District Court for the Southern District of California against the Company and its Chairman and Chief Executive officer, alleging violations of the federal securities laws related to declines in the Company’s stock price. Subsequently, at least seven similar lawsuits were filed in the same court against the same parties and an Executive Vice President of the Company. The complaints allege securities fraud in connection with various statements and alleged omissions to the public and to the securities markets relating to the development of SYMLIN. On December 27, 2001, all of the existing lawsuits were consolidated into a single action. The consolidated lawsuit is at an early stage and the extent or range of possible damages, if any, cannot yet be reasonably estimated.

7. Subsequent Event

     On October 12, 2001, the FDA completed its review of the Company’s New Drug Application (“NDA”) for SYMLIN, indicating that SYMLIN is approvable for both type 1 and insulin requiring type 2 diabetes. However, the FDA indicated that ultimate approval of SYMLIN will require that the Company achieve satisfactory results from additional clinical work, the specific requirements of which will be determined following further discussions with the FDA.

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 a number of risks and uncertainties including, among other things, risks and uncertainties in the FDA’s review of NDA’s generally, risks and uncertainties regarding the nature and scope of additional clinical testing of SYMLIN, risks and uncertainties that approvals of SYMLIN, if obtained, may be delayed and/or limited to specific indications, uncertainties in the review of our European Marketing Authorization Applications for SYMLIN, our ability to commercialize SYMLIN, if approved, our ability to enter into sales distribution, marketing and/or corporate partnering agreements with respect to SYMLIN and AC2993 (synthetic exendin-4), the results of our preclinical and clinical studies of our drug candidates, including AC2993, AC2993 LAR and AC3056 and potential liability and indemnification obligations arising out of ongoing litigation. 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, 2000, under the heading “Risk Factors.”

Background

     Amylin Pharmaceuticals, Inc. is engaged in the discovery, development and commercialization of drug candidates for the treatment of metabolic disorders.

8

     In December 2000, we submitted a New Drug Application to the FDA for approval to market SYMLIN, our lead diabetes drug candidate, which is targeted for people with diabetes that use insulin. In May 2001, we submitted Marketing Authorization Applications (“MAA”) for approval to market SYMLIN to the European Agency for the Evaluation of Medicinal Products. In July 2001, we presented our New Drug Application for SYMLIN to the Endocrinologic and Metabolic Drugs Advisory Committee (the “Committee”) of the FDA. The Committee elected not to recommend approval of SYMLIN at that time, however, the Committee did vote that efficacy of SYMLIN was demonstrated in both type 1 and insulin requiring type 2 diabetes. The FDA and the Advisory Committee expressed safety concerns primarily related to the initiation of therapy of SYMLIN. In October 2001, the FDA completed its review of our NDA for SYMLIN, indicating that SYMLIN is approvable for both type 1 and insulin-using type 2 diabetes. However, the FDA also indicated that the ultimate approval of SYMLIN will require that we achieve satisfactory results from additional clinical work, the specific requirements of which will be determined following further discussions with the FDA.

     Our second drug candidate, AC2993 (synthetic exendin-4) is targeted for people with type 2 diabetes. We have conducted a number of Phase 2 studies for AC2993 and were pleased with the outcome of our end of Phase 2 meeting with the FDA in October 2001. We intend to commence a Phase 3 clinical study for AC2993 before the end of 2001. Our third drug candidate, AC3056, is a compound that was in-licensed from Aventis Pharma. AC3056 is in Phase 1 clinical studies and is being evaluated for potential utility in the treatment of metabolic disorders relating to cardiovascular disease. In May 2000, we entered into a collaboration agreement with Alkermes, Inc., a company specializing in the development of products based on proprietary drug delivery technologies, for the development, manufacture and commercialization of an injectable long acting formulation of AC2993, or AC2993 LAR, with the goal of developing a product that would enable a monthly administration of AC2993. AC2993 LAR is currently in Phase 1 evaluation.

     Since our inception in September 1987, we have devoted substantially all of our resources to our research and development programs. Substantially all of our revenues to date have been derived from fees and expense reimbursements under earlier SYMLIN collaborative agreements and from interest income. We currently have no product sales and have not received any revenues from the sale of our drug candidates. We have been unprofitable since inception and expect to incur additional operating losses for at least the next few years. As of September 30, 2001, our accumulated deficit was approximately $390 million.

Results of Operations

Three Months Ended September 30, 2001

     Operating Expenses

     Our total operating expenses for the quarter ended September 30, 2001 increased to $19.5 million from $10.8 million for the comparable period in 2000. Research and development expenses for the quarter ended September 30, 2001 increased to $14.2 million from $8.7 million for the comparable period in 2000, and general and administrative expenses increased to $5.3 million from $2.1 million for the comparable period in 2000.

     The $5.5 million increase in research and development expenses in the current quarter reflects an increase in our internal and external expenses required to support our ongoing development programs, primarily AC2993 and AC2993 LAR. The increase in external expenses reflects costs incurred to conduct recently completed clinical trials, including Phase 2 evaluations of AC2993, Phase 1 evaluations of AC2993 LAR, as well as costs related to our AC2993 LAR development collaboration with Alkermes. These increased costs were partially offset by a reduction in external costs related to SYMLIN. The higher costs for SYMLIN last year were incurred in connection with the preparation of the NDA. We expect that our research and development costs will not change materially in the fourth quarter of 2001, but will begin to increase moderately in the first quarter of 2002 due primarily to the initiation of our Phase 3 evaluation of AC2993, planned to commence in the fourth quarter of 2001.

9

     The $3.2 million increase in general and administrative expenses in the current quarter reflects an overall increase in our internal headcount, costs associated with our commercialization plans for SYMLIN, including certain pre-marketing activities, and increased facilities and other infrastructure costs required to support our higher level of activity. Partially offsetting this increase in the current quarter was a reduction in non-cash, stock based compensation due to a decline in our stock price in the current quarter. We do not expect general and administrative expenses to change materially until the timing of the potential FDA approval for SYMLIN is more certain.

     Other Income and Expense

     Interest and other income was $1.2 million for the quarter ended September 30, 2001, compared to $2.4 million for the same period in 2000. The decrease in interest and other income is attributed to lower average cash balances and lower market interest rates in the current quarter as compared to the same period in 2000. Additionally, interest and other income for the quarter ended September 30, 2000 included a non-recurring gain of approximately $0.6 million associated with a sales tax refund. Interest and other expense was $1.4 million for the three months ended September 30, 2001, compared to $1.6 million for the same period in 2000. The decrease in interest and other expense reflects primarily declining market interest rates.

     Net Loss

     The net loss for the quarter ended September 30, 2001 was $19.8 million compared to a net loss of $10.0 million for the same period in 2000. The increase in the net loss reflects the increased operating expenses and the reduction in interest and other income discussed above.

     We expect to incur substantial operating losses for the remainder of 2001 and at least the next few years due to ongoing expenses associated with the continuation and potential expansion of our other research and development programs, including the clinical development of SYMLIN, AC2993, AC2993 LAR and AC3056, preparation for the planned commercialization of SYMLIN, 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.

     Future operating results may be negatively affected by certain deferred costs associated with the planned commercialization of SYMLIN, consisting primarily of advances to suppliers of $5.6 million at September 30, 2001 to secure commercial grade bulk drug material, the value of which we will not likely recover if SYMLIN is not approved.

     We are a party to a class action lawsuit involving alleged violations of the securities acts by us and several of our executive officers. The lawsuit alleges securities fraud in connection with various statements and alleged omissions relating to the development of SYMLIN. If the lawsuit is settled or if the courts find us or any of our executive officers to be guilty of the allegations, we may be required to make significant payments to our stockholders. The lawsuit is at an early stage and the extent or range of possible damages, if any, cannot yet be reasonably estimated. Accordingly we have not recorded a provision for potential damages in the accompanying statement of operations.

Nine Months Ended September 30, 2001

     Operating Expenses

     Our total operating expenses for the nine months ended September 30, 2001 increased to $53.3 million from $30.6 million for the same period in 2000. Research and development expenses for the nine months ended September 30, 2001 increased to $37.5 million from $23.3 million for the same period in 2000, and general and administrative expenses increased to $15.8 million from $7.3 million for the same period in 2000.

     The $14.2 million increase in research and development expenses in the current nine-month period is due to the same factors that influenced similar fluctuations in the third quarter discussed above.

     The $8.5 million increase in general and administrative expenses in the current nine-month period is due to the same factors that influenced similar fluctuations in the third quarter discussed above.

10

     Other Income and Expense

     Interest and other income was $3.7 million for the nine-month period ended September 30, 2001, compared to $5.0 million for the same period in 2000. The decrease in interest and other income is due to the same factors that influenced similar fluctuations in the third quarter discussed above.

     Interest and other expense was $4.6 million for the nine months ended September 30, 2001, comparable to $4.5 million for the same period in 2000.

     Net Loss

     The net loss for the nine months ended September 30, 2001 was $54.2 million compared to a net loss of $30.2 million for the same period in 2000. The increase in the net loss reflects primarily the increased operating expenses and the decrease in interest and other income discussed above.

Liquidity and Capital Resources

     Since inception, we have financed our operations primarily through private placements of common stock and preferred stock, public offerings of common stock, reimbursement of SYMLIN development expenses through a collaboration with Johnson & Johnson that terminated in August 1998, and other debt financings.

     At September 30, 2001, we had $65.8 million in cash, cash equivalents and short-term investments as compared to $82.9 million at December 31, 2000. Included in cash, cash equivalents and short-term investments is $1.7 million to secure irrevocable letters of credit issued pursuant to agreements entered into by the Company.

     As of September 30, 2001, we owed Johnson & Johnson approximately $58.8 million pursuant to debt incurred in connection with a collaboration agreement that terminated in 1998. The amount presented in the condensed consolidated balance sheet at September 30, 2001 of $55.5 million is net of a debt discount of $3.3 million which represents the unamortized portion of the value assigned to warrants issued to Johnson & Johnson. Repayment obligations on this debt commence in June 2005, however, repayment may be accelerated in the event that we enter into certain specified change in control transactions, specified types of agreements for SMYLIN or certain types of financing arrangements subsequent to approval of the SYMLIN NDA by the FDA. Additionally, we owe $1.2 million pursuant to equipment financing, which is payable in equal monthly installments through December 2003.

     We used cash of $49.1 million and $25.3 million for our operating activities in the nine months ended September 30, 2001 and 2000, respectively. Investing activities provided $48.4 million in the nine months ended September 30, 2001 and used $65.1 million in the nine months ended September 30, 2000. Investing activities in both periods consisted primarily of purchases and sales of short-term investments, purchases of laboratory and office equipment and increases in patents. Financing activities provided $34.7 million and $97.5 million in the nine months ended September 30, 2001 and 2000, respectively. These amounts consist of proceeds from the sale of common stock, partially offset by payments on capital leases and notes payable. The significant components of the cash provided from financing activities were private placements of common stock for net proceeds of approximately $33.8 million and $95.7 million during the nine months ended September 30, 2001 and 2000, respectively.

     Our use of cash during the nine months ended September 30, 2001, after giving effect to net proceeds of approximately $33.8 million generated by our private placement in May 2001, was approximately $50.9 million. This consists of $46.4 million to support our operations and $4.5 million to secure commercial grade bulk drug material. Consistent with our planned growth, the rate at which we have used our cash has increased throughout 2001. Until we have more definitive information regarding the nature and scope of additional clinical testing of SYMLIN and the timing of FDA approval thereof, spending related to our planned commercialization of SYMLIN is not expected to change materially. If it appears that FDA approval will be delayed significantly or not received at all, we expect to further re-evaluate our level of activity and cash expenditures associated with the planned commercialization of SYMLIN. Furthermore, the larger cash expenditures associated with the hiring and deployment of a SYMLIN sales force are subject to the approval of SYMLIN by the FDA.

11

     However, we expect that cash expenditures to conduct clinical trials will increase, due primarily to the planned Phase 3 evaluation of AC2993, scheduled to commence in the fourth quarter of 2001. Most of the increase related to these trials is expected to begin in the first quarter of 2002, which will be influenced significantly by the rate at which we are able to enroll study participants. Pending additional clarification from the FDA regarding the nature and scope required, additional cash expenditures will likely be incurred to conduct further clinical work for SYMLIN.

     Additionally, at September 30, 2001 we are committed to purchase approximately $4.5 million of bulk drug material in the subsequent twelve-month period, which includes approximately $2.6 million in the fourth quarter of 2001. If FDA approval for SYMLIN is received, our expenditures to secure commercial grade bulk drug material will increase substantially, including a commitment to purchase approximately $10.3 million of additional material pursuant to an agreement with Johnson & Johnson.

     We intend to use our existing financial resources for continuing costs associated with the continuation and potential expansion of our research and development programs, including the clinical development of AC2993, AC2993 LAR and AC3056, preparation for the planned commercialization of SYMLIN, 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, and, if approvals are received, time to market thereafter, technological advances, determination as to the commercial potential of our product candidates and other preclinical compounds currently under development, and the status of competitive products. The rate of our cash 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 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. Additional equity or debt financing may be required, and there can be no assurance that such financing will be available on reasonable terms, if at all. If adequate funds are not available, we may be required to delay, scale back, or eliminate one or more of our product development programs, or obtain funds through arrangements with collaborative partners, if available.

     Prior to marketing, potential drug candidates must undergo rigorous preclinical and clinical testing and an extensive regulatory approval process mandated by the FDA and equivalent foreign authorities. We continue to undertake extensive clinical testing in an effort to demonstrate optimal dose, safety, and efficacy for our drug candidates in humans. Further testing or use of SYMLIN, AC2993, AC2993 LAR, 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. New product candidates, 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.

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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.

Part II.   Other Information

Item 1.   Legal Proceedings

     On August 9, 2001, a class action lawsuit was filed against Amylin and it’s chief executive officer in the United States District Court for the Southern District of California on behalf of Eric W. Peters and all other similarly situated shareholders. On August 14, 2001 a second, similar class action lawsuit was filed against the same parties and an executive vice president in the same court. The lawsuits allege securities fraud in connection with various statements and alleged omissions to the public and securities markets, and seek compensatory damages, payment of fees and expenses, and further relief. On December 27, 2001, all existing lawsuits were consolidated into a single action.

     We believe that the consolidated lawsuit is without merit and intend to defend vigorously against the claims, although no assurance can be given that we will be successful in defending such claims. If we are not successful in our defense, we could be forced to make significant payments which could have a material adverse effect on our business, financial condition and results of operations.

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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: January 11, 2002 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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