-----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, GHHUK/jN0Azc3nragwrng7GIF0RkVc19TUrdhG5B2Hpk2DaTrsH2s/Fn6KozIUZv 8JL6WxcBqAtJ4AZfr0ztTw== 0000936392-96-000868.txt : 19961016 0000936392-96-000868.hdr.sgml : 19961016 ACCESSION NUMBER: 0000936392-96-000868 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19961015 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMYLIN PHARMACEUTICALS INC CENTRAL INDEX KEY: 0000881464 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 330266089 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-14143 FILM NUMBER: 96643538 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 S-3 1 AMYLIN PAHRMACEUTICALS, INC. -- FORM S-3 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 15, 1996 REGISTRATION NO. 333- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------------ AMYLIN PHARMACEUTICALS, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 33-026609 (STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
9373 TOWNE CENTRE DRIVE SAN DIEGO, CALIFORNIA 92121 (619) 552-2200 (ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) ------------------------ RICHARD M. HAUGEN PRESIDENT AND CHIEF EXECUTIVE OFFICER AMYLIN PHARMACEUTICALS, INC. 9373 TOWNE CENTRE DRIVE SAN DIEGO, CALIFORNIA 92121 (619) 552-2200 (NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE) ------------------------ COPIES TO: THOMAS A. COLL, ESQ. ALAN DEAN, ESQ. COOLEY GODWARD LLP DAVIS POLK & WARDWELL 4365 EXECUTIVE DRIVE, SUITE 1100 450 LEXINGTON AVENUE SAN DIEGO, CA 92121 NEW YORK, NY 10017 (619) 550-6000 (212) 450-4000
------------------------ APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after the effective date of this Registration Statement. If any of the securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. / / If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. / / If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. / / CALCULATION OF REGISTRATION FEE - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------- PROPOSED PROPOSED MAXIMUM AMOUNT MAXIMUM AGGREGATE AMOUNT OF TITLE OF EACH CLASS OF TO BE OFFERING PRICE OFFERING REGISTRATION SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE(2) PRICE(2) FEE - -------------------------------------------------------------------------------------------------- Common Stock, $.001 par value....................... 1,725,000 shares $12.9375 $22,317,188 $6,763 - -------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------
(1) Includes 225,000 shares that the Underwriters have the option to purchase solely to cover over-allotments, if any. (2) Estimated in accordance with Rule 457(c) solely for the purpose of computing the amount of the registration fee based on the average of the high and low prices of the Registrant's Common Stock as reported on The Nasdaq National Market on October 10, 1996. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any State in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such State. Subject to Completion, Dated October 15, 1996 PROSPECTUS 1,500,000 SHARES LOGO COMMON STOCK --------------------------- All of the 1,500,000 shares of Common Stock offered hereby are being sold by Amylin Pharmaceuticals, Inc. ("AMYLIN" or the "Company"). The Company's Common Stock is quoted on the Nasdaq National Market under the symbol "AMLN." On October 11, 1996, the last reported sale price for the Company's Common Stock on the Nasdaq National Market was $13.00. See "Price Range of Common Stock." Johnson & Johnson Development Corporation, one of the Company's collaborative partners and an existing stockholder, has committed to purchase an aggregate of $15,000,000 of shares of Common Stock in a private placement at the public offering price (estimated to be 1,153,846 shares assuming a public offering price of $13.00 per share) (the "Johnson & Johnson Shares"). The sale of the Johnson & Johnson Shares by the Company will not be registered in this Offering, and such shares will be purchased upon the closing of this Offering. See "Business -- Johnson & Johnson Collaboration" and "Underwriting." At the request of the Company, the Underwriters have reserved $900,000 of the shares offered hereby (estimated to be 69,230 shares assuming a public offering price of $13.00 per share) for sale at the public offering price to directors and executive officers of the Company. See "Underwriting." THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS," BEGINNING ON PAGE 6. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- ---------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------- Price to Underwriting Discounts Proceeds to Public and Commissions(1) Company(2) - ---------------------------------------------------------------------------------------------------------- Per Share................................ $ $ $ - ---------------------------------------------------------------------------------------------------------- Total(3)................................. $ $ $ - ---------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------
(1) For information regarding indemnification of the Underwriters, see "Underwriting." (2) Before deducting expenses of the Offering payable by the Company, estimated at $250,000. (3) The Company has granted the Underwriters an option, exercisable within 30 days from the date hereof, to purchase up to 225,000 additional shares of Common Stock on the same terms as set forth above, solely to cover over-allotments, if any. If such option is exercised in full, the total Price to Public will be $ , the Underwriting Discounts and Commissions will be $ and the Proceeds to the Company will be $ . Including the Johnson & Johnson Shares, the total Proceeds to Company will be $ , or $ if the Underwriters over-allotment option is exercised in full. See "Underwriting." --------------------------- The shares of Common Stock offered by the Underwriters are subject to prior sale, receipt and acceptance by them and subject to the right of the Underwriters to reject any order in whole or in part and to certain other conditions. It is expected that delivery of such shares will be made through the offices of UBS Securities LLC, 299 Park Avenue, New York, New York, on or about , 1996. --------------------------- UBS SECURITIES HAMBRECHT & QUIST VECTOR SECURITIES INTERNATIONAL, INC. October , 1996 3 LOGO PRODUCT DEVELOPMENT PIPELINE PRAMLINTIDE AS AN ADJUNCT TO INSULIN Injectable in vials Injectable in vials, suitable for mixing with insulin in syringes Injectable in cartridges, single cartridge pen injector Injectable in cartridges, dual cartridge pen injector (with insulin) Buccal, in lozenge form Pulmonary, for inhalation Nasal, for inhalation Jet injector, for injection without needles Transdermal, by iontophoresis patch Oral, non-peptide PRAMLINTIDE AS PRIMARY THERAPY Improved glucose control in Type II diabetic patients unresponsive to oral hypoglycemic agents and who are not using insulin therapy NON-AMYLIN METABOLIC TARGETS Exendin: for glucose control in diabetes GLP-1: for glucose control in diabetes Modulation of fat metabolism DEFINITIONS: - - DISCOVERY: Activities aimed at discovering novel ligands, receptors or otherwise biologically active molecules that can be targeted to intervene in disease processes. - - SELECTION: Activities aimed at designing and screening for potential drug candidates. - - VALIDATION: Activities aimed at demonstrating in whole animal models relevant therapeutic effects of potential drug candidates. - - DELIVERY: Activities aimed at developing chemical and mechanical systems for administering drug candidates to patients. - - PRECLINICAL: Activities aimed at filing an Investigational New Drug application to permit initiation of human clinical trials, including pharmacokinetic studies and preclinical toxicology. - - PHASE I: Activities aimed at demonstrating short-term safety and tolerability of a drug candidate in human volunteers. - - PHASE II: Activities aimed at demonstrating relevant therapeutic effects of a drug candidate in patients with disease. - - PHASE III: Activities aimed at establishing for a drug candidate statistical proof of therapeutic efficacy, long-term safety, tolerability, compliance with Good Manufacturing Practices, labeling and marketing claims, and contents of regulatory filings. - - REGISTRATION: Activities aimed at preparing for market launch while awaiting regulatory approval to market a drug candidate. - - MARKETING: Activities aimed at commercializing a drug following regulatory approval. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET, IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS OR THEIR AFFILIATES MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK ON THE NASDAQ NATIONAL MARKET, IN THE OVER-THE-COUNTER MARKET OR OTHERWISE IN ACCORDANCE WITH RULE 10B-6A UNDER THE SECURITIES EXCHANGE ACT OF 1934. SEE "UNDERWRITING." 4 PROSPECTUS SUMMARY The following summary is qualified in its entirety by the more detailed information and financial statements including the notes thereto contained elsewhere in this Prospectus or incorporated herein by reference. This Prospectus contains forward-looking statements that involve risks and uncertainties. The Company's actual results may differ materially from the results discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, without limitation, those discussed in the sections entitled "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business," as well as those discussed elsewhere in this Prospectus or incorporated herein by reference. Unless otherwise indicated, all information in this Prospectus assumes that the Underwriters' over-allotment option is not exercised. As used in this Prospectus, references to "Johnson & Johnson" include Johnson & Johnson and its wholly-owned subsidiaries LifeScan, Inc. and Johnson & Johnson Development Corporation, or any one of such entities. THE COMPANY Amylin Pharmaceuticals, Inc. ("AMYLIN" or the "Company") is focused on developing novel therapeutics for treating people with diabetes and other metabolic disorders. The Company is conducting a series of Phase III clinical trials of its lead drug candidate, pramlintide, which is being developed to improve glucose control in people with Type I (juvenile-onset) and Type II (maturity-onset) diabetes who use insulin, a patient population estimated by the Company to comprise 7 million people in major pharmaceutical markets. In June 1995, AMYLIN entered into a worldwide collaboration with Johnson & Johnson to develop and commercialize pramlintide. In August 1996, the Company achieved the first milestone in the collaboration when, based upon an administrative interim review of three-month glycated hemoglobin ("HbA1c") data from the first two, one-year Phase III clinical trials, Johnson & Johnson decided to continue the collaboration. By the closing of this Offering, Johnson & Johnson will have made payments to AMYLIN totaling $80.0 million. In addition, Johnson & Johnson has committed to provide significant, additional financial support for the development and commercialization of pramlintide, subject to the terms of its agreement with the Company. Assuming successful Phase III clinical trials, the Company plans to apply for marketing approval of pramlintide in North America and Europe by the end of 1998. Any profits or losses from the collaboration will be shared equally between AMYLIN and Johnson & Johnson. Since its inception, the Company has spent almost $200 million building its integrated drug discovery and development expertise, and, with its lead drug candidate now well advanced in clinical development, AMYLIN is broadening its research to develop new drug targets for treating metabolic disorders, including diabetes, obesity and dyslipidemia. Diabetes is a major global health problem which is inadequately treated by available drugs. The hallmark of diabetes is excessively high blood glucose, and the estimated seven million people with diabetes in the major pharmaceutical markets rely on insulin therapy to help control their blood glucose. However, most people with diabetes cannot maintain their blood glucose concentrations near the normal range with insulin alone. Even modest improvements in glucose control can result in significant reductions in the risk of degenerative complications such as blindness, kidney failure and nerve damage. In addition, many authorities believe that abnormally high blood glucose concentrations play a role in the development of heart disease. Consequently, the Company believes that a new drug which could safely help people with diabetes improve their glucose control would be of great therapeutic benefit. Pramlintide is an analog of human amylin, a hormone which in healthy individuals is believed to work in concert with insulin in controlling glucose metabolism. Amylin secretion is missing or deficient in many people with diabetes, an abnormality which the Company believes contributes to poor glucose control, especially after eating. To test whether replacing the actions of amylin, along with insulin, could be beneficial compared to the use of insulin alone, the Company has conducted extensive preclinical and clinical studies of pramlintide, including 18 Phase I and II clinical trials involving over 1,000 people with diabetes who use insulin. The results to date are encouraging: in seven-out-of-seven Phase II studies assessing glucose control, pramlintide caused a statistically significant and clinically relevant reduction in blood glucose. These studies evaluated a progression of different endpoint assessments of glucose control including reduction in post-meal glucose concentrations, 24-hour average glucose concentrations and fructosamine concentrations. Fructosamine is a surrogate marker 3 5 which reflects average glucose concentrations over the two-to-three weeks prior to testing. To date, pramlintide has been well tolerated at anticipated therapeutic doses and there have been no clinically important safety concerns. The principal endpoint for the Company's Phase III clinical trials of pramlintide is a reduction in HbA1c. HbA1c is a widely accepted, chemically measured index of glucose control which closely correlates with 24-hour average blood glucose concentrations, according to several published medical studies. Also, changes in fructosamine have been reported to mirror subsequent changes in HbA1c when the improvement in glucose control is maintained over time. Consequently, assuming the short-term glucose-lowering results demonstrated in the Phase II studies translate into long-term efficacy as evidenced by a safe, clinically relevant and statistically significant reduction in HbA1c in Phase III trials, the Company believes pramlintide should be approvable as a drug to improve glucose control in people with diabetes who need insulin therapy. Johnson & Johnson's ongoing financial commitment to AMYLIN under the pramlintide collaboration includes the funding of 50% of development costs and 100% of pre-launch marketing costs (AMYLIN's one-half share to be repaid over time from future profits), as well as milestone payments, license fees, equity investments, and a loan facility for use in certain circumstances. The Company will apply all of the license fees, any cash milestone payments and 50% of the proceeds from Johnson & Johnson's equity investments towards its share of pramlintide development expenses. AMYLIN continues to lead the global development and registration of pramlintide and, if marketing approval is obtained, Johnson & Johnson will take the lead in commercialization. A continuing priority of the Company is to expand the potential use of pramlintide by improving the convenience of drug administration and researching potential additional indications. AMYLIN plans to launch pramlintide in pre-filled cartridges for use in specially designed pen injectors. As part of its Phase III trials, AMYLIN is conducting studies to confirm that the most popular formulations of insulin can be mixed with pramlintide in the same syringe just prior to injection. The Company is also researching the possibility of dual cartridge injector pens (for injecting insulin and pramlintide simultaneously) and non-needle routes of administration, including buccal (in lozenge form), pulmonary (for inhalation), transdermal (by patch), nasal and jet injector. The Company also is examining whether pramlintide can safely and effectively control post-meal blood glucose concentrations in people with Type II diabetes who are unresponsive to oral hypoglycemic agents and who are not using insulin therapy. In addition, AMYLIN is broadening its research base beyond the study of amylin to include research of new drug targets for treating metabolic disorders, including diabetes, obesity and dyslipidemia (a condition characterized by unhealthy levels of cholesterol and triglycerides). The Company's experience and expertise gained in exploring the biology and chemistry of amylin and several amylin-related compounds in clinical testing is directly applicable in these efforts. For example, AMYLIN has acquired exclusive rights to certain patents and patent applications relating to exendin (a newly discovered compound derived from the venom of the Gila monster lizard) and glucagon-related peptide (GLP-1), which the Company plans to evaluate as potential new diabetes therapies. The Company is also in discussions with other third parties to collaborate on new technologies and/or in-license other metabolic compounds. The Company was incorporated in Delaware in September 1987. Unless the context otherwise requires, "AMYLIN" and the "Company" refer to Amylin Pharmaceuticals, Inc., a Delaware corporation, and its European subsidiary, Amylin Europe Limited. The Company's executive offices are located at 9373 Towne Centre Drive, San Diego, California 92121, and its telephone number is (619) 552-2200. 4 6 THE OFFERING Common Stock Offered by the Company........... 1,500,000 shares Johnson & Johnson Shares...................... 1,153,846 shares(1) Common Stock Outstanding after this Offering.................................... 30,851,198 shares(2) Use of Proceeds............................... To fund Phase III development of pramlintide, research and development, and other general corporate purposes. Nasdaq National Market Symbol................. AMLN
SUMMARY CONSOLIDATED FINANCIAL DATA (in thousands, except per share amounts)
SIX MONTHS ENDED YEARS ENDED DECEMBER 31, JUNE 30, -------------------------------------------------------- -------------------- 1991 1992 1993 1994 1995 1995 1996 -------- -------- -------- -------- -------- -------- -------- CONSOLIDATED STATEMENT OF OPERATIONS DATA: Revenues under collaborative agreements.................... $ 167 $ 667 $ 667 $ 500 $ 17,045 $ 9,066 $ 10,730 Expenses: Research and development...... 7,532 15,368 18,988 30,255 39,337 20,023 25,791 General and administrative.... 2,013 2,834 4,387 6,383 8,318 4,133 4,275 ------- -------- -------- -------- -------- -------- -------- 9,545 18,202 23,375 36,638 47,655 24,156 30,066 Net interest income............. 261 2,612 2,195 1,637 1,341 313 999 ------- -------- -------- -------- -------- -------- -------- Net loss........................ $ (9,117) $(14,923) $(20,513) $(34,501) $(29,269) $(14,777) $(18,337) ======= ======== ======== ======== ======== ======== ======== Net loss per share.............. $ (0.76) $ (0.87) $ (1.15) $ (1.71) $ (1.23) $ (0.69) $ (0.65) ======= ======== ======== ======== ======== ======== ======== Shares used in computing net loss per share................ 12,029 17,111 17,867 20,185 23,854 21,490 28,084
JUNE 30, 1996 -------------------------- ACTUAL AS ADJUSTED(3) --------- -------------- CONSOLIDATED BALANCE SHEET DATA: Cash, cash equivalents and short-term investments............................. $ 39,552 $ 79,710 Working capital............................................................... 27,896 68,054 Total assets.................................................................. 48,501 88,659 Notes payable and obligation under capital leases, less current portion....... 3,702 3,702 Accumulated deficit........................................................... (135,655) (128,655) Total stockholders' equity.................................................... 31,942 72,100
- --------------- (1) Concurrent with this Offering, the Company is selling $15.0 million of shares of Common Stock (1,153,846 shares, based on an assumed public offering price of $13.00 per share) to Johnson & Johnson at the public offering price. The sale of the Johnson & Johnson Shares by the Company will not be registered in this Offering. (2) Based on shares of Common Stock outstanding as of June 30, 1996 and assuming the issuance of the Johnson & Johnson Shares. Excludes 6,991,951 shares reserved for issuance under the Company's stock option plans, of which 4,658,636 shares of Common Stock were subject to outstanding options as of June 30, 1996 at a weighted average exercise price of $6.44 per share. See "Capitalization." (3) Adjusted to give effect to the receipt of the net proceeds from the sale of the 1,500,000 shares of Common Stock offered hereby (at an assumed public offering price of $13.00 per share and after deduction of estimated underwriting discounts and commissions and estimated expenses payable by the Company in connection with the Offering), and the sale of the Johnson & Johnson Shares. Also adjusted to give effect to the receipt of a $7.0 million milestone-related payment from Johnson & Johnson in August 1996. Does not include the receipt of a $7.4 million advance in development funding from Johnson & Johnson in September 1996. 5 7 RISK FACTORS Prospective investors in the shares of Common Stock offered hereby should carefully consider the following risk factors, in addition to the other information appearing in this Prospectus. The discussion in this Prospectus contains forward-looking statements that involve risks and uncertainties. The Company's actual results could differ materially from the results discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, without limitation, those discussed in the sections entitled "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business," as well as those discussed elsewhere in this Prospectus or incorporated herein by reference. Technological Uncertainty; Reliance on Single Drug Candidate in Clinical Development. All of the Company's products are in research or development, and no revenues have been generated from product sales. To date, the Company's resources have been dedicated primarily to the research and development of potential pharmaceutical products relating to the amylin hormone to treat metabolic disorders. The physiology of fuel metabolism is highly complex, and the causes of metabolic disorders, such as diabetes, are not fully known. Although preclinical and Phase II clinical data support the Company's belief that amylin plays an important role in the regulation of metabolism, there can be no assurance that the Company's theories are correct or that its product candidates will be effective in the treatment of metabolic disorders. While the Company has conducted Phase II dose ranging and preliminary efficacy studies of pramlintide up to one month in duration, results obtained in preclinical and early clinical studies are not necessarily indicative of results that will be obtained during Phase III clinical testing. Pramlintide is the only product candidate that the Company currently has in human clinical studies. The Company's research and development programs other than pramlintide are at an early stage. Any additional product candidates will require significant research, development, preclinical and clinical testing, regulatory approval and commitments of resources prior to commercialization. There can be no assurance that the Company's research will lead to the discovery of any additional product candidates or that pramlintide or any such potential products will be successfully developed, prove to be safe and efficacious in clinical trials, meet applicable regulatory standards, be produced in commercial quantities at acceptable costs or be marketed successfully. If pramlintide does not successfully complete clinical testing and meet applicable regulatory requirements or is not successfully marketed, the Company may not have the financial resources to continue research and development of other product candidates. See "Business -- Pramlintide: The Drug Candidate" and "-- Other Research and Development Activities." Reliance on Johnson & Johnson. The Company is dependent on future payments from Johnson & Johnson to continue the development and commercialization of pramlintide. The Company will apply all of the license fees and cash milestone payments and at least 50% of the proceeds from Johnson & Johnson's equity investments towards the Company's share of pramlintide development expenses. Under the collaboration agreement between Johnson & Johnson and the Company, Johnson & Johnson has primary responsibility for commercializing pramlintide. There can be no assurance that Johnson & Johnson will be able to establish effective sales and distribution capabilities or be successful in gaining market acceptance for pramlintide or that Johnson & Johnson will devote sufficient resources to the commercialization of pramlintide. If Johnson & Johnson desires to discontinue the collaboration, it can terminate the collaboration agreement with the Company, subject to notice of six months. Johnson & Johnson's financial and other obligations would continue during the six-month period following the receipt of any such termination notice. In addition, Johnson & Johnson has the right to terminate the collaboration agreement at any time based on material safety or tolerability issues. If Johnson & Johnson were to discontinue its financial support, the Company might not be able to continue the pramlintide development program, and the Company's financial condition would be materially adversely affected. If adequate funds were not available from other sources, the Company would be required to implement a restructuring plan and to delay, scale-back or eliminate one or more of its research or development programs. See "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Liquidity and Capital Resources" and "Business -- Johnson & Johnson Collaboration." 6 8 Uncertainty Associated with Clinical Trials; Government Regulation. Prior to marketing, any drug developed by the Company must undergo rigorous preclinical and clinical testing and an extensive regulatory approval process mandated by the United States Food and Drug Administration ("FDA") and equivalent foreign authorities. Subject to compliance with applicable regulations, the Company plans to undertake extensive clinical testing to demonstrate optimal dose, safety and efficacy for its product candidates. The Company has initiated adequate and well controlled Phase III efficacy studies on the Company's first product candidate, pramlintide. In the Phase III studies, the Company is testing whether treatment with pramlintide along with insulin can lower glycated hemoglobin (HbA1c), a widely accepted, chemically measured index of glucose control that is indicative of the risk of degenerative complications. HbA1c reflects average blood-glucose concentrations over the previous three- to four-month period and is a primary endpoint in the Company's Phase III studies. Although medical studies show a correlation between reductions in 24-hour average glucose concentrations, reductions in fructosamine, and lowering HbA1c there can be no assurance that Phase II clinical results with pramlintide showing reductions in 24-hour average glucose and fructosamine concentrations will translate into sustainable improvements in HbA1c levels in the Phase III efficacy studies. Further testing of pramlintide and the Company's other product candidates in research or development may reveal undesirable and unintended side effects or other characteristics that may prevent or limit their commercial use. The Company or applicable regulatory authorities may suspend clinical trials at any time if the subjects or patients participating in such trials are being exposed to unacceptable health risks. There can be no assurance that the Company will not encounter problems in clinical trials which will cause the Company or such regulatory authorities to delay or suspend clinical trials. In addition, there can be no assurance that any of the Company's products will obtain regulatory approval for any indication. In August 1996, AMYLIN and Johnson & Johnson conducted an administrative interim review of three-month data from AMYLIN'S first two, one-year Phase III clinical trials. Based on the administrative interim review, Johnson & Johnson decided to continue its collaboration with the Company. In compliance with FDA guidelines, the data that was the subject of the administrative interim review may not be disclosed. There can be no assurance that such data will ultimately support the marketing approval of pramlintide as a drug for the treatment of diabetes. Products, if any, resulting from AMYLIN's research and development programs are not expected to be commercially available for a number of years. The time required for completing such clinical testing and obtaining such regulatory approvals is uncertain and approval itself may not be obtained. In addition, delays or rejections may be encountered based upon FDA regulatory review of each submitted New Drug Application ("NDA") and changes in FDA policies during the period of product development. Similar delays may also be encountered in other countries. There can be no assurance that, even after such time and expenditures, regulatory approval will be obtained for any products developed by the Company. Moreover, prior to receiving regulatory approval to market its products, the Company may have to demonstrate that its products represent improved forms of treatment over existing therapies. If regulatory approval of a product is granted, such approval may be subject to limitations on the indicated uses for which the product may be marketed. Further, even if such regulatory approval is obtained, a marketed product, its manufacturers and its manufacturing facilities are subject to continual review and periodic inspections and later discovery of previously unknown problems with a product, manufacturer or facility may result in restrictions on such product or manufacturer, including withdrawal of the product from the market. See "Business -- Pramlintide: The Drug Candidate" and "-- Government Regulation." History of Operating Losses. The Company has experienced significant operating losses since its inception in 1987. As of June 30, 1996, the Company had an accumulated deficit of approximately $135.7 million. The Company expects to incur significant additional operating losses over the next several years. Substantially all of the Company's revenues to date have been derived from development funding, license fees and milestone payments under collaborative agreements and from interest income. To date, the Company has not received any revenues from product sales. To achieve profitable operations, the Company, alone or with others such as Johnson & Johnson, must successfully develop, manufacture, obtain required regulatory approvals and market its products. Future Capital Needs; Uncertainty of Additional Funding. The Company's future capital requirements will depend on many factors, including continuation of the collaboration with Johnson & Johnson, scientific progress in its research and development programs, the magnitude of these programs, progress with preclinical and clinical 7 9 trials, the time and costs involved in obtaining regulatory approvals, the costs involved in preparing, filing, prosecuting, maintaining and enforcing patents, competing technological and market developments, changes in collaborative relationships, the ability of the Company to establish research, development and commercialization arrangements pertaining to its non-pramlintide related programs, and the costs of manufacturing scale-up. AMYLIN anticipates that its existing available cash, interest income from cash investments, future payments by and loan facilities from Johnson & Johnson, and the proceeds from this Offering and the sale of the Johnson & Johnson Shares will be adequate to satisfy the Company's capital requirements through 1998. Although Johnson & Johnson's various payments to AMYLIN should be sufficient to fund the substantial portion of the Company's 50% share of pramlintide development, the Company may elect to raise additional funds to pay for its share of such development and for other corporate purposes. There can be no assurance that additional financing will be available on acceptable terms or at all. Patents and Proprietary Rights. The Company's success will depend in part on its ability to obtain patent protection for its products and technologies both in the United States and other countries. The patent positions of biotechnology and pharmaceutical companies can be highly uncertain and involve complex legal and factual questions. As of September 30, 1996, the Company held rights to 22 issued U.S. patents. Of these issued patents, 17 are owned by AMYLIN and five are licensed exclusively to AMYLIN. In addition, AMYLIN owns or has exclusive rights to 28 patent applications pending with the U.S. Patent and Trademark Office (the "U.S. PTO"). The Company intends to file additional applications as appropriate for patents covering both its products and processes. Generally, it is the Company's policy to file foreign counterparts in countries with significant pharmaceutical markets. The Company has filed foreign counterparts of certain of its issued and pending applications in many countries. There can be no assurance that patents will issue from any of these applications or, if patents do issue, that claims allowed on issued patents will be sufficient to protect the Company's technology. In addition, there can be no assurance that patents issued to the Company will not be challenged, invalidated or circumvented or that the rights granted thereunder will provide proprietary protection or commercial advantage to the Company. Since patent applications in the United States are maintained in secrecy until patents issue and since publication of discoveries in the scientific or patent literature often lag behind actual discoveries, the Company cannot be certain that it was the first to make the inventions covered by each of its pending patent applications or that it was the first to file patent applications for such inventions. In the event that a third party has also filed a patent for any of its inventions, the Company may have to participate in interference proceedings declared by the U.S. PTO to determine priority of invention, which could result in substantial cost to the Company, even if the eventual outcome is favorable to the Company. There can be no assurance that the Company's patents, if issued, would be held valid by a court of competent jurisdiction. There can be no assurance that the Company will not be obliged to defend itself in court against allegations of infringement of third-party patents. An adverse outcome in such a suit could subject the Company to significant liabilities to third parties, require disputed rights to be licensed from third parties or require the Company to cease using such technology. The Company has received letters from a third party asserting that pramlintide is covered by a patent which the Company has licensed from such third party. The third party claims to be entitled to 50% of any sublicensing fees received from Johnson & Johnson pursuant to the Collaboration Agreement (defined elsewhere herein), as well as a future running royalty as specified in the license agreement. The Company believes that these assertions are without merit and will vigorously defend against any claims related to the foregoing, should any such claims be brought. The third party has been informed that the Company does not agree with its assertions and that no such sublicensing moneys have been received from Johnson & Johnson, which is not a sublicensee under the third party's patent. If patents are issued to other companies that contain competitive or conflicting claims and such claims are ultimately determined to be valid, there can be no assurance that the Company would be able to obtain licenses to these patents at a reasonable cost or be able to develop or obtain alternative technology. In order to protect its proprietary technology and processes, AMYLIN also relies in part on confidentiality agreements with its corporate partners, employees, consultants, outside scientific collaborators and sponsored researchers and other advisors. There can be no assurance that these agreements will not be breached, that the Company will have adequate remedies for any breach or that the Company's trade secrets will not otherwise 8 10 become known or be independently discovered by competitors. See "Business -- Johnson & Johnson Collaboration" and "-- Patents, Proprietary Rights, and Licenses." Competition; Technological Change. Other products are currently in development or exist in the market that may compete directly with the products that the Company is seeking to develop and market. Various products are available to treat Type II diabetes, including sulfonylureas, metformin, acarbose and other compounds. In addition, several companies are researching various approaches to improve treatments for Type I and Type II diabetes. There can be no assurance that the Company's products, even if successfully tested and developed, will have sufficient advantages over existing products to cause health care professionals to adopt them over such other products or that the Company's products will offer an economically feasible alternative to such existing products. The Company is engaged in a rapidly developing field. A number of companies are pursuing the development of novel pharmaceuticals which target the same diseases that AMYLIN is targeting. These companies include biotechnology and pharmaceutical companies. It is expected that the number of companies seeking to develop products and therapies for the treatment of diabetes and other metabolic disorders will increase. There can be no assurance that other products and therapies will not be developed that will either render the Company's proposed products obsolete or that will have advantages that will significantly outweigh the advantages of the products and therapies that the Company is seeking to develop. Many of the Company's competitors have substantially greater financial, technical and human resources than the Company. In addition, many of these competitors have significantly greater experience than the Company in undertaking preclinical testing and human clinical trials of new pharmaceutical products and in obtaining regulatory approvals of human therapeutic products. Accordingly, the Company's competitors may succeed in obtaining FDA approval for products more rapidly than the Company. Furthermore, if the Company is permitted to commence commercial sales of products, it may also be competing with respect to manufacturing efficiency and marketing capabilities, areas in which it has limited or no experience. See "Business -- Competition." Reliance on Third-Party Manufacturers; Manufacture of Pramlintide in Commercial Quantities. The manufacturing of sufficient quantities of new drugs is a time consuming and complex process. The Company currently has no facilities for the manufacture of clinical trial or commercial supplies of pramlintide. The Company currently relies on third parties to manufacture pramlintide for preclinical testing and clinical trials. Pramlintide has not yet been manufactured on a commercial scale. Under the terms of the collaboration agreement with Johnson & Johnson, the Company is responsible for arranging for the manufacture of pramlintide during the development phase, while Johnson & Johnson is responsible for manufacturing during the commercialization phase. All manufacturing facilities must comply with applicable regulations of the FDA. No assurance can be given that the Company, together with Johnson & Johnson, will be able to make the transition to commercial production. The Company has established a quality control and quality assurance program, including a set of standard operating procedures and specifications, designed to ensure that the Company's products are manufactured in accordance with current good manufacturing practices ("GMP") and other applicable domestic and foreign regulations. However, the Company is dependent upon contract manufacturers and Johnson & Johnson to comply reliably with such procedures and regulations. There can be no assurance that these manufacturers will meet the Company's requirements for quality, quantity or timeliness. See "Business -- Manufacturing." Attraction and Retention of Key Employees and Consultants. The Company is highly dependent on the principal members of its scientific and management staff, the loss of whose services might impede the achievement of research and development objectives. Recruiting and retaining qualified scientific personnel to perform research and development work in the future will also be critical to the Company's success. Although the Company believes it will be successful in attracting and retaining skilled and experienced scientific personnel, there can be no assurance that the Company will be able to attract and retain such personnel on acceptable terms given the competition between numerous pharmaceutical and biotechnology companies, universities and other research institutions for experienced scientists and management personnel. In California, an initiative referred to as Proposition 211 has been placed on the state ballot for the November 5, 1996 election. Approval of Proposition 211 would result in certain changes in California law that would, among other things, restrict a company's ability to indemnify its directors and executive officers and would effect other changes in the standard of liability, 9 11 procedure and remedies in securities litigation. If Proposition 211 is approved, the Company may not be able to indemnify its directors and executive officers in all circumstances in which it currently provides indemnification and, as a result, the ability of the Company to attract and retain directors and executive officers may be materially adversely affected. The Company does not maintain "key person" insurance on any of its employees. In addition, the Company relies on consultants and advisors, including its scientific and clinical advisors, to assist the Company in formulating its research and development strategy. All of the Company's consultants and advisors are employed by employers other than the Company and have commitments to or consulting or advisory contracts with other entities that may limit their availability to the Company. Absence of Sales and Marketing Organization. The Company has limited experience in market development and no experience in sales, marketing or distribution. To market any of its products directly, the Company must obtain access to marketing and sales forces with technical expertise and with supporting distribution capability. To this end, the Company has entered into a collaboration agreement with Johnson & Johnson which provides that Johnson & Johnson will have primary responsibility for commercialization of pramlintide. There can be no assurance that Johnson & Johnson or the Company will establish adequate sales and distribution capabilities or be successful in gaining market acceptance for products. Uncertainty of Pharmaceutical Pricing and Reimbursement; Health Care Reform. AMYLIN's ability to commercialize its products successfully will depend in part on the extent to which reimbursement for the cost of such products and related treatments will be available from government health administration authorities, private health insurers and other organizations. The levels of revenues and profitability of pharmaceutical companies may be affected by the continuing efforts of governmental and third-party payors to contain or reduce the costs of health care through various means. For example, in certain foreign markets pricing or profitability of prescription pharmaceuticals is subject to government control. In the United States, there have been, and the Company expects that there will continue to be, a number of federal and state proposals to implement similar government control. In addition, both in the United States and elsewhere, sales of prescription pharmaceuticals are dependent in part on the availability of reimbursement from third-party payors, such as government and private insurance plans. Third-party payors are increasingly challenging the prices charged for medical products and services. If the Company and Johnson & Johnson succeed in bringing pramlintide to the market, there can be no assurance that it will be considered cost effective and that reimbursement will be available or will be sufficient to allow the Company and Johnson & Johnson to sell pramlintide on a competitive basis. This could have a material adverse effect on the Company's business. Product Liability and Insurance. The Company's business exposes it to potential product liability risks which are inherent in the testing, manufacturing and marketing of human therapeutic products. Although the Company currently has product liability insurance, there can be no assurance that it will be able to maintain such insurance on acceptable terms or that insurance will provide adequate coverage against potential liabilities. Hazardous Materials. The Company's research and development involves the controlled use of hazardous materials, chemicals and various radioactive compounds. Although the Company believes that its safety procedures for handling and disposing of such materials comply with the standards prescribed by state and federal regulations, the risk of accidental contamination or injury from these materials cannot be eliminated. In the event of such an accident, others may seek to hold the Company liable for any damages that result and any such liability could exceed the resources of the Company. Volatility of Stock Price. The market prices for securities of biopharmaceutical and biotechnology companies, including AMYLIN, have historically been highly volatile, and the market from time to time has experienced significant price and volume fluctuations that are unrelated to the operating performance of such companies. Factors such as fluctuation in the Company's operating results, announcements of technological innovations or new commercial therapeutic products by the Company or its competitors, clinical trial results, governmental policy or regulation, developments in patent or other proprietary rights, developments in the Company's relationships with Johnson & Johnson or future collaborative partners, public concern as to the safety of drugs developed by the Company and general market conditions may have a significant effect on the market price of the Common Stock. 10 12 USE OF PROCEEDS The net proceeds to the Company from the sale of the 1,500,000 shares of Common Stock offered by the Company hereby (the "Offering") are estimated to be approximately $18.2 million ($20.9 million if the Underwriters' over-allotment option is exercised in full), assuming a public offering price of $13.00 per share and after deduction of underwriting discounts and commissions and estimated expenses payable by the Company in connection with the Offering. In addition, the net proceeds to the Company from the sale of the Johnson & Johnson Shares will be $15.0 million. The combined net proceeds to the Company from this Offering and the sale of the Johnson & Johnson Shares are estimated to be $33.2 million ($35.9 million if the Underwriters' over-allotment option is exercised in full), assuming a public offering price of $13.00 per share and after deduction of underwriting discounts and commissions and estimated expenses payable by the Company. The Company intends to use the combined net proceeds of this Offering and the sale of the Johnson & Johnson Shares for expanded development of pramlintide, including the Phase III efficacy studies, and for the expansion of its other research and development programs and other general corporate purposes. To the extent that clinical trials progress as planned, the Company's research and development expenses will include costs of supplying materials for and conducting pramlintide clinical trials, expanding the potential use and indications for pramlintide, further exploring amylin biology and continuing to broaden its research base to investigate new drug targets for the treatment of metabolic disorders, including diabetes (such as exendin and GLP-1), obesity and dyslipidemia. The amounts actually expended for each purpose may vary significantly depending on numerous factors, including the progress of the Company's research and development programs, the results of preclinical and clinical studies, the timing of regulatory submissions and approvals, if any, technological advances, determinations as to commercial potential of the Company's compounds and the status of competitive products. Expenditures will also depend upon the continued participation of Johnson & Johnson in the collaboration agreement, the availability of additional sources of funds, the establishment of collaborative arrangements with other companies, and other factors. The Company anticipates that its existing available cash, interest income from cash investments, financial payments by and loan facilities from Johnson & Johnson, and the proceeds of this Offering and the sale of the Johnson & Johnson Shares will be adequate to satisfy the Company's activities through 1998. In addition, the Company may also use a portion of such proceeds to acquire or invest in businesses, products and/or technologies that it considers complementary to those of the Company. No portion of such proceeds has been allocated for any specific acquisition. Pending such uses, the Company will invest the net proceeds in investment-grade, interest-bearing marketable securities. 11 13 PRICE RANGE OF COMMON STOCK The Company's Common Stock is traded on the Nasdaq National Market under the symbol "AMLN." The following table sets forth, for the periods indicated, the intra-day high and low sales prices per share of Common Stock on the Nasdaq National Market:
HIGH LOW ------ ------ 1996 Fourth Quarter (through October 11, 1996)............................. $$13.75 $11.13 Third Quarter......................................................... 14.50 7.00 Second Quarter........................................................ 13.00 9.00 First Quarter......................................................... 14.38 8.88 1995 Fourth Quarter........................................................ $ 9.63 $ 6.00 Third Quarter......................................................... 9.50 6.25 Second Quarter........................................................ 9.00 3.50 First Quarter......................................................... 6.50 4.25 1994 Fourth Quarter........................................................ $ 8.50 $ 4.75 Third Quarter......................................................... 8.75 5.75 Second Quarter........................................................ 12.50 5.75 First Quarter......................................................... 15.25 10.00
The last reported sale price of the Common Stock on the Nasdaq National Market on October 11, 1996 was $13.00. As of September 30, 1996, there were approximately 904 stockholders of record of the Company's Common Stock. DIVIDEND POLICY The Company has never declared or paid any cash dividends on its capital stock. The Company currently intends to retain any future earnings for funding growth and, therefore, does not anticipate paying any cash dividends in the foreseeable future. 12 14 CAPITALIZATION The following table sets forth at June 30, 1996 the actual capitalization of the Company and the capitalization as adjusted to reflect (i) the receipt of the estimated net proceeds from the sale of the 1,500,000 shares of Common Stock being offered by the Company hereby (at an assumed public offering price of $13.00 per share and after deduction of estimated underwriting discounts and commissions and estimated expenses payable by the Company in connection with the Offering), (ii) the concurrent sale of the Johnson & Johnson Shares (at an assumed price of $13.00 per share) and (iii) the receipt of a $7.0 million milestone-related payment from Johnson & Johnson in August 1996.
JUNE 30, 1996 ------------------------- ACTUAL AS ADJUSTED --------- ----------- (IN THOUSANDS) Note payable, less current portion................................... $ 3,168 $ 3,168 Obligation under capital lease, less current portion................. 534 534 Stockholders' equity: Preferred stock, $.001 par value; 7,500,000 shares authorized; no shares issued or outstanding.................................... -- -- Common stock, $.001 par value; 50,000,000 shares authorized; 28,197,352 shares issued and outstanding; and 30,851,198 shares to be outstanding as adjusted (1)............................... 28 31 Additional paid-in capital......................................... 167,575 200,730 Accumulated deficit................................................ (135,655) (128,655) Unrealized (gains) losses on short-term investments................ (6) (6) ------- --------- Total stockholders' equity...................................... 31,942 72,100 ------- --------- Total capitalization.......................................... $ 35,644 $ 75,802 ======= =========
- --------------- (1) Excludes 6,991,951 shares reserved for issuance under the Company's stock option plans, of which 4,658,636 shares were subject to outstanding options as of June 30, 1996 at a weighted average exercise price of $6.44 per share. 13 15 DILUTION The pro forma net tangible book value of the Company's Common Stock at June 30, 1996, after giving effect to the sale of the Johnson & Johnson Shares, was $45.6 million or $1.55 per share of Common Stock. Pro forma net tangible book value per share represents the amount of the Company's total tangible assets after giving effect to the sale of the Johnson & Johnson Shares less total liabilities divided by the number of shares of Common Stock outstanding plus the Johnson & Johnson Shares. After giving effect to the sale by the Company of the 1,500,000 shares of Common Stock offered hereby (based upon an assumed offering price of $13.00 per share and after deducting estimated underwriting discounts and commissions and estimated offering expenses), the adjusted pro forma net tangible book value of the Company at June 30, 1996 would have been $63.7 million or $2.06 per share, representing an immediate increase of $.51 per share to existing stockholders and an immediate dilution of $10.94 per share to new investors. The following table illustrates this dilution to new investors: Assumed public offering price per share(1)............................. $13.00 Pro forma net tangible book value per share as of June 30, 1996... $1.55 Increase in pro forma net tangible book value per share attributable to new investors.................................... .51 ----- Adjusted pro forma net tangible book value per share after this Offering.............................................................. 2.06 ------ Dilution per share to new investors.................................... $10.94 ======
- --------------- (1) Before deduction of underwriting discounts and commissions and estimated expenses payable by the Company in connection with the Offering. The preceding table assumes no exercise of any outstanding options to purchase Common Stock. At June 30, 1996, there were 4,658,636 shares of Common Stock issuable upon exercise of outstanding options with a weighted average exercise price of $6.44 per share. To the extent outstanding options are exercised, there will be further dilution in net tangible book value per share of Common Stock to new investors. 14 16 SELECTED CONSOLIDATED FINANCIAL DATA The selected consolidated financial data set forth below with respect to the Company's consolidated statements of operations for each of the years in the three-year period ended December 31, 1995 and with respect to the consolidated balance sheets at December 31, 1994 and 1995, are derived from the consolidated financial statements that have been audited by Ernst & Young LLP, independent auditors, which are incorporated by reference in this Prospectus and are qualified by reference to such financial statements and the notes related thereto. The consolidated balance sheet data at December 31, 1991, 1992 and 1993, and the consolidated statement of operations data for the years ended December 31, 1991 and 1992 are derived from audited financial statements not incorporated by reference in this Prospectus. The consolidated statement of operations for the six months ended June 30, 1995 and 1996 and the consolidated balance sheet data at June 30, 1996 are derived from unaudited consolidated financial statements incorporated by reference in this Prospectus. The unaudited financial statements include all adjustments, consisting only of normal recurring adjustments, which the Company considers necessary for a fair presentation of the financial position and the results of operations for these periods. Operating results for the six months ended June 30, 1996 are not necessarily indicative of the results that may be expected for the entire year ending December 31, 1996. The data should be read in conjunction with the consolidated financial statements, related notes and other financial information incorporated by reference herein.
SIX MONTHS ENDED YEARS ENDED DECEMBER 31, JUNE 30, ------------------------------------------------------------ --------------------- 1991 1992 1993 1994 1995 1995 1996 -------- -------- -------- -------- -------- -------- -------- (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) CONSOLIDATED STATEMENT OF OPERATIONS DATA: Revenues under collaborative agreements............... $ 167 $ 667 $ 667 $ 500 $ 17,045 $ 9,066 $ 10,730 Expenses: Research and development............ 7,532 15,368 18,988 30,255 39,337 20,023 25,791 General and administrative......... 2,013 2,834 4,387 6,383 8,318 4,133 4,275 --------- --------- --------- --------- --------- --------- --------- 9,545 18,202 23,375 36,638 47,655 24,156 30,066 Net interest income........ 261 2,612 2,195 1,637 1,341 313 999 --------- --------- --------- --------- --------- --------- --------- Net loss................... $ (9,117) $(14,923) $(20,513) $(34,501) $(29,269) $(14,777) $(18,337) ========= ========= ========= ========= ========= ========= ========= Net loss per share......... $ (0.76) $ (0.87) $ (1.15) $ (1.71) $ (1.23) $ (0.69) $ (0.65) ========= ========= ========= ========= ========= ========= ========= Shares used in computing net loss per share....... 12,029 17,111 17,867 20,185 23,854 21,490 28,084
DECEMBER 31, --------------------------------------------------------- JUNE 30, 1991 1992 1993 1994 1995 1996 -------- -------- -------- -------- --------- --------- (IN THOUSANDS) CONSOLIDATED BALANCE SHEET DATA: Cash, cash equivalents and short-term investments............................ $ 9,142 $ 54,331 $ 56,250 $ 29,149 $ 53,521 $ 39,552 Working capital.......................... 8,325 52,773 54,435 26,209 45,268 27,896 Total assets............................. 13,028 57,823 62,029 37,306 61,949 48,501 Note payable, less current portion....... -- -- -- 964 1,671 3,168 Obligation under capital leases, less current portion........................ 1,115 720 819 1,213 759 534 Accumulated deficit...................... (18,113) (33,035) (53,548) (88,049) (117,318) (135,655) Total stockholders' equity............... 8,530 53,866 58,162 30,869 49,755 31,942
15 17 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion of the financial condition and results of operations of the Company should be read in conjunction with the consolidated financial statements and the related notes thereto incorporated by reference herein. The discussion in this Prospectus contains forward-looking statements that involve risks and uncertainties. The Company's actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, without limitation, those discussed in the sections entitled "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business," as well as those discussed elsewhere in this Prospectus or incorporated herein by reference. OVERVIEW Since its inception in September 1987, AMYLIN has devoted substantially all of its resources to its research and development programs and has expended almost $200 million to this end through September 30, 1996. Substantially all of the Company's revenues to date have been derived from fees and expense reimbursements under collaborative agreements and from interest income. AMYLIN has not received any revenues from the sale of products. The Company has been unprofitable since its inception and expects to incur additional operating losses for the next several years. As of June 30, 1996, the Company's accumulated deficit was approximately $135.7 million. In June 1995, AMYLIN and Johnson & Johnson entered into a worldwide collaboration to develop and commercialize pramlintide. By the closing of this Offering, Johnson & Johnson will have made payments to AMYLIN totaling $80.0 million. These payments primarily included the payment of one-half of the pramlintide development costs through the date of this Offering, the purchase of $15.0 million of Common Stock in 1995 and $15.0 million of Common Stock in conjunction with this Offering, a license fee and certain milestone and option fee payments. RESULTS OF OPERATIONS SIX MONTHS ENDED JUNE 30, 1996 Revenue The Company had $10.7 million of revenue for the six month periods ended June 30, 1996 as compared to $9.1 million for the same period in 1995. The revenues recognized in 1996 and 1995 were related to the Company's collaboration with Johnson & Johnson. 1996 revenues were comprised of Johnson & Johnson's one- half share of collaboration development expenses incurred by AMYLIN in the first half of the year. 1995 revenues were comprised of Johnson & Johnson's one-half share of collaboration development expenses incurred by AMYLIN in the second quarter of 1995 along with a license fee which was paid at the signing of the agreements. Operating Expenses For the six months ended June 30, 1996, operating expenses increased to $30.1 million from $24.2 million for the same period in 1995. Research and development expenses for the six months ended June 30, 1996 increased to $25.8 million from $20.0 million for the same period in 1995. The increase in these expenditures was primarily due to the costs of expanding pramlintide clinical development efforts. Several other factors also contributed to this increase, including increased staffing, expanded product development efforts and increased facilities expenditures. General and administrative expenses for the six months ended June 30, 1996 increased to $4.3 million from $4.1 million for the same period in 1995. The increase for the six month period was primarily related to expanded pramlintide market development efforts in conjunction with the Company's collaboration with Johnson & Johnson. 16 18 Other Income and Expense Interest and other income is principally comprised of interest income from investment of the Company's cash reserves. Interest and other income increased to $1.2 million for the six months ended June 30, 1996 from $0.5 million for the same period in 1995. The increase in interest and other income was primarily due to higher average cash reserves available for investment for the six months ended June 30, 1996 as compared to the same period in 1995. Interest and other expense is principally comprised of interest expense resulting from long-term debt obligations. Debt financing has been utilized by the Company to acquire laboratory and other equipment and to fund tenant improvements to the Company's facilities. In addition, in accordance with the terms of the Company's collaborative agreement with Johnson & Johnson, Johnson & Johnson has advanced AMYLIN's share of pramlintide pre-launch marketing expenses incurred since the date of the collaboration, to be repaid with interest over time out of AMYLIN's share of future pramlintide profits, if any. Interest and other expense increased to approximately $171,000 for the six months ended June 30, 1996 from approximately $161,000 for the same period in 1995. The increase in interest and other expense is reflective of an overall higher long-term debt balance during the first half of 1996 as compared to 1995. Net Loss The Company incurred a net loss of $18.3 million for the six months ended June 30, 1996 as compared to $14.8 million for the six months ended June 30, 1995. The 1996 increase in the net loss was primarily related to increased pramlintide clinical development efforts. AMYLIN expects to incur substantial operating losses over the next several years due to continuing and increasing expenses associated with its research and development programs, including preclinical and clinical testing of multiple product candidates, and related general and administrative support. Operating losses may fluctuate from quarter to quarter as a result of differences in the timing of expenses incurred and revenues recognized. LIQUIDITY AND CAPITAL RESOURCES Since its inception, AMYLIN has financed its operations primarily through private placements of preferred stock, sales of Common Stock, its collaboration with Johnson & Johnson, and operating and capital lease obligations. In June 1995, the Company and Johnson & Johnson entered into a worldwide collaboration agreement for the development and commercialization of pramlintide, a diabetes drug candidate currently in Phase III clinical trials. In conjunction with the collaboration agreement, the Company also entered into a Stock Purchase Agreement and a Loan Agreement with Johnson & Johnson. As of June 30, 1996, Johnson & Johnson has made various financial payments to the Company totaling $50.5 million. These payments primarily include a license fee, the purchase of $15.0 million of the Company's Common Stock in 1995, and payment of one-half of the pramlintide development costs. In August 1996, the Company achieved the first milestone in the collaboration when, based upon an administrative interim review of three-month data from the first two, one-year Phase III clinical trials, Johnson & Johnson decided to continue the collaboration. As a result, Johnson & Johnson is making additional payments associated with the milestone to AMYLIN totaling $22.0 million, in addition to providing significant ongoing development support. The additional payments associated with the milestone include $7.0 million in milestone and option fee payments paid by Johnson & Johnson in the third quarter of 1996 and a commitment to purchase $15.0 million of AMYLIN Common Stock concurrently with this Offering. In compliance with FDA guidelines, the data that was the subject of the administrative interim review may not be disclosed. There can be no assurance that such data will ultimately support the marketing approval of pramlintide as a drug for the treatment of diabetes. 17 19 In addition to the above mentioned milestone-related payments and investment, Johnson & Johnson's ongoing financial commitment to AMYLIN now includes the funding of 50% of development costs and 100% of pre-launch marketing costs (AMYLIN's one-half share to be repaid over time from future profits), as well as milestone payments, license fees, equity investments, and a loan facility for use in certain circumstances. The Company will apply all of the license fees, cash milestone payments and 50% of the proceeds from Johnson & Johnson's equity investments towards its share of pramlintide development expenses. In this regard, Johnson & Johnson paid AMYLIN $7.4 million in September 1996 as an advance of quarterly development expenses. As a result, by the closing of this Offering, Johnson & Johnson will have made payments to AMYLIN totaling $80.0 million. In addition, AMYLIN and Johnson & Johnson entered into a Loan Agreement under which Johnson & Johnson agreed to provide to AMYLIN a $27.8 million credit facility (as of June 30, 1996) for use in certain circumstances to cover the Company's share of development expenses relating to the collaboration agreement. This facility will be adjusted in certain circumstances. For example, the facility will be increased by 50% of any increases in the pramlintide development budget from the existing pre-approved budget and decreased by 50% of the Company's net proceeds received from equity and debt offerings after December 31, 1995 (including the proceeds from this Offering) to investors other than Johnson & Johnson or other corporate partners. The Company is dependent on future payments from Johnson & Johnson to continue the development and commercialization of pramlintide. Johnson & Johnson may terminate the collaboration agreement with the Company subject to a notice period of six months. Johnson & Johnson's financial and other obligations under the collaboration agreement would continue during any such termination notice period. In addition, Johnson & Johnson has the right to terminate the collaboration agreement at any time based on material safety or tolerability issues. Without Johnson & Johnson's continued collaborative support, the Company might not be able to continue the pramlintide development program, and the Company's financial condition would be materially adversely affected. At June 30, 1996, the Company had $39.6 million in cash, cash equivalents and short-term investments as compared to $53.5 million at December 31, 1995. The Company invests its cash in U.S. government and other highly rated liquid debt instruments. The Company intends to use its financial resources for the ongoing development of pramlintide, including the Phase III efficacy studies, and for the expansion of its other research and development programs and other general corporate purposes. To the extent that clinical trials of the Company's compounds progress as planned, research and development expenses will include costs of supplying materials for and conducting pramlintide clinical trials, expanding the potential use and indications for pramlintide, further exploring amylin biology and continuing to broaden its research base to investigate new drug targets for the treatment of metabolic disorders, including diabetes (such as exendin and GLP-1), obesity and dyslipidemia. The amounts actually expended for each purpose may vary significantly depending upon numerous factors, including the progress of the Company's research and development programs, the results of preclinical and clinical studies, the timing of regulatory submissions and approvals, if any, technological advances, determinations as to commercial potential of the Company's compounds, and the status of competitive products. Expenditures will also depend upon the continued participation of Johnson & Johnson in the collaboration, the availability of additional sources of funds, the establishment of collaborative arrangements with other companies, and other factors. The Company currently leases or sub-leases approximately 72,000 square feet of space. The Company is presently considering options to sub-lease an additional 12,500 square feet of space for its product development efforts. In addition, the Company is evaluating leasing additional laboratory and office space in 1997. Should the Company lease this additional space, the terms of the leases will be at competitive market rates. At this time, the Company expects to incur approximately $2.0 million of capital expenditures in the second half of 1996. These expenditures will primarily be directed toward the purchase of new equipment to support research and development efforts. In addition, some capital expenditures will be directed toward the purchase of equipment coming off of lease lines which will expire during the year and to complete tenant improvements to the Company's product development facility. The Company has entered into a $3.0 million loan agreement for the financing of the majority of its equipment needs and intends to use this financing source during 1996. As of 18 20 June 30, 1996 approximately $1.0 million of this loan facility had been utilized. The terms of the loan agreement call for amounts drawn down under the loan to be repaid monthly over a four year period. The Company does not expect to generate a positive internal cash flow for several years due to substantial additional research and development costs, including costs related to drug discovery, preclinical testing, clinical trials, manufacturing costs, and general and administrative expenses necessary to support such activities. AMYLIN anticipates that its existing cash, interest income from cash investments, financial payments and loan facilities from Johnson & Johnson and the proceeds of this Offering and the sale of the Johnson & Johnson Shares will be adequate to satisfy the Company's capital requirements through 1998. Although Johnson & Johnson's various payments to AMYLIN should be sufficient to fund the substantial portion of the Company's 50% share of pramlintide development, the Company may elect to raise additional funds to pay for its share of such development and for other corporate purposes. However, there can be no assurance that additional financial resources will be raised in the necessary time frame or on terms favorable to the Company. 19 21 BUSINESS The discussion in this Prospectus contains forward-looking statements which involve risks and uncertainties. The Company's actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, without limitation, those discussed in the sections entitled "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business," as well as those discussed elsewhere in this Prospectus or incorporated herein by reference. GENERAL AMYLIN is focused on developing novel therapeutics for treating people with diabetes and other metabolic disorders. The Company is conducting a series of Phase III clinical trials of its lead drug candidate, pramlintide, which is being developed to improve glucose control in people with Type I (juvenile-onset) and Type II (maturity-onset) diabetes who use insulin, a patient population estimated by the Company to comprise 7 million people in major pharmaceutical markets. In June 1995, AMYLIN entered into a worldwide collaboration with Johnson & Johnson to develop and commercialize pramlintide. In August 1996, the Company achieved the first milestone in the collaboration when, based upon an administrative interim review of three-month glycated hemoglobin (HbA1c) data from the first two, one-year Phase III clinical trials, Johnson & Johnson decided to continue the collaboration. By the closing of this Offering, Johnson & Johnson will have made payments to AMYLIN totaling $80.0 million. In addition, Johnson & Johnson has committed to provide significant, additional financial support for the development and commercialization of pramlintide, subject to the terms of its agreement with the Company. Assuming successful Phase III clinical trials, the Company plans to apply for marketing approval of pramlintide in North America and Europe by the end of 1998. Any profits or losses from the collaboration will be shared equally between AMYLIN and Johnson & Johnson. Since its inception, the Company has spent almost $200 million building its integrated drug discovery and development expertise, and, with its lead drug candidate now well advanced in clinical development, AMYLIN wishes to broaden its research to develop new drug targets for treating metabolic disorders, including diabetes, obesity and dyslipidemia. BACKGROUND Diabetes is a major global health problem which is inadequately treated by available drugs. The International Diabetes Federation estimates that over 100 million people worldwide are afflicted with this disease. Diabetes costs the American economy over $100 billion annually, according to a study reported in the Journal of Clinical Endocrinology and Metabolism, which went on to say that ". . . health care expenditures for people with diabetes constituted about one in seven health care dollars spent in 1992." Moreover, the American Medical Association reports that the incidence of diagnosed diabetes as a percentage of the American population has tripled since 1958, and that the total number of diagnosed and undiagnosed cases has grown to about 16 million. Diabetes occurs when the pancreas no longer produces enough insulin, a hormone that regulates the metabolism of blood glucose. In Type I (juvenile-onset) diabetes, which afflicts about 10% of all people with diagnosed diabetes in developed countries, the pancreatic beta cells that make insulin have been destroyed. In the more prevalent form of diabetes, Type II (maturity-onset), the insulin-producing cells are unable to produce enough insulin to compensate for the patient's poor sensitivity to the hormone in glucose-using tissues such as skeletal muscle (a condition called insulin resistance). In both Type I and Type II diabetes, the insulin deficiency results in an abnormally high blood-glucose concentration (a condition called hyperglycemia) which is an important cause of the degenerative complications associated with diabetes, including blindness, kidney failure and nerve damage. In addition, many authorities believe hyperglycemia plays a role in the development of heart disease. Since its discovery in 1921, insulin replacement therapy has played a central role in treating diabetes. For people with Type I diabetes, insulin injections are essential, since these patients would otherwise die. For people with Type II diabetes, oral medications that either stimulate greater insulin production or enhance insulin sensitivity may improve metabolic control. However, as many as 20% of people with newly diagnosed Type II diabetes do not respond to oral therapy. Moreover, patients who do respond to oral therapy become progressively 20 22 resistant over time, with as many as 10% each year ceasing to derive a therapeutic benefit. Thus, an estimated 40% of people diagnosed with Type II diabetes are using insulin injections to manage their disease. The Company estimates that in the major pharmaceutical markets as many as two million people with Type I diabetes and five million people with Type II diabetes use insulin to help control their blood-glucose concentrations. Despite 75 years of efforts to improve insulin therapy, most people with diabetes have great difficulty achieving optimal glucose control with insulin alone. For superior glucose control, each insulin injection must be adjusted to reflect the person's pre-meal blood-glucose concentration and the carbohydrate content of the meal. These adjustments require multiple finger-pricks each day for glucose monitoring. Aggressive efforts to bring blood-glucose concentration down into the normal range using intensive insulin therapy increase the risk of blood-glucose concentration falling too low (a condition called hypoglycemia), which can cause unpleasant and dangerous effects including sweating, disorientation, personality changes, coma, convulsions and even death. To avoid hypoglycemia, many people with diabetes maintain high blood-glucose concentrations but thereby increase their risk of degenerative complications from the disease. In June 1993, the National Institutes of Health announced the results of the Diabetes Control and Complications Trial ("DCCT"). This decade-long, prospective study of over 1,400 people with Type I diabetes established the importance of glucose control as a determinant of long-term risk of degenerative complications. The quality of glucose control for each DCCT participant was determined by measuring the proportion of blood-hemoglobin which had chemically combined with blood-glucose to form glycated hemoglobin (HbA1c). This measurement is a recognized indicator of average blood-glucose concentration over the three- to four-month period prior to testing, and lower glycated hemoglobin values are indicative of better glucose control. In this regard, the data from the DCCT showed definitively that the risk of degenerative complications is greatly reduced if blood-glucose concentrations in people with Type I diabetes can be brought closer to the concentrations measured in non-diabetic individuals. However, the intensive insulin therapy used to achieve this benefit had several side effects and disadvantages, including (1) a three-fold increase in severe hypoglycemia compared with the control group, (2) an average weight gain of 10 to 15 pounds per patient, (3) a highly burdensome treatment regimen requiring strict patient compliance, and (4) intensive and costly support from diabetes care-givers. As a result of these side effects and disadvantages, most people using insulin currently are unable to achieve normal blood-glucose concentrations. In view of the health problems and economic costs associated with this failure to achieve optimal glucose control, the Company believes that significant value would result from a new medicine that could safely improve glucose control without imposing unacceptable treatment and cost burdens. Although the DCCT study involved people with Type I diabetes only, the Company believes that the conclusions of that study concerning the benefits of glucose control are also applicable to people with Type II diabetes. Additional clinical studies addressing the issue in people with Type II diabetes are underway in the United Kingdom under the sponsorship of various nationally funded academic research institutes and pharmaceutical companies and are expected to be concluded in 1997. Amylin: The Partner Hormone in Glucose Control In 1987, researchers at the University of Oxford discovered that the pancreatic beta-cells which make insulin also produce a second peptide, amylin. In the nine years since amylin's discovery, extensive research in animals and humans has generated data consistent with the idea that amylin is a partner hormone to insulin: - Rises in blood-glucose concentrations after eating stimulate increases in blood concentrations of amylin, so that both amylin and insulin concentrations normally increase after meals. - Amylin exerts biological effects on various tissues relevant to glucose metabolism, including the gastrointestinal tract, pancreas and skeletal muscle. - In people with diabetes who need insulin therapy, both the endogenous insulin and amylin responses are deficient. 21 23 Amylin has been shown to have at least two effects believed to be important for normal glucose metabolism: it slows glucose inflow into the bloodstream from the gastrointestinal tract, and it suppresses glucagon secretion and thereby lowers glucose production by the liver. Effect on Glucose Inflow. After a typical meal, over 75 grams of glucose pass from the stomach and gastrointestinal tract, through the bloodstream, and into muscle and liver tissue for storage as glycogen. This amount of glucose is large relative to the five to six grams of glucose typically present at normal concentrations in the blood pool of an average adult. In healthy people, the rate of glucose inflow from the gastrointestinal tract is closely matched with the rate of outflow into the storage tissues, allowing the body to maintain normal blood glucose concentrations. The endocrine regulator of glucose outflow rate is insulin, which is secreted by pancreatic beta-cells in response to rising blood glucose concentrations. The endocrine regulator of glucose inflow rate has, until recently, been unknown. Now, preclinical and clinical data support the idea that amylin is a key regulator of glucose inflow rate. In animals and humans, rising amylin blood concentrations slow down the transfer of nutrients from the stomach to the intestines. This transfer is the rate-limiting step in the appearance of nutrient-derived glucose in the bloodstream. Thus, the simultaneous secretion of both insulin and amylin by the pancreatic beta-cells acts to regulate both inflow and outflow, thereby keeping post-meal blood glucose concentrations within a narrow and healthy range. Effect on Glucagon Secretion. Between meals, the liver produces glucose which is carried by the bloodstream to the brain and other tissues that do not store glucose. The endocrine regulator of liver glucose production is glucagon, a peptide hormone secreted by pancreatic alpha-cells in response to falling blood glucose concentrations. At mealtime, glucagon secretion must be suppressed to avoid hyperglycemia induced by excess liver glucose production, and a known regulator of glucagon suppression is insulin. Now, preclinical and clinical data support the idea that amylin is also an endocrine regulator of glucagon secretion. In animals and humans, increasing amylin blood concentrations slows pancreatic alpha-cell secretion of glucagon, an effect which amplifies the same regulatory effect of insulin. Thus, the simultaneous secretion of both insulin and amylin by the pancreatic beta-cells acts to suppress glucagon and curtail liver glucose production, thereby helping to keep post-meal blood glucose concentrations within a narrow and healthy range. The following diagram illustrates what the Company believes are important roles of amylin as a partner hormone to insulin in glucose control: LOGO Studies have shown that people with Type I diabetes have difficulty avoiding hyperglycemia at mealtime with insulin alone, in part because they have abnormally rapid glucose inflow from the gastrointestinal tract into the bloodstream and abnormally high blood concentrations of glucagon associated with excessive liver glucose production. These findings are consistent with the predicted effects of their amylin deficiency, and they support the clinical hypothesis that amylin replacement therapy could aid in achieving better glucose control. 22 24 PRAMLINTIDE: THE DRUG CANDIDATE The following table summarizes the completed, ongoing and planned clinical trials for pramlintide: PRAMLINTIDE CLINICAL DEVELOPMENT PROGRAM
DISEASE PLACE PATIENTS DURATION ENDPOINT STATUS++ --------- ------- -------- ----------- ----------------------------------------------- ---------- Phase I Type I US 20 1 dose Safety Completed Normal Europe 37 1 dose Safety (dose limiting) Completed Type I Europe 17 1 dose Safety Completed ----- 74 Phase II Type I US 25 2 doses Post-meal glucose profile Completed Type I US 32 5 days Hypoglycemia challenge Completed Type I US 48 5 days Hypoglycemia challenge Completed Type I Europe 10* 1 day Glucose clamp Completed Type I US 84* 2 weeks Post-meal glucose profile Completed Type I US 13 24 hrs. Dose ranging Completed Type I US 27* 5 hrs. Post-meal glucose profile Completed Type I US 86* 2 weeks Clinical pharmacology Completed Type I Europe 9* 5 hrs. Mechanism of action (gastric emptying) Completed Type I US 168* 2 weeks 24-hr glucose profile Completed Type I US 215* 1 month Fructosamine Completed Type II US 24* 5 hrs. Post-meal glucose profile Completed Type I Europe 14* 1 month Mechanism of action (glucagon) Completed Type II US 203* 1 month Fructosamine Completed Type I US 27* 1 dose Insulin mixing Completed Type I Europe 18* 3 doses Mechanism of action (gastric emptying) Completed Type I US 24* 1 month Mechanism of action (liver glycogen) Ongoing Type I US 24* 1 month Insulin sparing Ongoing Type I US 30* 5 doses Insulin mixing Ongoing Type I US 30* 5 doses Insulin mixing Ongoing Type I tbd+ 24 tbd Safety (gastroparesis) Planned Type II tbd 24* tbd Mechanism of action (gastric emptying) Planned Type I tbd 24* tbd Mechanism of action (gastric emptying) Planned Type I&II tbd 36* tbd Mechanism of action (glucagon) Planned Type I tbd 30 tbd Nocturnal hypoglycemia Planned Type I&II tbd (a) tbd Insulin mixing Planned Type I&II tbd 272* tbd Pharmacokinetics (3 to 6 studies) Planned ----- 1,521 Phase III Type II US 440* 12 mos. HbA1c (pivotal) Ongoing Type I US 400* 12 mos. HbA1c (pivotal) Ongoing Type I Europe 100 12 mos. Long-term safety & HbA1c (open label) Ongoing Type I US 350 12 mos. Long-term safety & HbA1c (open label) Ongoing Type I Europe 400* 6 mos. HbA1c (pivotal) Planned Type I US 400* 6 mos. HbA1c (pivotal) Planned Type II US 600* 6 mos. HbA1c (pivotal) Planned Type II Europe 400* 6 mos. HbA1c (pivotal) Planned Type I&II Europe (a) 12 mos. Safety (pen injectors) Planned Type I tbd 100 12 mos. Safety (pediatric) Planned ----- 3,190 ----- Total Patients 4,785 =====
- --------------- * Double blind, placebo controlled studies. + "tbd" means "to be decided." ++ "Planned" refers to the period from the fourth quarter 1996 through the end of 1998. (a) Patients already counted in other studies. 23 25 A chemical analog of human amylin, pramlintide (previously referred to as AC137), combines the desired biologic actions of the native hormone with superior pharmaceutical characteristics which greatly facilitate the manufacture, formulation, and stability of the finished drug product. In preclinical testing, pramlintide has elicited similar biological responses in vitro and in vivo to those observed with the natural hormone. Also, pramlintide has shown no toxicology issues to date with doses that are many multiples greater than the highest expected human dose. In Phase II clinical trials, pramlintide has been well tolerated at the anticipated therapeutic doses, and the patient drop-out rate because of adverse drug effects (nausea) at these doses has been less than 5%. Based on these results, the Company is encouraged about the prospects for a good clinical safety profile of a long-term pramlintide dosing regimen. The Company's pramlintide development program includes 18 completed Phase I and Phase II clinical trials involving more than 1,000 insulin-using people with diabetes. Over 750 people with diabetes have completed two- or four-week dosing periods in double-blind, placebo-controlled Phase II studies. In addition, the Phase II program included several mechanism-of-action studies. Important findings from these clinical investigations include the following: - Pramlintide produced statistically significant and clinically relevant reductions in blood-glucose concentrations in seven-out-of-seven Phase II clinical trials assessing glucose control as measured: -- After meals in people with Type I and Type II diabetes who use insulin; -- Over a 24-hour period in people with Type I diabetes; and -- By fructosamine, a surrogate marker which reflects average glucose concentrations over the two-to-three weeks prior to testing, in people with Type I and Type II diabetes who use insulin. - Glucose lowering was achieved in people with Type I and Type II diabetes who use insulin without an increase in the incidence of hypoglycemia compared with the placebo group. - Pramlintide was well tolerated at the anticipated therapeutic doses. - No clinically important safety concerns have arisen to date in Phase II and Phase III trials involving over 1,800 people. - At least two important physiologic mechanisms of pramlintide. Key clinical results supporting these findings and the Company's development plans for Phase III trials are discussed below. Key Clinical Results In a 14-day, double-blind, placebo-controlled Phase II clinical study completed in 1994, subjects with Type I diabetes had a statistically significant reduction in blood-glucose concentrations after a test meal compared to placebo when they self injected pramlintide three times per day in addition to their usual insulin therapy. Results from this study were presented at the June 1994 annual meeting of the American Diabetes Association and were published in April 1996 in Diabetologia. In January 1995, AMYLIN disclosed the results of a placebo-controlled, double-blind, clinical pharmacology study in which an intravenous infusion of pramlintide significantly reduced post-meal blood-glucose concentrations in subjects with Type II diabetes who use insulin. This finding was similar to previous observations in comparable studies in people with Type I diabetes. Results from this study were presented at the June 1995 annual meeting of the American Diabetes Association and the September 1995 annual meeting of the European Association for the Study of Diabetes. In February 1995, the Company reported the results of another 14-day, double-blind, placebo-controlled Phase II study in subjects with Type I diabetes, which showed that 30-microgram doses of pramlintide self-administered four times per day resulted in a statistically significant reduction in blood-glucose concentrations following a test meal and also significantly reduced the average blood-glucose concentrations over a 24-hour observation period (35 mg/dl, p = 0.003) during which patients ingested their usual meals, compared to placebo. 24 26 Results from this study were presented at the September 1995 annual meeting of the European Association for the Study of Diabetes. In August 1995, the Company reported the results of a 28-day, double-blind, placebo-controlled Phase II trial in subjects with Type I diabetes. This study showed that self-administered, 30-microgram doses of pramlintide four times per day (one before each main meal and a late-night snack) significantly lowered the excessive rise in post-meal blood-glucose concentration, compared to the placebo control group. Using this dosing regimen, the study also confirmed that pramlintide significantly lowered 24-hour average blood-glucose concentrations (31 mg/dl, p = 0.009) and fructosamine (33 micromoles/liter, p = 0.003), compared to placebo. As in previous studies, the 30-microgram dose of pramlintide was well tolerated. The only adverse effects significantly different from those reported by the placebo group were mild gastrointestinal symptoms in a small number of patients, and those were substantially reduced after the first two weeks of treatment. Results from this study were presented at the June 1996 annual meeting of the American Diabetes Association. At the same meeting, the Company presented results which suggest that it is feasible to mix pramlintide with insulin in the same syringe just prior to administration. In this study involving people with Type I diabetes, plasma glucose profiles were similar when identical doses of Humulin(R) 70/30 insulin and pramlintide were administered, either as separate injections or mixed in the same syringe immediately prior to injection. The Company is investigating interactions with additional insulin preparations in studies which are presently underway. In August 1996, the Company reported the results of a 28-day, double-blind, placebo-controlled Phase II trial in subjects with Type II diabetes who use insulin. In all dose groups, self-administered pramlintide significantly lowered fructosamine as follows: 30 micrograms four times a day (17.5 micromoles/liter, p = 0.029), 60 micrograms four times a day (22.6 micromoles/liter, p = 0.001), and 60 micrograms three times a day (24.1 micromoles/liter, p = 0.003). These results are similar to the positive findings previously reported in patients with Type I diabetes. The reduction in fructosamine in the 60 microgram dose groups represents a 50 - 60% reduction in the excess of fructosamine above the upper limits of the normal range. Therefore, this study demonstrated that three-times-a-day dosing of pramlintide can achieve similar clinical benefits as four-times-a-day dosing in people with Type II diabetes who use insulin. The study also corroborated the excellent short-term safety profile that has been observed to date in other clinical trials of pramlintide. The gastrointestinal symptoms that occurred in a small percentage of people with the initiation of therapy were generally mild in nature and decreased during the first two weeks of therapy. The Company has reviewed its clinical data and planned clinical trial protocols with its collaborators at Johnson & Johnson, outside clinical consultants, various regulatory authorities, and European regulatory consultants. As a result of these reviews, the Company initiated a series of Phase III trials as described below. Phase III Clinical Trials In June 1995, AMYLIN began its PARADIGM (Pramlintide for Amylin Replacement: Adjunct for Diabetes in Glycemic Management) trials, a Phase III program involving a series of six pivotal studies designed to assess the long-term safety and efficacy of pramlintide. The PARADIGM studies will involve approximately 2,600 people at multiple centers in North America and Europe and are planned to be completed in 1998. The primary endpoint of the Phase III studies is a reduction in HbA1c, a measurement that is well accepted by regulatory authorities and the medical community as the key indicator of long-term average blood-glucose concentrations and a predictor of long-term degenerative complications. HbA1c is also the primary endpoint for marketing approval of other diabetes drugs which are designed to lower blood-glucose. Also, changes in fructosamine have been shown to mirror subsequent changes in HbA1c when the improvement in glucose control is maintained over time. Consequently, if the ability of pramlintide to lower 24-hour of average blood-glucose and fructosamine seen during Phase II studies translates to long-term efficacy as evidenced by a safe, clinically relevant, and statistically significant reduction in HbA1c in Phase III trials, the Company believes pramlintide should be approvable as a drug to improve glucose control in people with diabetes who use insulin therapy. 25 27 In June 1995, the Company initiated a Phase III efficacy study in people with Type II diabetes who use insulin, involving one-year dosing, to test whether 30-, 75- and 150-microgram doses of pramlintide self-administered three times daily can safely improve glucose control. In September 1995, the Company initiated a separate Phase III study in people with Type I diabetes involving one-year dosing. Dosing initially employed a 30-microgram, four-times-per-day dosing regimen. After three months of dosing, subjects receiving pramlintide who did not achieve a reduction in HbA1c of 1% or more were re-randomized into one of two treatment arms receiving either 30-microgram or 60-microgram doses four times per day. Enrollment in both Phase III studies was completed in June 1996. The different dose-frequency regimens in studies of Type I and Type II diabetes were designed to facilitate integration with different insulin regimens. In August 1996, AMYLIN and Johnson & Johnson completed an administrative interim review of data from these two, one-year Phase III trials. The review included an analysis of HbA1c reductions after three months of dosing in patients receiving pramlintide or placebo in the various arms and the safety data set which had accrued to date. The administrative interim review, which was planned and discussed with the FDA in advance of the initiation of the studies, did not allow any protocol changes and will not result in any statistical penalties at the end of the studies. Based on the administrative interim review, Johnson & Johnson decided to continue its collaboration with the Company. In compliance with FDA guidelines, the data that was the subject of the administrative interim review may not be disclosed. There can be no assurance that such data will ultimately support the marketing approval of pramlintide as a drug for the treatment of diabetes. In addition to the ongoing one-year Phase III studies, AMYLIN also plans to initiate four additional Phase III studies during the fourth quarter of 1996, two each in people with Type I and Type II diabetes who use insulin. The studies in people with Type I diabetes will employ dosing regimens involving two-, three-, and four-times-a-day administration, while the studies in people with Type II diabetes will employ dosing regimens involving two-and three-times-a-day administration. The Company is also conducting open label safety studies, label claims studies, mechanism-of-action studies and drug interaction studies. The design, planning and execution of clinical trials for drug candidates aimed at chronic therapy of important diseases require expertise in many areas. Consequently, the Company has recruited management and technical personnel experienced in the fields of medical affairs, product development, clinical development, marketing, quality assurance and regulatory affairs. The Company also relies upon additional guidance from its Clinical Advisory Board, which is comprised of leading American and European experts in the treatment of diabetes, and its collaborators at Johnson & Johnson. An outside Data Monitoring Board is reviewing safety data in ongoing double-blind Phase III trials. OTHER RESEARCH AND DEVELOPMENT ACTIVITIES Additional Pramlintide Development Activities A continuing priority of the Company is to expand the potential use of pramlintide by improving the convenience of drug administration. AMYLIN plans to launch pramlintide in pre-filled cartridges for use in specially designed pen injectors. As part of its Phase III trials, AMYLIN is conducting studies to confirm that the most popular formulations of insulin can be mixed with pramlintide in the same syringe just prior to injection. The Company is also researching the possibility of dual cartridge injector pens (for injecting insulin and pramlintide simultaneously) and non-needle routes of administration, including buccal (in lozenge form), pulmonary (for inhalation), transdermal (by patch), nasal and jet injector. Company scientists and physicians will also be researching additional clinical indications for pramlintide. For instance, preliminary Phase II results suggest that some people with Type II diabetes, who are unresponsive to oral hypoglycemic agents but who are not yet using insulin, might benefit from pramlintide's actions. The Company plans to conduct further Phase II studies in this patient population in 1997. Also, amylin's reported actions on bone metabolism and on inducing satiety could have therapeutic benefit for patients with diabetes and/or other metabolic diseases. In addition, the Company is conducting research to identify orally-active chemical analogs of amylin. 26 28 Non-Amylin Metabolic Targets In order to develop and commercialize pramlintide, AMYLIN has created an integrated research and development team for discovering and developing medicines focused on the control of glucose and lipid metabolism. AMYLIN is leveraging these capabilities and is broadening its research base beyond the study of amylin to include research of new drug targets for treating metabolic disorders, including diabetes, obesity, and dyslipidemia (a condition characterized by unhealthy levels of cholesterol and triglycerides). The Company's experience and expertise gained in exploring the biology and chemistry of amylin and several amylin-related compounds in clinical testing is directly applicable in these efforts. In addition to its internal discovery efforts, the Company is also in discussions with other third parties to collaborate on new technologies and/or in-license other metabolic compounds. To this end, in October 1996, the Company acquired exclusive rights to certain patents and patent applications relating to exendin, a newly discovered compound derived from the venom of the Gila monster lizard, and glucagon-related peptide (GLP-1). The Company plans to evaluate both of these compounds as potential drugs for treating diabetes. In particular, these compounds have been shown in preclinical studies to have effects known to be important for improving glucose control, including stimulation of secretion of insulin and modulation of gastric emptying to slow the entry into the bloodstream of glucose from ingested carbohydrates. Presumably as a result of these actions, exendin and GLP-1 have exhibited glucose-lowering effects in an animal model of diabetes. In addition, GLP-1 has been shown to suppress glucagon secretion in animal studies. Because increases in blood glucose following meals are a major cause of excessive blood glucose concentrations in people with diabetes, the actions of exendin and GLP-1 observed in animals to suppress meal-induced increases of blood glucose, coupled with their effects on insulin, strengthen the rationale for their potential use as a medicine for treating certain people with either Type I or II diabetes. AMYLIN's research team will assess exendin, GLP-1 and their analogs in the treatment of diabetes, and appropriately qualified product candidates will be evaluated further in clinical trials. Assuming satisfactory progress in preclinical studies, the Company is aiming to file an Investigational New Drug application ("IND") for exendin, GLP-1 or an analog during 1998. JOHNSON & JOHNSON COLLABORATION In June 1995, AMYLIN and Johnson & Johnson entered into a worldwide collaboration to develop and commercialize pramlintide. By the closing of this Offering, Johnson & Johnson will have made payments to AMYLIN totaling $80.0 million. These payments primarily included payment of one half of the pramlintide development costs through the date of this Offering, the purchase of $15.0 million of Common Stock in 1995 and $15.0 million of Common Stock in conjunction with this Offering, a license fee and certain milestone and option fee payments. Under the collaboration agreement with Johnson & Johnson (the "Collaboration Agreement"), AMYLIN is the lead party in developing and registering pramlintide and Johnson & Johnson is the lead party in commercializing and marketing pramlintide. Both parties share equally in the development and commercialization costs incurred for pramlintide as well as sharing equally in any profits or losses recognized after commercial launch. In addition, Johnson & Johnson has committed to provide AMYLIN with significant, additional financial support in the form of funding for certain development and commercialization costs, milestone payments and equity investments, subject to the terms of its agreement with the Company. The Collaboration Agreement is part of an overall strategy of Johnson & Johnson to establish a comprehensive disease management approach to diabetes. In conjunction with the Collaboration Agreement, the Company also entered into a Stock Purchase Agreement (the "Stock Purchase Agreement") and a Loan and Security Agreement (the "Loan Agreement") with Johnson & Johnson. In August 1996, AMYLIN achieved the first milestone in the collaboration when, following an administrative interim review of data from the first two, one-year Phase III clinical trials, Johnson & Johnson decided to continue the collaboration. The review included an analysis of HbA1c reductions after three months of dosing in patients receiving pramlintide or placebo in the various arms of these two trials, and the safety data set which had accrued from these two studies. As a result, Johnson & Johnson made $7.0 million in milestone and option fee payments in the third quarter of 1996 and committed to purchase $15.0 million of Common Stock concurrent 27 29 with this Offering and to provide significant ongoing development support. In compliance with FDA guidelines, the data that was the subject of the administrative interim review may not be disclosed. There can be no assurance that such data will ultimately support the marketing approval of pramlintide as a drug for the treatment of diabetes. In addition to the above mentioned milestone-related payments and investments, Johnson & Johnson's financial commitment now includes the funding of 50% of development costs and 100% of pre-launch marketing costs (AMYLIN's one-half share to be repaid over time from future profits), as well as future milestone payments, license fees, equity investments, and a loan facility for use in certain circumstances. The Company will apply all of the license fees, cash milestone payments and 50% of the proceeds from Johnson & Johnson's equity investments towards its share of pramlintide development expenses. If the development of pramlintide is terminated or if a sufficient level of operating profits of pramlintide has not been achieved within three years after commercial launch, the Company will be required to repay loans provided by Johnson & Johnson out of a percentage of the Company's net income. In accordance with the terms of the Stock Purchase Agreement, Johnson & Johnson purchased 1,955,407 shares of Common Stock in 1995 providing the Company with net proceeds of approximately $15.0 million. Pursuant to the Stock Purchase Agreement, AMYLIN is entitled to require Johnson & Johnson to purchase additional shares of Common Stock upon the achievement of certain milestones. With the achievement of the first milestone, AMYLIN earned and is now exercising its right to sell additional shares of its Common Stock to Johnson & Johnson resulting in net proceeds of $15.0 million concurrent with this Offering. After completion of the Phase III clinical program, the Company also has the right to sell additional shares of its Common Stock to Johnson & Johnson resulting in net proceeds of up to $15.0 million. As part of the Stock Purchase Agreement, the Company agreed to use at least 50% of the proceeds from the sale of Common Stock to Johnson & Johnson to fund AMYLIN's share of pramlintide development expenses under the Collaboration Agreement. In addition, the parties have entered into a Loan Agreement under which Johnson & Johnson has agreed to provide to AMYLIN a $27.8 million credit facility (as of June 30, 1996) for use in certain circumstances to cover the Company's share of development expenses related to the Collaboration Agreement. This facility will be adjusted in certain circumstances. For example, the facility will be increased by 50% of any increases in the pramlintide development budget from the existing pre-approved budget and decreased by 50% of the Company's net proceeds received from equity and debt offerings after December 31, 1995 (including the proceeds from this Offering) to investors other than Johnson & Johnson or other corporate partners. The Company is dependent on the future payments from Johnson & Johnson to continue the development and commercialization of pramlintide. Johnson & Johnson may terminate the Collaboration Agreement with the Company subject to a notice period of six months. Johnson & Johnson's financial and other obligations under the Collaboration Agreement would continue during any such termination notice period. In addition, Johnson & Johnson has the right to terminate the Collaboration Agreement at any time based on material safety or tolerability issues. Without Johnson & Johnson's continued collaborative support, the Company might not be able to continue the pramlintide development program, and the Company's financial condition would be materially adversely affected. COMMERCIALIZATION STRATEGY The development of pramlintide is aimed at satisfying the medical needs of approximately seven million people with diabetes who use insulin in the major pharmaceutical markets. To address a market of this potential breadth and magnitude in a timely and effective fashion, AMYLIN sought to leverage its technology platform by entering into a collaboration with Johnson & Johnson. AMYLIN selected Johnson & Johnson as a partner to commercialize pramlintide based on its status as one of the world's largest pharmaceutical companies with expertise in global manufacturing, marketing and selling peptide medicines and hormone-replacement therapies. Pramlintide could represent an important strategic opportunity for Johnson & Johnson to expand its leadership position in the field of diabetes medicines. AMYLIN believes that Johnson & Johnson brings unique characteristics to the partnership, given its established relationship with people who use insulin and its reputation for consumer marketing. Johnson & 28 30 Johnson's LifeScan subsidiary, a global leader in the sale of blood glucose monitors and test strips, has a strong franchise in the diabetes market that provides Johnson & Johnson with broad access to diabetes specialists and millions of people with diabetes who use insulin. In addition, Johnson & Johnson's established consumer relationships and pharmaceutical market access will provide the necessary platform for the future commercialization of pramlintide. AMYLIN and Johnson & Johnson have invested approximately $1.2 million to date in market research studies with physicians and consumers in North America and Europe. These studies have allowed AMYLIN and Johnson & Johnson to develop a commercialization plan designed to accelerate the adoption of pramlintide upon commercial launch. This plan, developed jointly by AMYLIN and Johnson & Johnson, is focused on building a solid foundation of opinion leader advocacy and clinical support for the fundamental role of pramlintide in the regulation of blood glucose levels. The plan also identifies key education initiatives and communication strategies for maximizing the breadth and depth of physician knowledge. Johnson & Johnson will be the lead party in the commercialization and marketing of pramlintide. To assist in executing the commercialization plan referred to above, AMYLIN will employ medical affairs and strategic marketing personnel in each major country. It will be their responsibility to implement the plans discussed above and to work directly with the Johnson & Johnson subsidiary in each country to assist in developing the pramlintide launch marketing plan, to ensure broad sales force deployment, and to provide appropriate medical/ marketing education on pramlintide. AMYLIN currently has marketing staff in place in the U.S., United Kingdom and France and plans to add additional marketing personnel in the U.S., Germany, United Kingdom, France and Italy in 1997. PATENTS, PROPRIETARY RIGHTS, AND LICENSES The Company believes that patents and other proprietary rights are important to its business. The Company's policy is to file patent applications to protect technology, inventions and improvements that are important to the development of its business. AMYLIN also relies upon trade secrets, know-how, continuing technological innovations and licensing opportunities to develop and maintain its competitive position. The Company plans to enforce its issued patents and its rights to proprietary information and technology. The Company reviews third-party patents and patent applications in its fields of endeavor, both to shape its own patent strategy and to identify useful licensing opportunities. At September 30, 1996, the Company held rights to 22 issued U.S. patents. Of these issued patents, 17 are owned by AMYLIN and five are licensed exclusively to AMYLIN. In addition, AMYLIN owns or has exclusive rights to 28 patent applications pending with the U.S. PTO. The Company has 11 pending and five issued U.S. patents relevant to the development and commercialization of pramlintide. AMYLIN also has filed foreign counterparts of certain of these issued patents and applications in many countries. Generally, it is the Company's policy to file foreign counterparts in countries with significant pharmaceutical markets. All commercial rights to these patents and patent applications are held by the Company or, in some cases, jointly with Johnson & Johnson. There can be no assurance that patents will issue from any of the still-pending applications. The patent positions of pharmaceutical and biotechnology firms, including the Company, can be uncertain and involve complex legal and factual questions. In addition, the coverage sought in a patent application can be significantly reduced before the patent is issued. Consequently, the Company does not know whether any of its pending applications will result in the issuance of patents or, if any patents are issued, whether they will provide significant proprietary protection or commercial advantage or will be circumvented by others. Since patent applications in the United States are maintained in secrecy until patents issue and since publication of discoveries in the scientific or patent literature often lag behind actual discoveries, the Company cannot be certain that it was the first to make the inventions covered by each of its pending patent applications or that it was the first to file patent applications for such inventions. In the event a third party has also filed a patent for any of its inventions, the Company may have to participate in interference proceedings declared by the U.S. PTO to determine priority of invention, which could result in substantial cost to the Company, even if the eventual outcome is favorable to the Company. There can be no assurance that the Company's patents, if issued, would be held valid by a court of competent jurisdiction. There can be no assurance that the Company will not be obliged to defend itself in court 29 31 against allegations of infringement of third-party patents. An adverse outcome in such a suit could subject the Company to significant liabilities to third parties, require disputed rights to be licensed from third parties or require the Company to cease using such technology. The Company has received letters from a third party asserting that pramlintide is covered by a patent which the Company has licensed from such third party. The third party claims under its license to be entitled to 50% of any sublicensing fees received from Johnson & Johnson pursuant to the Collaboration Agreement, as well as a future running royalty as specified in the license agreement. The Company believes that these assertions are without merit and will vigorously defend against any claims related to the foregoing, should any such claims be brought. The third party has been informed that the Company does not agree with its assertions and that no such sublicensing moneys have been received from Johnson & Johnson, which is not a sublicensee under the third party's patent. If patents are issued to other companies that contain competitive or conflicting claims and such claims are ultimately determined to be valid, there can be no assurance that the Company would be able to obtain licenses to these patents at a reasonable cost or be able to develop or obtain alternative technology. The Company also relies upon trade secret protection for its confidential and proprietary information. There can be no assurance that others will not independently develop substantially equivalent proprietary information or techniques or otherwise gain access to the Company's trade secrets or disclose such technology or that the Company can meaningfully protect its trade secrets. It is the Company's policy to require its corporate partners, employees, consultants, outside scientific collaborators and sponsored researchers and other advisors to execute confidentiality agreements upon the commencement of employment or consulting relationships with the Company. There can be no assurance, however, that these agreements will provide meaningful protection or adequate remedies for the Company's trade secrets in the event of unauthorized use or disclosure of such information. MANUFACTURING The Company has internally developed and also has contracted for the development of processes for manufacturing pramlintide bulk drug and dosage form. Progress has been made in improving the purity of active drug substance, in scaling up drug synthesis and dosage form manufacturing processes, and in developing new approaches for drug synthesis. The Company plans to launch pramlintide based upon solid phase synthesis of the bulk substance. The Company currently has no facilities to manufacture clinical trial or commercial supplies of pramlintide and currently relies on third parties to do so. The Company has selected manufacturers which it believes comply with GMP and other regulatory standards. Under the terms of the agreement with Johnson & Johnson, AMYLIN is responsible for arranging for the manufacture of pramlintide during the development phase, while Johnson & Johnson is responsible for manufacturing during the commercialization phase. The Company currently uses two external suppliers for synthetic chemical manufacture of pramlintide bulk drug and two suppliers and Johnson & Johnson for fill-finish activities. The Company has established a quality control and quality assurance program, including a set of standard operating procedures and specifications, designed to ensure that the Company's products are manufactured in accordance with GMP and other applicable domestic and foreign regulations. However, the Company is dependent upon third party manufacturers to comply reliably with such procedures and regulations. There can be no assurance that these manufacturers will meet the Company's requirements for quality, quantity or timeliness. GOVERNMENT REGULATION Regulation by governmental authorities in the United States and foreign countries is a significant factor in the manufacture and marketing of pramlintide and in the Company's ongoing research and development 30 32 activities. All of the Company's therapeutic products, including pramlintide, will require regulatory approval by governmental agencies prior to commercialization. In particular, human therapeutic products are subject to rigorous preclinical testing and clinical trials and other pre-market approval requirements by the FDA and regulatory authorities in foreign countries. Various federal, and in some cases state, statutes and regulations also govern or influence the manufacturing, safety, labeling, storage, record keeping and marketing of such products. The lengthy process of seeking these approvals and the subsequent compliance with applicable federal and state statutes and regulations require the expenditure of substantial resources. Any failure by the Company or its collaborators or licensees to obtain, or any delay in obtaining, regulatory approvals could adversely affect the marketing of any products developed by the Company and its ability to receive product revenue, royalty revenue or profit sharing payments. The activities required before a pharmaceutical agent may be marketed in the United States begin with preclinical testing. Preclinical tests include laboratory evaluation of product chemistry and animal studies to assess the potential safety and efficacy of the product and its formulations. The results of these studies must be submitted to the FDA as part of an IND application, which must be reviewed by the FDA before proposed clinical trials can begin. Typically, clinical trials involve a three-phase process. In Phase I, clinical trials are conducted with a small number of subjects to determine the early safety and tolerability profile and the pattern of drug distribution and metabolism. In Phase II, clinical trials are conducted with groups of patients afflicted with a specified disease in order to determine preliminary efficacy, dosing regimes and expanded evidence of safety. In Phase III, large-scale, multicenter, adequate and well-controlled, comparative clinical trials are conducted with patients afflicted with a target disease in order to provide enough data for the statistical proof of efficacy and safety required by the FDA and others. In the case of pramlintide, the results of the preclinical testing and clinical trials are then submitted to the FDA for a pharmaceutical product in the form of a New Drug Application ("NDA") for approval to commence commercial sales. In responding to an NDA, the FDA may grant marketing approval, request additional information, or deny the application if it determines that the application does not satisfy its regulatory approval criteria. There can be no assurance that approvals will be granted on a timely basis, or at all. Among the conditions for NDA approval is the requirement that the prospective manufacturer's quality control and manufacturing procedures conform with GMP guidelines. In complying with GMP, manufacturers must continue to expend time, money and effort in the area of production and quality control and quality assurance to ensure full technical compliance. Manufacturing facilities are subject to periodic inspections by the FDA to ensure compliance. See "-- Manufacturing." The Company is also subject to various federal, state and local laws, regulations and recommendations relating to safe working conditions, laboratory and manufacturing practices, the experimental use of animals and the use and disposal of hazardous or potentially hazardous substances, including radioactive compounds and infectious disease agents, used in connection with the Company's research. The extent of government regulation which might result from any legislation or administrative action cannot be accurately predicted. Clinical testing, manufacture and sale of the Company's products outside of the United States will be subject to regulatory approval by other jurisdictions which may be more or less rigorous than in the United States. COMPETITION Although competitive activity in the diabetes market is intense, the Company believes that for many people with diabetes pramlintide, if approved, will have advantages over alternative approaches to improving glucose control. Pramlintide is aimed at restoring the actions of a human hormone that is missing or deficient in people with diabetes who use insulin, and hormone replacement therapy is a well established treatment concept. Subcutaneous injections of pramlintide are relatively straightforward for patients who are already self-injecting insulin. Moreover, assuming clinical utility is established, alternative delivery routes and mechanisms may be feasible based on the current dosing requirements and chemical characteristics of pramlintide. Based upon published reports of alternative approaches to improving glucose control, the Company believes that pramlintide could provide an attractive combination of safety and efficacy and could become an important part of the drug armamentarium directed at diabetes. Since diabetes is a heterogeneous disease with many degenerative 31 33 complications, it is likely that multiple pharmaceutical strategies will be useful in arresting its relentless progression. Nevertheless, pramlintide may compete with several established therapies for market share. In addition, many companies are pursuing the development of novel pharmaceuticals which target the same diseases to which pramlintide is targeted, and several product candidates are in Phase III clinical trials or in registration. These companies may develop and introduce products competitive with or superior to pramlintide. Such competitive or potentially competitive products may include troglitazone, and if indications for pramlintide's use are expanded to people with diabetes who do not use insulin, may also include metformin, acarbose, bromocriptine and other oral hypoglycemic agents such as sulfonylureas. The Company's competition will be determined in part by the indications for which the Company's products are developed and ultimately approved by regulatory authorities. An important factor in competition may be the timing of market introduction of the Company's or competitors' products. Accordingly, the relative speed with which AMYLIN and Johnson & Johnson or future corporate partners can develop products, complete the clinical trials and approval processes and supply commercial quantities of the products to the market are expected to be important competitive factors. The Company expects that competition among products approved for sale will be based, among other things, on product efficacy, safety, convenience, reliability, availability, price and patent position. EMPLOYEES As of September 30, 1996, AMYLIN had 206 full-time equivalent employees, of whom 38 hold Ph.D. or Sc.D. degrees and seven hold M.D. degrees (five of whom also hold Ph.D.s). A significant number of the Company's management and professional employees have had prior experience with pharmaceutical, biotechnology or medical product companies. AMYLIN believes that it has been highly successful in attracting skilled and experienced scientific personnel. None of the Company's employees is covered by collective bargaining agreements and management considers relations with its employees to be good. CLINICAL ADVISORY BOARD To provide strategic guidance to AMYLIN's pramlintide clinical development program, as well as to assist in reviewing clinical data, AMYLIN works with a network of experts who serve as clinical advisors to the Company. Each advisor has entered into a consulting agreement with the Company. All of the advisors are employed by employers other than the Company and have commitments to or consulting or advisory agreements with other entities that may limit their availability to the Company. The advisors have agreed, however, not to provide any services to any other entities that might conflict with the services that they provide the Company. The Company has not issued stock or stock options to any of its clinical advisors. The clinical advisory board is comprised of the following individuals from the diabetes medical community in America and Europe: CHARLES M. CLARK, JR., M.D. Professor of Medicine and Pharmacology, Indiana University School of Medicine; Co-Director of Regenstrief Institute; Past President of American Diabetes Association DANIEL W. FOSTER, M.D. Donald W. Seldin Distinguished Chair in Internal Medicine, Professor and Chairman, Department of Internal Medicine, University of Texas, Southwestern Medical Center LEIF GROOP, M.D. Professor of Endocrinology, Malmo General Hospital, University of Lund, Sweden HARRY KEEN, M.D., F.R.C.P. Emeritus Professor of Human Metabolism and Diabetes, Guys and St. Thomas Hospitals, London; Honorary President of International Diabetes Foundation
32 34 PIERRE LEFEBVRE, M.D., PH.D. Head of Diabetes, Nutrition and Metabolic Disorders Division, University of Liege Hospital, Belgium; Past President of European Association for the Study of Diabetes GERARD SLAMA Chef de Service, Service de Diabetologie, Hopital Hotel-Dieu de Paris FRED W. WHITEHOUSE, M.D. Division Head, Endocrinology and Metabolism, Henry Ford Hospital; Past President of American Diabetes Association
33 35 MANAGEMENT EXECUTIVE OFFICERS, DIRECTORS AND KEY EMPLOYEES The following table sets forth certain information with respect to the executive officers, directors and key employees of the Company as of September 30, 1996:
NAME AGE POSITION - ----------------------------- --- --------------------------------------------------------- Howard E. Greene, Jr.(1) 53 Chairman of the Board Richard M. Haugen(1) 44 President, Chief Executive Officer and Member, Board of Directors Gareth W. Beynon, M.D., Ph.D. 46 Vice President of Amylin Europe Limited Daniel M. Bradbury 35 Vice President of Marketing Suzanne S. Burgess 39 Vice President of Administration Maurizio Denaro, M.D. 45 Senior Vice President of Research Bradford J. Duft 41 Vice President and General Counsel Richard A. Kenley, Ph.D. 50 Vice President of Product Development Orville G. Kolterman, M.D. 49 Vice President of Medical Affairs Albert A. Lauritano 43 Vice President of Business Development Marjorie T. Sennett 36 Vice President, Chief Financial Officer and Assistant Secretary Robert G. Thompson, M.D. 58 Vice President of Clinical Development Mary W. Treuhaft, Ph.D. 53 Vice President of Regulatory Affairs and Quality Assurance Andrew A. Young, M.D., Ph.D. 44 Vice President of Physiology James C. Blair, Ph.D.(1)(2) 57 Member, Board of Directors Joseph C. Cook, Jr.(1)(3) 55 Member, Board of Directors James C. Gaither 59 Member, Board of Directors Ginger L. Howard 41 Member, Board of Directors Vaughn M. Kailian 52 Member, Board of Directors Timothy J. Wollaeger(2)(3) 53 Member, Board of Directors
- --------------- (1) Member of the Executive Committee. (2) Member of the Compensation Committee. (3) Member of the Audit Committee. Mr. Greene has served as Chairman of the Board of Directors since he co-founded the Company in 1987. He was a full-time employee from September 1989 until September 1996, at which time he became a half-time employee. Mr. Greene served as Chief Executive Officer of the Company from Company inception until July 1996, and he has served as Chairman of the Executive Committee since that time. From October 1986 to September 1993, Mr. Greene was a general partner of Biovest Partners, a venture capital firm, and in this capacity he was Chairman of the Board of Pyxis Corporation from 1989 to 1993. He was Chief Executive Officer of Hybritech Incorporated from 1979 to its acquisition by Eli Lilly & Company in 1986, and he was co-inventor of Hybritech's monoclonal antibody diagnostic technology. Prior to joining Hybritech, he was an executive with Baxter Healthcare Corporation from 1974 to 1979 and a consultant with McKinsey & Company from 1967 to 1974. He is Chairman of the Board of Cytel Corporation and a director of Allergan, Inc., Neurex Corporation and The International Biotechnology Trust Plc. Mr. Greene received an M.B.A. from Harvard University. Mr. Haugen, an executive officer of the Company, has served as President, Chief Executive Officer and a director since July 1996. Previously, Mr. Haugen was Executive Vice President, Chief Operating Officer and a director of Allergan, Inc., a leading eye care company that develops, manufactures and markets ethical pharmaceuticals and over-the-counter products. As an employee of Allergan since 1980, Mr. Haugen served in a variety of sales, manufacturing and general management positions, including President Worldwide Sales & Marketing, President Pharmaceuticals Division and President Optical Division. Prior to joining Allergan, he was employed by American Hospital Supply. He serves on the Dean's Advisory Board for the University of 34 36 California at Irvine Graduate School of Management. Mr. Haugen received an M.B.A. from the University of Southern California. Dr. Beynon, an executive officer of the Company, has served as Vice President of Amylin Europe Limited, the Company's wholly owned European subsidiary, since February 1992. Prior to joining the Company, Dr. Beynon had been employed at G.D. Searle & Co. since 1984, where he held a number of positions in Europe, including Director of Clinical Research, Director of Strategic Planning and Regulatory Affairs and Marketing Director for France. From 1979 to 1984, he practiced internal medicine with a particular interest in endocrinology and diabetes. He held a number of clinical appointments at London Teaching Hospitals, including Guys Hospital and the Postgraduate Medical School at Hammersmith Hospital. Dr. Beynon has a Ph.D. in endocrine physiology from the University of Cambridge and completed his training for his M.B.B.Chir. (M.D.) at Guys Hospital, London. Dr. Beynon also earned an M.B.A. at Cranfield Management Institute. Mr. Bradbury has served as Vice President of Marketing since June 1995. From July 1994 to May 1995, Mr. Bradbury held the position of Director, Marketing -- AMYLIN Europe Limited. Prior to joining the Company, Mr. Bradbury was employed by SmithKline Beecham Pharmaceuticals, where he held a number of positions, most recently as Associate Director, Anti-Infectives in the Worldwide Strategic Product Development Division. Prior to 1986, Mr. Bradbury worked as a Pre-registration Pharmacist with Glaxo Group Research. Mr. Bradbury holds a B.Pharm. from Nottingham University and a Diploma in Management Studies from Harrow and Ealing Colleges of Higher Education. Ms. Burgess has served as Vice President of Administration since May 1994. Ms. Burgess joined the Company in March 1992 as Director of Human Resources and most recently held the position of Senior Director of Human Resources and Facilities Administration. Prior to joining the Company, Ms. Burgess worked for seven years with Dole Food Company/Castle & Cooke, Inc. where she held a number of positions including Director of Human Resources. Dr. Denaro, an executive officer of the Company, has served as Senior Vice President of Research since February 1996. Prior to joining the Company, he was a Vice President of Research at Hoechst Marion Roussel, Inc., and he was Center Director of the Marion Merrell Dow Research Institute in Cincinnati. From 1985 to 1994, Dr. Denaro held various positions at Marion Merrell Dow Research Institute's Lepetit Research Center, Gerenzano, Italy, including Vice President and Director from 1992 to 1994. Prior to 1985, Dr. Denaro held various senior research and post-doctoral fellowship positions at Centro di Riferimento Oncologico in Italy, Uppsala University in Sweden and Stanford Medical School. Dr. Denaro earned an M.D. from Bologna University Medical School. Mr. Duft, an executive officer of the Company, has served as Vice President and General Counsel since July 1990. Prior to joining the Company, from 1983 to July 1990, he was an attorney in private practice with the patent law firm of Lyon & Lyon, most recently as managing partner of its San Diego office. From 1980 to 1983, he served as law clerk and technical advisor to Judge Giles S. Rich of the U.S. Court of Appeals for the Federal Circuit and the U.S. Court of Customs and Patent Appeals. Mr. Duft received a J.D. from California Western School of Law and an LL.M. in Patent and Trade Regulation from George Washington University. Dr. Kenley has served as Vice President of Product Development since January 1994. Prior to joining the Company, he was Director of Pharmaceutical Sciences at Genetics Institute, Inc. From 1986 to 1990, Dr. Kenley was Associate Director of Analytical Chemistry at Baxter Healthcare Corporation. From 1982 to 1986, he was Department Head of Analytical Chemistry Development at Syntex Corporation. Dr. Kenley earned a Ph.D. in chemistry from the University of California at San Diego. Dr. Kolterman, an executive officer of the Company, has served as Vice President, Medical Affairs since July 1993 and Director, Medical Affairs from May 1992 to July 1993. From 1983 to May 1992, he was Program Director of the General Clinical Research Center and Medical Director of the Diabetes Center, both at the University of California, San Diego Medical Center. Since 1989 he has been Adjunct Professor of Medicine at U.C.S.D. From 1978 to 1983, he was Assistant Professor of Medicine in the Endocrinology and Metabolism Division at the University of Colorado School of Medicine, Denver. He is a member of the Diabetes Control and 35 37 Complications Trial Study Group and past-President of the California Affiliate of the American Diabetes Association. Dr. Kolterman earned an M.D. from Stanford University School of Medicine. Mr. Lauritano has served as Vice President of Business Development since December 1994. From February 1994 to December 1994, Mr. Lauritano held the position of Vice President of Market Development. From 1982 to February 1994, Mr. Lauritano was employed by Novo Nordisk Pharmaceuticals, where he held a number of positions, most recently as Vice President New Product Marketing and Business Development. In this position, he was responsible for strategic planning and new product launches in the United States. From 1981 to 1982, he was Assistant Vice President of the Pharmaceutical Division of Bauers-Krey Associates, a consulting firm. Prior to 1981, he held various clinical research positions at Lederle Laboratories and ICI Americas. Mr. Lauritano received an M.S. in Pharmacology from Rutgers University. Ms. Sennett, an executive officer of the Company, has served as Vice President and Chief Financial Officer since January 1989 and has served as Assistant Secretary since January 1993. From August 1982 to July 1986, Ms. Sennett held several corporate finance positions at Bankers Trust Company, one of which involved the structuring of leveraged acquisitions. From August 1986 to June 1988, she attended the Stanford Graduate School of Business, from which she received an M.B.A. She is a member of the Nasdaq Regional Advisory Board. Dr. Thompson has served as Vice President of Clinical Development since May 1994. From 1986 to 1994, Dr. Thompson held a number of positions, including Global Research Physician, at Eli Lilly and Co. Prior to 1986, he served as Professor of Pediatrics, Chair of the Pediatric Endocrine Division, and Vice Chairman of the Department of Pediatrics at the University of Iowa, College of Medicine. Dr. Thompson received his M.D. from the University of Iowa, College of Medicine. Dr. Treuhaft has served as Vice President, Regulatory Affairs and Quality Assurance since September 1996. From 1994 to September 1996, she was Vice President, Regulatory Affairs of RGene Therapeutics. From 1993 to 1994, she was Senior Director, Regulatory Affairs and Quality Assurance of Glycomed Incorporated and from 1989 to 1993, Associate Director, Regulatory Affairs of Schering Plough Research. Prior to 1989, Dr. Treuhaft was Senior Clinical Research Coordinator for Hoffman-LaRoche, Inc. and Associate Director, Biotechnology Assays for Schering Corporation. Dr. Treuhaft received her Ph.D. in Microbiology from the University of Chicago. Dr. Young has served as Vice President of Physiology since January 1994. From 1989 to 1993 he held a number of positions in the Company's Physiology department, most recently as Principal Scientist and Senior Director of Physiology. Prior to joining the Company in 1989, Dr. Young was a lecturer in the Department of Physiology at the University of Auckland, New Zealand and a part-time general medical practitioner. From 1984 to 1987, Dr. Young was a Clinical Research Scientist at the National Institutes of Health in Phoenix, Arizona, where he studied insulin resistance and diabetes. He received his M.B., Ch.B. (M.D.) and his Ph.D. in Physiology from the University of Auckland, New Zealand. Dr. Blair has served as a director since December 1988 and serves on the Compensation and Executive Committees. He has been a general partner of Domain Associates, a venture capital investment firm, since 1985. Domain Associates manages Domain Partners, L.P., Domain Partners II, L.P. and Domain Partners III, L.P. and is the U.S. venture capital advisor to Biotechnology Investments, Ltd. From 1969 to 1985, Dr. Blair was an officer of three investment banking and venture capital firms. Dr. Blair is a director of CoCensys, Inc., Dura Pharmaceuticals, Inc., Gensia, Inc. and Houghten Pharmaceuticals, Inc. Dr. Blair received a B.S.E. from Princeton University and the M.S.E. and Ph.D degrees from the University of Pennsylvania in electrical engineering. Mr. Cook has served as a director since November 1994. Mr. Cook is a founding partner of Life Science Advisors, Inc. and President of Cambrian Associates, Inc. Mr. Cook retired as Group Vice-President, Global Manufacturing, Engineering and Corporate Quality at Eli Lilly and Co. ("Lilly") in 1993. During his 28 years with Lilly, Mr. Cook was a Vice-President of Sales and Marketing and Chief Financial Officer for Elanco Products Company and General Manager of a worldwide business unit of Lilly. He is also a director of Dura Pharmaceuticals, Inc., NABI, Inc., and Personnel Management, Inc. He is a founder of Mountain Ventures, Inc., a real estate development firm. 36 38 Mr. Gaither has served as a director since November 1995. He has been a partner of the law firm Cooley Godward LLP ("Cooley Godward") since 1971 where he also served as managing partner from 1984 to 1990. Prior to joining Cooley Godward in 1969, Mr. Gaither served as Staff Assistant to the President of the United States from July 1966 to January 1969. He is a director of Basic American, Inc., Levi Strauss & Co., and the Stanford Management Company and serves on the executive committee of the Board of Visitors at Stanford Law School. He is a trustee of the Carnegie Endowment for International Peace, The James Irvine Foundation, The Rand Corporation, The Scripps Research Institute and The William and Flora Hewlett Foundation. Mr. Gaither received his J.D. from Stanford University. Ms. Howard has served as a director since November 1995. Ms. Howard has served as Vice President of Guidant Corporation, a medical device company, since July 1994. She also holds the position of president of the Vascular Intervention Group, which includes Advanced Cardiovascular Systems (ACS) and Devices for Vascular Intervention. She has served as President and Chief Executive Officer of ACS since January 1993. Prior to joining ACS, she held various positions with Eli Lilly and Co. from 1979 to 1992, including sales and strategic planning positions. She serves on the Board of Directors and the Executive Committee for the California Healthcare Institute and on the Advisory Board of the California Institute for Federal Policy Research. Ms. Howard received an M.B.A. from Harvard University. Mr. Kailian has served as a director since November 1995. Mr. Kailian has served as President, Chief Executive Officer and board member of COR Therapeutics, Inc. since March 1990. From 1967 to 1990, Mr. Kailian was employed by Marion Merrell Dow, Inc., a pharmaceutical company, and its predecessor companies, in various general management, marketing and sales positions. Among the positions held by Mr. Kailian were President and General Manager, Merrell Dow USA and Corporate Vice President of Global Commercial Development, Marion Merrell Dow, Inc. He is a director of COR Therapeutics, Inc., Arris Pharmaceutical Corporation, the Biotechnology Organization and the California Health Care Institute. Mr. Kailian holds a B.A. from Tufts University. Mr. Wollaeger has served as a director since the Company's inception. He has been the general partner of Kingsbury Associates and the general partner of Kingsbury Capital Partners, L.P. I and II, venture capital investment partnerships, since December 1993. Mr. Wollaeger was Senior Vice President of Columbia Hospital Corporation ("CHC"), a hospital management company, and President of Sutter Corporation, CHC's medical products subsidiary, from May 1990 until December 1993. Mr. Wollaeger was a general partner of Biovest Associates from February 1987 until September 1993. From 1983 to 1986, Mr. Wollaeger served as Senior Vice President and Chief Financial Officer of Hybritech Incorporated. From 1972 to 1980, he was employed by Baxter Healthcare Corporation. Mr. Wollaeger is a director of Celtrix Pharmaceuticals, Inc., Raytel Medical Corporation and Phamis, Inc. He received an M.B.A. from Stanford University. 37 39 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth certain information regarding the ownership of the Company's Common Stock as of September 30, 1996 by: (i) each director; (ii) each executive officer employed by the Company in that capacity on September 30, 1996; (iii) all executive officers and directors of the Company as a group; and (iv) all those known by the Company to be beneficial owners of more than five percent of its Common Stock.
BENEFICIAL OWNERSHIP ------------------------------------- BENEFICIAL OWNER(1) NUMBER OF SHARES PERCENT OF TOTAL - -------------------------------------------------------------- ---------------- ---------------- Gareth W. Beynon, M.D.(2)..................................... 146,657 * James C. Blair(2)(3).......................................... 698,424 2.46% Joseph C. Cook, Jr.(2)........................................ 211,708 * Maurizio Denaro, M.D.(2)...................................... 0 0 Bradford J. Duft(2)........................................... 313,954 1.11% James C. Gaither(2)........................................... 13,249 * Howard E. Greene, Jr.(2)...................................... 1,740,941 6.09% Richard M. Haugen(2).......................................... 0 0 Ginger L. Howard(2)........................................... 10,725 * Vaughn M. Kailian(2).......................................... 10,725 * Orville G. Kolterman, M.D.(2)................................. 114,379 * Marjorie T. Sennett(2)........................................ 321,892 1.13% Timothy J. Wollaeger(2)(4).................................... 307,002 1.08% Johnson & Johnson Development Corporation..................... 1,955,407 6.90% One Johnson & Johnson Plaza New Brunswick, NJ 08933 State of Wisconsin Investment Board........................... 2,391,500 8.44% Lake Terrace 121 E. Wilson Street P.O. Box 7842 Madison, WI 53707 Wellington Management Company(5).............................. 3,078,300 10.87% 75 State Street Boston, MA 02109 All executive officers and directors as a group (13 persons)(2)................................................. 3,889,656 13.28%
- --------------- * Less than one percent. (1) This table is based upon information supplied by officers, directors and principal stockholders and Schedules 13D and 13G filed with the Securities and Exchange Commission (the "Commission"). Unless otherwise indicated in the footnotes to this table and subject to community property laws where applicable, each of the stockholders named in this table has sole voting and investment power with respect to the shares indicated as beneficially owned. Applicable percentages are based on 28,320,525 shares outstanding on September 30, 1996, adjusted as required by rules promulgated by the Securities and Exchange Commission ("SEC"). Except as shown otherwise in the table, the address of each stockholder listed is in care of the Company at 9373 Towne Centre Drive, San Diego, California 92121. (2) Includes shares which certain executive officers, directors and principal stockholders of the Company have the right to acquire within 60 days after the date of this table pursuant to outstanding options and warrants, as follows: Dr. Beynon, 144,157 shares; Dr. Blair, 13,209 shares; Mr. Cook, 157,708 shares; Mr. Duft, 88,224 shares; Mr. Gaither, 10,725 shares; Mr. Greene, 265,373 shares; Ms. Howard, 10,725 shares; Mr. Kailian, 10,725 shares; Dr. Kolterman, 108,442 shares; Ms. Sennett, 134,671 shares; Mr. Wollaeger, 17,671 shares; and all executive officers and directors as a group, 1,016,092 shares. These figures do not include shares which certain executive officers, directors and principal stockholders of the Company have a right to acquire 60 days or more after the date of this table pursuant to outstanding options and warrants as follows: Dr. Beynon, 53,350 shares; Dr. Blair, 7,329 shares; Mr. Cook, 42,292 shares; Dr. Denaro, 125,000 shares; Mr. Duft, 36,776 shares; Mr. Gaither, 29,275 shares; Mr. Greene, 74,267; Mr. Haugen, 38 40 500,000 shares; Ms. Howard, 29,275 shares; Mr. Kailian, 29,275 shares; Dr. Kolterman, 56,702 shares; Ms. Sennett, 71,209 shares; Mr. Wollaeger, 7,329 shares; and all executive officers and directors as a group, 1,062,079 shares. (3) Dr. Blair may be deemed to be the beneficial owner of 653,847 shares held of record by Domain Partners II, L.P. Dr. Blair is a general partner of One Palmer Square Associates, L.P., the general partner of Domain Partners, and One Palmer Square Associates II, L.P., the general partner of Domain Partners II, and shares voting and investment power with respect to such shares. (4) Mr. Wollaeger may be deemed to be the beneficial owner of 160,000 shares held of record by Kingsbury Capital Partners, L.P. Mr. Wollaeger is the general partner of Kingsbury Associates and Kingsbury Capital Partners, L.P., and shares voting and investment power with respect to such shares. (5) Includes 1,411,500 shares as to which Wellington Management Company ("WMC") has shared voting power and 3,078,300 shares as to which WMC has shared dispositive power. 39 41 DESCRIPTION OF CAPITAL STOCK GENERAL The authorized capital stock of the Company consists of 50,000,000 shares of Common Stock, par value $.001, and 7,500,000 shares of Preferred Stock, par value $.001. At the close of business on September 30, 1996, there were 28,320,525 shares of Common Stock outstanding and no shares of Preferred Stock outstanding. PREFERRED STOCK The Board of Directors has the authority, without further action by the stockholders, to issue up to 7,500,000 shares of Preferred Stock in one or more series and to fix the rights, preferences, privileges and restrictions thereof, including dividend rights, conversion rights, voting rights, terms of redemption, liquidation preference, sinking fund terms and the number of shares constituting any series or the designation of such series, without any further vote or action by stockholders. The issuance of Preferred Stock could adversely affect the voting power of holders of Common Stock and the likelihood that such holders will receive dividend payments and payments upon liquidation and could have the effect of delaying, deferring or preventing a change in control of the Company. COMMON STOCK All issued and outstanding shares of Common Stock of the Company, including the shares offered hereby, are fully paid and nonassessable. Holders of Common Stock have no preemptive, subscription or conversion rights and are not liable for further calls or assessments. There are no redemption or sinking fund provisions in effect with respect to the Common Stock. Subject to the rights of any holders of then-outstanding Preferred Stock, holders of Common Stock are entitled to receive such dividends as may be declared by the Board of Directors out of funds legally available therefor and to share ratably in the assets available for distribution upon liquidation. Except as described below, each share of Common Stock is entitled to one vote at all meetings of stockholders. The holders of Common Stock are not entitled to cumulative voting rights in the election of directors. The Company has paid no cash dividends on its Common Stock since its incorporation and anticipates that for the foreseeable future it will continue to retain any earnings for use in its business. The Common Stock of the Company is traded on the Nasdaq National Market under the symbol "AMLN." The transfer agent for the Common Stock is First Interstate Bank of California. DELAWARE LAW AND CERTAIN CHARTER PROVISIONS The Company is subject to the provisions of Section 203 of the Delaware General Corporation Law (the "Delaware Law"), an anti-takeover law. In general, the statute prohibits a publicly held Delaware corporation from engaging in a "business combination" with an "interested stockholder" for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner. For purposes of Section 203, a "business combination" includes a merger, asset sale or other transaction resulting in a financial benefit to the interested stockholder, and an "interested stockholder" is a person who, together with affiliates and associates, owns (or within three years prior, did own) 15% or more of the corporation's voting stock. The Company's Certificate of Incorporation contains a provision (the "Fair Price Provision") that requires the approval of holders of 66% of the Company's voting stock as a condition to a merger or certain other business transactions with, or proposed by, a holder of 15% or more of the Company's voting stock ( an "Interested Stockholder"), except in cases where the Continuing Directors approve the transaction or certain minimum price criteria and other procedural requirements are met. A "Continuing Director" is a director originally elected upon incorporation of the Company or a director who is not an Interested Stockholder or affiliated with an Interested Stockholder or whose nomination or election to the Board of Directors is recommended or approved by a majority of the Continuing Directors. The minimum price criteria generally require that, in a transaction in which stockholders are to receive payments, holders of Common Stock must receive a value equal to the highest price paid by the Interested Stockholder for Common Stock during the prior two years and that such payment be made 40 42 in cash or in the type of consideration paid by the Interested Stockholder for the greatest portion of its shares. The Company's Board of Directors believes that the Fair Price Provision will help assure that all of the Company's stockholders will be treated similarly if certain kinds of business combinations are effected. However, the Fair Price Provision may make it more difficult to accomplish certain transactions that are opposed by the incumbent Board of Directors and that could be beneficial to stockholders. The Company's Certificate of Incorporation also requires that any action required or permitted to be taken by stockholders of the Company must be effected at a duly called annual or special meeting of stockholders and may not be effected by a consent in writing. In addition, special meetings of the stockholders of the Company may be called only by the Board of Directors, the Chief Executive Officer of the Company or by any person or persons holding shares representing at least 10% of the outstanding capital stock. The Company's Certificate of Incorporation also provides that the authorized number of directors may be changed only by resolution of the Board of Directors. These provisions may have the effect of deterring hostile takeovers or delaying changes in control or management of the Company. 41 43 UNDERWRITING Subject to the terms and conditions of the Underwriting Agreement, the underwriters named below (the "Underwriters"), for whom UBS Securities LLC, Hambrecht & Quist LLC and Vector Securities International, Inc. are acting as representatives (the "Representatives"), have agreed to purchase from the Company the following respective number of shares of Common Stock:
NUMBER OF UNDERWRITER SHARES ------------------------------------------------------------------ --------- UBS Securities LLC................................................ Hambrecht & Quist LLC............................................. Vector Securities International, Inc.............................. --------- Total................................................... 1,500,000 ---------
The Underwriting Agreement provides that the obligations of the Underwriters are subject to certain conditions precedent, including the absence of any material adverse change in the Company's business and the receipt of certain certificates, opinions and letters from the Company and its counsel. The nature of the Underwriters' obligation is such that they are committed to purchase all shares of Common Stock offered hereby if any of such shares are purchased. The Underwriting Agreement contains certain provisions whereby if any Underwriter defaults in its obligation to purchase shares, and the aggregate obligations of the Underwriters so defaulting do not exceed 10% of the shares of Common Stock offered hereby, the remaining Underwriters, or some of them, must assume such obligations. The Representatives have advised the Company that the Underwriters propose to offer the shares of Common Stock directly to the public initially at the offering price set forth on the cover page of this Prospectus and to certain dealers at such price less concession not in excess of $ per share. The Underwriters may allow and such dealers may reallow a concession not in excess of $ per share to certain other dealers. After the initial public offering of the shares of Common Stock, the offering price and other selling terms may be changed by the Underwriters. The Company has granted to the Underwriters an option, exercisable no later than 30 days after the date of this Prospectus, to purchase up to 225,000 additional shares of Common Stock to cover over-allotments, if any, at the public offering price, set forth on the cover page of this Prospectus, less the underwriting discounts and commissions. To the extent that the Underwriters exercise such option, each of the Underwriters will have a firm commitment to purchase approximately the same percentage thereof which the number of shares of Common Stock to be purchased by it shown in the above table bears to the total number of shares of Common Stock offered hereby. The Company will be obligated, pursuant to the option, to sell such shares to the Underwriters to the extent the option is exercised. The Company has agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act, and to contribute to payments the Underwriters may be required to make in respect thereof. Johnson & Johnson has committed to purchase an aggregate of $15 million of shares of Common Stock in a private placement at the public offering price (estimated to be 1,153,846 shares assuming a public offering price of $13.00 per share). The sale of the Johnson & Johnson Shares by the Company will not be registered in this Offering or covered by the Underwriting Agreement, and the Underwriters will not receive any fee in connection with the sale of such shares. Johnson & Johnson has agreed to purchase such shares upon the closing of this Offering. At the request of the Company, the Underwriters have reserved approximately $900,000 of the shares offered hereby (estimated to be 69,230 shares assuming a public offering price of $13.00 per share) for sale at the public offering price to directors and executive officers of the Company. The number of shares of Common Stock available for sale to the public will be reduced to the extent such persons purchase such reserved shares. Any reserved shares not so purchased will be offered by the Underwriters to the general public on the same basis as the other shares offered hereby. 42 44 The Company's executive officers and directors, who will beneficially own in the aggregate approximately 3,958,886 shares of Common Stock after the Offering, and Johnson & Johnson, which after the Offering will own 3,109,253 shares of Common Stock (assuming a public offering price of $13.00 per share), have agreed that, except as noted below, they will not, without the prior written consent of UBS Securities LLC, during the period ending 90 days after the date of this Prospectus, (i) sell, offer, contract to sell, make any short sale, pledge, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase or otherwise transfer or dispose of any shares of Common Stock or any securities convertible into or exchangeable or exercisable for or any rights to purchase or acquire Common Stock, or (ii) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of Common Stock, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Common Stock or such other securities, in cash or otherwise. The foregoing agreement does not apply to an aggregate of 50,000 shares held by the executive officers and directors of the Company. In addition, in connection with the agreement by the Company and Glaxo-Wellcome, Inc. ("Glaxo") to discontinue their research and development collaboration regarding amylin blocker technology, Glaxo agreed not to sell or otherwise transfer prior to December 30, 1996 any of the 362,319 shares of the Company's Common Stock purchased by Glaxo pursuant to that agreement. The Company has agreed that it will not, without the prior written consent of UBS Securities LLC, offer, sell or otherwise dispose of any shares of Common Stock, options or warrants to acquire shares of Common Stock or securities exchangeable for or convertible into shares of Common Stock during the 90-day period following the date of this Prospectus, except that the Company may issue stock upon the exercise of options granted prior to the date hereof, and may issue additional stock and grant additional options, under its stock option and stock purchase plans in effect on the date hereof. In general, the rules of the Commission will prohibit the Underwriters from making a market in the Company's Common Stock during the "cooling off" period immediately preceding the commencement of sales in the Offering. The Commission has, however, adopted exemptions from these rules that permit passive market making under certain conditions. These rules permit an underwriter to continue to make a market subject to the conditions, among others, that its bid not exceed the highest bid by a market maker not connected with the Offering and that its net purchases on any one trading day not exceed prescribed limits. Pursuant to these exemptions, the Underwriters, selling group members (if any) or their respective affiliates may engage in passive market making in the Company's Common Stock during the cooling off period. LEGAL MATTERS The validity of the Common Stock offered hereby will be passed upon for the Company by Cooley Godward LLP, San Diego, California, and for the Underwriters by Davis Polk & Wardwell, New York, New York. EXPERTS The consolidated financial statements of Amylin Pharmaceuticals, Inc. incorporated by reference in the Company's Annual Report (Form 10-K) for the year ended December 31, 1995, have been audited by Ernst & Young LLP, independent auditors, as set forth in their report thereon incorporated by reference therein and incorporated herein by reference. Such consolidated financial statements are incorporated herein by reference in reliance upon such report given upon the authority of such firm as experts in accounting and auditing. The statements in this Prospectus under the captions "Risk Factors -- Patents and Proprietary Rights" and "Business -- Patents, Proprietary Rights, and Licenses" have been reviewed and approved by Lyon & Lyon LLP, as experts in such matters, and are included herein in reliance upon such review and approval. 43 45 AVAILABLE INFORMATION The Company is subject to the information requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance therewith, files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). Such reports, proxy statements and other information filed by the Company with the Commission in accordance with the Exchange Act may be inspected without charge at the Public Reference Section of the Commission at Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and at the Commission's following Regional Offices: Chicago Regional Office, Suite 1400, Northwest Atrium Center, 500 West Madison Street, Chicago, Illinois 60661; and the New York Regional Office, Seven World Trade Center, Suite 1300, New York, New York 10048. Copies of such material can be obtained at prescribed rates from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549. The Commission also maintains a site on the World Wide Web that contains reports, proxy and information statements and other information regarding the Company. The address for such site is http://www.sec.gov. Additional information regarding the Company and the shares offered hereby is contained in the Registration Statement on Form S-3 and the exhibits thereto filed with the Commission under the Securities Act of 1933, as amended (the "Securities Act"). For further information pertaining to the Company and the shares, reference is made to the Registration Statement and the exhibits thereto, which may be inspected without charge at, and copies thereof may be obtained at prescribed rates from, the office of the Commission at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549. The AMYLIN logo is a trademark of the Company. All other brand names or trademarks appearing in this Prospectus are the property of their respective holders. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1995, the Company's Quarterly Reports on Form 10-Q for the quarters ended March 31 and June 30, 1996, and the Company's Registration Statement on Form 8-A dated November 27, 1991 filed by the Company with the Commission are hereby incorporated by reference in this Prospectus except as superseded or modified herein. All documents filed by the Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and prior to the termination of the Offering of the shares offered hereby shall be deemed to be incorporated by reference into this Prospectus and to be a part hereof from the date of filing of such documents. Any statement contained in any document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as modified or superseded, to constitute a part of this Prospectus. The Company will provide without charge to each person, including any beneficial owner to whom this Prospectus is delivered, upon written or oral request of such person, a copy of any and all of the documents that have been or may be incorporated by reference herein (other than exhibits to such documents which are not specifically incorporated by reference into such documents). Such requests should be directed to the Chief Financial Officer at the Company's principal executive offices at 9373 Towne Centre Drive, San Diego, California 92121 (telephone (619) 552-2200). 44 46 No dealer, salesperson or any other person has been authorized to give any information or make any representation not contained in this Prospectus in connection with the offer made by this Prospectus and, if given or made, such information or representation must not be relied upon as having been authorized by the Company or the Underwriters. This Prospectus does not constitute an offer to sell or a solicitation of an offer to buy any of the securities offered hereby to anyone in any jurisdiction in which such offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so or to anyone to whom it is unlawful to make such offer or solicitation. Neither the delivery of this Prospectus nor any sale made hereunder shall, under any circumstances, create any implication that the information herein is correct as of any time subsequent to the date of this Prospectus. --------------------------- Table of Contents
Page ---- Prospectus Summary.................... 3 Risk Factors.......................... 6 Use of Proceeds....................... 11 Price Range of Common Stock........... 12 Dividend Policy....................... 12 Capitalization........................ 13 Dilution.............................. 14 Selected Consolidated Financial Data................................ 15 Management's Discussion and Analysis of Financial Condition and Results of Operations....................... 16 Business.............................. 20 Management............................ 34 Security Ownership of Certain Beneficial Owners and Management.... 38 Description of Capital Stock.......... 40 Underwriting.......................... 42 Legal Matters......................... 43 Experts............................... 43 Available Information................. 44 Incorporation of Certain Documents by Reference........................... 44
1,500,000 SHARES LOGO COMMON STOCK --------------------------------- PROSPECTUS OCTOBER , 1996 --------------------------------- UBS SECURITIES HAMBRECHT & QUIST VECTOR SECURITIES INTERNATIONAL, INC. 47 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION The following table sets forth all expenses payable by the Registrant in connection with the sale of the Common Stock being registered. All the amounts shown are estimates except for the SEC registration fee. SEC Registration fee.............................. $ 6,763 NASD filing fee................................... $ 2,732 Nasdaq National Market Listing Application Fee.... $ 17,500 Blue sky qualification fees and expenses.......... $ 10,000 Printing and engraving expenses................... $ 50,000 Legal fees and expenses........................... $ 100,000 Accounting fees and expenses...................... $ 30,000 Miscellaneous..................................... $ 33,005 -------- Total........................................... $ 250,000 ========
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS. Under Section 145 of the Delaware General Corporation Law, the Registrant has broad powers to indemnify its Directors and officers against liabilities they may incur in such capacities, including liabilities under the Securities Act of 1933, as amended (the "Securities Act"). The Registrant's Certificate of Incorporation and By-laws include provisions to (i) eliminate the personal liability of its directors for monetary damages resulting from breaches of their fiduciary duty to the extent permitted by Section 102(b)(7) of the General Corporation Law of Delaware (the "Delaware Law") and (ii) require the Registrant to indemnify its Directors and officers to the fullest extent permitted by Section 145 of the Delaware Law, including circumstances in which indemnification is otherwise discretionary. Pursuant to Section 145 of the Delaware Law, a corporation generally has the power to indemnify its present and former directors, officers, employees and agents against expenses incurred by them in connection with any suit to which they are or are threatened to be made, a party by reason of their serving in such positions so long as they acted in good faith and in a manner they reasonably believed to be in or not opposed to, the best interests of the corporation and with respect to any criminal action, they had no reasonable cause to believe their conduct was unlawful. The Registrant believes that these provisions are necessary to attract and retain qualified persons as Directors and officers. These provisions do not eliminate the Directors' duty of care, and, in appropriate circumstances, equitable remedies such as injunctive or other forms of non-monetary relief will remain available under Delaware Law. In addition, each Director will continue to be subject to liability for breach of the Director's duty of loyalty to the Registrant, for acts or omissions not in good faith or involving intentional misconduct, for knowing violations of law, for acts or omissions that the Director believes to be contrary to the best interests of the Registrant or its stockholders, for any transaction from which the Director derived an improper personal benefit, for acts or omissions involving a reckless disregard for the Director's duty to the Registrant or its stockholders when the Director was aware or should have been aware of a risk of serious injury to the Registrant or its stockholders, for acts or omissions that constitute an unexcused pattern of inattention that amounts to an abdication of the Director's duty to the Registrant or its stockholders, for improper transactions between the Director and the Registrant and for improper distributions to stockholders and loans to Directors and officers. The provision also does not affect a Director's responsibilities under any other law, such as the federal securities law or state or federal environmental laws. The Registrant has entered into indemnity agreements with each of its Directors and executive officers that require the Registrant to indemnify such persons against expenses, judgments, fines, settlements and other amounts incurred (including expenses of a derivative action) in connection with any proceeding, whether actual or threatened, to which any such person may be made a party by reason of the fact that such person is or was a II-1 48 Director or an executive officer of the Registrant or any of its affiliated enterprises, provided such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Registrant and, with respect to any criminal proceeding, had no reasonable cause to believe his conduct was unlawful. The indemnification agreements also set forth certain procedures that will apply in the event of a claim for indemnification thereunder. At present, there is no pending litigation or proceeding involving a Director or officer of the Registrant as to which indemnification is being sought nor is the Registrant aware of any threatened litigation that may result in claims for indemnification by any officer or Director. The Registrant has an insurance policy covering the officers and Directors of the Registrant with respect to certain liabilities, including liabilities arising under the Securities Act or otherwise. ITEM 16. EXHIBITS
EXHIBIT NUMBER DESCRIPTION OF DOCUMENT ------ ------------------------------------------------------------------------------ 1.1 Form of Underwriting Agreement 4.1 Amended and Restated Certificate of Incorporation.(1) 4.2 Amended and Restated Bylaws.(1) 5.1 Opinion of Cooley Godward LLP. 23.1 Consent of Ernst & Young LLP, Independent Auditors. 23.2 Consent of Cooley Godward LLP. Reference is made to Exhibit 5.1. 23.3 Consent of Lyon & Lyon LLP 24.1 Power of Attorney. Reference is made to page II-3.
- --------------- (1) Filed as an exhibit to the Registration Statement on Form S-1 (No. 33-44195) or amendments thereto and incorporated herein by reference. ITEM 17. UNDERTAKINGS. Insofar as indemnification for liabilities arising under the Act may be permitted to directors, officers and controlling persons of the registrant pursuant to provisions described in Item 15 or otherwise, the registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. The undersigned Registrant hereby undertakes: (1) That, for purposes of determining any liability under the Act, each filing of the registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (2) That, for purposes of determining any liability under the Act, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Act shall be deemed to be part of this Registration Statement as of the time it was declared effective. (3) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-2 49 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Diego, State of California, on October 15, 1996. AMYLIN PHARMACEUTICALS, INC. By: /s/ Richard M. Haugen ---------------------------------- Richard M. Haugen President, Chief Executive Officer and Director (Principal Executive Officer) POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Howard E. Greene, Jr., Richard M. Haugen and Marjorie T. Sennett and each of them, as his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments, exhibits thereto and other documents in connection therewith) to this Registration Statement and any subsequent registration statement filed by the registrant pursuant to Rule 462(b) of the Securities Act of 1933, as amended, which relates to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE --------- ----- ---- /s/ Howard E. Greene Jr. Chairman of the Board and October 15, 1996 ------------------------------------ Director Howard E. Greene Jr. /s/ Richard M. Haugen President, Chief Executive October 15, 1996 ------------------------------------ Officer and Director Richard M. Haugen (Principal Executive Officer) /s/ Marjorie T. Sennett Vice President, Chief October 15, 1996 ------------------------------------ Financial Officer and Marjorie T. Sennett Assistant Secretary (Principal Financial Officer) /s/ Karl H. Olsen Treasurer and Controller October 15, 1996 ------------------------------------ (Principal Accounting Karl H. Olsen Officer) /s/ James C. Blair Director October 15, 1996 ------------------------------------ James C. Blair
II-3 50
SIGNATURE TITLE DATE --------- ----- ---- /s/ Joseph C. Cook, Jr. Director October 15, 1996 ------------------------------------- Joseph C. Cook, Jr. /s/ James C. Gaither Director October 15, 1996 -------------------------------------- James C. Gaither /s/ Ginger L. Howard Director October 15, 1996 -------------------------------------- Ginger L. Howard /s/ Vaughn M. Kailian Director October 15, 1996 -------------------------------------- Vaughn M. Kailian /s/ Timothy J. Wollaeger Director October 15, 1996 -------------------------------------- Timothy J. Wollaeger
II-4 51 INDEX TO EXHIBITS
EXHIBIT SEQUENTIAL NUMBER DESCRIPTION PAGE NO. ------ --------------------------------------------------------------------- ---------- 1.1 Form of Underwriting Agreement....................................... 4.1 Amended and Restated Certificate of Incorporation(1)................. 4.2 Amended and Restated Bylaws(1)....................................... 5.1 Opinion of Cooley Godward LLP........................................ 23.1 Consent of Ernst & Young LLP, Independent Auditors................... 23.2 Consent of Cooley Godward LLP. Reference is made to Exhibit 5.1...... 23.3 Consent of Lyon & Lyon LLP........................................... 24.1 Power of Attorney. Reference is made to page II-3....................
- --------------- (1) Filed as an exhibit to the Registration Statement on Form S-1 (No. 33-44195) or amendments thereto and incorporated herein by reference. EX-1.1 2 EXHIBIT 1.1 1 Exhibit 1.1 ________ Shares AMYLIN PHARMACEUTICALS, INC Common Stock UNDERWRITING AGREEMENT ____________ __, 1996 UBS SECURITIES LLC HAMBRECHT & QUIST LLC VECTOR SECURITIES INTERNATIONAL, INC. c/o UBS Securities LLC 299 Park Avenue New York, NY 10171 Ladies and Gentlemen: Amylin Pharmaceuticals, Inc., a Delaware corporation (the "Company"), proposes to issue and sell 1,500,000 shares (the "Firm Shares") of its authorized but unissued Common Stock, $.001 par value per share (the "Common Stock"), to the several underwriters listed on Schedule A to this Agreement (collectively, the "Underwriters"). In addition, the Company proposes to concurrently issue and sell $15 million of shares (herein called the Johnson & Johnson Shares) of its Common Stock (_____ shares) to Johnson & Johnson Development Corporation (herein called JJDC), a wholly owned subsidiary of Johnson & Johnson. The Company also proposes to grant to the Underwriters an option to purchase up to 225,000 additional shares (the "Option Shares") of Common Stock on the terms and for the purposes set forth in Section 3(c). The Firm Shares and the Option Shares are hereinafter collectively referred to as the "Shares." The Company wishes to confirm as follows its agreements with you (the "Representatives") and the other Underwriters on whose behalf you are acting in connection with the several purchases by the Underwriters of the Shares. 1. REGISTRATION STATEMENT. A registration statement on Form S-3 (File No. 333- ) including a prospectus relating to the Shares and each amendment 2 thereto has been prepared by the Company in conformity with the requirements of the Securities Act of 1933, as amended (the "Act"), and the rules and regulations (the "Rules and Regulations") of the Securities and Exchange Commission (the "Commission") thereunder, and has been filed with the Commission. There have been delivered to you four signed copies of such registration statement and amendments, together with four copies of each exhibit filed therewith. Copies of such registration statement and amendments (but without exhibits) and of the related preliminary prospectus have been delivered to you in such reasonable quantities as you have requested for each of the Underwriters. If such registration statement has not become effective, a further amendment to such registration statement, including a form of final prospectus, necessary to permit such registration statement to become effective will be filed promptly by the Company with the Commission. If such registration statement has become effective, a final prospectus containing all Rule 430A Information (as hereinafter defined) will be filed by the Company with the Commission in accordance with Rule 424(b) of the Rules and Regulations on or before the second business day after the date hereof (or such earlier time as may be required by the Rules and Regulations). The term "Registration Statement" as used in this Agreement shall mean such registration statement (including all exhibits and financial statements and all documents incorporated by reference therein) at the time such registration statement becomes or became effective (the "Effective Date") and, in the event any post-effective amendment thereto becomes effective prior to the Closing Date (as hereinafter defined), shall also mean such registration statement as so amended; provided, however, that such term shall include all Rule 430A Information deemed to be included in such registration statement at the time such registration statement becomes effective as provided by Rule 430A of the Rules and Regulations and shall also mean any registration statement filed pursuant to Rule 462(b) of the Rules and Regulations with respect to the Shares. The term "Preliminary Prospectus" shall mean any preliminary prospectus (including the documents incorporated by reference therein) referred to in the preceding paragraph and any preliminary prospectus included in the Registration Statement at the time it becomes effective that omits Rule 430A Information. The term "Prospectus" as used in this Agreement shall mean the prospectus (including the documents incorporated by reference therein) relating to the Shares in the form in which it is first filed with the Commission pursuant to Rule 424(b) of the Rules and Regulations or, if no filing pursuant to Rule 424(b) of the Rules and Regulations is required, shall mean the form of final prospectus included in the Registration Statement at the time such registration statement becomes effective. The term "Rule 430A Information" means information with respect to the Shares and the offering thereof permitted to be omitted from the Registration Statement when it becomes effective pursuant to Rule 430A of the Rules and Regulations. 2 3 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby represents and warrants as follows: (a) Each of the Company and Amylin Europe Limited, a corporation organized under the laws of England and Wales ("Amylin Europe"), has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has full corporate power and authority to own or lease its properties and conduct its business as described in the Registration Statement and the Prospectus and as being conducted, and is duly qualified as a foreign corporation and in good standing in all jurisdictions in which the character of the property owned or leased or the nature of the business transacted by it makes qualification necessary (except where the failure to be so qualified would not have a material adverse effect on the business, properties, financial condition or results of operations of the Company and its subsidiaries, taken as a whole); Amylin Europe is the Company's only subsidiary. (b) Since the respective dates as of which information is given in the Registration Statement and the Prospectus, there has not been any materially adverse change in the business, properties, financial condition or results of operations of the Company and Amylin Europe, taken as a whole, whether or not arising from transactions in the ordinary course of business, other than as set forth in the Registration Statement and the Prospectus, and since such dates, except in the ordinary course of business, neither the Company nor Amylin Europe has entered into any material transaction not referred to in the Registration Statement and the Prospectus. (c) The Registration Statement and the Prospectus comply, and on the Closing Date (as hereinafter defined) and any later date on which Option Shares are to be purchased, the Prospectus will comply, in all material respects, with the provisions of the Act and the Securities Exchange Act of 1934, as amended (herein called the Exchange Act) and the rules and regulations of the Commission thereunder; on the Effective Date, the Registration Statement did not contain any untrue statement of a material fact and did not omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading; and, on the Effective Date the Prospectus did not and, on the Closing Date and any later date on which Option Shares are to be purchased, will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that none of the representations and warranties in this subparagraph (c) shall apply to statements in, or omissions from, the Registration Statement or the Prospectus made in reliance upon and in conformity with information herein or otherwise 3 4 furnished in writing to the Company by or on behalf of the Underwriters for use in the Registration Statement or the Prospectus. (d) The Shares, when issued and sold to the Underwriters as provided herein, will be duly and validly issued, fully paid and nonassessable and conforms to the description thereof in the Prospectus. No further approval or authority of the stockholders or the Board of Directors of the Company will be required for the issuance and sale of the Shares as contemplated herein. (e) Prior to the Closing Date the Shares to be issued and sold by the Company will be authorized for inclusion on The Nasdaq National Market upon official notice of issuance. (f) This Agreement has been duly authorized, executed and delivered by the Company. (g) The execution and delivery by the Company of, and the performance by the Company of its obligations under, this Agreement will not contravene any provision of applicable law or the certificate of incorporation or by-laws of the Company or any material agreement or other material instrument binding upon the Company, or any judgment, order or decree of any governmental body, agency or court having jurisdiction over the Company, and no consent, approval or authorization or order of, or qualification with, any governmental body or agency is required for the performance by the Company of its obligations under this Agreement, except such as may be required by the securities or Blue Sky laws of the various states in connection with the offer and sale of the Shares. (h) There are no legal or governmental proceedings pending or threatened to which the Company is a party or to which any of the properties of the Company is subject that are required to be described in the Registration Statement or the Prospectus and are not so described or any statutes, regulations, contracts or other documents that are required to be described in the Registration Statement or the Prospectus or to be filed as exhibits to the Registration Statement that are not described or filed as required. (i) Each of the Company and Amylin Europe has all necessary consents, authorizations, approvals, orders, certificates and permits of and from, and has made all declarations and filings with, all federal, state, local and other governmental authorities, all self-regulatory organizations and all courts and other tribunals, to own, lease, license and use its properties and assets and to conduct its business in the manner described in the Prospectus. 4 5 (j) There are no rights of any person, corporation, partnership or other entity not effectively satisfied or waived, to require registration of any shares of Common Stock or any other securities of the Company in connection with the filing of the Registration Statement. (k) The Company owns or possesses, or believes it can acquire on reasonable terms, all material patents (or foreign equivalents), trademarks, copyrights and proprietary, confidential information or licenses to any of the foregoing currently required by it in connection with its business except such as the failure to so own, possess or acquire would not have a material adverse affect on the Company. In connection with the filing of its patent applications, when it deemed necessary the Company conducted reasonable investigations of the published literature and patent references relating to the inventions claimed in such applications. There are no enforceable United States or foreign patents known to the Company on the basis of a reasonable monitoring of patents issued in the United States which the Company believes to be infringed by its present activities or which would preclude the pursuit of its business as described in the Prospectus. Except as disclosed in the Prospectus, the Company has not has received any notice of infringement of or conflict with asserted rights of any third party with respect to any of the foregoing. (l) Neither the Company nor Amylin Europe is in violation of its certificate of incorporation or by-laws, or in violation of any applicable statute, judgment, decree, order, rule or regulation, which, singly or in the aggregate, would result in a material adverse change in the condition, financial or otherwise, or in the prospects, earnings, business or operations of the Company and Amylin Europe, taken as a whole. No default exists, and no event has occurred which, with notice or lapse of time or both, would constitute a default, in the due performance and observance of any term, covenant or condition of any material indenture, mortgage, deed of trust, lease or other material agreement or instrument to which the Company or Amylin Europe is a party or by which the Company, Amylin Europe or any of their properties is bound or may be affected in any respect which would result in a materially adverse change in the condition, financial or otherwise, or in the prospects, earnings, business or operations of the Company and Amylin Europe, taken as a whole. (m) Each Preliminary Prospectus filed as part of the registration statement as originally filed or as part of any amendment thereto, or filed pursuant to Rule 424 under the Securities Act, complied when so filed in all material respects with the Securities Act and the rules and regulations of the Commission thereunder. 5 6 (n) The Company is not an "investment company" or an entity "controlled" by an "investment company," as such terms are defined in the Investment Company Act of 1940, as amended (the "Investment Company Act"). (o) Each of the Company and Amylin Europe is (i) in compliance with any and all applicable foreign, federal, state and local laws and regulations relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants ("Environmental Laws"), (ii) has received all permits, licenses or other approvals required of it under applicable Environmental Laws to conduct its business and (iii) is in compliance with all terms and conditions of any such permit, license or approval, except where such noncompliance with Environmental Laws, failure to receive required permits, licenses or other approvals or failure to comply with the terms and conditions of such permits, licenses or approvals would not, singly or in the aggregate, result in a material adverse effect on the condition, financial or otherwise, or on the earnings, business, prospects or operations of the Company and Amylin Europe, taken as a whole. (p) In the ordinary course of its business, the Company conducts a periodic review of the effect of Environmental Laws on the business, operations and properties of the Company and Amylin Europe, in the course of which it identifies and evaluates associated costs and liabilities (including, without limitation, any capital or operating expenditures required for clean-up, closure of properties or compliance with Environmental Laws or any permit, license or approval, any related constraints on operating activities and any potential liabilities to third parties). On the basis of such review, the Company has reasonably concluded that such associated costs and liabilities would not, singly or in the aggregate, have a material adverse effect on the condition, financial or otherwise, or on the earnings, business, prospects or operations of the Company and Amylin Europe, taken as a whole. (q) The Company has complied with all provisions of Section 517.075, Florida Statutes (Chapter 92-198, Laws of Florida). 3. PURCHASE OF THE SHARES BY THE UNDERWRITERS. (a) On the basis of the representations and warranties and subject to the terms and conditions herein set forth, the Company agrees to issue and sell the Firm Shares to the several Underwriters, and each of the Underwriters agrees to purchase from the Company the respective aggregate number of Firm Shares set forth opposite its name on Schedule A, plus such additional number of Firm Shares which such Underwriter may become obligated to purchase pursuant to Section 3(b) hereof. The price at which such Firm Shares shall be sold by the 6 7 Company and purchased by the several Underwriters shall be $_____ per share. In making this Agreement, each Underwriter is contracting severally and not jointly; except as provided in paragraphs (b) and (c) of this Section 3, the agreement of each Underwriter is to purchase only the respective number of Firm Shares set forth opposite its name on Schedule A. (b) If for any reason one or more of the Underwriters shall fail or refuse (otherwise than for a reason sufficient to justify the termination of this Agreement under the provisions of Section 10 hereof) to purchase and pay for the number of Shares agreed to be purchased by such Underwriter or Underwriters, the non-defaulting Underwriters shall have the right within twenty-four (24) hours after such default to purchase, or procure one or more other Underwriters to purchase, in such proportions as may be agreed upon between you and such purchasing Underwriter or Underwriters and upon the terms herein set forth, all or any part of the Shares which such defaulting Underwriter or Underwriters agreed to purchase. If the non-defaulting Underwriters fail so to make such arrangements with respect to all such Shares, the number of Shares which each non-defaulting Underwriter is otherwise obligated to purchase under this Agreement shall be automatically increased on a pro rata basis (as adjusted by you in such manner as you deem advisable to avoid fractional shares) to absorb the remaining shares and portion which the defaulting Underwriter or Underwriters agreed to purchase; provided, however, that the non-defaulting Underwriters shall not be obligated to purchase the Shares which the defaulting Underwriter or Underwriters agreed to purchase if the aggregate number of such Shares exceeds 10% of the total number of Shares which all Underwriters agreed to purchase hereunder. If the total number of Shares which the defaulting Underwriter or Underwriters agreed to purchase shall not be purchased or absorbed in accordance with the two preceding sentences, the Company shall have the right, within twenty-four (24) hours next succeeding the 24-hour period referred to above, to make arrangements with other underwriters or purchasers reasonably satisfactory to you for purchase of such Shares on the terms herein set forth. In any such case, either you or the Company shall have the right to postpone the Closing Date determined as provided in Section 5 hereof for not more than seven business days after the date originally fixed as the Closing Date pursuant to said Section 5 in order that any necessary changes in the Registration Statement, the Prospectus or any other documents or arrangements may be made. If the aggregate number of Shares which the defaulting Underwriter or Underwriters agreed to purchase exceeds 10% of the total number of Shares which all Underwriters agreed to purchase hereunder, and if neither the non-defaulting Underwriters nor the Company shall make arrangements within the 24-hour periods stated above for the purchase of all the Shares which the defaulting Underwriter or Underwriters agreed to purchase hereunder, this Agreement shall be terminated without further act or deed and without any liability on the part of the Company to any non-defaulting Underwriter 7 8 and without any liability on the part of any non-defaulting Underwriter to the Company. Nothing in this paragraph (b), and no action taken hereunder, shall relieve any defaulting Underwriter from liability in respect of any default of such Underwriter under this Agreement. (c) On the basis of the representations, warranties and covenants herein contained, and subject to the terms and conditions herein set forth, the Company grants an option to the several Underwriters to purchase all or any portion of the Option Shares from the Company at the same price per share as the Underwriters shall pay for the Firm Shares. Said option may be exercised only to cover over-allotments in the sale of the Firm Shares by the Underwriters and may be exercised in whole or in part at any time (but not more than once) on or before the 30th day after the date of this Agreement upon written or telegraphic notice by you to the Company setting forth the aggregate number of shares of the Option Shares as to which the several Underwriters are exercising the option. Delivery of certificates for the shares of Option Shares, and payment therefor, shall be made as provided in Section 5 hereof. Each Underwriter will purchase such percentage of the Option Shares as is equal to the percentage of Firm Shares that such Underwriter is purchasing, the exact number of shares to be adjusted by you in such manner as you deem advisable to avoid fractional shares. 4. OFFERING BY UNDERWRITERS. (a) The terms of the initial public offering of the Shares by the Underwriters shall be as set forth in the Prospectus. The Underwriters may from time to time change the public offering prices after the initial public offering and increase or decrease the concessions and discounts to dealers as they may determine. (b) You, on behalf of the Underwriters, represent and warrant that (i) the information set forth in the last paragraph on the front cover page and paragraph __ under the caption "Underwriting" in the Registration Statement, any Preliminary Prospectus and the Prospectus relating to the Shares (insofar as such information relates to the Underwriters) constitutes the only information furnished by the Underwriters to the Company for inclusion in the Registration Statement, any Preliminary Prospectus, and the Prospectus, and that the statements made therein are correct and do not omit to state any material fact required to be stated therein or necessary to make the statements made therein in light of the circumstances under which they were made not misleading, and (ii) the Underwriters have not distributed and will not distribute prior to the Closing Date or on any Option Closing Date, as the case may be, any offering material in connection with the offering and sale of the Shares other than the Preliminary 8 9 Prospectus, the Prospectus, the Registration Statement and other materials permitted by the Act. 5. DELIVERY OF AND PAYMENT FOR THE SHARES. (a) Delivery of certificates for the Firm Shares and the Option Shares (if the option granted pursuant to Section 3(c) hereof shall have been exercised not later than [7:00 a.m., San Diego time], on the date at least two business days preceding the Closing Date), and payment therefor, shall be made at the office of [Cooley Godward LLP, 4365 Executive Drive, Suite 1200, San Diego, California 92121], [7:00 a.m. San Diego] time, on the [third] business day after the date of this Agreement, or at such time on such other day, not later than seven full business days after such [third] business day, as shall be agreed upon in writing by the Company and you (the "Closing Date"). (b) If the option granted pursuant to Section 3(c) hereof shall be exercised after [7:00 a.m., San Diego time], on the date two business days preceding the Closing Date, and on or before the 30th day after the date of this Agreement, delivery of certificates for the Option Shares, and payment therefor, shall be made at the office of [Cooley Godward LLP, 4365 Executive Drive, Suite 1200, San Diego, California 92121], at 7:00 a.m. San Diego time, on the third business day after the exercise of such option. (c) Payment for the Shares purchased from the Company shall be made to the Company or its order, by either a same day funds check or Federal Funds wire transfer. Such payment shall be made upon delivery of certificates for the Shares to you for the respective accounts of the several Underwriters against receipt therefor signed by you. Certificates for the Shares to be delivered to you shall be registered in such name or names and shall be in such denominations as you may request at least three business days before the Closing Date, in the case of Firm Shares, and at least two business days prior to the Option Closing Date, in the case of the Option Shares. Such certificates will be made available to the Underwriters for inspection, checking and packaging at a location in New York, New York, designated by the Underwriters not less than one full business day prior to the Closing Date or, in the case of the Option Shares, by 3:00 p.m., New York time, on the business day preceding the Option Closing Date. It is understood that you, individually and not on behalf of the Underwriters, may (but shall not be obligated to) make payment to the Company for shares to be purchased by any Underwriter whose check shall not have been received by you on the Closing Date or any later Option Closing Date. Any such payment by you shall not relieve such Underwriter from any of its obligations hereunder. 9 10 6. FURTHER AGREEMENTS OF THE COMPANY. The Company covenants and agrees as follows: (a) The Company will use its best efforts to cause the Registration Statement and any amendment thereof, if not effective at the time and date that this Agreement is executed and delivered by the parties hereto, to become effective as promptly as possible; it will notify you, promptly after it shall receive notice thereof, of the time when the Registration Statement or any subsequent amendment to the Registration Statement has become effective or any supplement to the Prospectus has been filed. If the Company omitted information from the Registration Statement at the time it was originally declared effective in reliance upon Rule 430A(a), the Company will provide evidence satisfactory to you that the Prospectus contains such information and has been filed, within the time period prescribed, with the Commission pursuant to subparagraph (1) or (4) of Rule 424(b) of the Rules and Regulations or as part of a post-effective amendment to such Registration Statement as originally declared effective which is declared effective by the Commission. If for any reason the filing of the final form of Prospectus is required under Rule 424(b)(3) of the Rules and Regulations, it will provide evidence satisfactory to you that the Prospectus contains such information and has been filed with the Commission within the time period prescribed. The Company will notify you promptly of any request by the Commission for the amending or supplementing of the Registration Statement or the Prospectus or for additional information. Promptly upon your request, it will prepare and file with the Commission any amendments or supplements to the Registration Statement or Prospectus which, in the reasonable opinion of counsel to the several Underwriters ("Underwriters' Counsel"), may be necessary or advisable in connection with the distribution of the Shares by the Underwriters. The Company will promptly prepare and file with the Commission, and promptly notify you of the filing of, any amendments or supplements to the Registration Statement or Prospectus which may be necessary to correct any statements or omissions, if, at any time when a prospectus relating to the Shares is required to be delivered under the Act, any event shall have occurred as a result of which the Prospectus or any other prospectus relating to the Shares as then in effect would include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. In case any Underwriter is required to deliver a prospectus within the nine-month period referred to in Section 10(a)(3) of the Act in connection with the sale of the Shares, and the Underwriters shall propose to vary the terms of offering thereof by reason of changes in general market conditions or otherwise, you will advise the Company in writing of the proposed variation, and, if in the opinion either of counsel for the Company or of counsel for the Underwriters such proposed variation requires that the Prospectus be supplemented or amended, the 10 11 Company will prepare promptly upon request such amendment or amendments to the Registration Statement and such prospectus or prospectuses as may be necessary to permit compliance with the requirements of Section 10(a)(3) of the Act. The Company will file no amendment or supplement to the Registration Statement or Prospectus that shall not previously have been submitted to you a reasonable time prior to the proposed filing thereof or to which you shall reasonably object in writing or which is not in compliance with the Act and Rules and Regulations or the provisions of this Agreement. (b) The Company will advise you, promptly after it shall receive notice or obtain knowledge thereof of the issuance of any stop order by the Commission suspending the effectiveness of the Registration Statement or the use of the Prospectus or of the initiation or threat of any proceeding for that purpose; and it will promptly use its best efforts to prevent the issuance of any such stop order or to obtain its withdrawal at the earliest possible moment if such stop order should be issued. (c) The Company will cooperate with you in endeavoring to qualify the Shares for offering and sale under the securities laws of such jurisdictions as you may designate and to continue such qualifications in effect for so long as may be required for purposes of the distribution of the Shares, except that the Company shall not be required in connection therewith or as a condition thereof to qualify as a foreign corporation, or to execute a general consent to service of process in any jurisdiction, or to make any undertaking with respect to the conduct of its business. In each jurisdiction in which the Shares shall have been qualified, the Company will make and file such statements, reports and other documents as are or may be reasonably required by the laws of such jurisdictions so as to continue such qualifications in effect for so long a period as you may reasonably request for distribution of the Shares, or as otherwise may be required by law. (d) The Company will furnish to you, as soon as available, copies of the Registration Statement (four of which will be signed and which will include all exhibits), each Preliminary Prospectus, the Prospectus and any amendments or supplements to such documents, including any prospectus prepared to permit compliance with Section 10(a)(3) of the Act, all in such quantities as you may from time to time reasonably request. (e) The Company will make generally available to its stockholders as soon as practicable, but in any event not later than the 45th day following the end of the fiscal quarter first occurring after the first anniversary of the effective date of the Registration Statement, an earnings statement (which will be in reasonable detail but need not be audited) complying with the provisions of Section 11(a) of the Act and Rule 158 of the Rules and Regulations and covering a 11 12 twelve-month period beginning after the effective date of the Registration Statement, and will advise you in writing when such statement has been made available. (f) During a period of five years after the date hereof, the Company, as soon as practicable after the end of each respective period, will furnish to its stockholders annual reports (including financial statements audited by independent certified public accountants) and will furnish to its stockholders unaudited quarterly reports of operations for each of the first three quarters of the fiscal year, and will, upon request, furnish to you and the other several Underwriters hereunder (i) concurrently with making such reports available to its stockholders, statements of operations of the Company for each of the first three quarters in the form made available to the Company's stockholders; (ii) concurrently with the furnishing thereof to its stockholders, a balance sheet of the Company as of the end of such fiscal year, together with statements of operations, of stockholders' equity and of cash flow of the Company for such fiscal year, accompanied by a copy of the certificate or report thereon of nationally recognized independent certified public accountants; (iii) concurrently with the furnishing of such reports to its stockholders, copies of all reports (financial or other) mailed to stockholders; and (iv) as soon as they are available, copies of all reports and financial statements furnished to or filed with the Commission, any securities exchange or The Nasdaq National Market by the Company (except for documents for which confidential treatment is requested). During such five-year period, if the Company shall have any active subsidiaries, the foregoing financial statements shall be on a consolidated basis to the extent that the accounts of the Company are consolidated with any subsidiaries, and shall be accompanied by similar financial statements for any significant subsidiary that is not so consolidated. (g) Prior to or simultaneously with the execution and delivery of this Agreement, the Company will obtain agreement from each beneficial owner of the Company's Common Stock listed on Schedule B to this Agreement providing that such person will not, for a period of 90 days following the commencement of the public offering of the Shares by the Underwriters, directly or indirectly, (i) sell, offer, contract to sell, make any short sale, pledge, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase or otherwise transfer or dispose of any shares of Common Stock or any securities convertible into or exchangeable or exercisable for or any rights to purchase or acquire Common Stock or (ii) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of Common Stock, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Common Stock or such other securities, in cash or otherwise. The foregoing agreement shall not apply to an aggregate of 50,000 shares of Common Stock held by the executive officers and directors of the 12 13 Company. Each such person or entity shall also agree and consent to the entry of stop transfer instructions with the Company's transfer agent against the transfer of shares of Common Stock held by such person or entity, except in compliance with the foregoing restriction. (h) The Company shall not, during the 90 days following the effective date of the Registration Statement, except with your prior written consent as Representatives, file a registration statement covering any of its shares of capital stock, except that one or more registration statements on Form S-8 may be filed at any time following the effective date of the Registration Statement. (i) The Company shall not, during the 90 days following the commencement of the public offering of the Shares by the Underwriters, directly or indirectly, (i) sell, offer, contract to sell, make any short sale, pledge, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase or otherwise transfer or dispose of any shares of Common Stock or any securities convertible into or exchangeable or exercisable for or any rights to purchase or acquire Common Stock or (ii) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of Common Stock, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Common Stock or such other securities, in cash or otherwise. The foregoing sentence shall not apply to (A) the Shares to be sold to the Underwriters pursuant to this Agreement and the Johnson & Johnson Shares, (B) shares of Common Stock issued by the Company upon the exercise of options granted under the stock option plans of the Company (the "Option Plans") or upon the exercise of warrants outstanding as of the date hereof, all described in footnote (1) to the table under the caption "Capitalization" in the Preliminary Prospectus, (C) grants of options to purchase Common Stock granted under the Option Plans and Common Stock issuable upon the exercise of such options , and (D) shares of Common Stock issuable pursuant to the Company's Employee Stock Purchase Plan. (j) The Company will apply the net proceeds from the sale of the Shares being sold by it in the manner set forth under the caption "Use of Proceeds" in the Prospectus. (k) The Company will maintain a Transfer Agent and, if necessary under the jurisdiction of incorporation of the Company, a Registrar (which may be the same entity as the Transfer Agent) for its Common Stock. (l) The Company will use its best efforts to maintain listing of its shares of Common Stock on The Nasdaq National Market. 13 14 (m) The Company is familiar with the Investment Company Act of 1940, as amended, and the rules and regulations thereunder, and has in the past conducted its affairs, and will in the future conduct its affairs, in such a manner so as to ensure that the Company was not and will not be an "investment company" within the meaning of the Investment Company Act of 1940, as amended, and the rules and regulations thereunder. (n) If at any time during the 180-day period after the Registration Statement becomes effective, any rumor, publication or event relating to or affecting the Company shall occur as a result of which in your reasonable opinion the market price of the Common Stock has been or is likely to be materially affected (regardless of whether such rumor, publication or event necessitates a supplement to or amendment of the Prospectus), the Company will, after written notice from you advising the Company to the effect set forth above consult with you in good faith regarding the necessity of disseminating a press release or other public statement responding to or commenting on such rumor, publication or event and, if the Company in its reasonable judgment determines that such a press release or other public statement is appropriate, the substance of any press release or other public statement. 7. EXPENSES. The Company agrees with each Underwriter that: (a) The Company will pay and bear all costs, fees and expenses in connection with the preparation, printing and filing of the Registration Statement (including financial statements, Preliminary Prospectuses and the Prospectus and any amendments or supplements thereto); the reproduction of this Agreement, the Preliminary Blue Sky Memoranda and any Supplemental Blue Sky Memoranda and any instruments related to any of the foregoing; the issuance and delivery of the Shares hereunder to the several Underwriters, including transfer taxes, if any; the cost of all stock certificates representing the Shares and Transfer Agents' and Registrars' fees; the fees and disbursements of corporate, patent and regulatory counsel for the Company; all fees and other charges of the Company's independent public accountants; the cost of furnishing to the several Underwriters copies of the Registration Statement (including appropriate exhibits), Preliminary Prospectuses and the Prospectus, and any amendments or supplements to any of the foregoing; NASD filing fees and expenses incident to securing any required review and the cost of qualifying the Shares under the laws of such jurisdictions within the United States as you may designate (including filing fees and fees and disbursements of Underwriters' Counsel in connection with such NASD filings and Blue Sky qualifications); listing application fees of the Nasdaq National Market; and all other 14 15 expenses directly incurred by the Company in connection with the performance of its obligations hereunder. (b) If the transactions contemplated hereby are not consummated by reason of any failure, refusal or inability on the part of the Company to perform any agreement on its part to be performed hereunder or to fulfill any condition of the Underwriters' obligations hereunder, the Company will, in addition to paying the expenses described in clause (a) above, reimburse the several Underwriters for all out-of-pocket expenses (including reasonable fees and disbursements of Underwriters' Counsel) incurred by the Underwriters in reviewing the Registration Statement and the Prospectus and in otherwise investigating, preparing to market or marketing the Shares. The Company will in no event be liable to any of the several Underwriters for any loss of anticipated profits from the sale by them of the Shares. 8. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of the several Underwriters to purchase and pay for the Shares, as provided herein, shall be subject to the accuracy, as of the date hereof and the Closing Date and any later Option Closing Date, as the case may be, of the representations and warranties of the Company herein, to the performance by the Company of its obligations hereunder and to the following additional conditions: (a) The Registration Statement shall have become effective not later than [9:00 a.m., New York City time], on the date following the date of this Agreement, or such later time or date as shall be consented to in writing by you. If the filing of the Prospectus, or any supplement thereto, is required pursuant to Rule 424(b) and Rule 430A of the Rules and Regulations, the Prospectus shall have been filed in the manner and within the time period required by Rule 424(b) and Rule 430A of the Rules and Regulations. No stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceeding for that purpose shall have been initiated or, to the knowledge of the Company or any Underwriter, threatened by the Commission, and any request of the Commission for additional information (to be included in the Registration Statement or the Prospectus or otherwise) shall have been complied with to the reasonable satisfaction of Underwriters' Counsel. (b) All corporate proceedings and other legal matters in connection with this Agreement, the form of Registration Statement and the Prospectus, and the registration, authorization, issue, sale and delivery of the Shares shall have been reasonably satisfactory to Underwriters' Counsel, and such counsel shall have been furnished with such papers and information as they may reasonably have requested to enable them to pass upon the matters referred to in this subsection. 15 16 (c) The Company shall have issued and sold at least $[14.5] million of the Johnson & Johnson Shares (________ shares) to JJDC. (d) You shall have received, at no cost to you, on the Closing Date and on any later Option Closing Date, as the case may be, the opinions of (i) Cooley Godward LLP, corporate counsel to the Company and (ii) Bradford J. Duft, patent counsel to the Company, dated the Closing Date or such later Option Closing Date, in the forms attached hereto as Appendix A and Appendix B, respectively, addressed to the Underwriters and with reproduced copies of signed counterparts thereof for each of the Representatives. (e) You shall have received from Davis Polk & Wardwell, Underwriters' Counsel, an opinion or opinions, dated the Closing Date or on any later Option Closing Date, as the case may be, in form and substance reasonably satisfactory to you, and the Company shall have furnished to such counsel such documents as it may have reasonably requested for the purpose of enabling it to pass upon such matters. (f) You shall have received on the Closing Date and on any later Option Closing Date, as the case may be, a letter from Ernst & Young LLP addressed to the Company and the Underwriters, dated the Closing Date or such later Option Closing Date, as the case may be, confirming that it is an independent certified public accountant with respect to the Company within the meaning of the Act and the Rules and Regulations thereunder and based upon the procedures described in its letter delivered to you concurrently with the execution of this Agreement (herein called the "Original Letter"), but carried out to a date not more than three days prior to the Closing Date or any such later Option Closing Date, as the case may be, (i) confirming that the statements and conclusions set forth in the Original Letter are accurate as of the Closing Date or such later Option Closing Date, as the case may be; and (ii) setting forth any revisions and additions to the statements and conclusions set forth in the Original Letter that are necessary to reflect any changes in the facts described in the Original Letter since the date of such letter, or to reflect the availability of more recent financial statements, data or information. The letter shall not disclose any change, or any development involving a prospective change, in or affecting the business or properties of the Company or Amylin Europe which, in your reasonable judgment, makes it impracticable or inadvisable to proceed with the public offering of the Shares as contemplated by the Prospectus. (g) You shall have received on the Closing Date and on any later Option Closing Date, as the case may be, a certificate of the President and the Chief Financial Officer of the Company, dated the Closing Date or such later date, to the effect that as of such date (and you shall be satisfied that as of such date): 16 17 (i) The representations and warranties of the Company in this Agreement are true and correct, as if made on and as of the Closing Date or any later Option Closing Date, as the case may be; and the Company has complied with all of the agreements and satisfied all of the conditions on its part to be performed or satisfied at or prior to the Closing Date or any later Option Closing Date, as the case may be; (ii) The Registration Statement has become effective under the Act and no stop order suspending the effectiveness of the Registration Statement or preventing or suspending the use of the Prospectus has been issued, and no proceedings for that purpose have been instituted or are pending or, to the best of their knowledge, threatened under the Act; (iii) They have carefully reviewed the Registration Statement and the Prospectus; and, when the Registration Statement became effective and at all times subsequent thereto up to the delivery of such certificate, the Registration Statement and the Prospectus and any amendments or supplements thereto contained all statements and information required to be included therein or necessary to make the statements therein not misleading; and when the Registration Statement became effective, and at all times subsequent thereto up to the delivery of such certificate, none of the Registration Statement, the Prospectus or any amendment or supplement thereto included any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein not misleading; and, since the effective date of the Registration Statement, there has occurred no event required to be set forth in an amended or supplemented Prospectus that has not been so set forth; and (iv) Subsequent to the respective dates as of which information is given in the Registration Statement and the Prospectus, there has not been (A) any material adverse change in the properties or assets described or referred to in the Registration Statement and the Prospectus or in the condition (financial or otherwise), operations, business or prospects of the Company and Amylin Europe, (B) any transaction which is material to the Company and Amylin Europe, except transactions entered into in the ordinary course of business, (C) any obligation, direct or contingent, incurred by the Company or Amylin Europe, which is material to the Company and Amylin Europe taken as a whole, (D) any change in the capital stock or outstanding indebtedness of the Company or Amylin Europe which is material to the Company and Amylin Europe taken as a whole or (E) any dividend or distribution of any kind declared, paid or made on the capital stock of the Company. 17 18 (h) The Company shall have furnished to you such further certificates and documents as you shall reasonably request as to the accuracy of the representations and warranties of the Company herein, as to the performance by the Company of its obligations hereunder and as to the other conditions concurrent and precedent to the obligations of the Underwriters hereunder. (i) The Firm Shares and the Option Shares, if any, shall have been approved for designation upon notice of issuance on the Nasdaq National Market. (j) On or prior to the Closing Date, you shall have received from all directors and executive officers of the Company and from JJDC agreements, in form reasonably satisfactory to UBS Securities LLC, stating that such person or entity will not, for a period of 90 days following the commencement of the public offering of the Shares by the Underwriters, directly or indirectly, (i) sell, offer, contract to sell, make any short sale, pledge, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase or otherwise transfer or dispose of any shares of Common Stock or any securities convertible into or exchangeable or exercisable for or any rights to purchase or acquire Common Stock or (ii) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of Common Stock, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Common Stock or such other securities, in cash or otherwise. The foregoing agreements do not apply to an aggregate of 50,000 shares of Common Stock held by the executive officers and directors of the Company. All such opinions, certificates, letters and documents will be in compliance with the provisions hereof only if they are reasonably satisfactory to Underwriters' Counsel. The Company will furnish you with such number of conformed copies of such opinions, certificates, letters and documents as you shall reasonably request. 9. INDEMNIFICATION AND CONTRIBUTION. (a) Subject to the provisions of paragraph (f) below, the Company agrees to indemnify and hold harmless each Underwriter and each person (including each partner or officer thereof) who controls any Underwriter within the meaning of Section 15 of the Act from and against any and all losses, claims, damages or liabilities, joint or several, to which such indemnified parties or any of them may become subject under the Act, the Exchange Act, or the common law or otherwise, and the Company agrees to reimburse each such Underwriter and controlling person for any legal or other out-of-pocket expenses (including, except as otherwise hereinafter provided, reasonable fees and disbursements of counsel) incurred by the respective indemnified parties in connection with defending against 18 19 any such losses, claims, damages or liabilities or in connection with any investigation or inquiry of, or other proceeding which may be brought against, the respective indemnified parties, in each case arising out of or based upon (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (including the Prospectus as part thereof and any 462(b) registration statement) or any post-effective amendment thereto (including any 462(b) registration statement), or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or (ii) any untrue statement or alleged untrue statement of a material fact contained in any Preliminary Prospectus or the Prospectus (as amended or as supplemented if the Company shall have filed with the Commission any amendment thereof or supplement thereto) or the omission or alleged omission to state therein a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that (1) the indemnity agreements of the Company contained in this paragraph (a) shall not apply to any such losses, claims, damages, liabilities or expenses if such statement or omission is contained in the section of the Prospectus entitled "Underwriting" (except for the ____ paragraph thereof) or the last paragraph of text on the cover page of the Prospectus, and (2) the indemnity agreement contained in this paragraph (a) with respect to any Preliminary Prospectus shall not inure to the benefit of any Underwriter from whom the person asserting any such losses, claims, damages, liabilities or expenses purchased the Shares which is the subject thereof (or to the benefit of any person controlling such Underwriter) if at or prior to the written confirmation of the sale of such Shares a copy of the Prospectus (or the Prospectus as amended or supplemented) was not sent or delivered to such person (excluding any documents incorporated by reference) and the untrue statement or omission of a material fact contained in such Preliminary Prospectus was corrected in the Prospectus (or the Prospectus as amended or supplemented) unless the failure is the result of noncompliance by the Company with paragraph (a) of Section 6 hereof. The indemnity agreements of the Company contained in this paragraph (a) and the representations and warranties of the Company contained in Section 2 hereof shall remain operative and in full force and effect regardless of any investigation made by or on behalf of any indemnified party and shall survive the delivery of any payment for the Shares. (b) Each Underwriter severally agrees to indemnify and hold harmless the Company, each of its executive officers, each of its directors, each other Underwriter and each person (including each partner or officer thereof) who controls the Company or any such other Underwriter within the meaning of Section 15 of the Act, from and against any and all losses, claims, damages or liabilities, joint or several, to which such indemnified parties or any of them may become subject under the Act, the Exchange Act, or the common law or otherwise 19 20 and to reimburse each of them for any legal or other expenses including, except as otherwise hereinafter provided, reasonable fees and disbursements of counsel) incurred by the respective indemnified parties in connection with defending against any such losses, claims, damages or liabilities or in connection with any investigation or inquiry of, or other proceeding which may be brought against, the respective indemnified parties, in each case arising out of or based upon (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (including the Prospectus as part thereof and any Rule 462(b) registration statement) or any post-effective amendment thereto (including any 462(b) registration statement) or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading or (ii) any untrue statement or alleged untrue statement of a material fact contained in any Preliminary Prospectus or the Prospectus (as amended or as supplemented if the Company shall have filed with the Commission any amendment thereof or supplement thereto) or the omission or alleged omission to state therein a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that in the cases of clauses (i) and (ii) above, such statement or omission is contained in the Section of the Prospectus entitled "Underwriting" [(except for the ____ paragraph thereof)] or the last paragraph on the cover page of the Prospectus. The indemnity agreement of each Underwriter contained in this paragraph (b) shall remain operative and in full force and effect regardless of any investigation made by or on behalf of any indemnified party and shall survive the delivery of and payment for the Shares. (c) Each party indemnified under the provision of paragraphs (a) and (b) of this Section 9 agrees that, upon the service of a summons or other initial legal process upon it in any action or suit instituted against it or upon its receipt of written notification of the commencement of any investigation or inquiry of, or proceeding against it, in respect of which indemnity may be sought on account of any indemnity agreement contained in such paragraphs, it will promptly give written notice (a "Notice") of such service or notification to the party or parties from whom indemnification may be sought hereunder. No indemnification provided for in such paragraphs shall be available to any party who shall fail so to give the Notice if the party to whom such Notice was not given was unaware of the action, suit, investigation, inquiry or proceeding to which the Notice would have related and was prejudiced by the failure to give the Notice, but the omission so to notify such indemnifying party or parties of any such service or notification shall not relieve such indemnifying party or parties from any liability which it or they may have to the indemnified party for contribution or otherwise than on account of such indemnity agreement. Any indemnifying 20 21 party shall be entitled at its own expense to participate in the defense of any action, suit or proceeding against, or investigation or inquiry of, an indemnified party. Any indemnifying party shall be entitled, if it so elects within a reasonable time after receipt of the Notice by giving written notice (the "Notice of Defense") to the indemnified party, to assume (alone or in conjunction with any other indemnifying party or parties) the entire defense of such action, suit, investigation, inquiry or proceeding, in which event such defense shall be conducted, at the expense of the indemnifying party or parties, by counsel chosen by such indemnifying party or parties and reasonably satisfactory to the indemnified party or parties; provided, however, that (i) if the indemnified party or parties reasonably determine that there may be a conflict between the positions of the indemnifying party or parties and of the indemnified party or parties in conducting the defense of such action, suit, investigation, inquiry or proceeding or that there may be legal defenses available to such indemnified party or parties different from or in addition to those available to the indemnifying party or parties, then counsel for the indemnified party or parties shall be entitled to conduct the defense to the extent reasonably determined by such counsel to be necessary to protect the interests of the indemnified party or parties and (ii) in any event, the indemnified party or parties shall be entitled, at its or their own expense to have counsel chosen by such indemnified party or parties participate in, but not conduct, the defense. It is understood that the indemnifying parties shall not, in respect of the legal defenses of any indemnified party in connection with any proceeding or related proceedings in the same jurisdiction, be liable for (a) the fees and expenses of more than one separate firm (in addition to any local counsel) for all of the Underwriters and each person, if any, who controls any Underwriter within the meaning of Section 15 of the Act, and (b) the fees and expenses of more than one separate firm (in addition to any local counsel) for the Company, its directors, its officers who sign the Registration Statement and each person, if any, who controls the Company within the meaning of Section 15 of the Act. If, within a reasonable time after receipt of the Notice, an indemnifying party gives a Notice of Defense and the counsel chosen by the indemnifying party or parties is reasonably satisfactory to the indemnified party or parties, the indemnifying party or parties will not be liable under paragraphs (a) through (c) of this Section 9 for any legal or other expenses subsequently incurred by the indemnified party or parties in connection with the defense of the action, suit, investigation, inquiry or proceeding, except that (a) the indemnifying party or parties shall bear the legal and other expenses incurred in connection with the conduct of the defense as referred to in clause (i) of the proviso to the preceding sentence and (B) the indemnifying party or parties shall bear such other expenses as it or they have authorized to be incurred by the indemnified party or parties. If, within a reasonable time after receipt of the Notice, no Notice of Defense has been given, the indemnifying party or parties shall be responsible for any legal or other expenses incurred by the indemnified party or parties in connection with the defense of the action, suit, investigation, inquiry or proceeding. The indemnifying party or parties shall not be liable for any settlement of any proceeding effected 21 22 without its or their written consent, provided such consent has not been unreasonably withheld. (d) If the indemnification provided for in this Section 9 is unavailable or insufficient to hold harmless an indemnified party under paragraph (a) or (b) of this Section 9, then each indemnifying party shall, in lieu of indemnifying such indemnified party, contribute to the amount paid or payable by such indemnified party as a result of the losses, claims, damages or liabilities referred to in paragraph (a) or (b) of this Section 9 (i) in such proportion as is appropriate to reflect the relative benefits received by each indemnifying party from the offering of the Shares or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of each indemnifying party in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, or actions in respect thereof, as well as any other relevant equitable considerations. The relative benefits received by the Company, on the one hand, and the Underwriters, on the other, shall be deemed to be in the same respective proportions as the total net proceeds from the offering of the Shares received by the Company and the total underwriting discount received by the Underwriters, as set forth in the table on the cover page of the Prospectus, bear to the aggregate public offering price of the Shares. Relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by each indemnifying party and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The parties agree that it would not be just and equitable if contributions pursuant to this paragraph (d) were to be determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take into account the equitable considerations referred to in the first sentence of this paragraph (d). The amount paid by an indemnified party as a result of the losses, claims, damages or liabilities, or actions in respect thereof, referred to in the first sentence of this paragraph (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigation, preparation to defend or defense against any action or claim which is the subject of this paragraph (d). Notwithstanding the provisions of this paragraph (d), no Underwriter shall be required to contribute any amount in excess of the underwriting discount applicable to the Shares purchased by such Underwriter. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent 22 23 misrepresentation. The Underwriters' obligations in this paragraph (d) to contribute are several in proportion to their respective underwriting obligations and not joint. Each party entitled to contribution agrees that upon the service of a summons or other initial legal process upon it in any action instituted against it in respect of which contribution may be sought, it will promptly give written notice of such service to the party or parties from whom contribution may be sought, but the omission so to notify such party or parties of any such service shall not relieve the party from whom contribution may be sought from any obligation it may have hereunder or otherwise (except as specifically provided in paragraph (c) of this Section 9). (e) The Company will not, without the prior written consent of each Underwriter, settle or compromise or consent to the entry of any judgment in any pending or threatened claim, action, suit or proceeding in respect of which indemnification may be sought hereunder (whether or not such Underwriter or any person who controls such Underwriter within the meaning of Section 15 of the Act or Section 20 of the Exchange Act is a party to such claim, action, suit or proceeding) unless such settlement, compromise or consent includes an unconditional release of such Underwriter and each such controlling person from all liability arising out of such claim, action, suit or proceeding. (f) The parties to this Agreement hereby acknowledge that they are sophisticated business persons who were represented by counsel during the negotiations regarding the provisions hereof, including without limitation the provisions of this Section 9 and are fully informed regarding said provisions. They further acknowledge that the provisions of this Section 9 fairly allocate the risks in light of the ability of the parties to investigate the Company and its business in order to assure that adequate disclosure is made in the Registration Statement and Prospectus as required by the Act and the Exchange Act. 10. TERMINATION. This Agreement may be terminated by you at any time on or prior to the Closing Date or on or prior to any later Option Closing Date, as the case may be, (i) if the Company shall have failed, refused or been unable, at or prior to the Closing Date, or on or prior to any later Option Closing Date, as the case may be, to perform any agreement on its part to be performed, or because any other condition of the Underwriters' obligations hereunder required to be fulfilled by the Company is not fulfilled, or (ii) if trading on the New York Stock Exchange, the American Stock Exchange or the Nasdaq National Market shall have been suspended, or minimum or maximum prices for trading shall have been fixed, or maximum ranges for prices for securities shall have been required on the New York Stock Exchange, the American Stock Exchange or the Nasdaq National 23 24 Market, by such trading exchanges or by order of the Commission or any other governmental authority having jurisdiction, or if a banking moratorium shall have been declared by federal or New York authorities, or (iii) if the Company shall have sustained a loss by strike, fire, flood, accident or other calamity of such character as to have a Material Adverse Effect regardless of whether or not such loss shall have been insured, or (iv) if there shall have been a material adverse change in the general political or economic conditions or financial markets in the United States as in the judgment of the Representatives makes it inadvisable or impracticable to proceed with the offering, sale and delivery of the Shares, or (v) if there shall have occurred an outbreak or escalation of hostilities between the United States and any foreign power or of any other insurrection or armed conflict involving the United States or other national or international calamity, hostilities or crisis or the declaration by the United States of a national emergency which, in the judgment of the Representatives, adversely affects the marketability of the Shares, or (vi) if since the respective dates as of which information is given in the Registration Statement and the Prospectus, there shall have occurred any material adverse change or any development involving a prospective material adverse change in or affecting the condition, financial or otherwise, of the Company or the business affairs, management, or business prospects of the Company, whether or not arising in the ordinary course of business, or (vii) if any foreign, federal or state statute, regulation, rule or order of any court or other governmental authority shall have been enacted, published, decreed or otherwise promulgated which in the judgment of the Representatives materially and adversely affects or will materially and adversely affect the business or operations of the Company, or trading in the Common Stock shall have been suspended, or (viii) there shall have occurred a material adverse decline in the value of securities generally on the New York Stock Exchange, the American Stock Exchange or the Nasdaq National Market or (ix) action shall be taken by any foreign, federal, state or local government or agency in respect of its monetary or fiscal affairs which, in the judgment of the Representatives, has a material adverse effect on the securities markets in the United States. If this Agreement shall be terminated in accordance with this Section 10, there shall be no liability of the Company to the Underwriters and no liability of the Underwriters to the Company; provided, however, that in the event of any such termination the Company agrees to indemnify and hold harmless the Underwriters from all costs or expenses incident to the performance of the obligations of the Company under this Agreement, including all costs and expenses referred to in Section 7. If you elect to terminate this Agreement as provided in this Section 10, the Company shall be notified promptly by you by telephone, telecopy or telegram, confirmed by letter. 24 25 11. REIMBURSEMENT OF CERTAIN EXPENSES. (a) In addition to their other obligations under Section 9 of this Agreement, the Company hereby agrees to reimburse on a quarterly basis the Underwriters for all reasonable legal and other expenses incurred in connection with investigating or defending any claim, action, investigation, inquiry or other proceeding arising out of or based upon any statement or omission, or any alleged statement or omission, described in paragraph (a) of Section 9 of this Agreement, notwithstanding the absence of a judicial determination as to the propriety and enforceability of the obligations under this Section 11 and the possibility that such payments might later be held to be improper; provided, however, that (i) to the extent any such payment is ultimately held to be improper, the persons receiving such payments shall promptly refund them and (ii) such persons shall provide to the Company, upon request, reasonable assurances of their ability to effect any refund, when and if due. (b) In addition to their other obligations under Section 9 of this Agreement, the Underwriters hereby agree to reimburse on a quarterly basis the Company for all reasonable legal and other expenses incurred in connection with investigating or defending any claim, action, investigation, inquiry or other proceeding arising out of or based upon any statement or omission, or any alleged statement or omission, described in paragraph (b) of Section 9 of this Agreement, notwithstanding the absence of a judicial determination as to the propriety and enforceability of the obligations under this Section 11 and the possibility that such payments might later be held to be improper; provided, however, that (i) to the extent any such payment is ultimately held to be improper, the Company shall promptly refund it and (ii) the Company shall provide to the Underwriter, upon request, reasonable assurances of its ability to effect any refund, when and if due. 12. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall inure to the benefit of the Company and the several Underwriters and, with respect to the provisions of Section 9 hereof, the several parties (in addition to the Company and the several Underwriters) indemnified under the provisions of said Section 9, and their respective personal representatives, successors and assigns. Nothing in this Agreement is intended or shall be construed to give to any other person, firm or corporation any legal or equitable remedy or claim under or in respect of this Agreement or any provision herein contained. The term "successors and assigns" as herein used shall not include any purchaser, as such purchaser, of any of the Shares from any of the several Underwriters 13. NOTICES. Except as otherwise provided herein, all communications hereunder shall be in writing or by telegraph and, if to the Underwriters, shall be mailed, telegraphed or delivered to UBS Securities LLC, 299 Park Avenue, New 25 26 York, NY 10171, Attention: Mr. Richard Messina; and if to the Company, shall be mailed, telegraphed or delivered to it at its office, 9373 Towne Center Drive, San Diego, California 92121 Attention: Chief Financial Officer. All notices given by telegraph shall be promptly confirmed by letter. 14. MISCELLANEOUS. The reimbursement, indemnification and contribution agreements contained in this Agreement and the representations, warranties and covenants in this Agreement shall remain in full force and effect regardless of (i) any investigation made by or on behalf of any Underwriter or controlling person thereof, or by or on behalf of the Company or its respective directors of officers, and (ii) delivery of and payment for the Shares under this Agreement[; provided however, that if this Agreement is terminated prior to the Closing Date, the provisions of paragraph (k) of Section 6 hereof shall be of no further force or effect]. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. You will act as Representatives of the several Underwriters in all dealings with the Company under this Agreement, and any action under or in respect of this Agreement taken by you jointly or by UBS Securities LLC, as Representatives, will be binding upon all of the Underwriters. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York. 26 27 Please sign and return to the Company the enclosed duplicates of this letter, whereupon this letter will become a binding agreement among the Company and the several Underwriters in accordance with its terms. Very truly yours, AMYLIN PHARMACEUTICALS, INC. By: --------------------------------- [Name] [Title] The foregoing Agreement is hereby confirmed and accepted as of the date first above written. UBS SECURITIES LLC HAMBRECHT & QUIST LLC VECTOR SECURITIES INTERNATIONAL, INC. By: UBS SECURITIES LLC By: ---------------------------------- Title: Acting on behalf of the several Underwriters, including themselves, named on Schedule A hereto. 27 28 SCHEDULE A UNDERWRITERS
Number of Shares Underwriters to be Purchased ------------------ --------------------- UBS Securities LLC . . . . . . . . . . . . . . . . . . . . . . . . Hambrecht & Quist . . . . . . . . . . . . . . . . . . . . . . . . . Vector Securities International, Inc. . . . . . . . . . . . . . . . Total =============
29 SCHEDULE B Lock-Up Agreements 30 APPENDIX A MATTERS TO BE COVERED IN THE OPINION OF COOLEY GODWARD LLP COUNSEL FOR THE COMPANY (i) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, is duly qualified as a foreign corporation and in good standing in each state of the United States of America in which its ownership or leasing of property requires such qualification (except where the failure to be so qualified would not have a material adverse effect on the business, properties, financial condition or results of operations of the Company and Amylin Europe, taken as a whole), and has full corporate power and authority to own or lease its properties and conduct its business as described in the Registration Statement. (ii) the authorized capital stock of the Company consists of 7,500,000 shares of Preferred Stock, par value $.001 per share, and 50,000,000 shares of Common Stock, par value $.001 per share; proper corporate proceedings have been taken validly to authorize such authorized capital stock; all of the outstanding shares of such capital stock (including the Firm Shares, the Johnson & Johnson Shares and the Option Shares issued, if any) have been duly and validly issued and are fully paid and nonassessable; any Option Shares or Johnson & Johnson Shares purchased after the Closing Date, when issued and delivered to and paid for by the Underwriters as provided in the Underwriting Agreement, will have been duly and validly issued and be fully paid and nonassessable; and no preemptive rights of, or rights of refusal in favor of, stockholders exist with respect to the Shares, or the issue and sale thereof, pursuant to the Certificate of Incorporation or Bylaws of the Company and, to the knowledge of such counsel, there are no contractual preemptive rights that have not been waived, rights of first refusal or rights of co-sale which exist with respect to the issue and sale of the Shares; (iii) the Registration Statement has become effective under the Securities Act and, to the best of such counsel's knowledge, no stop order suspending the effectiveness of the Registration Statement or suspending or preventing the use of the Prospectus is in effect and no proceedings for that purpose have been instituted or are pending or contemplated by the Commission; (iv) the Registration Statement and the Prospectus (except as to the financial statements and schedules and other financial data contained therein, as to which such counsel need express no opinion) comply as to form in all material respects with the requirements of the Act, the Exchange Act and with the A-1 31 rules and regulations of the Commission thereunder; (v) such counsel have no reason to believe that the Registration Statement (except as to the financial statements and schedules and other financial and statistical data contained or incorporated by reference therein, as to which such counsel need not express any opinion or belief) at the Effective Date contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or that the Prospectus (except as to the financial statements and schedules and other financial and statistical data contained or incorporated by reference therein, as to which such counsel need not express any opinion or belief) as of its date or at the Closing Date (or any later date on which Option Shares are purchased), contained or contains any untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; (vi) the information required to be set forth in the Registration Statement in answer to Items 9 and 10 (insofar as it relates to such counsel) of Form S-3 is to the best of such counsel's knowledge accurately and adequately set forth therein in all material respects or no response is required with respect to such Items, and, the description of the Company's stock option plans set forth or incorporated by reference in the Prospectus accurately and fairly presents the information required to be shown with respect to said plans to the extent required by the Securities Act and the rules and regulations of the Commission thereunder; (vii) such counsel do not know of any franchises, contracts, leases, documents or legal proceedings, pending or threatened, which in the opinion of such counsel are of a character required to be described in the Registration Statement or the Prospectus or to be filed as exhibits to the Registration Statement, which are not described and filed as required; (viii) the Underwriting Agreement has been duly authorized, executed and delivered by the Company; (ix) the issue and sale by the Company of the shares of Common Stock sold by the Company as contemplated by the Underwriting Agreement will not conflict with, or result in a breach of, the Certificate of Incorporation or Bylaws of the Company or, to the best of such counsel's knowledge, any agreement or instrument attached as an exhibit or incorporated by reference as an exhibit to any of the Company's public documents filed with the Commission pursuant to the Exchange Act to which the Company is a party or any applicable law or regulation, or so far as is A-2 32 known to such counsel, any order, writ, injunction or decree, of any jurisdiction, court or governmental instrumentality; (x) to the best of such counsel's knowledge, all holders of securities of the Company having rights to the registration of shares of Common Stock, or other securities, because of the filing of the Registration Statement by the Company have waived such rights or such rights have expired by reason of lapse of time following notification of the Company's intent to file the Registration Statement; (xi) no consent, approval, authorization or order of any court or governmental agency or body is required for the consummation of the transactions contemplated in the Underwriting Agreement, except such as have been obtained under the Act and such as may be required under state securities or blue sky laws in connection with the purchase and distribution of the Shares by the Underwriters; and (xii) the Shares and the Johnson & Johnson Shares issued and sold by the Company will been duly authorized for inclusion on The Nasdaq National Market upon official notice of issuance. ____________________________________ Counsel rendering the foregoing opinion may rely as to questions of law not involving the laws of the United States, the General Corporate Law of the State of Delaware or the laws of the State of California, upon opinions of local counsel satisfactory in form and scope to counsel for the Underwriters. Copies of any opinions so relied upon shall be delivered to the Representatives and to counsel for the Underwriters and the foregoing opinion shall also state that counsel knows of no reason the Underwriters are not entitled to rely upon the opinions of such local counsel. In addition, the foregoing opinion may contain such qualifications as are required by the opinion committee of the counsel rendering such opinion and as are reasonable to counsel for the Underwriters. A-3 33 APPENDIX B MATTERS TO BE COVERED IN THE OPINION OF BRADFORD J. DUFT PATENT COUNSEL FOR THE COMPANY Such counsel is familiar with the technology used by the Company in its business and the manner of its use thereof and have read the Registration Statement and the Prospectus, including particularly the portions of the Registration Statement and the Prospectus referring to patents, trade secrets, trademarks, service marks or other proprietary information or materials and: (i) based on the information brought to such counsel's attention by the Company with respect to the Company's investigation, if any, of the published literature and patent references relating to the inventions claimed in its patent applications, such counsel disclosed all references known to it to the Patent and Trademark Office in accordance with 37 C.F.R. Section 1.56; to the best of such counsel's knowledge, all information submitted to the U.S. Patent and Trademark Office in the relevant applications, and in connection with the prosecution of the relevant applications, was accurate; neither such counsel, nor to the best of its knowledge, the Company, made any misrepresentation or concealed any material information from the Patent and Trademark Office in any of such applications, or in connection with the prosecution of such applications in violation of 37 C.F.R. Section 1.56; (ii) the statements in the Prospectus under the headings "Risk Factors - Patents and Proprietary Rights" and "Business - Patents, Proprietary Rights and Licenses" constitute an accurate summary of the matters referred to therein and fairly present the information called for with respect to such matters; and (iii) other than as disclosed in the Prospectus, to the best of such counsel's knowledge, the Company has not received any notice of infringement of or conflict with asserted rights of any third party with respect to any material patents, trademarks, licenses, copyright and proprietary or other confidential information employed by the Company in connection with its business. With respect to subparagraph (i) above, Bradford J. Duft may state that he has not independently conducted any investigation of the published literature and patent references relating to the inventions claimed in the Company's patent applications. B-1 EX-5.1 3 EXHIBIT 5.1 1 EXHIBIT 5.1 [COOLEY GODWARD LLP LETTERHEAD] October 15, 1996 Amylin Pharmaceuticals, Inc. 9373 Towne Centre Drive San Diego, CA 92121 Ladies and Gentlemen: You have requested our opinion with respect to certain matters in connection with the filing by Amylin Pharmaceuticals, Inc. (the "Company") of a Registration Statement on Form S-3 (the "Registration Statement") with the Securities and Exchange Commission, including a related prospectus filed with the Registration Statement (the "Prospectus"), and the public offering of up to 1,725,000 shares of the Company's common stock, including 225,000 shares issuable upon exercise of an over-allotment option by the underwriters (collectively, the "Shares"). In connection with this opinion, we have examined and relied upon the Registration Statement and related Prospectus, the Company's Amended and Restated Certificate of Incorporation and Bylaws, as amended, and the originals or copies certified to our satisfaction of such records, documents, certificates, memoranda and other instruments as in our judgment are necessary or appropriate to enable us to render the opinion expressed below. We have assumed that the Shares will be sold at a price authorized by the Board of Directors of the Company or a Pricing Committee of the Board. On the basis of the foregoing, and in reliance thereon, we are of the opinion that the Shares, when sold and issued in accordance with the Registration Statement and related Prospectus, will be validly issued, fully paid, and nonassessable. We consent to the reference to our firm under the caption "Legal Matters" in the Prospectus included in the Registration Statement and to the filing of this opinion as an exhibit to the Registration Statement. Very truly yours, COOLEY GODWARD LLP By: /s/ Thomas A. Coll ---------------------------- Thomas A. Coll EX-23.1 4 EXHIBIT 23.1 1 EXHIBIT 23.1 CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS We consent to the reference to our firm under the captions "Selected Consolidated Financial Data" and "Experts" in the Registration Statement (Form S-3) and related Prospectus of Amylin Pharmaceuticals, Inc. for the registration of shares of its common stock and to the incorporation by reference therein of our report dated January 18, 1996, with respect to the consolidated financial statements of Amylin Pharmaceuticals, Inc. incorporated by reference in its Annual Report (Form 10-K) for the year ended December 31, 1995, filed with the Securities and Exchange Commission. ERNST & YOUNG LLP San Diego, California October 11, 1996 EX-23.3 5 EXHIBIT 23.3 1 Exhibit 23.3 [LYON & LYON LLP LETTERHEAD] CONSENT OF LYON & LYON LLP, PATENT COUNSEL October 15, 1996 The Board of Directors and Stockholders Amylin Pharmaceuticals, Inc. We have reviewed and approved the statements in your Registration Statement (form S-3 dated October 15, 1996) under the captions "Risk Factors--Patents and Proprietary Rights" and "Business--Patents, Proprietary Rights, and Licenses," and we consent to the reference to our firm in this regard under the caption "EXPERTS" and to the use of our name wherever appearing in the Registration Statement (Form S-3 dated October 15, 1996) and related Prospectus of Amylin Pharmaceuticals, and any amendment thereto. LYON & LYON LLP -----END PRIVACY-ENHANCED MESSAGE-----