10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2008
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 0-19700

AMYLIN PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)

Delaware	33-0266089
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
9360 Towne Centre Drive San Diego, California	92121
(Address of principal executive offices)	(Zip code)

(858) 552-2200
(Registrant’s telephone number, including area code)

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x     No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer x	Accelerated filer o
Non-accelerated filer o (Do not check if a smaller reporting company)	Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o     No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Outstanding on July 25, 2008
Common Stock, $.001 par value	137,241,585

AMYLIN PHARMACEUTICALS, INC.

TABLE OF CONTENTS

COVER PAGE
TABLE OF CONTENTS			2
PART I. FINANCIAL INFORMATION
ITEM 1.		Financial Statements
		Consolidated Balance Sheets as of June 30, 2008 (unaudited) and December 31, 2007	3
		Consolidated Statements of Operations for the three and six months ended June 30, 2008 and 2007 (unaudited)	4
		Consolidated Statements of Cash Flows for the six months ended June 30, 2008 and 2007 (unaudited)	5
		Notes to Consolidated Financial Statements (unaudited)	6
ITEM 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
ITEM 3.		Quantitative and Qualitative Disclosures about Market Risk	21
ITEM 4.		Controls and Procedures	21
PART II. OTHER INFORMATION
ITEM 1A.	Risk Factors		21
ITEM 4.	Submission of Matters to a Vote of Security Holders		33
ITEM 6.	Exhibits		34
SIGNATURE			36

2

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

AMYLIN PHARMACEUTICALS, INC.

Consolidated Balance Sheets
(in thousands, except per share data)

	June 30, 2008			December 31, 2007
	(unaudited)			(Note 1)
Assets
Current assets:
Cash and cash equivalents	$	130,818		$	422,232
Short-term investments	760,046			708,183
Accounts receivable, net	65,638			73,579
Inventories, net	100,166			100,214
Other current assets	33,480			32,100
Total current assets	1,090,148			1,336,308
Property, plant and equipment, net	548,290			390,301
Other long-term assets, net	27,049			28,082
Debt issuance costs, net	17,781			19,520
	$	1,683,268		$	1,774,211
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	41,202		$	37,530
Accrued compensation	48,369			56,428
Payable to collaborative partner	61,429			66,116
Other current liabilities	89,296			122,924
Current portion of deferred revenue	4,286			4,286
Current portion of long-term note payable	15,625			—
Total current liabilities	260,207			287,284
Other long-term obligations, net of current portion	32,270			31,023
Deferred revenue, net of current portion	943			3,086
Long-term note payable, net of current portion	109,375			125,000
Convertible senior notes	775,000			775,000
Commitments and contingencies (Note 10)
Stockholders’ equity:
Common stock, $.001 par value, 450,000 shares authorized, 137,221 and 135,044 issued and outstanding at June 30, 2008 and December 31, 2007, respectively	137			135
Additional paid-in capital	2,077,357			1,987,453
Accumulated deficit	(1,567,933		)	(1,434,320		)
Accumulated other comprehensive loss	(4,088		)	(450		)
Total stockholders’ equity	505,473			552,818
	$	1,683,268		$	1,774,211

See accompanying notes to consolidated financial statements.

3

AMYLIN PHARMACEUTICALS, INC.

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

	Three months ended June 30,						Six months ended June 30,
	2008			2007			2008			2007
Revenues:
Net product sales	$	200,335		$	167,337		$	379,056		$	329,340
Revenues under collaborative agreements	21,684			29,616			40,200			39,591
Total revenues	222,019			196,953			419,256			368,931
Costs and expenses:
Cost of goods sold	24,682			14,362			46,706			29,572
Selling, general and administrative	111,088			93,121			209,331			180,908
Research and development	75,401			71,691			152,607			131,255
Collaborative profit sharing	78,950			70,355			148,851			137,302
Total costs and expenses	290,121			249,529			557,495			479,037
Operating loss	(68,102		)	(52,576		)	(138,239		)	(110,106		)
Interest and other income	6,974			9,918			18,004			19,322
Interest and other expense	(3,688		)	(2,365		)	(13,378		)	(3,653		)
Net loss	$	(64,816	)	$	(45,023	)	$	(133,613	)	$	(94,437	)
Net loss per share, basic and diluted	$	(0.47	)	$	(0.34	)	$	(0.98	)	$	(0.72	)
Shares used in computing net loss per share, basic and diluted	137,142			131,774			136,500			131,416

See accompanying notes to condensed consolidated financial statements.

4

AMYLIN PHARMACEUTICALS, INC.

Consolidated Statements of Cash Flows
(in thousands)
(unaudited)

	Six months ended June 30,
	2008				2007
Operating activities:
Net loss	$	(133,613		)	$	(94,437		)
Adjustments to reconcile net loss to net cash used for operating activities:
Depreciation and amortization	15,639				9,042
Stock-based compensation	29,002				29,056
Other non-cash expenses, net	2,124				899
Changes in operating assets and liabilities:
Accounts receivable, net	7,941				3,809
Inventories	48				(18,877			)
Other current assets	(2,557			)	(10,784			)
Accounts payable and accrued liabilities	1,902				21,664
Accrued compensation	13,220				(4,172			)
Payable to collaborative partner	(4,687			)	5,893
Deferred revenue	(2,143			)	(2,143			)
Other assets and liabilities, net	438				5,832
Net cash flows used for operating activities	(72,686			)	(54,218			)
Investing activities:
Purchases of short-term investments	(642,520			)	(291,494			)
Sales and maturities of short-term investments	588,196				231,016
Purchase of property, plant and equipment, net	(173,403			)	(141,979			)
Increase in other long-term assets	(510			)	(12,720			)
Net cash flows used for investing activities	(228,237			)	(215,177			)
Financing activities:
Issuance of common stock, net	9,509				23,357
Issuance of convertible senior notes, net	—				558,797
Net cash flows provided by financing activities	9,509				582,154
Change in cash and cash equivalents	(291,414			)	312,759
Cash and cash equivalents at beginning of period	422,232				66,640
Cash and cash equivalents at end of period	$	130,818			$	379,399
Supplemental disclosure of cash flow information:
Property, plant and equipment additions in other current liabilities	$		13,702		$		2,759
Non-cash financing activities:
Issuance of common stock for contingent share settled obligation	$		30,000		$		—
Shares contributed as employer 401(k) match	$		4,284		$		5,819
Shares contributed to employee stock ownership plan	$		16,996		$		—

See accompanying notes to consolidated financial statements.

5

AMYLIN PHARMACEUTICALS, INC.

Notes to Consolidated Financial Statements
June 30, 2008
(unaudited)

1.Summary of Significant Accounting Policies

Basis of Presentation

The information contained herein has been prepared in accordance with instructions for Form 10-Q and Article 10 of Regulation S-X. The information as of June 30, 2008, and for the three month and six month periods ended June 30, 2008 and 2007, are unaudited. In the opinion of management, the information reflects all adjustments necessary to make the results of operations for the interim periods a fair statement of such operations. All such adjustments are of a normal recurring nature. Interim results are not necessarily indicative of results for a full year. The balance sheet at December 31, 2007, has been derived from the audited consolidated financial statements at that date but does not include all information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. For more complete financial information, these financial statements should be read in conjunction with the audited consolidated financial statements included in Amylin Pharmaceuticals, Inc.’s (referred to as the Company or Amylin) Annual Report on Form 10-K for the year ended December 31, 2007.

Revenue Recognition

Net Product Sales

The Company sells BYETTA^® (exenatide) injection and SYMLIN^® (pramlintide acetate) injection primarily to wholesale distributors, who, in turn, sell to retail pharmacies and government entities. Product sales are recognized when delivery of the products has occurred, title has passed to the customer, the selling price is fixed or determinable, collectability is reasonably assured and the Company has no further obligations. The Company records allowances for product returns, rebates and wholesaler chargebacks, wholesaler discounts, and prescription vouchers at the time of sale and reports product sales net of such allowances. The Company must make significant judgments in determining these allowances. If actual results differ from the Company’s estimates, the Company will be required to make adjustments to these allowances in the future.

The Company reports all United States BYETTA and SYMLIN product sales. With respect to BYETTA, the Company has determined that it is qualified as a principal under the criteria set forth in Emerging Issues Task Force (EITF), Issue 99-19, “Reporting Gross Revenue as a Principal vs. Net as an Agent,” based on the Company’s responsibilities under its contracts with Eli Lilly and Company, or Lilly, which include manufacture of product for sale in the United States, responsibility for establishing pricing in the United States, distribution, ownership of product inventory and credit risk from customers.  Accordingly the Company records all United States products sales of BYETTA.

Revenues Under Collaborative Agreements

Amounts received for upfront product and technology license fees under multiple-element arrangements are deferred and recognized over the period of such services or performance if such arrangements require on-going services or performance. Non-refundable amounts received for substantive milestones are recognized upon achievement of the milestone. Amounts received for sharing of development expenses are recognized in the period in which the related expenses are incurred. Any amounts received prior to satisfying these revenue recognition criteria will be recorded as deferred revenue.

Collaborative Profit-Sharing

Collaborative profit-sharing represents Lilly’s 50% share of the gross margin for BYETTA sales in the United States.

AccountsReceivable

Trade accounts receivable are recorded net of allowances for cash discounts for prompt payment, doubtful accounts, product returns and chargebacks. Allowances for rebate discounts and distribution fees are included in other current liabilities in the accompanying consolidated balance sheets. Estimates for allowances for doubtful accounts are determined based on existing contractual obligations, historical payment patterns and individual customer circumstances.  The allowance for doubtful accounts was $0.3 million and $0.2 million at June 30, 2008 and December 31, 2007, respectively.

6

Research and Development Expenses

Research and development costs are expensed as incurred and include salaries and bonuses, benefits, non-cash stock-based compensation, license fees, milestones under license agreements, costs paid to third-party contractors to perform research, conduct clinical trials, and develop drug materials and delivery devices; and associated overhead expenses and facilities costs. Clinical trial costs, including costs associated with third-party contractors, are a significant component of research and development expenses. Invoicing from third-party contractors for services performed can lag several months. The Company accrues the costs of services rendered in connection with such activities based on its estimate of management fees, site management and monitoring costs, and data management costs. Actual clinical trial costs may differ from estimates and are adjusted in the period in which they become known.

Per Share Data

Basic and diluted net loss applicable to common stock per share is computed using the weighted average number of common shares outstanding during the period. Common stock equivalents from stock options and warrants of 3.2 million for both the three and six months ended June 30, 2008, and common stock equivalents of 8.1 million and 7.9 million from stock options and warrants for the three and six months ended June 30, 2007, respectively, are excluded from the calculation of diluted loss per share for all periods presented because the effect is antidilutive. Common stock equivalents from shares underlying our convertible senior notes of 15.2 million for the three and six months ended June 30, 2008, and 8.1 million and 7.0 million for the three and six months ended June 30, 2007, respectively, are also excluded from the calculation of diluted loss per share because the effect is antidilutive. In future periods, if the Company reports net income and the common share equivalents for our convertible senior notes are dilutive, the common stock equivalents will be included in the weighted average shares computation and interest expense related to the notes will be added back to net income to calculate diluted earnings per share.

Accounting for Stock-Based Compensation

Effective January 1, 2006, the Company adopted the fair value method of accounting for stock-based compensation arrangements in accordance with Financial Accounting Standards Board (FASB) revised Statement of Financial Accounting Standards (SFAS) No. 123 (SFAS 123R), “Share-Based Payment,” which establishes accounting for non-cash, stock-based awards exchanged for employee services and requires companies to expense the estimated fair value of these awards over the requisite employee service period, which for the Company is generally the vesting period. The Company adopted SFAS 123R using the modified prospective method. Under the modified prospective method, prior periods are not revised for comparative purposes. The valuation provisions of SFAS 123R apply to new awards and to awards that are outstanding on the effective date and subsequently modified or cancelled. Estimated non-cash, compensation expense for awards outstanding at the effective date will be recognized over the remaining service period using the compensation cost calculated for pro-forma disclosure purposes under SFAS 123, “Accounting for Stock-Based Compensation.”

Total estimated stock-based compensation was as follows (in thousands, except per share data):

	Three months ended June 30,				Six months ended June 30,
	2008		2007		2008		2007
Selling, general and administrative expenses	$	9,054	$	9,539	$	17,386	$	17,520
Research and development expenses	5,886		6,200		11,616		11,536
	$	14,940	$	15,739	$	29,002	$	29,056
Net stock-based compensation expense, per common share:
Basic	$	0.11	$	0.12	$	0.21	$	0.22
Diluted	$	0.11	$	0.12	$	0.21	$	0.22

The Company recorded $14.9 million and $15.7 million of total non-cash, stock-based compensation expense during the three months ended June 30, 2008 and 2007, respectively, and $29.0 million and $29.1 million of total non-cash, stock-based compensation expense during the six months ended June 30, 2008 and 2007, respectively, in all cases related to stock-based awards consisting of stock options and employee stock purchase rights.  At June 30, 2008, total unrecognized estimated compensation cost related to non-vested stock-based awards granted prior to that date was $112.3 million, which is expected to be recognized over a weighted-average period of 2.5 years.  The Company issued 0.2 million and 0.4 million shares upon the exercise of stock options in the three and six months ended June 30, 2008, respectively.

7

In addition to the stock-based compensation discussed above, the Company also recorded $5.3 million, of which $3.0 million is including in selling general and administrative expenses, and $2.3 million is included in research and development expenses, and $10.7 million, of which $5.8 million is included in selling general and administrative expenses, and $4.9 million is included in research and development expenses, of expense associated with its Employee Stock Ownership Plan, or ESOP, during the three months and six months ended June 30, 2008, respectively.  There was no expense for the ESOP during the three and six months ended June 30, 2007 as the ESOP was not adopted until December 2007.

Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Amylin Europe Limited, Amylin Puerto Rico LLC, Amylin Ohio LLC, and Amylin Investments LLC. All significant intercompany transactions and balances have been eliminated in consolidation.

Recently Issued Accounting Pronouncements

In May 2008, the FASB issued FASB Staff Position (FSP) No. APB 14-1 (FSP No. APB 14-1), “Accounting for Convertible Debt Instruments that may be Settled in Cash Upon Conversion (Including Partial Cash Settlement).”  FSP No. APB 14-1 establishes that the liability and equity components of convertible debt instruments within the scope of FSP APB No. 14-1 shall be separately accounted for in a manner that will reflect the entity’s nonconvertible debt borrowing rate when interest cost is recognized in subsequent periods.  The carrying amount of the liability component of the convertible debt instrument will be determined by measuring the fair value of a similar liability that does not have an associated equity component.  The carrying value of the equity component will be determined by deducting the fair value of the liability component from the initial proceeds ascribed to the convertible debt instrument as a whole.  Related transaction costs shall be allocated to the liability and equity components in proportion to the allocation of proceeds and accounted for as debt issuance costs and equity issuance costs, respectively.  The excess of the principal amount of the liability component over its carrying amount shall be amortized to interest cost using the interest method.  FSP No. APB 14-1 is effective for the Company  on January 1, 2009 and shall be applied retrospectively to all periods presented with the cumulative effect of the change in accounting principle on periods prior to those presented recognized as of the beginning of the first period presented.  Early adoption is not permitted.  The Company expects that the adoption of FSP No. APB 14-1 will have a material impact on its consolidated financial statements.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations” and SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements, an amendment of Accounting Research Bulletin No. 51.”  SFAS No. 141R will change how business acquisitions are accounted for and will impact financial statements both on the acquisition date and in subsequent periods.  SFAS No. 160 will change the accounting and reporting for minority interests, which will be recharacterized as noncontrolling interests and classified as a component of equity.  SFAS No. 141R and SFAS No. 160 are effective for the Company on January 1, 2009.  Early adoption is not permitted.  The Company is currently evaluating the impact that adoption of SFAS No. 141R and SFAS No. 160 will have on its consolidated financial statements.

In June 2007, the FASB ratified the EITF consensus on EITF Issue No. 07-3, “Accounting for Nonrefundable Advance Payments for Goods or Services Received for Use in Future Research and Development Activities.”   EITF Issue No. 07-3 requires that nonrefundable advance payments for goods or services that will be used or rendered for future research and development activities should be deferred and capitalized.  Such amounts should be recognized as an expense as the related goods are delivered or the related services are performed.  Entities should continue to evaluate whether they expect the goods to be delivered or services to be rendered.  If an entity does not expect the goods to be delivered or services to be rendered, the capitalized advance payment should be charged to expense.  The Company adopted EITF Issue No. 07-3 on January 1, 2008.  The adoption of EITF Issue No. 07-3 did not have a material impact on the Company’s consolidated financial statements.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities.” SFAS No. 159 gives the Company the irrevocable option to carry many financial assets and liabilities at fair values, with changes in fair value recognized in earnings.  The Company adopted SFAS No. 159 on January 1, 2008.  The adoption of SFAS No. 159 did not have a material impact on the Company’s consolidated financial statements.

8

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,” which defines fair value, establishes guidelines for measuring fair value and expands disclosures regarding fair value measurements.  SFAS No. 157 does not require any new fair value measurements but rather eliminates inconsistencies in guidance found in various prior accounting pronouncements.  SFAS No. 157 prioritizes the inputs used in measuring fair value into the following hierarchy:

Level 1	Quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2	Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable; and
Level 3	Unobservable inputs in which little or no market activity exists, therefore requiring an entity to develop its own assumptions about the assumptions that market participants would use in pricing.

The Company adopted SFAS No. 157 on January 1, 2008.  The adoption of SFAS No. 157 did not have a material impact on the Company’s consolidated financial statements.

2.     Short-term Investments

The Company’s short-term investments, consisting principally of debt securities, are classified as available-for-sale and are stated at fair value based upon observed market prices (Level 1 in the fair value hierarchy). Unrealized holding gains or losses on these securities are included in other comprehensive income. The amortized cost of debt securities in this category is adjusted for amortization of premiums and accretion of discounts to maturity. For investments in mortgage-backed securities, amortization of premiums and accretion of discounts are recognized in interest income using the interest method, adjusted for anticipated prepayments as applicable.  Estimates of expected cash flows are updated periodically and changes are recognized in the calculated effective yield prospectively as appropriate.  Such amortization is included in interest income. Realized gains and losses and declines in value judged to be other-than-temporary (of which there have been none to date) on available-for-sale securities are included in interest income. In assessing potential impairment of its short-term investments, the Company evaluates the impact of interest rates, potential prepayments on mortgage-backed securities, changes in credit quality, the length of time and extent to which the market value has been less than cost, and the Company’s intent and ability to retain the security in order to allow for an anticipated recovery in fair value. The cost of securities sold is based on the specific-identification method.

3.Inventories

Inventories are stated at the lower of cost (FIFO) or market and net of a valuation allowance for potential excess and/or obsolete material of $8.4 million and $5.3 million at June 30, 2008 and December 31, 2007, respectively. Raw materials consists of bulk drug material for BYETTA and SYMLIN, work-in-process consists of in-process BYETTA cartridges, in-process SYMLIN cartridges and in-process Symlin vials, and finished goods consists of BYETTA drug product in a disposable pen/cartridge delivery system,  finished SYMLIN drug product in vials for syringe administration, and finished SYMLIN drug product in a disposable pen/cartridge delivery system.

Inventories consist of the following (in thousands):

	June 30, 2008		December 31, 2007
Raw materials	$	60,159	$	55,706
Work-in-process	26,709		24,463
Finished goods	13,298		20,045
	$	100,166	$	100,214

4.Debt Issuance Costs

Debt issuance costs relate to the $200 million principal amount of 2.5% convertible senior notes, due April 15, 2011, issued in April 2004, referred to as the 2004 Notes, the $575 million principal amount of 3.0% convertible senior notes, due June 15, 2014, issued in June 2007, referred to as the 2007 Notes, and a $125 million term loan entered into in December 2007, referred to as the Term Loan.  Amortization of debt issuance costs are recorded as interest expense in the consolidated statement of operations on a straight-line basis, which approximates the interest method over the contractual term of the related debt. The Company incurred total debt issuance costs of $24.3 million in connection with the 2004 Notes, the 2007 Notes and the Term Loan. Amortization expense of $0.9 million and $0.4 million was recorded in each of the three months ended June 30, 2008 and 2007, respectively. Amortization expense of $1.9 and $0.6 million was recorded in each of the six months ended June 30, 2008 and 2007, respectively.

9

5.Other Current Liabilities

Other current liabilities consist of the following (in thousands):

	June 30, 2008		December 31, 2007
Contingent share-settled obligation (1)	$	—	$	30,000
Accrued contract research and development expenses	11,956		20,107
Accrued rebate discounts	24,773		19,673
Accrued property, plant and equipment additions	13,702		15,559
Other accrued sales allowances	13,130		13,989
Other current liabilities	25,735		23,596
	$	89,296	$	122,924

(1)Represents a liability for $30 million in convertible milestone payments received from Lilly that converted into approximately 0.8 million shares of the Company’s common stock during the three months ended March 31, 2008.

6.Comprehensive Loss

SFAS No. 130 (SFAS 130), “Reporting Comprehensive Income,” requires reporting and displaying comprehensive income (loss) and its components, which, for the Company, includes net loss and unrealized gains and losses on investments. In accordance with SFAS 130, the accumulated balance of other comprehensive income (loss) is disclosed as a separate component of stockholders’ equity. For the three and six months ended June 30, 2008 and 2007, the comprehensive loss consisted of (in thousands):

	Three months ended June 30,						Six months ended June 30,
	2008			2007			2008			2007
Net loss	$	(64,816	)	$	(45,023	)	$	(133,613	)	$	(94,437	)
Other comprehensive loss:
Unrealized (loss) gain on investments	(493		)	390			(3,638		)	628
Comprehensive loss	$	(65,309	)	$	(44,633	)	$	(137,251	)	$	(93,809	)

7.Convertible Senior Notes

In June 2007, the Company issued the 2007 Notes, which have an aggregate principal amount of $575 million, and are due June 15, 2014, in a private placement. The 2007 Notes are senior unsecured obligations and rank equally with all other existing and future senior unsecured debt. The 2007 Notes bear interest at 3.0% per year, payable in cash semi-annually, and are initially convertible into a total of up to 9.4 million shares of common stock at a conversion price of $61.07 per share, subject to the customary adjustment for stock dividends and other dilutive transactions. In addition, if a “fundamental change” (as defined in the associated indenture agreement) occurs prior to the maturity date, the Company will in some cases increase the conversion rate for a holder of notes that elects to convert its notes in connection with such fundamental change. The maximum conversion rate is 22.9252, which would result in a maximum issuance of 13.2 million shares of common stock if all holders converted at the maximum conversion rate.

The 2007 Notes will be convertible into shares of the Company’s common stock unless the Company elects net-share settlement. If net-share settlement is elected by the Company, the Company will satisfy the accreted value of the obligation in cash and will satisfy the excess of conversion value over the accreted value in shares of the Company’s common stock based on a daily conversion value, determined in accordance with the associated indenture agreement, calculated on a proportionate basis for each day of the relevant 20-day observation period. Holders may convert the 2007 Notes only in the following circumstances and to the following extent: (1) during the five business-day period after any five consecutive trading period (the measurement period) in which the trading price per note for each day of such measurement period was less than 97% of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such day; (2) during any calendar quarter after the calendar quarter ending March 31, 2007, if the last reported sale price of the Company’s common stock for 20 or more trading days in a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter exceeds 130% of the applicable conversion price in effect on the last trading day of the immediately preceding calendar quarter; (3) upon the occurrence of specified events; and (4) the 2007 Notes will be convertible at any time on or after April 15, 2014 through the scheduled trading day immediately preceding the maturity date.

10

Subject to certain exceptions, if the Company undergoes a “designated event” (as defined in the associated indenture agreement) including a “fundamental change,” holders of the 2007 Notes will, for the duration of the 2007 Notes, have the option to require the Company to repurchase all or any portion of their 2007 Notes. The designated event repurchase price will be 100% of the principal amount of the 2007 Notes to be purchased plus any accrued interest up to but excluding the relevant repurchase date. The Company will pay cash for all 2007 Notes so repurchased. The Company may not redeem the Notes prior to maturity.

The 2007 Notes have been registered under the Securities Act of 1933, as amended, to permit registered resale of the 2007 Notes and of the common stock issuable upon conversion of the 2007 Notes.  Subject to certain limitations, the Company will be required to pay the holders of the 2007 Notes special interest on the 2007 Notes if the Company fails to keep such registration statement effective during specified time periods.

In April 2004, the Company issued the 2004 Notes, which have an aggregate principal amount of $200 million, and are due April 15, 2011, in a private placement. The 2004 Notes are senior unsecured obligations and rank equally with all other existing and future senior unsecured debt. The 2004 Notes bear interest at 2.5% per year, payable in cash semi-annually and are convertible into a total of up to 5.8 million shares of common stock at a conversion price of $34.35 per share, subject to customary adjustments for stock dividends and other dilutive transactions. The Company may not redeem the 2004 Notes prior to maturity.

Upon a change in control, the holders of the 2004 Notes may elect to require the Company to repurchase the 2004 Notes. The Company may elect to pay the purchase price in common stock instead of cash, or a combination thereof. If paid with common stock the number of shares of common stock a holder will receive will be valued at 95% of the closing prices of the Company’s common stock for the five-day trading period ending on the third day before the purchase date.

The 2004 Notes have been registered under the Securities Act of 1933, as amended, to permit registered resale of the 2004 Notes and of the common stock issuable upon conversion of the 2004 Notes.

8.     Long-Term Note Payable

In December 2007, the Company entered into a $140 million credit agreement with Bank of America, N.A., as administrative agent, collateral agent and letter of credit issuer, Silicon Valley Bank and RBS Asset Finance, Inc., as syndication agents, and Comerica Bank and BMO Capital Markets Financing, Inc., as documentation agents.  The credit agreement provides for a $125 million term loan and a $15 million revolving credit facility.  The proceeds of both loans will be used for general corporate purposes.  The revolving credit facility also provides for the issuance of letters of credit and foreign exchange hedging up to the $15 million borrowing limit.  The Company had an outstanding balance of $125.0 million under the term loan and had issued $5.6 million and $5.2 million of stand-by letters of credit under the revolving credit facility, respectively, primarily in connection with office leases, at June 30, 2008 and December 31, 2007.

The Company’s domestic subsidiaries, Amylin Ohio LLC and Amylin Investments LLC, are co-borrowers under the credit agreement.  The loans under the revolving credit facility are secured by substantially all of the Company’s and the two domestic subsidiaries’ assets (other than intellectual property and certain other excluded collateral).  The term loan is repayable on a quarterly basis, with no principal payments due quarters one through four, 6.25% of the outstanding principal due quarters five through eleven, and 56.25% of the outstanding principal due in quarter twelve.  Interest on the term loan will be paid quarterly on the unpaid principal balance at 1.75% above the London Interbank Offered Rate, or LIBOR, based on the Company’s election of either one, two, three or six months LIBOR term, and payable at the end of the selected interest period but no less frequently than quarterly as of the first business day of the quarter prior to the period in which the quarterly installment is due.  The Company has elected to use the three month LIBOR rate, which was 2.78% and 4.85% at June 30, 2008 and December 31, 2007, respectively.  Interest periods on the revolving credit facility may be either one, two, three or six months, and payable at the end of the selected interest period but no less frequently than quarterly, and the interest rate will be either LIBOR plus 1.0% or the Bank of America prime rate, as selected by the Company.  Both loans have a final maturity date of December 21, 2010.

The credit agreement contains certain covenants, including a requirement to maintain minimum unrestricted cash and cash equivalents, as defined in the agreement, in excess of $400 million, and events of default that permit the administrative agent to accelerate the Company’s outstanding obligations if not cured within applicable grace periods, including nonpayment of principal, interest, fees or other amounts, violation of covenants, inaccuracy of representations and warranties, and default under other indebtedness.  In addition, the credit agreement provides for automatic acceleration upon the occurrence of bankruptcy and other insolvency events.  There is an annual commitment fee associated with the revolving credit facility of 0.25%.

11

Maturities of long-term note payable for years ending after June 30, 2008 are as follows (in thousands):

2008	$	—
2009	31,250
2010	93,750
Thereafter	—
Total minimum long-term debt payments	$	125,000

In connection with the execution of the term loan, the Company entered into an interest rate swap with an initial notional amount of $125 million on December 21, 2007.  The Company will make payments to a counter-party at 3.967% and receive payments at LIBOR which is reset every three months, the first reset date being March 21, 2008.  Payments will be made on the 21^st of each March, June, September and December, commencing on March 21, 2008 for the period December 21, 2007 through March 21, 2008, and continuing in similar fashion throughout the maturity of the swap, which maturity is coincident with the term loan maturity.  The Company determined that the interest rate swap agreement is defined as Level 2 in the fair value hierarchy. As of June 30, 2008, the fair value of the interest rate swap agreement was a liability of $1.0 million and the recognized loss on the interest rate swap for the six months ended June 30, 2008 was $0.7 million.  The interest rate swap has resulted in a fixed rate of 5.717% for net interest receipts and payments for the term loan and interest rate swap transactions.

9.     Stockholders’ Equity

In March 2008, the Company contributed approximately 0.7 million newly issued shares of its common stock, valued at $24.87 per share, to the Company’s ESOP for amounts earned by participants during the year ended December 31, 2007.

In February 2008, the Company contributed approximately 0.1 million newly issued shares of its common stock, at $37.00 per share, to the Company’s 401(k) plan for amounts earned by participants during the year ended December 31, 2007.

In February 2008, the Company issued approximately 0.8 million shares of its common stock to Lilly, upon Lilly’s election to convert $30 million of development milestone payments related to exenatide once weekly, received in 2007 at a conversion price of $37.95, which represents the immediately preceding twenty day average closing market price of the Company’s common stock on December 31, 2007 in accordance with the Company’s exenatide collaboration agreement with Lilly.

10.   Commitments and Contingencies

Other Commitments

The Company has committed to make potential future milestone payments to third parties as part of in-licensing and development programs primarily related to research and development agreements. Potential future payments generally become due and payable only upon the achievement of certain developmental, regulatory and/or commercial milestones, such as achievement of regulatory approval, successful development and commercialization of products, and subsequent product sales. Because the achievement of these milestones is neither probable nor reasonably estimable, the Company has not recorded a liability on the balance sheet for any such contingencies.

As of June 30, 2008, if all such milestones are successfully achieved, the potential future milestone and other contingency payments due under certain contractual agreements are approximately $312.4 million in aggregate, of which $1.8 million are expected to be paid over the next twelve months.

We have committed to make future minimum payments to third parties for certain inventories in the normal course of business. The minimum purchase commitments total approximately $44.0 million as of June 30, 2008.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Except for the historical information herein, the discussion in this quarterly report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. These statements include projections about our accounting and

12

finances, plans and objectives for the future, future operating and economic performance and other statements regarding future performance. These statements are not guarantees of future performance or events. Our actual results may differ materially from those discussed here. Factors that could cause or contribute to differences in our actual results include those discussed under the caption “Cautionary Factors That May Affect Future Results,” as well as those discussed elsewhere in this quarterly report on Form 10-Q or in our other public disclosures. You should consider carefully those cautionary factors, together with all of the other information included in this quarterly report on Form 10-Q. Each of the cautionary factors, either alone or taken together, could adversely affect our business, operating results and financial condition, as well as adversely affect the value of an investment in our common stock. There may be additional risks that we are not presently aware of or that we currently believe are immaterial which could also impair our business and financial position. We disclaim any obligation to update these forward-looking statements.

Overview

Amylin Pharmaceuticals, Inc. is a biopharmaceutical company committed to improving the lives of people with diabetes, obesity and other diseases through the discovery, development and commercialization of innovative medicines. We have developed and gained approval for two first-in-class medicines to treat diabetes, BYETTA^® (exenatide) injection and SYMLIN^® (pramlintide acetate) injection, both of which were commercially launched in the United States during the second quarter of 2005.  BYETTA has also been approved in the European Union, or EU, and our collaboration partner Eli Lilly and Company, or Lilly, has commercially launched BYETTA in more than 30 countries as of June 30, 2008.  We expect Lilly to continue to launch BYETTA in additional EU member states and other countries during 2008.

BYETTA is the first and only approved medicine in a new class of compounds called incretin mimetics. We began selling BYETTA in the United States in June 2005.  BYETTA is approved in the United States for the treatment of patients with type 2 diabetes who have not achieved adequate glycemic control and are using metformin, sulfonylurea and/or a thiazolidinedone, or TZD, three common oral therapies for type 2 diabetes.  Net product sales of BYETTA were $177.5 million and $152.1 million for the three months ended June 30, 2008 and 2007, respectively, and $336.0 million and $298.6 million for the six months ended June 30, 2008 and 2007, respectively.

We have an agreement with Lilly for the global development and commercialization of exenatide. This agreement includes BYETTA and any sustained-release formulations of exenatide such as exenatide once weekly, our once weekly formulation of exenatide for the treatment of type 2 diabetes. Under the terms of the agreement, operating profits from products sold in the United States are shared equally between Lilly and us.  The agreement provides for tiered royalties payable to us by Lilly based upon the annual gross margin for all exenatide product sales, including any long-acting release formulations, outside of the United States.  Royalty payments for exenatide product sales outside of the United States will commence after a one-time cumulative gross margin threshold amount has been met.  We expect royalty payments to commence in 2009.  Lilly is responsible for 100% of the costs related to development of twice-daily BYETTA for sale outside of the United States.  Development costs related to all other exenatide products for sale outside of the United States will continue to be allocated 80% to Lilly and 20% to us.  Lilly will continue to be responsible for commercialization and all of the costs related to commercialization of all exenatide products for sale outside of the United States.

SYMLIN is the first and only approved medicine in a new class of compounds called amylinomimetics.  We began selling SYMLIN in the United States in April 2005.  SYMLIN is approved in the United States for the treatment of patients with either type 1 or type 2 diabetes who are treated with mealtime insulin but who have not achieved adequate glycemic control.  In January 2008, we commercially launched the SymlinPen^TM 120 and SymlinPen^TM 60 pen injector devices in the United States.  These new pre-filled pen-injector devices feature simple, fixed dosing to improve mealtime glucose control.  Net product sales of SYMLIN were $22.8 million and $15.2 million for the three months ended June 30, 2008 and 2007, respectively, and $43.1 million and $30.7 million for the six months ended June 30, 2008 and 2007, respectively.

We have a field force of approximately 650 people, after our recent expansion discussed below, dedicated to marketing BYETTA and SYMLIN in the United States.  Our field force includes our specialty and primary care sales forces, a managed care and government affairs organization, a medical science organization and diabetes care specialists.  In addition, Lilly co-promotes BYETTA in the United States.   In May 2008, we amended our United States co-promotion agreement with Lilly, resulting in a 40% increase in the total number of sales representatives promoting BYETTA beginning July 1, 2008.  To achieve this increase, Lilly’s existing third party sales force for Cialis® (tidalafil) will co-promote BYETTA in the United States and Amylin increased the number of sales representatives in its existing primary care sales force by approximately 15%.   In exchange for Lilly sharing in 50% of the costs related to the additional Amylin sales representatives and paying 100% of the costs of the third party sales force discussed above, our primary care sales force will co-promote Cialis in the United States.

13

In addition to our marketed products, we are working with Lilly and Alkermes, Inc., or Alkermes, to develop exenatide once weekly.  We are also working with Alkermes and Parsons, Inc., or Parsons, on the construction of a manufacturing facility for exenatide once weekly in Ohio.  We are now manufacturing exenatide once weekly at commercial scale in our facility in Ohio and we plan to begin supplying ongoing and planned clinical trials with this material in the third quarter of 2008.  During the second quarter of 2008, we held our pre-NDA meeting with the United States Food and Drug Administration, or FDA, to discuss open items for our exenatide once weekly regulatory submission.  We remain on track to submit our NDA for exenatide once weekly to the FDA by the end of the first half of 2009 and we are working aggressively to provide sufficient data to the FDA to demonstrate comparability between exenatide once weekly clinical trial material manufactured by our partner, Alkermes, in its facility and exenatide once weekly produced in our Ohio facility that could allow for an acceleration of the NDA submission.

We also have other early stage programs for diabetes, obesity, and other therapeutic areas.  We have a number of compounds in development for the potential treatment of obesity, which are part of a broader clinical strategy which we refer to as INTO: Integrated Neurohormonal Therapies for Obesity.  In March 2008, we licensed rights to sustained release technology from Pacira Pharmaceuticals, Inc. for the potential development of sustained release formulations of our early stage obesity and other potential product candidates.

We also maintain an active discovery research program focused on novel peptide therapeutics.  We are actively seeking to in-license additional drug candidates and we have made a number of strategic investments and collaborations for the potential development of additional drug candidates.

Since our inception in September 1987, we have devoted substantially all of our resources to our research and development programs and, more recently, to the commercialization of our products. All of our revenues prior to May 2005 were derived from fees and expense reimbursements under our BYETTA collaboration agreement with Lilly, previous SYMLIN collaborative agreements and previous co-promotion agreements. During the second quarter of 2005, we began to derive revenues from product sales of BYETTA and SYMLIN.  At June 30, 2008, our accumulated deficit was approximately $1.6 billion.

At June 30, 2008, we had approximately $890.9 million in cash, cash equivalents and short-term investments.  We may not generate positive operating cash flows for at least the next few years and accordingly, we may need to raise additional funds from outside sources. Refer to the discussions under the headings “Liquidity and Capital Resources” below and “Cautionary Factors That May Affect Future Results” in Part II, Item 1A for further discussion regarding our anticipated future capital requirements.

Application of Critical Accounting Policies

Our discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make significant estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures. On an on-going basis, our actual results may differ significantly from our estimates.

There were no significant changes in critical accounting policies from those at December 31, 2007.  The financial information as of June 30, 2008, should be read in conjunction with the financial statements for the year ended December 31, 2007, contained in our annual report on Form 10-K filed on February 27, 2008.

For a discussion of the Company’s critical accounting policies, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our annual report on Form 10-K filed on February 27, 2008.

Results of Operations

Comparison of Three Months Ended June 30, 2008 to Three Months Ended June 30, 2007

Net Product Sales

Net product sales for the three months ended June 30, 2008 and 2007 were $200.3 million and $167.3 million, respectively, and consisted of shipments of BYETTA and SYMLIN, less allowances for product returns, rebates and wholesaler chargebacks, wholesaler discounts and prescription vouchers.

14

The following table provides information regarding net product sales (in millions):

	Three months ended June 30,
	2008		2007
BYETTA	$	177.5	$	152.1
SYMLIN	22.8		15.2
	$	200.3	$	167.3

The increases in net product sales for BYETTA and SYMLIN in the current period reflect continued growth in patient demand.

Revenues Under Collaborative Agreements

Revenues under collaborative agreements for the three months ended June 30, 2008, were $21.7 million compared to $29.6 million for the same period in 2007. Substantially all of the revenue recorded in these periods consists of amounts earned pursuant to our BYETTA collaboration agreement with Lilly. The $7.9 million decrease in revenues under collaborative agreements in the current quarter compared to the same period in 2007 reflects a reduction in milestone revenues partially offset by higher cost-sharing payments from Lilly due primarily to increased development expenses for exenatide once weekly and a higher proportion of total shared development expenses incurred by us.  Milestone revenues for the three months ended June 30, 2007 consisted of $15.0 million in milestones associated primarily with Lilly’s launch of BYETTA in the EU.  There were no milestones earned in the three months ended June 30, 2008.

 The following table summarizes the components of revenues under collaborative agreements for the three months ended June 30, 2008 and 2007 (in millions):

	Three months ended June 30,
	2008		2007
Amortization of up-front payments	$	1.1	$	1.1
Milestones	—		15.0
Cost-sharing and co-promotion payments	20.6		13.5
	$	21.7	$	29.6

In future periods, revenues under collaborative agreements will consist of ongoing cost-sharing payments from Lilly for sharing of development costs, possible future milestone payments and the continued amortization of the $30 million portion of the up-front payment received from Lilly upon signing of our collaboration agreement in 2002. The amount of cost-sharing revenue recorded will be dependent on the timing, extent and relative proportion of total development costs for the exenatide once weekly and BYETTA development programs incurred by us and by Lilly. The receipt and recognition as revenue of future milestone payments is subject to the achievement of performance requirements underlying such milestone payments.

Cost of Goods Sold

Cost of goods sold for the three months ended June 30, 2008 and 2007 was $24.7 million, representing a gross margin of 88%, and $14.4 million, representing a gross margin of 91%, respectively, and is comprised primarily of manufacturing costs associated with BYETTA and SYMLIN sales during the period.  The decrease in gross margin for the three months ended June 30, 2008, compared to the same period in 2007, primarily reflects increased product costs for BYETTA due to lower production volumes, and product mix, including the introduction of the Symlin Pen, partially offset by higher net sales prices per unit for BYETTA and SYMLIN. Quarterly fluctuations in gross margins may be influenced by product mix, pricing and the level of sales allowances.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased to $111.1 million for the three months ended June 30, 2008, from $93.1 million for the same period in 2007. The increase primarily reflects expenses associated with the recent expansion of our sales force, increased promotional expenses for BYETTA and SYMLIN, expenses associated with pre-launch education activities for exenatide once weekly and increases in business infrastructure to support our growth.

15

Research and Development Expenses

Our research and development costs are comprised of salaries and bonuses, benefits, non-cash stock-based compensation, license fees, milestones under license agreements, costs paid to third-party contractors to perform research, conduct clinical trials, and develop drug materials and delivery devices; and associated overhead expenses and facilities costs.  We charge direct internal and external program costs to the respective development programs. We also incur indirect costs that are not allocated to specific programs because such costs benefit multiple development programs and allow us to increase our pharmaceutical development capabilities. These consist primarily of facilities costs and other internal shared resources related to the development and maintenance of systems and processes applicable to all of our programs.

Our research and development efforts are focused on diabetes, obesity, and other diseases.  We also maintain an active discovery research program.  In diabetes, we have two approved products, BYETTA and SYMLIN, and we are developing exenatide once weekly, a long-acting release formulation of exenatide, the active pharmaceutical ingredient in BYETTA.  In obesity, we have a number of compounds in development for the potential treatment of obesity which are part of a broader program, which we refer to as INTO: Integrated Neurohormonal Therapies for Obesity.  As part of this program, we are currently conducting several clinical trials of our drug candidates, or combinations of our drug candidates.

The following table provides information regarding our research and development expenses for our major projects (in millions):

	Three months ended June 30,
	2008		2007		Increase/(Decrease)
Diabetes (1)	$	41.2	$	35.5	$	5.7
Obesity	12.3		19.7		(7.4		)
Research and early-stage programs	9.1		7.1		2.0
Indirect costs	12.8		9.4		3.4
	$	75.4	$	71.7	$	3.7

(1)  Research and development expenses consist primarily of costs associated with BYETTA and exenatide once weekly which are shared by Lilly pursuant to our collaboration agreement.  Cost-sharing payments received by Lilly are included in revenues under collaborative agreements.  Increased expenditures for our diabetes development programs are generally partially offset by an increase in cost-sharing payments from Lilly.  Cost-sharing payments were $20.6 million and $13.5 million for the three months ended June 30, 2008 and 2007, respectively.

The $3.7 million increase in research and development expenses for the three months ended June 30, 2008 as compared to the same period in 2007 primarily reflects increased expenses of $5.7 million for our diabetes programs, increased expenses of $3.4 million for indirect costs and increased expenses of $2.0 million for our research and early-stage programs, partially offset by a $7.4 million reduction in our obesity programs. The increase in expenses for our diabetes programs primarily reflects increased expenses for exenatide once weekly associated with manufacturing scale-up and on-going clinical trials.  The increase in indirect costs primarily reflects increased facilities costs, a portion of which are allocated to research and development expenses.  The increase in expenses for our research and early-stage programs primarily reflects investments in drug delivery platforms.  The decrease in expenses for our obesity programs primarily reflects the fact that expenses for our obesity programs for the three months ended June 30, 2007 included a development milestone for Leptin. There was no comparable expense in the three months ended June 30, 2008.

Collaborative Profit Sharing

Collaborative profit sharing was $79.0 million and $70.4 million for the three months ended June 30, 2008 and 2007, respectively, and consists of Lilly’s 50% share of the gross margin for BYETTA in the United States.

Interest and Other Income and Expense

Interest and other income consist primarily of interest income from investment of cash and other investments. Interest and other income decreased to $7.0 million for the three months ended June 30, 2008, from $9.9 million for the same period in 2007.  The decrease primarily reflects lower interest rates earned on our short-term investments partially offset by higher average short-term investment balances during the three months ended June 30, 2008 as compared to the same period in 2007.

16

Interest and other expense consist primarily of interest expense resulting from our long-term debt obligations. Interest expense in the three months ended June 30, 2008 consists of interest on our $775 million of outstanding convertible senior notes and our $125 million of outstanding long-term note payable, the amortization of associated debt issuance costs and recognized gains and losses associated with recording economic hedge transactions at fair value. Interest and other expense was $3.7 million and $2.4 million for the three months ended June 30, 2008 and 2007, respectively.  The increase in interest and other expense for the three months ended June 30, 2008 reflects additional interest expense for our convertible senior notes issued in June 2007 and long-term note payable entered into in December 2007, partially offset by a recognized gain of approximately $3 million associated with the interest rate swap related to the term loan.  There was no comparable gain in the three months ended June 30, 2007.

Net Loss

Our net loss for the three months ended June 30, 2008 was $64.8 million compared to a net loss of $45.0 million for the same period in 2007. The increase in net loss primarily reflects the increased selling, general and administrative expenses, increased collaborative profit-sharing, the decreased revenues under collaborative arrangements and the increased research and development expenses discussed above, partially offset by increased net product sales discussed above. We may incur operating losses for the next few years.  Our ability to reach profitability in the future will be heavily dependent upon the amount of product sales that we achieve for BYETTA and SYMLIN. In addition, ongoing and potential increased expenses associated with the continued commercialization of BYETTA and SYMLIN, costs associated with the development and commercialization of exenatide once weekly, if approved, and expenses associated with potential expansion of our research and development programs, including our obesity and our early-stage development programs, and related support infrastructure, may impact our ability to reach profitability in the future. Our operating results may fluctuate from quarter to quarter as a result of differences in the timing of expenses incurred and revenues recognized.

Comparison of Six Months Ended June 30, 2008 to Six Months Ended June 30, 2007

Net Product Sales

Net product sales for the six months ended June 30, 2008 and 2007 were $379.1 million and $329.3 million, respectively, and consisted of shipments of BYETTA and SYMLIN, less allowances for product returns, rebates and wholesaler chargebacks, wholesaler discounts, and prescription vouchers.

The following table provides information regarding net product sales (in millions):

	Six months ended June 30,
	2008		2007
BYETTA	$	336.0	$	298.6
SYMLIN	43.1		30.7
	$	379.1	$	329.3

The increases in net product sales for BYETTA and SYMLIN in the current period reflect continued growth in patient demand.

Revenues Under Collaborative Agreements

Revenues under collaborative agreements for the six months ended June 30, 2008 were $40.2 million compared to $39.6 million for the same period in 2007. Substantially all of the revenue recorded in these periods consists of amounts earned pursuant to our BYETTA collaboration agreement with Lilly. The $0.6 million increase in revenues under collaborative agreements in the six months ended June 30, 2008 compared to the same period in 2007 reflects higher cost-sharing payments from Lilly due primarily to increased development expenses for exenatide once weekly and a higher proportion of total shared development expenses incurred by us, partially off-set by a reduction in milestone revenues.  Milestone revenues for the six months ended June 30, 2007 consisted of $15.0 million in milestones associated primarily with Lilly’s launch of BYETTA in the EU.  There were no milestones earned in the six months ended June 30, 2008.

17

The following table summarizes the components of revenues under collaborative agreements for the six months ended June 30, 2008 and 2007 (in millions):

	Six months ended June 30,
	2008		2007
Amortization of up-front payments	$	2.1	$	2.1
Milestones	—		15.0
Cost-sharing and co-promotion payments	38.1		22.5
	$	40.2	$	39.6

Cost of Goods Sold

Cost of goods sold for the six months ended June 30, 2008 and 2007 was $46.7 million, representing a gross margin of 88%, and $29.6 million, representing a gross margin of 91%, respectively, and is comprised primarily of manufacturing costs associated with BYETTA and SYMLIN sales during the period.  The decrease in gross margin for the six months ended June 30, 2008 compared to the same period in 2007 reflects the same factors that influenced similar fluctuations in the three months ended June 30, 2008 discussed above.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased to $209.3 million for the six months ended June 30, 2008, from $180.9 million for the same period in 2007. The increase primarily reflects the same factors that influenced similar fluctuations in the three months ended June 30, 2008 discussed above.

Research and Development Expenses

The following table provides information regarding our research and development expenses for our major projects (in millions):

	Six months ended June 31,
	2008		2007		Increase/(Decrease)
Diabetes (1)	$	81.7	$	63.8	$	17.9
Obesity	29.3		34.9		(5.6		)
Research and early-stage programs	16.5		13.8		2.7
Indirect costs	25.1		18.8		6.3
	$	152.6	$	131.3	$	21.3

(1)Research and development expenses consist primarily of costs associated with BYETTA and exenatide once weekly which are shared by Lilly pursuant to our collaboration agreement.  Cost-sharing payments received by Lilly are included in revenues under collaborative agreements.  Increased expenditures for our diabetes development programs are generally partially offset by an increase in cost-sharing payments from Lilly.  Cost-sharing payments were $38.1 million and $22.5 million for the six months ended June 30, 2008 and 2007, respectively.

The $21.3 million increase in research and development expenses for the six months ended June 30, 2008 as compared to the same period in 2007 primarily reflects increases of $17.9 million for our diabetes programs, $6.3 million for indirect costs, and $2.7 million for our research and early-stage programs, partially offset by a reduction of $5.6 million for our obesity programs. The increase in expenses for our diabetes programs primarily reflects increased expenses for exenatide once weekly associated with manufacturing scale-up and on-going clinical trials. The increase in indirect costs primarily reflects increased facilities costs, a portion of which are allocated to research and development expenses.  The increase in expenses for our research and early stage programs primarily reflects investments in drug delivery platforms.  The increase in indirect costs primarily reflects increased facilities costs to support our growth, a portion of which is allocated to research and development expenses.  The reduction in expenses for our obesity programs primarily reflects reduced clinical trial costs following the completion of several clinical trials in 2007 conducted as part of our INTO strategy.

18

Collaborative Profit Sharing

Collaborative profit sharing was $148.9 million and $137.3 million for the six months ended June 30, 2008 and 2007, respectively, and consists of Lilly’s 50% share of the gross margin for BYETTA in the United States.

Interest and Other Income and Expense

Interest and other income consist primarily of interest income from investment of cash and other investments. Interest and other income decreased to $18.0 million for the six months ended June 30, 2008, from $19.3 million for the same period in 2007.  The decrease of $1.3 million primarily reflects lower interest rates, partially offset by higher average investment balances during the six months ended June 30, 2008 as compared to the same period in 2007.

Interest and other expense consist primarily of interest expense resulting from our long-term debt obligations. Interest expense in the six months ended June 30, 2008 consists of interest on our $775 million of outstanding convertible senior notes and our $125 million of outstanding long-term note payable, or our term loan, and the amortization of associated debt issuance costs. Interest and other expense was $13.4 million and $3.7 million for the six months ended June 30, 2008 and 2007, respectively.  The increase reflects additional interest expense for our convertible senior notes issued in June 2007 and long-term note payable entered into in December 2007.

Net Loss

Our net loss for the six months ended June 30, 2008 was $133.6 million compared to a net loss of $94.4 million for the same period in 2007. The increase in net loss primarily reflects the increased selling, general and administrative expenses, increased research and development expenses, increased collaborative profit-sharing and increased interest and other expense, partially offset by the increased net product sales and revenues under collaborative agreements discussed above.

Liquidity and Capital Resources

Since our inception, we have financed our operations primarily through public sales and private placements of our common and preferred stock, debt financings, payments received pursuant to our BYETTA collaboration with Lilly, reimbursement of SYMLIN development expenses through earlier collaboration agreements, and since the second quarter of 2005, through product sales of BYETTA and SYMLIN.

At June 30, 2008, we had $890.9 million in cash, cash equivalents and short-term investments, compared to $1.1 billion at December 31, 2007.  We used cash of $72.7 million and $54.2 million for our operating activities in the six months ended June 30, 2008 and 2007, respectively.   Our cash used for operating activities in the six months ended June 30, 2008 included a net source of cash of $14.2 million from changes in working capital, due primarily to sources of cash from a decrease in accounts receivable and an increase in accrued compensation of $7.9 million and $13.2 million, respectively, offset by uses of cash from a decrease in payable to collaborative partner and an increase in other current assets of $4.7 million and $2.6 million, respectively.

Our investing activities used cash of $228.2 million and $215.2 million for the six months ended June 30, 2008 and 2007, respectively. Investing activities in both quarters consisted primarily of purchases and sales of short-term investments and purchases of property, plant and equipment and increases in other long-term assets.   Purchases of property, plant and equipment increased to $173.4 million for the six months ended June 30, 2008 from $142.0 million for the six months ended June 30, 2007.  The increase during the six months ended June 30, 2008 primarily reflects costs associated with our manufacturing facility for exenatide once weekly and, to a lesser extent, purchases of tenant improvements, office equipment and scientific equipment to support our growth.  We are now manufacturing exenatide once weekly at commercial scale in our facility in Ohio and we plan to begin supplying ongoing and planned clinical trials with this material during the third quarter of 2008. Through June 30, 2008, we had expended in excess of $400 million associated with the construction of this facility and we expect the total investment to be in excess of $500 million by the end of 2008, which includes costs associated with the construction of the facility, purchase and installation of equipment and capitalized labor and materials required to validate the facility.   We will continue to evaluate potential additional investments in Ohio during the product lifecycle for exenatide once weekly.

Financing activities provided cash of $9.5 million and $582.2 million for the six months ended June 30, 2008 and 2007, respectively.   Financing activities in six months ended June 30, 2008 include proceeds from the exercise of stock options and proceeds from our employee stock purchase plan.

19

At March 31, 2008, we had $200 million in aggregate principal amount of our 2.5% convertible senior notes due in 2011, or the 2004 Notes, and $575 million in aggregate principal amount of our 3.0% convertible senior notes due in 2014, or the 2007 Notes, outstanding. The 2004 Notes are currently convertible into a total of up to 5.8 million shares of our common stock at approximately $34.35 per share and are not redeemable at our option. The 2007 Notes are currently convertible into a total of up to 9.4 million shares of our common stock at approximately $61.07 per share and are not redeemable at our option.

In December 2007, we entered into a $140 million credit agreement.  The credit agreement provides for a $125 million term loan and a $15 million revolving credit facility.  The revolving credit facility also provides for the issuance of letters of credit and foreign exchange hedging up to the $15 million borrowing limit.  The term loan is repayable on a quarterly basis, with no principal payments due quarters one through four, 6.25% of the outstanding principal due quarters five through eleven, and 56.25% of the outstanding principal due in quarter twelve.  At June 30, 2008 we had an outstanding balance of $125.0 million under the term loan and had issued $5.6 million of stand-by letters of credit under the revolving credit facility.  Both loans have a final maturity date of December 21, 2010.  Interest on the term loan is payable quarterly in arrears at a rate equal to 1.75% above the London Interbank Offered Rate, or LIBOR, of either one, two, three or six months LIBOR term at our election.  We have entered into an interest rate swap agreement which resulted in a net fixed interest rate of 5.717% under the term loan.  The interest rate on the credit facility is either LIBOR plus 1.0% or the Bank of America prime rate, at our election.

The following table summarizes our contractual obligations and maturity dates as of June 30, 2008 (in thousands):

	Payments Due by Period
Contractual Obligations	Total		Less than 1 year		1-3 years		4-5 years		After 5 years
Long-term convertible debt	$	775,000	$	—	$	200,000	$	—	$	575,000
Interest payments on long-term convertible debt	118,500		22,250		44,500		34,500		17,250
Long-term note payable	125,000		15,625		109,375		—		—
Interest on long-term note payable, net of swap transactions (1)	14,740		7,035		7,705		—		—
Inventory purchase obligations(2)	130,417		86,879		39,908		3,630		—
Operating lease obligations	166,301		18,571		36,184		38,408		73,138
Total(3)	$	1,329,958	$	150,360	$	437,672	$	76,538	$	665,388

(1)  The interest payments shown were calculated using a rate of 5.717%, the combined net rate of the term loan and interest rate swap, on the outstanding principal balance of the term loan

(2)Includes $86.5 million of outstanding purchase orders, cancelable by us upon 30 days’ written notice, subject to reimbursement of costs incurred through the date of cancellation.

(3)Excludes long-term obligation of $8.4 million related to deferred compensation, the payment of which is subject to elections made by participants that are subject to change.

In addition, under certain license and collaboration agreements we are required to pay royalties and/or milestone payments upon the successful development and commercialization of related products.  We expect to make development milestone payments up to $1.8 million associated with licensing agreements in the next 12 months.  Additional milestones of up to approximately $310.7 million could be paid over the next 10 to 15 years if development and commercialization of all our early stage programs continue and are successful.  The significant majority of these milestones relate to potential future regulatory approvals and subsequent sales thresholds.  Given the inherent risk in pharmaceutical development, it is highly unlikely that we will ultimately make all of these milestone payments; however, we would consider these payments as positive because they would signify that the related products are moving successfully through development and commercialization.

Our future capital requirements will depend on many factors, including: the amount of product sales we achieve for BYETTA and SYMLIN; costs associated with the continued commercialization of BYETTA and SYMLIN; costs associated with the establishment of our exenatide once weekly manufacturing facility; costs of potential licenses or acquisitions; the potential need to repay existing indebtedness; costs associated with an increase in our infrastructure; our ability to receive or need to make milestone payments; our ability, and the extent, to which we establish collaborative arrangements for SYMLIN or any of our product candidates; progress in our research and development programs and the magnitude of these programs;

20

costs involved in preparing, filing, prosecuting, maintaining, enforcing or defending our patents; competing technological and market developments; and costs of manufacturing, including costs associated with establishing our own manufacturing capabilities or obtaining and validating additional manufacturers of our products; and scale-up costs for our drug candidates.

ITEM 3.Quantitative and Qualitative Disclosures about Market Risk

We invest our excess cash primarily in United States Government securities, asset-backed securities and debt instruments of financial institutions and corporations with strong credit ratings. These instruments have various short-term maturities. We do not utilize derivative financial instruments, derivative commodity instruments or other market risk sensitive instruments, positions or transactions in any material fashion. Accordingly, we believe that, while the instruments held are subject to changes in the financial standing of the issuer of such securities, we are not subject to any material risks arising from changes in interest rates, foreign currency exchange rates, commodity prices, equity prices or other market changes that affect market risk sensitive investments. Our debt is not subject to significant swings in valuation as interest rates on our debt are fixed. The fair value of our 2004 Notes and 2007 Notes at June 30, 2008 was approximately $206 million and $470 million, respectively. A hypothetical 1% adverse move in interest rates along the entire interest rate yield curve would not materially affect the fair value of our financial instruments that are exposed to changes in interest rates.

ITEM 4.Controls and Procedures

As of June 30, 2008, an evaluation was performed under the supervision and with the participation of our management, including our President and Chief Executive Officer (referred to as our CEO) and our Senior Vice President, Finance and Chief Financial Officer (referred to as our CFO), of the effectiveness of the design and operation of our disclosure controls and procedures. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on that evaluation, our management, including our CEO and CFO, concluded that our disclosure controls and procedures were effective at a reasonable level of assurance as of June 30, 2008.

Our management does not expect that our disclosure control and procedures or our internal control over financial reporting will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, or misstatements due to error, if any, within the company have been detected. While we believe that our disclosure controls and procedures and internal control over financial reporting are and have been effective, in light of the foregoing we intend to continue to examine and refine our disclosure controls and procedures and internal control over financial reporting.

An evaluation was also performed under the supervision and with the participation of our management, including our CEO and CFO, of any change in our internal control over financial reporting that occurred during our last fiscal quarter and that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. That evaluation did not identify any change in our internal control over financial reporting that occurred during our latest fiscal quarter and that has materially affected, or is reasonably likely to affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1A.  Risk Factors

CAUTIONARY FACTORS THAT MAY AFFECT FUTURE RESULTS

The following sets forth cautionary factors that may affect our future results, including clarifications to the cautionary factors included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2007.

We have a history of operating losses, anticipate future losses and may never become profitable.

We have experienced significant operating losses since our inception in 1987, including losses of $133.6 million for the six months ended June 30, 2008, $211.1 million in 2007, $218.9 million in 2006 and $206.8 million in 2005.  As of June 30, 2008, we had an accumulated deficit of approximately $1.6 billion.  The extent of our future losses and the timing of potential profitability are uncertain, and we may never achieve profitable operations.  We have been engaged in discovering and developing drugs since inception, which has required, and will continue to require, significant research and development expenditures.  We derived substantially all of our revenues prior to 2005 from development funding, fees and milestone payments under collaborative agreements and from interest income.  BYETTA and SYMLIN may not be as commercially

21

successful as we expect and we may not succeed in commercializing any of our other drug candidates.  We may incur substantial operating losses for at least the next few years as we continue to expand our commercial function for BYETTA and SYMLIN and our research and development activities for the other drug candidates in our development pipeline.  These losses, among other things, have had and will have an adverse effect on our stockholders’ equity and working capital.  Even if we become profitable, we may not remain profitable.

We began selling, marketing and distributing our first products, BYETTA and SYMLIN, in 2005 and we will depend heavily on the success of those products in the marketplace.

Prior to the launch of BYETTA and SYMLIN in 2005, we had never sold or marketed our own products.  Our ability to generate product revenue for the next few years will depend solely on the success of these products.  The ability of BYETTA and SYMLIN to generate revenue at the levels we expect will depend on many factors, including the following:

·acceptance of and ongoing satisfaction with these first-in-class medicines in the United States and foreign markets by the medical community, patients receiving therapy and third party payors;

·a satisfactory efficacy and safety profile as demonstrated in a broad patient population;

·successfully expanding and sustaining manufacturing capacity to meet demand;

·safety concerns in the marketplace for diabetes therapies;

·the competitive landscape for approved and developing therapies that will compete with the products; and

·our ability to expand the indications for which we can market the products.

If we encounter safety issues with BYETTA or SYMLIN or any other drugs we market or fail to comply with extensive continuing regulations enforced by domestic and foreign regulatory authorities, it could cause us to discontinue marketing those drugs, reduce our revenues and harm our ability to generate future revenues, which would negatively impact our financial position.

BYETTA and SYMLIN, in addition to any other of our drug candidates that may be approved by the FDA, will be subject to continual review by the FDA, and we cannot assure you that newly discovered or developed safety issues will not arise.  With the use of any of our marketed drugs by a wide patient population, serious adverse events may occur from time to time that initially do not appear to relate to the drug itself, and only if the specific event occurs with some regularity over a period of time does the drug become suspect as having a causal relationship to the adverse event.  Any safety issues could cause us to suspend or cease marketing of our approved products, subject us to substantial liabilities, and adversely affect our revenues and financial condition.

Moreover, the marketing of our approved products will be subject to extensive regulatory requirements administered by the FDA and other regulatory bodies, including adverse event reporting requirements and the FDA’s general prohibition against promoting products for unapproved uses.  The manufacturing facilities for our approved products are also subject to continual review and periodic inspection and approval of manufacturing modifications.  Manufacturing facilities that manufacture drug products for the United States market, whether they are located inside or outside the United States, are subject to biennial inspections by the FDA and must comply with the FDA’s current good manufacturing practice, or cGMP, regulations.  The FDA stringently applies regulatory standards for manufacturing.  Failure to comply with any of these post-approval requirements can, among other things, result in warning letters, product seizures, recalls, fines, injunctions, suspensions or revocations of marketing licenses, operating restrictions and criminal prosecutions.  Any of these enforcement actions, any unanticipated changes in existing regulatory requirements or the adoption of new requirements, or any safety issues that arise with any approved products, could adversely affect our ability to market products and generate revenues and thus adversely affect our ability to continue our business.

The manufacturers of our products and drug candidates also are subject to numerous federal, state, local and foreign laws relating to such matters as safe working conditions, manufacturing practices, environmental protection, fire hazard control and hazardous substance disposal.  In the future, our manufacturers may incur significant costs to comply with those laws and regulations, which could increase our manufacturing costs and reduce our ability to operate profitably.

22

We currently do not manufacture our own drug products or drug candidates and may not be able to obtain adequate supplies, which could cause delays, subject us to product shortages, or reduce product sales.

The manufacturing of sufficient quantities of newly-approved drug products and drug candidates is a time-consuming and complex process.  We currently have no manufacturing capabilities.  In order to successfully commercialize our products, including BYETTA and SYMLIN, and continue to develop our drug candidates, including exenatide once weekly, we rely on various third parties to provide the necessary manufacturing.

There are a limited number of manufacturers that operate under the FDA’s cGMP regulations capable of manufacturing for us.  In addition, there are a limited number of bulk drug substance suppliers, cartridge manufacturers and disposable pen manufacturers.  If we are not able to arrange for and maintain third-party manufacturing on commercially reasonable terms, or we lose one of our sole source suppliers used for our existing products or for some components of our manufacturing processes for our products or drug candidates, we may not be able to market our products or complete development of our drug candidates on a timely basis, if at all.

Reliance on third-party suppliers limits our ability to control certain aspects of the manufacturing process and therefore exposes us to a variety of significant risks, including, but not limited to, risks to our ability to commercialize our products or conduct clinical trials, risks of reliance on the third-party for regulatory compliance and quality assurance, third-party refusal to supply on a long-term basis, or at all, the possibility of breach of the manufacturing agreement by the third-party and the possibility of termination or non-renewal of the agreement by the third-party, based on its business priorities, at a time that is costly or inconvenient for us.  If any of these risks occur, our product supply will be interrupted resulting in lost or delayed revenues and delayed clinical trials.  Our reliance on third-party manufacturers for the production of our two commercial products is described in more detail below.

We rely on Bachem California, or Bachem, and Mallinckrodt, Inc., or Mallinckrodt, to manufacture our long-term commercial supply of bulk exenatide, the active ingredient in BYETTA.  In addition, we rely on single-source manufacturers for some of our raw materials used by Bachem and Mallinckrodt to produce bulk exenatide.  We also rely on Wockhardt UK (Holdings) Ltd., or Wockhardt, and Baxter Pharmaceutical Solutions LLC, a subsidiary of Baxter, Inc., or Baxter, to manufacture the dosage form of BYETTA in cartridges.  We are further dependent upon Lilly to supply pens for delivery of BYETTA in cartridges.

We rely on Bachem and Lonza Ltd. to manufacture our commercial supply of bulk pramlintide acetate, the active ingredient contained in SYMLIN.  In addition, we rely on Baxter to manufacture the dosage form of SYMLIN in vials.  We recently received FDA approval of a disposable pen for the delivery of SYMLIN in cartridges.  We rely on Wockhardt for the dosage form of SYMLIN in cartridges and Ypsomed AG to manufacture the components for the SYMLIN disposable pen. We also rely on Hollister-Stier Laboratories LLC for the assembly of the SYMLIN pen.

If any of our existing or future manufacturers cease to manufacture or are otherwise unable to timely deliver sufficient quantities of BYETTA or SYMLIN, in either bulk or dosage form, or other product components, including pens for the delivery of these products, it could disrupt our ability to market our products, subject us to product shortages, reduce product sales and/or reduce our profit margins.  Any delay or disruption in the manufacturing of bulk product, the dosage form of our products or other product components, including pens for delivery of our products, could also harm our reputation in the medical and patient communities.  In addition, we may need to engage additional manufacturers so that we will be able to continue our commercialization and development efforts for these products or drug candidates.  The cost and time to establish these new manufacturing facilities would be substantial.

Our manufacturers have not produced BYETTA or SYMLIN for commercial use for a sustained period of time.  As such, additional unforeseeable risks may be encountered as we, together with our manufacturers, continue to develop familiarity and experience with regard to manufacturing our products.  Furthermore, we and the other manufacturers used for our drug candidates may not be able to produce supplies in commercial quantities if our drug candidates are approved.  While we believe that business relations between us and our manufacturers are generally good, we cannot predict whether any of the manufacturers that we may use will meet our requirements for quality, quantity or timeliness for the manufacture of bulk exenatide or pramlintide acetate, dosage form of BYETTA or SYMLIN, or pens.  Therefore, we may not be able to obtain necessary supplies of products with acceptable quality, on acceptable terms or in sufficient quantities, if at all.  Our dependence on third parties for the manufacture of products may also reduce our gross profit margins and our ability to develop and deliver products in a timely manner.

23

In order to manufacture exenatide once weekly on a commercial scale, if it is approved by the FDA, we must design, construct, and commission a new facility and validate the manufacturing process.  We are dependent on Alkermes and Parsons to assist us in the design, construction and commissioning of the manufacturing facility.  We have never established, validated, and operated a manufacturing facility and cannot assure you that we will be able to successfully establish or operate such a facility in a timely or economical manner, or at all.  In addition, we are dependent on Alkermes to successfully develop and transfer to us its technology for manufacturing exenatide once weekly and to supply us with commercial quantities of the polymer required to manufacture exenatide once weekly.  We also will need to obtain sufficient supplies of diluents, solvents, devices, packaging and other components necessary for commercial manufacture of exenatide once weekly.  Although we are working diligently to qualify the commercial-scale manufacturing process at this facility, we cannot be assured that we will be able to demonstrate comparability of product manufactured at development scale and product manufactured at commercial scale.  If we are unable to demonstrate comparability of product, we may not be able to commercially launch exenatide once weekly in a timely manner or at all.

Our ability to generate revenues will be diminished if we fail to obtain acceptable prices or an adequate level of reimbursement for our products from third-party payors.

The continuing efforts of government, private health insurers and other third-party payors to contain or reduce the costs of health care through various means, including efforts to increase the amount of patient co-pay obligations, may limit our commercial opportunity.  In the United States, we expect that there will continue to be a number of federal and state proposals to implement government control over the pricing of prescription pharmaceuticals.  In addition, increasing emphasis on managed care in the United States will continue to put pressure on the rate of adoption and pricing of pharmaceutical products.

Significant uncertainty exists as to the reimbursement status of health care products.  Third-party payors, including Medicare, are challenging the prices charged for medical products and services.  Government and other third-party payors increasingly are attempting to contain health care costs by limiting both coverage and the level of reimbursement for new drugs and by refusing to provide coverage for uses of approved products for disease indications for which the FDA has not granted labeling approval.  Third-party insurance coverage may not be available to patients for BYETTA and/or SYMLIN or any other products we discover and develop.  If government and other third-party payors do not provide adequate coverage and reimbursement levels for our products, the market acceptance of these products may be reduced.

Competition in the biotechnology and pharmaceutical industries may result in competing products, superior marketing of other products and lower revenues or profits for us.

There are many companies that are seeking to develop products and therapies for the treatment of diabetes and other metabolic disorders.  Our competitors include multinational pharmaceutical and chemical companies, specialized biotechnology firms and universities and other research institutions.  A number of our largest competitors, including AstraZeneca, Bristol-Myers Squibb, GlaxoSmithKline, Lilly, Merck & Co., Novartis, Novo Nordisk, Pfizer, Sanofi-Aventis and Takeda Pharmaceuticals, are pursuing the development or marketing of pharmaceuticals that target the same diseases that we are targeting, and it is possible that the number of companies seeking to develop products and therapies for the treatment of diabetes, obesity and other metabolic disorders will increase.  Many of our competitors have substantially greater financial, technical, human and other resources than we do and may be better equipped to develop, manufacture and market technologically superior products.  In addition, many of these competitors have significantly greater experience than we do in undertaking preclinical testing and human clinical studies of new pharmaceutical products and in obtaining regulatory approvals of human therapeutic products.  Accordingly, our competitors may succeed in obtaining FDA approval for superior products.  Furthermore, now that we have received FDA approval for BYETTA and SYMLIN, we may also be competing against other companies with respect to our manufacturing and product distribution efficiency and sales and marketing capabilities, areas in which we have limited or no experience as an organization.

Our target patient population for BYETTA includes people with diabetes who have not achieved adequate glycemic control using metformin, sulfonylurea and/or a TZD, three common oral therapies for type 2 diabetes.  Our target population for SYMLIN is people with either type 2 or type 1 diabetes whose therapy includes multiple mealtime insulin injections daily.  Other products are currently in development or exist in the market that may compete directly with the products that we are developing or marketing.  Various other products are available or in development to treat type 2 diabetes, including:

·sulfonylureas;

·metformin;

·insulins, including injectable and inhaled versions;

24

·TZDs;

·glinides;

·DPP-IV inhibitors;

·incretin/GLP-1 agonists;

·CB-1 antagonists;

·PPARs; and

·alpha-glucosidase inhibitors.

In addition, several companies are developing various approaches, including alternative delivery methods, to improve treatments for type 1 and type 2 diabetes. We cannot predict whether our products will have sufficient advantages to cause health care professionals to adopt them over other products or that our products will offer an economically feasible alternative to other products.  Our products could become obsolete before we recover expenses incurred in developing these products.

Delays in the conduct or completion of our clinical trials, the analysis of the data from our clinical trials or our manufacturing scale-up activities may result in delays in our planned filings for regulatory approvals, and may adversely affect our ability to enter into new collaborative arrangements.

We cannot predict whether we will encounter problems with any of our completed, ongoing or planned clinical studies that will cause us to delay or suspend our ongoing and planned clinical studies, delay the analysis of data from our completed or ongoing clinical studies or perform additional clinical studies prior to receiving necessary regulatory approvals.  We also cannot predict whether we will encounter delays or an inability to create manufacturing processes for drug candidates that allow us to produce drug product in sufficient quantities to be economical, otherwise known as manufacturing scale-up.

If the results of our ongoing or planned clinical studies for our drug candidates are not available when we expect or if we encounter any delay in the analysis of data from our clinical studies or if we encounter delays in our ability to scale-up our manufacturing processes:

·we may be unable to complete our development programs for exenatide once weekly or our obesity clinical trials;

·we may have to delay or terminate our planned filings for regulatory approval;

·we may not have the financial resources to continue research and development of any of our drug candidates; and

·we may not be able to enter into, if we chose to do so, any additional collaborative arrangements.

In addition, Lilly can terminate our collaboration for the development and commercialization of BYETTA and sustained-release formulations of exenatide at any time on 60 days’ notice.

Any of the following could delay the completion of our ongoing and planned clinical studies:

·ongoing discussions with the FDA or comparable foreign authorities regarding the scope or design of our clinical trials;

·delays in enrolling volunteers;

·lower than anticipated retention rate of volunteers in a clinical trial;

·negative results of clinical studies;

·insufficient supply or deficient quality of drug candidate materials or other materials necessary for the performance of clinical trials;

25

·our inability to reach agreement with Lilly regarding the scope, design, conduct or costs of clinical trials with respect to BYETTA, exenatide once weekly or nasal exenatide; or

·serious side effects experienced by study participants relating to a drug candidate.

We are substantially dependent on our collaboration with Lilly for the development and commercialization of BYETTA and dependent on Lilly and Alkermes for the development of exenatide once weekly.

We have entered into a collaborative arrangement with Lilly, who currently markets diabetes therapies and is developing additional diabetes drug candidates, to commercialize BYETTA and further develop sustained-release formulations of BYETTA, including exenatide once weekly.  We entered into this collaboration in order to:

·fund some of our research and development activities;

·assist us in seeking and obtaining regulatory approvals; and

·assist us in the successful commercialization of BYETTA and exenatide once weekly.

In general, we cannot control the amount and timing of resources that Lilly may devote to our collaboration.  If Lilly fails to assist in the further development of exenatide once weekly or the commercialization of BYETTA, or if Lilly’s efforts are not effective, our business may be negatively affected.  We are relying on Lilly to obtain regulatory approvals for and successfully commercialize BYETTA and exenatide once weekly outside the United States.  Our collaboration with Lilly may not continue or result in additional successfully commercialized drugs.  Lilly can terminate our collaboration at any time upon 60 days’ notice.  If Lilly ceased funding and/or developing and commercializing BYETTA or exenatide once weekly, we would have to seek additional sources for funding and may have to delay, reduce or eliminate one or more of our commercialization and development programs for these compounds.  If Lilly does not successfully commercialize BYETTA outside the United States we may receive limited or no revenues from them.  In addition, we are dependent on Alkermes to successfully develop and transfer to us its technology for manufacturing exenatide once weekly.  If Alkermes’ technology is not successfully developed to effectively deliver exenatide in a sustained release formulation, or Alkermes does not devote sufficient resources to the collaboration, our efforts to develop sustained release formulations of exenatide could be delayed or curtailed.

If our patents are determined to be unenforceable or if we are unable to obtain new patents based on current patent applications or for future inventions, we may not be able to prevent others from using our intellectual property.  If we are unable to obtain licenses to third party patent rights for required technologies, we could be adversely affected.

We own or hold exclusive rights to many issued United States patents and pending United States patent applications related to the development and commercialization of exenatide, including BYETTA and exenatide once weekly, SYMLIN and our other drug candidates.  These patents and applications cover composition-of-matter, medical indications, methods of use, formulations and other inventive results.  We have issued and pending applications for formulations of BYETTA and exenatide once weekly, but we do not have a composition-of-matter patent covering exenatide.  We also own or hold exclusive rights to various foreign patent applications that correspond to issued United States patents or pending United States patent applications.

Our success will depend in part on our ability to obtain patent protection for our products and drug candidates and technologies both in the United States and other countries.  We cannot guarantee that any patents will issue from any pending or future patent applications owned by or licensed to us.  Alternatively, a third party may successfully challenge or circumvent our patents.  Our rights under any issued patents may not provide us with sufficient protection against competitive products or otherwise cover commercially valuable products or processes.  For example, our SYMLIN AND BYETTA products are subject to the provisions of the Drug Price Competition and Patent Term Restoration Act of 1984, also known as the “Hatch-Waxman Act,” which provides data exclusivity for a certain period of time.  Once this exclusivity period expires, the Hatch-Waxman Act allows generic manufacturers to file Abbreviated New Drug Applications, or ANDAs, with the FDA requesting approval of generic versions of previously-approved products.  For example, a generic pharmaceutical manufacturer could file an ANDA for SYMLIN as early as March 2009 and for BYETTA as early as April 2009.  If an ANDA is filed for one of our approved products prior to expiration of the patents covering those products, it could result in our initiating patent infringement litigation to enforce our rights.  We can provide no assurances that we would prevail in such an action or in any challenge related to our patent rights.

26

In addition, because patent applications in the United States are maintained, in general, in secrecy for 18 months after the filing of the applications, and publication of discoveries in the scientific or patent literature often lag behind actual discoveries, we cannot be sure that the inventors of subject matter covered by our patents and patent applications were the first to invent or the first to file patent applications for these inventions.  Third parties have filed, and in the future are likely to file, patent applications on inventions similar to ours.  From time-to-time we have participated in, and in the future are likely to participate in, interference proceedings declared by the United States Patent and Trademark Office to determine priority of invention, which could result in a loss of our patent position.  We have also participated in, and in the future are likely to participate in, opposition proceedings against our patents in other jurisdictions, such as Europe and Australia.  Furthermore, we may not have identified all United States and foreign patents that pose a risk of infringement.

We also rely upon licensing opportunities for some of our technologies.  We cannot be certain that we will not lose our rights to certain patented technologies under existing licenses or that we will be able to obtain a license to any required third-party technology.  If we lose our licensed technology rights or if we are not able to obtain a required license, we could be adversely affected.

We may be unable to obtain regulatory clearance to market our drug candidates in the United States or foreign countries on a timely basis, or at all.

Our drug candidates are subject to extensive government regulations related to development, clinical trials, manufacturing and commercialization.  The process of obtaining FDA and other regulatory approvals is costly, time-consuming, uncertain and subject to unanticipated delays.  Regulatory authorities may refuse to approve an application for approval of a drug candidate if they believe that applicable regulatory criteria are not satisfied.  Regulatory authorities may also require additional testing for safety and efficacy.  Moreover, if the FDA grants regulatory approval of a product, the approval may be limited to specific indications or limited with respect to its distribution, and expanded or additional indications for approved drugs may not be approved, which could limit our revenues.  Foreign regulatory authorities may apply similar limitations or may refuse to grant any approval.  Unexpected changes to the FDA or foreign regulatory approval process could also delay or prevent the approval of our drug candidates.

The data collected from our clinical trials may not be sufficient to support approval of our drug candidates or additional or expanded indications by the FDA or any foreign regulatory authorities.  Biotechnology stock prices have declined significantly in certain instances where companies have failed to meet expectations with respect to FDA approval or the timing for FDA approval.  If the FDA’s or any foreign regulatory authority’s response is delayed or not favorable for any of our drug candidates, our stock price could decline significantly.

Moreover, manufacturing facilities operated by us or by the third-party manufacturers with whom we may contract to manufacture our unapproved drug candidates may not pass an FDA or other regulatory authority preapproval inspection.  Any failure or delay in obtaining these approvals could prohibit or delay us or any of our business partners from marketing these drug candidates.

Consequently, even if we believe that preclinical and clinical data are sufficient to support regulatory approval for our drug candidates, the FDA and foreign regulatory authorities may not ultimately approve our drug candidates for commercial sale in any jurisdiction.  If our drug candidates are not approved, our ability to generate revenues may be limited and our business will be adversely affected.

Litigation regarding patents and other proprietary rights may be expensive, cause delays in bringing products to market and harm our ability to operate.

Our success will depend in part on our ability to operate without infringing the proprietary rights of third parties and preventing others from infringing our patents.  Challenges by pharmaceutical companies against the patents of competitors are common.  Legal standards relating to the validity of patents covering pharmaceutical and biotechnological inventions and the scope of claims made under these patents are still developing.  As a result, our ability to obtain and enforce patents is uncertain and involves complex legal and factual questions.  Third parties may challenge, in courts or through patent office proceedings, or infringe upon, existing or future patents.  In the event that a third party challenges a patent, a court or patent office may invalidate the patent or determine that the patent is not enforceable.  Proceedings involving our patents or patent applications or those of others could result in adverse decisions about:

·the patentability of our inventions, products and drug candidates; and/or

·the enforceability, validity or scope of protection offered by our patents.

27

The manufacture, use or sale of any of our products or drug candidates may infringe on the patent rights of others.  If we are unable to avoid infringement of the patent rights of others, we may be required to seek a license, defend an infringement action or challenge the validity of the patents in court. Patent litigation is costly and time consuming.  We may not have sufficient resources to bring these actions to a successful conclusion.  In addition, if we do not obtain a license, develop or obtain non-infringing technology, fail to successfully defend an infringement action or have infringing patents declared invalid, we may:

·incur substantial monetary damages;

·encounter significant delays in bringing our drug candidates to market; and/or

·be precluded from participating in the manufacture, use or sale of our products or drug candidates or methods of treatment requiring licenses.

We are subject to “fraud and abuse” and similar laws and regulations, and a failure to comply with such regulations or prevail in any litigation related to noncompliance could harm our business.

Upon approval of BYETTA and SYMLIN by the FDA, we became subject to various health care “fraud and abuse” laws, such as the Federal False Claims Act, the federal anti-kickback statute and other state and federal laws and regulations.  Pharmaceutical companies have faced lawsuits and investigations pertaining to violations of these laws and regulations.  We cannot guarantee that measures that we have taken to prevent such violations, including our corporate compliance program, will protect us from future violations, lawsuits or investigations.  If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant fines or other sanctions.

Our financial results will fluctuate, and these fluctuations may cause our stock price to fall.

Forecasting future revenues is difficult, especially since we launched our first products in 2005 and the level of market acceptance of these products may change rapidly.  In addition, our customer base is highly concentrated with four customers accounting for most of our net product sales.  Fluctuations in the buying patterns of these customers, which may result from seasonality, wholesaler buying decisions or other factors outside of our control, could significantly affect the level of our net sales on a period to period basis.  As a result, it is reasonably likely that our financial results will fluctuate to an extent that may not meet with market expectations and that also may adversely affect our stock price.  There are a number of other factors that could cause our financial results to fluctuate unexpectedly, including:

·product sales;

·cost of product sales;

·achievement and timing of research and development milestones;

·collaboration revenues;

·cost and timing of clinical trials, regulatory approvals and product launches;

·marketing and other expenses;

·manufacturing or supply issues; and

·potential acquisitions of businesses and technologies and our ability to successfully integrate any such acquisitions into our existing business.

28

We may require additional financing in the future, which may not be available to us on favorable terms, or at all.

We intend to use our available cash for:

·Commercialization of BYETTA and SYMLIN;

·Establishment of additional manufacturing sources, including our Ohio manufacturing facility;

·Development of exenatide once weekly and other pipeline candidates;

·Executing our INTO strategy;

·Our other research and development activities;

·Other operating expenses;

·Potential acquisitions or investments in complementary technologies or businesses; and

·Other general corporate purposes.

We may also be required to use our cash to pay principal and interest on outstanding debt, including a $125 million term loan due in 2010 and $775 million in outstanding principal amount of convertible senior notes, of which $200 million is due in 2011, referred to as the 2004 Notes, and $575 million is due in 2014, referred to as the 2007 Notes.

Our business has a substantial risk of product liability claims, and insurance may not be adequate to cover these claims.

Our business exposes us to potential product liability risks that are inherent in the testing, manufacturing and marketing of human therapeutic products.  Product liability claims could result in the imposition of substantial liability on us, a recall of products, or a change in the indications for which they may be used.  We currently have limited product liability insurance coverage.  We cannot assure you that our insurance will provide adequate coverage against potential liabilities.

Our ability to enter into and maintain third-party relationships is important to our successful development and commercialization of BYETTA, SYMLIN and our other drug candidates and to our potential profitability.

With respect to sales, marketing and distribution outside the United States, we will be substantially dependent on Lilly for activities relating to BYETTA and sustained-release formulations of BYETTA, including exenatide once weekly.  We believe that we will likely need to enter into marketing and distribution arrangements with third parties for, or find a corporate partner who can provide support for, the development and commercialization of SYMLIN or our other drug candidates outside the United States.  We may also enter into arrangements with third parties for the commercialization of SYMLIN or any of our other drug candidates within the United States.

With respect to BYETTA and, if approved, exenatide once weekly, Lilly is co-promoting within the United States.  If Lilly ceased commercializing BYETTA or, if approved, exenatide once weekly, for any reason, we would likely need to either enter into a marketing and distribution arrangement with a third party for those products or significantly increase our internal sales and commercialization infrastructure.

We may not be able to enter into marketing and distribution arrangements or find a corporate partner for SYMLIN or our other drug candidates as we deem necessary.  If we are not able to enter into a marketing or distribution arrangement or find a corporate partner who can provide support for commercialization of our drug candidates as we deem necessary, we may not be able to successfully perform these marketing or distribution activities.  Moreover, any new marketer or distributor or corporate partner for our drug candidates, including Lilly, with whom we choose to contract may not establish adequate sales and distribution capabilities or gain market acceptance for our products, if any.

We have a significant amount of indebtedness.  We may not be able to make payments on our indebtedness, and we may incur additional indebtedness in the future, which could adversely affect our operations.

In April 2004, we issued $200 million of the 2004 Notes and in June 2007, we issued $575 million of the 2007 Notes.  In December 2007, we entered into a $125 million term loan due in December 2010, or the Term Loan.  Our ability to make payments on our debt, including the 2004 and 2007 Notes and the Term Loan, will depend on our future operating performance and ability to generate cash and may also depend on our ability to obtain additional debt or equity financing. During each of the last five years, our operating cash flows were negative and insufficient to cover our fixed charges.  We

29

may need to use our cash to pay principal and interest on our debt, thereby reducing the funds available to fund our research and development programs, strategic initiatives and working capital requirements.  Our ability to generate sufficient operating cash flow to service our indebtedness, including the 2004 and 2007 Notes and the Term Loan, and fund our operating requirements will depend on our ability, alone or with others, to successfully develop, manufacture, obtain required regulatory approvals for and market our drug candidates, as well as other factors, including general economic, financial, competitive, legislative and regulatory conditions, some of which are beyond our control.  Our debt service obligations increase our vulnerabilities to competitive pressures, because many of our competitors are less leveraged than we are.  If we are unable to generate sufficient operating cash flow to service our indebtedness and fund our operating requirements, we may be forced to reduce or defer our development programs, sell assets or seek additional debt or equity financing, which may not be available to us on satisfactory terms or at all.  Our level of indebtedness may make us more vulnerable to economic or industry downturns.  If we incur new indebtedness, the risks relating to our business and our ability to service our indebtedness will intensify.

We may be required to redeem our convertible senior notes upon a designated event or repay the Term Loan upon an event of default.

Holders of the 2004 and 2007 Notes may require us to redeem all or any portion of their notes upon the occurrence of certain designated events which generally involve a change in control of our company.  The lenders under the Term Loan may require us to repay outstanding principal and accrued interest due under the Term Loan upon the occurrence of an event of default, which could include, among other things, nonpayment of principle and interest, violation of covenants and a change in control.  We may not have sufficient cash funds to redeem the notes upon a designated event or repay the Term Loan upon an event of default.  We may elect, subject to certain conditions, to pay the redemption price for the 2004 Notes in our common stock or a combination of cash and our common stock.  We may be unable to satisfy the requisite conditions to enable us to pay some or all of the redemption price for the 2004 Notes in our common stock.  In addition, although there are currently no restrictions on our ability to pay the redemption price under our existing debt agreements, future debt agreements may prohibit us from repaying the redemption price of either of the notes in either cash or common stock.  If we are prohibited from redeeming the 2004 Notes or 2007 Notes, we could seek consent from our lenders to redeem the notes.  If we are unable to obtain their consent, we could attempt to refinance the notes.  If we were unable to obtain a consent or refinance, we would be prohibited from redeeming the notes.  If we were unable to redeem the notes upon a designated event, it would result in an event of default under the indentures governing the notes.  An event of default under the indentures could result in a further event of default under our other then-existing debt including the Term Loan.  In addition, the occurrence of a designated event may be an event of default under our other debt.  Further, an event of default under the Term Loan could result in an event of default under the indentures governing the notes.

If our research and development programs fail to result in additional drug candidates, the growth of our business could be impaired.

Certain of our research and development programs for drug candidates are at an early stage and will require significant research, development, preclinical and clinical testing, manufacturing scale-up activities, regulatory approval and/or commitments of resources before commercialization.  We cannot predict whether our research will lead to the discovery of any additional drug candidates that could generate additional revenues for us.

Our future success depends on our chief executive officer, and other key executives and our ability to attract, retain and motivate qualified personnel.

We are highly dependent on our chief executive officer, and the other principal members of our executive and scientific teams.  The unexpected loss of the services of any of these persons might impede the achievement of our research, development and commercialization objectives.  Recruiting and retaining qualified sales, marketing, regulatory, scientific and other personnel and consultants will also be critical to our success.  We may not be able to attract and retain these personnel and consultants on acceptable terms given the competition between numerous pharmaceutical and biotechnology companies.  We do not maintain “key person” insurance on any of our employees.

We may be unable to adequately prevent disclosure of trade secrets and other proprietary information.

In order to protect our proprietary technology and processes, we rely in part on confidentiality agreements with our corporate partners, employees, consultants, manufacturers, outside scientific collaborators and sponsored researchers and other advisors.  These agreements may not effectively prevent disclosure of confidential information and may not provide an adequate remedy in the event of unauthorized disclosure of confidential information.  In addition, others may independently discover our trade secrets and proprietary information.

30

Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and failure to obtain or maintain trade secret protection could adversely affect our competitive business position.

Our research and development activities and planned manufacturing activities involve the use of hazardous materials, which subject us to regulation, related costs and delays and potential liabilities.

Our research and development and our planned manufacturing activities involve the controlled use of hazardous materials, chemicals and various radioactive compounds.  Although we believe that our research and development safety procedures for handling and disposing of these 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 addition, as part of the development of our planned manufacturing activities, we will need to develop additional safety procedures for the handling and disposing of hazardous materials.  If an accident occurs, we could be held liable for resulting damages, which could be substantial.  We are also subject to numerous environmental, health and workplace safety laws and regulations, including those governing laboratory procedures, exposure to blood-borne pathogens and the handling of biohazardous materials.  Additional federal, state and local laws and regulations affecting our operations may be adopted in the future.  We may incur substantial costs to comply with, and substantial fines or penalties if we violate, any of these laws or regulations.

We are exposed to potential risks from legislation requiring companies to evaluate internal control over financial reporting.

The Sarbanes-Oxley Act requires that we report annually on the effectiveness of our internal control over financial reporting.  Among other things, we must perform systems and processes evaluation and testing.  We must also conduct an assessment of our internal control to allow management to report on, and our independent registered public accounting firm to attest to, our internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act.  In connection with our Section 404 compliance efforts, we have incurred or expended, and expect to continue to incur or expend, substantial accounting and other expenses and significant management time and resources.  We have implemented certain remediation activities resulting from our ongoing assessment of internal control over financial reporting.  Our future assessment, or the future assessments by our independent registered public accounting firm, may reveal material weaknesses in our internal control.  If material weaknesses are identified in the future we would be required to conclude that our internal control over financial reporting are ineffective and we could be subject to sanctions or investigations by the SEC, the NASDAQ Stock Market or other regulatory authorities, which would require additional financial and management resources and could adversely affect the market price of our common stock.

We have implemented anti-takeover provisions that could discourage or prevent an acquisition of our company, even if the acquisition would be beneficial to our stockholders, and as a result our management may become entrenched and hard to replace.

Provisions in our certificate of incorporation and bylaws could make it more difficult for a third party to acquire us, even if doing so would benefit our stockholders.  These provisions include:

·allowing our board of directors to elect a director to fill a vacancy created by the expansion of the board of directors;

·allowing our board of directors to issue, without stockholder approval, up to 5.5 million shares of preferred stock with terms set by the board of directors;

·limiting the ability of holders of our outstanding common stock to call a special meeting of our stockholders; and

·preventing stockholders from taking actions by written consent and requiring all stockholder actions to be taken at a meeting of our stockholders.

Each of these provisions, as well as selected provisions of Delaware law, could discourage potential takeover attempts, could adversely affect the trading price of our securities and could cause our management to become entrenched and hard to replace.  In addition to provisions in our charter documents and under Delaware law, an acquisition of our company could be made more difficult by our employee benefits plans and our employee change in control severance plan, under which, in connection with a change in control and termination of employment, stock options held by our employees may become vested and our officers may receive severance benefits.  We also have implemented a stockholder rights plan, also called a poison pill, which could make it uneconomical for a third party to acquire us on a hostile basis.

31

Our executive officers, directors and major stockholders control approximately 78% of our common stock.

As of June 30, 2008, executive officers, directors and holders of 5% or more of our outstanding common stock, in the aggregate, owned or controlled approximately 78% of our outstanding common stock.  As a result, these stockholders are able to influence all matters requiring approval by our stockholders, including the election of directors and the approval of corporate transactions.  This concentration of ownership may also delay, deter or prevent a change in control of our company and may make some transactions more difficult or impossible to complete without the support of these stockholders.

Substantial future sales of our common stock by us or our existing stockholders or the conversion of our convertible senior notes to common stock could cause the trading price of our common stock to fall.

Sales by existing stockholders of a large number of shares of our common stock in the public market or the perception that additional sales could occur could cause the trading price of our common stock to drop.  Likewise, the issuance of shares of common stock upon conversion of our convertible notes or redemption of our convertible notes upon a designated event, or upon additional convertible debt or equity financings or other share issuances by us, including shares issued in connection with potential future strategic alliances, could adversely affect the trading price of our common stock.  Our convertible notes are currently convertible into a total of up to 15.2 million shares. In addition, the existence of these notes may encourage short selling of our common stock by market participants.

Significant volatility in the market price for our common stock could expose us to litigation risk.

The market prices for securities of biopharmaceutical and biotechnology companies, including our common stock, have historically been highly volatile, and the market from time to time has experienced significant price and volume fluctuations that are unrelated to the quarterly operating performance of these biopharmaceutical and biotechnology companies.  Since January 1, 2006, the high and low sales price of our common stock varied significantly, as shown in the following table:

	High		Low
Year ending December 31, 2008
Third Quarter (through July 25, 2008)	$	29.57	$	24.13
Second Quarter	$	33.22	$	25.30
First Quarter	$	37.38	$	23.75
Year ended December 31, 2007
Fourth Quarter	$	51.10	$	35.83
Third Quarter	$	53.25	$	40.86
Second Quarter	$	46.93	$	36.91
First Quarter	$	42.45	$	35.55
Year ended December 31, 2006
Fourth Quarter	$	48.48	$	35.74
Third Quarter	$	51.54	$	40.76
Second Quarter	$	49.37	$	38.16
First Quarter	$	49.08	$	35.58

Given the uncertainty of our future funding, whether BYETTA and SYMLIN will meet our expectations, and the regulatory approval of our other drug candidates, we may continue to experience volatility in our stock price for the foreseeable future.  In addition, the following factors may significantly affect the market price of our common stock:

·our financial results and/or fluctuations in our financial results;

·safety issues with BYETTA, SYMLIN or our product candidates;

·clinical study results;

·determinations by regulatory authorities with respect to our drug candidates;

·our ability to complete our Ohio manufacturing facility and the commercial manufacturing process for exenatide once weekly;

32

·developments in our relationships with current or future collaborative partners;

·our ability to successfully execute our commercialization strategies;

·developments in our relationships with third-party manufacturers of our products and other parties who provide services to us;

·technological innovations or new commercial therapeutic products by us or our competitors;

·developments in patent or other proprietary rights; and

·governmental policy or regulation, including with respect to pricing and reimbursement.

Broad market and industry factors also may materially adversely affect the market price of our common stock, regardless of our actual operating performance.  Periods of volatility in the market price of our common stock expose us to securities class-action litigation, and we may be the target of such litigation as a result of market price volatility in the future.

ITEM 4. Submission of Matters to a Vote of Security Holders

Our Annual Meeting of Stockholders was held on May 30, 2008.  At the Annual Meeting, the stockholders of the Company (i) elected each of the persons listed below to serve as a director of Amylin until the next annual meeting or until his/her successor is elected, (ii) approved an increase of 3.5 million shares in the aggregate number of shares of our common stock authorized for issuance under our 2001 Equity Incentive Plan, and (iii) ratified the selection of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2008.

We had 137,058,518 shares of common stock outstanding and entitled to vote as of April 4, 2008, the record date for the Annual Meeting.  At the Annual Meeting, 124,341,882 shares of common stock were present in person or represented by proxy for the four proposals indicated above.  The following sets forth detailed information regarding the results of the voting at the Annual Meeting:

Proposal 1:  Election of Directors.

Director	Votes in Favor	Votes Withheld
Adrian Adams	116,444,063	7,897,818
Steven R. Altman	116,507,996	7,833,885
Teresa Beck	116,530,336	7,811,545
Daniel M. Bradbury	116,162,509	8,179,372
Joseph C. Cook, Jr.	116,263,036	8,078,845
Karin Eastham	116,403,046	7,938,835
James R. Gavin III, M.D., PhD.	115,234,157	9,107,724
Ginger L. Graham	116,331,797	8,010,084
Howard E. Greene, Jr.	116,447,174	7,894,707
Jay S. Skyler, M.D., MACP	114,779,160	9,562,721
Joseph P. Sullivan	116,528,886	7,812,995
James N. Wilson	115,174,305	9,167,576

Proposal 2:  Approve an increase of 3.5 million shares in the aggregate number of shares of our common stock authorized for issuance under our 2001 Equity Incentive Plan.

Votes in Favor:	74,761,567
Votes Against:	26,716,459
Abstentions:	138,064
Broker Non Vote:	22,725,792

Proposal 3:  Ratification of selection of Ernst & Young LLP as our independent registered public accounting firm.

Votes in Favor:	116,869,889
Votes Against:	862,013
Abstentions:	6,609,980

33

ITEM 6.  Exhibits

The following exhibits are included as part of this report:

Exhibit  Number	Description
3.1	Amended and Restated Certificate of Incorporation (filed as an exhibit to Registrant’s registration statement on Form S-1 (File No. 333-44195) or amendments thereto and incorporated herein by reference)
3.2	Third Amended and Restated Bylaws (filed as an exhibit to Registrant’s Current Report on Form 8-K filed on October 31, 2007 and incorporated herein by reference)
3.3	Certificate of Amendment of Amended and Restated Certificate of Incorporation (filed as an exhibit to Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2001 and incorporated herein by reference)
3.4	Certificate of Amended and Restated Certificate of Incorporation (filed as an exhibit to Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007 and incorporated herein by reference)
4.1	Specimen Common Stock Certificate (filed as an exhibit to Registrant’s registration statement on Form S-1 (File No. 333-44195) or amendments thereto and incorporated herein by reference)
4.2	Rights Agreement, dated as of June 17, 2002, between the Registrant and American Stock Transfer & Trust Company (filed as an exhibit to Registrant’s Current Report on Form 8-K filed on June 18, 2002 and incorporated herein by reference)
4.3	First Amendment to Rights Agreement dated December 13, 2002, between the Registrant and American Stock Transfer & Trust Company (filed as an exhibit to Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002 and incorporated herein by reference)
4.4	Second Amendment to Rights Agreement, dated March 31, 2008, between the Registrant and American Stock Transfer and Trust Company (filed as an exhibit to Registrant’s Current Report on Form 8-K filed on March 13, 2008 and incorporated herein by reference)
4.5	Form of Rights Certificate (filed as an exhibit to Registrant’s Current Report on Form 8-K filed on June 18, 2002 and incorporated herein by reference)
4.6	Certificate of Designation of Series A Junior Participating Preferred Stock (filed as an exhibit to Registrant’s Current Report on Form 8-K filed on June 18, 2002 and incorporated herein by reference)
10.1	First Amendment to Exenatide Manufacturing Agreement, dated January 6, 2006, between the Registrant and Mallinckrodt Inc.
10.2	Amended and Restated Commercial Supply Agreement, dated April 1, 2008, between the Registrant and Wockhardt UK (Holdings) Ltd.*
10.3	Addendum to U.S. Co-Promotion Agreement, dated May 8, 2008, between the Registrant and Eli Lilly and Company*
10.4	Consulting Agreement, dated June 1, 2008, between the Registrant and Alain D. Baron+
10.5	Third Amendment to Exenatide Manufacturing Agreement, dated June 16, 2008, between the Registrant and Mallinckrodt Inc.*
31.1	Certification of Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended

34

31.2	Certification of Principal Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended
32.1	Certifications Pursuant to U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

* Confidential treatment has been requested with respect to certain portions of this exhibit. Omitted portions have been filed separately with the Securities and Exchange Commission.

+ Indicates a management contract or compensatory plan.

35

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Amylin Pharmaceuticals, Inc.
Date: July 31, 2008	By:	/S/ MARK G. FOLETTA
	Mark G. Foletta, Senior Vice President, Finance and Chief Financial Officer (on behalf of the registrant and as the registrant’s principal financial and accounting officer)

36

EX-10.1

Exhibit 10.1

[Amylin Pharmaceuticals, Inc. letterhead]

December 21, 2005

Scott Macke	VIA FEDERAL EXPRESS
Senior Product Manager	(IN DUPLICATE)
Mallinckrodt, Inc.
675 McDonnell Boulevard
St. Louis, Missouri  63134

Re:First Amendment to Exenatide Manufacturing Agreement dated
October 1, 2003 (the “Agreement”)

Dear Mr. Macke:

We understand that Amylin Pharmaceuticals, Inc. (“Amylin”) and Mallinckrodt, Inc. (“Mallinckrodt”) desire to modify the Agreement between Amylin and Mallinckrodt as stated below for the first time in this amendment letter. Therefore, Amylin and Mallinckrodt agree as follows:

1.The current Section 1.12 is hereby replaced in its entirety with the following:

“Contract Year” variously (as the context requires) means (i) a twelve (12) month period beginning on October 1, 2003 and ending on September 30, 2004 (i.e. the “first Contract Year”), (ii) a fifteen (15) month period beginning on October 1, 2004 and ending on December 31, 2005 (i.e., the “second Contract Year”) and (iii) thereafter, each consecutive twelve (12) month period coinciding with the calendar year, beginning with the calendar year 2006 (i.e. the “third”, “fourth” and all subsequent Contract Years).

All provisions of the Agreement (in particular, but without limitation, Sections 2.3, 2.4 and 7.2) will be read and interpreted in a manner consistent with the amended Section 1.12.

Except as expressly amended above, the terms and conditions of the Agreement will continue in full force and effect in accordance with its terms. The terms and conditions of this amendment letter will be incorporated into and made a part of the Agreement effective as of January 1, 2006.

If the terms and conditions of this amendment letter are acceptable, please have an authorized representative of Mallinckrodt Inc. sign the enclosed duplicate originals of this amendment letter, and return one fully signed amendment letter to me for our records.

Sincerely,

AMYLIN PHARMACEUTICALS, INC.

/s/ Gregg Stetsko

Gregg Stetsko, Ph.D.

Vice President, Operations

Agreed and Accepted:

MALLINCKRODT INC.

By:	/s/ Pat E. Cunningham
Name:				Pat E. Cunningham
Title:		V.P. & G.M. API’s Unit
Date:			January 6, 2006

2

EX-10.2

Exhibit 10.2

***Text Omitted and Filed Separately
Confidential Treatment Requested
Under 17 C.F.R. Section 200.80(b)(4)
And 240.24b-2

AMENDED AND RESTATED COMMERCIAL SUPPLY AGREEMENT

THIS AMENDED AND RESTATED COMMERCIAL SUPPLY AGREEMENT (the “Agreement”) is entered into as of April 1, 2008 (the “Effective Date”), by and between AMYLIN PHARMACEUTICALS, INC. (“Company”), having its principal place of business located at 9360 Towne Centre Drive, San Diego, CA 92121, U.S.A. and Wockhardt UK (Holdings) Ltd., formerly CP Pharmaceuticals Ltd., (“Manufacturer”), having its registered office at Ash Road North, Wrexham Industrial Estate, Wrexham LL13 9UF, United Kingdom and as of the Effective Date hereof shall amend and replace in its entirety the Commercial Supply Agreement entered into between Company and Manufacturer as of October 7, 2004 (the “Commercial Supply Agreement”), as amended.

RECITALS

WHEREAS, Manufacturer is in the business of manufacturing pharmaceutical products;

WHEREAS, Company is engaged in research and development of, and intends to commercialize, pharmaceutical products;

WHEREAS, pursuant to the Development Letter Agreement between the parties dated April 13, 2004 (the “Letter Agreement”), Manufacturer has assisted Company in the development of a Manufacturing Process for the Product (each as defined herein) and has supplied the Product to Company for use in clinical investigations and registration batches to support regulatory filings; and

WHEREAS, Company wishes to purchase from Manufacturer, and Manufacturer is willing to supply to Company, the Product in commercial quantities for commercial sale on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and premises contained in this Agreement, the parties hereto agree as follows:

1.Definitions.

1.1“Affiliate” shall mean an entity that, directly or indirectly, controls, is controlled by or is under common control with a party, where “control” means the possession, direct or indirect, or the power to direct or cause the direction of the management or policies of an entity, whether by ownership of at least 50% of the common stock or voting ownership interest of an entity, by contract or otherwise; provided, however that the Collaboration Partner shall not be an Affiliate of Amylin.

1.2“Applicable Laws” shall mean all United States, European and any other jurisdiction’s federal, state, local and other laws, statutes, rules, regulations, ordinances, (including any amendments thereto), applicable to the manufacture and shipment of Product, including, without limitation, the applicable regulations and guidance of the FDA and all applicable EU cGMPs.  Extensions to the aforementioned defined territories shall be the subject of side letters to this Agreement which may be jointly agreed in good faith from time to time between the Parties.

1.3“Approval Date” shall mean the date the FDA grants final Regulatory Approval of a Drug Approval Application submitted by the Company for the Product.

1.4“Batch” shall mean that quantity of units of Product produced from a single homogeneous mix in a single cycle of manufacture.

1.5“Batch Record” shall mean Manufacturer’s documented procedures for compounding, filling and packaging Exenatide and/or inactive excipients into Product as agreed upon by the parties in writing in advance of manufacture of the applicable Batch.

1.6“Business Day” shall mean any Monday, Tuesday, Wednesday, Thursday or Friday which is not a bank holiday in San Diego, California or the United Kingdom.

1.7“Certificate of Analysis” shall mean a signed certificate, issued by the party providing a pharmaceutical compound or product, attesting to the nature and/or content, as applicable, of such compound or product.

1.8“cGMP” shall mean current good manufacturing practices as defined from time to time (a) in regulations promulgated under the FDCA; (b) the principles and guidelines specified in Chapter II of European Commission Directive 91/356/EEC, including “the rules governing medicinal products” in the European Union Volume 4; and (c) laws, rules, or regulations of an applicable Regulatory Authority at the time of manufacture equivalent to those in (a) and (b) above.

1.9“Collaboration Partner” shall mean Eli Lilly and Company, with whom Company has entered into a collaboration arrangement regarding Exenatide, or its successor.

1.10“Confidential Information” of a party shall mean all data and information, tangible or intangible, whether in written, graphic, verbal or electronic form, disclosed by such party to the other party, its employees or representatives, or developed for or on behalf of such party by the other party under this Agreement.

1.11“Contaminant” means a substance contained in Product that (i) causes Product to fail to meet any Product Requirements or (ii) causes Product to be adulterated within the meaning of the FDCA.

1.12“Control” shall mean, with respect to certain rights, possessing ownership of or possessing the right to grant a license to such rights.

1.13“Drug Approval Application” shall mean an application for Regulatory Approval required before commercial sale or use of Product as a drug in a regulatory jurisdiction.

1.14“Exenatide or Exenatide Drug Substance” shall mean a dry powder preparation containing Exenatide peptide as provided by Company for further manufacture into Product by Manufacturer.

1.15“Facilities” shall mean the manufacturing plant and offices owned by Manufacturer and located at Ash Road North, Wrexham Industrial Estate, Wrexham LL 13 9UF, United Kingdom and a storage and distribution facility owned by Manufacturer and located at Unit B, Spectrum Business Park, Bridge Road South, Wrexham Industrial Estate, Wrexham LL13 9QA, United Kingdom.

1.16“FDA” shall mean United States Food and Drug Administration or any successor agency.

1.17“FDCA” shall mean the United States Federal Food Drug and Cosmetics Act, as amended and all regulations promulgated thereunder, or any successor laws and regulations thereto

1.18“Fill Date” shall mean that date on which the manufacture of a Batch is actually completed, notwithstanding the date on which the Batch manufacture begins.

1.19“Hidden Defect” shall mean a defect that causes Product to fail to conform to the Specifications or to the warranties provided by Manufacturer hereunder, which defect is not discoverable upon reasonable physical inspection and testing performed pursuant to Section 5.3 but is discovered at a later time (e.g., in the course or as a result of long-term stability studies).

1.20“Manufacturing Process” shall mean the methods, techniques, processes and procedures developed under the Development Agreement or otherwise provided to Manufacturer by the Company or its Collaboration Partner with respect to Product.

1.21“Manufacturing Technology” shall mean the specific and confidential technology which has been developed by Manufacturer for the siliconization of glass cartridges used in the production of the Product as defined herein and is described further in related standard operating procedures (“SOPs”).

1.22“Materials” shall mean raw materials, components, excipients and other ingredients and packaging materials used in the manufacture and packaging of Product.

1.23“OUS Country” shall mean any country outside of the United States and its territories.

1.24“Product” shall mean the finished dosage form of Exenatide, for injection in cartridge presentation as described in Exhibit B of this Agreement.

1.25“Product Price” shall mean the price for Product set forth in Exhibit A.

1.26“Product Requirements” shall mean all of the requirements referenced in Section 8.3 of this Agreement.

1.27“Quality Agreement” shall mean the (Technical) Quality Agreement among Amylin, Collaboration Partner and Manufacturer dated as of the October 7, 2004, which is incorporated into this Agreement by reference and made a part hereof.

1.28“Recall Action” shall have the meaning ascribed to it in Section 5.4 hereof.

1.29“Regulatory Approval” shall mean any approvals (including supplements, amendments, pre-marketing and post-marketing approvals, labeling approval, and pricing and reimbursement approvals), licenses, registrations or authorizations of any national, supra-national (e.g., the European Commission or the Council of the European Union), regional, state or local regulatory agency, department, bureau, commission, council or other governmental entity, necessary for the manufacture, distribution, use or sale of Product in a regulatory jurisdiction.

1.30“Regulatory Authority” shall mean the FDA in the United States or the MHRA, EMEA or any other the applicable regulatory agency or entity having the responsibility, jurisdiction, and authority to approve the manufacture, use, importation, packaging, labeling, marketing, and sale of Product in any additional country, or any successor body to any of them.

1.31“Specifications” shall mean the regulatory, manufacturing, quality control and quality assurance procedures, processes, practices, standards, instructions and any other attributes that the parties agree upon, or that are otherwise required, in connection with the manufacture of Product, as set forth on Exhibit B, as amended from time to time by written agreement of the parties pursuant to Section 4.3.

1.32“Term” shall have the meaning provided in Section 9.1.

2.Purchase and Supply.

2.1Purchase and Supply Agreement.  During the Term, Company agrees to buy from Manufacturer, and Manufacturer agrees to sell to Company, such quantities of the Product as may be set forth on purchase orders placed by Company in accordance with the provisions hereof.

2.2Minimum Orders.  For the time frames set forth on the attached Exhibit C, Company agrees to purchase Product from Manufacturer in an amount equal to or greater than the minimum quantities set forth on Exhibit C.  For clarification, purposes, cartridges purchased as process validation batches, including those for which purchase orders have been submitted prior to October 7, 2004 by Company to Manufacturer, will count as part of the minimum quantity required in the Initial Period.  In the event that during any Purchase Period (as defined in Exhibit C) the Company’s actual purchases of the Product from Manufacturer are less than the minimum amount specified above for said Purchase Period, Company will pay to Manufacturer

the difference between the amount invoiced to Company for its actual purchases during the Purchase Period and the amount that would have been invoiced had Company purchased the minimum amount agreed to for such Purchase Period; provided, however, (i) Company shall not be obligated to make any such payments if the Agreement has been terminated, (ii) the Company shall only be obligated to pay for Product supplied to the Company pursuant to this Agreement.  In any given calendar quarter, Company shall order [***]%, plus or minus [***]%, of the minimum quantity for the Purchase Period in which the calendar quarter occurs.  Following the Fifth Period, Manufacturer may bid, in competition with Company’s other manufactures of the Product, to provide a greater percentage of Company’s requirements of the Product.  For purposes of this Section 2.2, a “purchase” shall mean the submission by Company of a firm purchase order.

For Product orders not timely shipped by Manufacturer, Company agrees to add the balance of the delayed Product to the next Purchase Period with the shipment schedule to be agreed upon by both parties in writing.

2.3Forecasts.  Beginning within seven days of the Approval Date and at the commencement of every calendar [***] thereafter, Company shall furnish Manufacturer with non-binding forecasts of Product requirements under this Agreement for the ensuing [***] ([***]) calendar [***].

2.4Purchase Orders.  Company shall order the Product by submitting written purchase orders, in Company’s standard form in effect from time to time, to Manufacturer.  Each purchase order shall specify the quantities of the Product ordered which shall be in batch quantities or multiples thereof, the cartridge size thereof, the desired shipment date for such Product, the pricing, and any special shipping instructions.  Company shall submit each purchase order to Manufacturer at least [***] Business days in advance of the desired shipment date specified in such purchase order.  No more than ten (10) Business days following receipt of each purchase order Manufacturer shall confirm in writing its acceptance of same and shall advise Company of its planned shipment date and its designated lot numbers for the Product.  Manufacturer shall make each shipment of the Product in the quantity, cartridge size and on the shipment date specified for it on Company’s purchase order, via the mode(s) of transportation and to the party and destination specified on such purchase order.   Release samples representing the Manufacturing Process and meeting the requirements set forth in the Batch Record will be shipped within [***] Business Days after the actual Fill Date. No later than [***] ([***]) Business days following Company’s submission of a purchase order Manufacturer shall ship the Product which is the subject of the purchase order, subject to Section 5.1, and shall supply copies of the associated documentation as described in the Quality (Technical) Agreement, including the signed Certificate of Analysis and signed Certificate of Compliance for the Product.  Any purchase orders for the Product submitted by Company to Manufacturer shall reference this Agreement and shall be governed exclusively by the terms contained herein except to the extent set forth in the following sentence.  The terms and conditions of this Agreement shall supersede any term or condition in any order, confirmation or other document furnished by Company or Manufacturer that is inconsistent with these terms and conditions, unless it is mutually agreed between the parties hereto in writing.  If purchase orders are issued less than

* Confidential Treatment Request(ed)

[***] Business days in advance of the desired shipment date, Manufacturer shall make commercially reasonable efforts to meet Company’s requirements, however Manufacturer’s failure to meet such requirements shall not be deemed to be a breach of this Agreement.  In the event a purchase order is issued less than [***] ([***]) Business days in advance of the desired shipment date, Manufacturer shall advise Company within ten (10) Business Days whether such purchase order can be fulfilled by the date requested in the purchase order and the parties shall agree upon a delivery date of the requested Product.

3.Prices and Payment.

3.1Price.  Company shall pay to Manufacturer the applicable Product Price for all Product supplied to Company pursuant to this Agreement. All shipment and delivery costs directly related to Product shipment shall be invoiced directly to Company. For any additional services requested by Company via a purchase order and provided by Manufacturer, such as testing or packaging, Company shall pay the applicable price set forth on Exhibit A hereto provided; however, Manufacturer shall provide Company a prior written estimate of the costs for such services.  Company shall pay to Manufacturer the actual, out-of-pocket costs for any materials for which it has agreed herein to be responsible to pay.

3.2Purchase Price Adjustment.  Company and Manufacturer agree to meet no less than twice per year (12 month period) to formally review continuous improvement activities and other improvements resulting from experience in operating the Manufacturing Process including potential adjustments in Materials or Materials pricing. Company and Manufacturer shall work together to obtain process improvements.  Net savings or increases in the purchase costs of Materials obtained by Manufacturer according to Section 4.1(a) shall result in reductions or increases respectively in the Purchase Price. Net savings in labour costs resulting from Manufacturer’s efficient management of the Manufacturing Process shall not result in reductions in the Purchase Price. Net increases in the cost of the Manufacturing Process due to increased labour costs or changes demanded by the Company shall result in increases in the Purchase Price. Net savings in the product cost per unit achieved due to increases in the Target Yield or manufacturing batch size shall result in corresponding reductions in the Purchase Price.  If the parties cannot in good faith agree on the proposed Purchase Price adjustment, the dispute will be discussed between the senior management of both Company and Manufacturer.  In no event may Manufacturer increase the Purchase Price by a percent which exceeds the lesser of (i) the percentage change in the [***] or (ii) [***] percent ([***]%) of the original Purchase Price.  The increase or decrease will be applicable on 1^st May of every calendar year.

3.3Invoices.  Upon acceptance by Manufacturer of a purchase order, Manufacturer shall invoice Company for [***] percent ([***]%) of the estimated aggregate Product Price for the purchase order (the “Reservation Fee”).  Upon completion of the manufacture of each purchase order and the submission of a Certificate of Analysis and Certificate of Compliance duly approved by Manufacturer to Company for the batches of Product manufactured for such purchase order, Manufacturer shall invoice Company the Product Price for the quantity of Product manufactured with a credit to Company in the amount of the Reservation Fee.

* Confidential Treatment Request(ed)

3.4Cancellation Fee.  If, after issuing a Purchase Order to the Manufacturer for quantities which are in excess of the minimum order quantities defined in Section 2.2 for that Purchase Period and acceptance by the Manufacturer of such Purchase Order, but before Manufacturer starts work to manufacture for that Purchase Order, the Company subsequently cancels or postpones its order, then Manufacturer shall have the right but not the obligation to charge to Company [***] percent ([***]%) of the product price (“Cancellation Fee”). If, after issuing a Purchase Order to the Manufacturer, the Company subsequently cancels or postpones its order after the Manufacturer has started work to manufacture for that Purchase Order, the Manufacturer shall be entitled to charge to Company [***] percent ([***]%) of the Product Price for that Purchase Order.

3.5Time for payments shall be of the essence. The Manufacturer reserves the right to charge the lesser of either [***]% or the highest percentage allowed under applicable law, per month on any overdue amount until the date of payment in full save where part or whole payment is withheld by the Company on a specific invoice as a result of a genuine dispute over that invoice or part thereof.

3.6Method of Payment; Currency.  All payments due hereunder to Manufacturer shall be paid to Manufacturer in [***] not later than [***] ([***]) days following the receipt of the applicable invoice, unless such shipment of Product is rejected in accordance with the provisions of Section 5.3.  Company shall make payment by telegraphic transfer to the account number [***] at HSBC, 17-19 Regent Street, Wrexham North Wales, UK. LL11 1RY or to such other account of Manufacturer designated in writing to Company.  All currency amounts referenced in this Agreement are to [***].

3.7Effect of Certain Events.  In the event of termination or expiration of this Agreement, Manufacturer shall provide reasonable assistance to Company to implement the transfer of manufacturing responsibility for the Product to Company or its designee.  Such reasonable assistance shall include transfer of the Manufacturing Process as described in Section 7.7.  In the event of termination of this Agreement by Company pursuant to Section 9.2(a) or (b) or 9.3(c), such reasonable assistance will be provided at Manufacturer’s expense. In the event of any other termination of this Agreement pursuant to Section 9.3(b) or Section 9.4, within [***] days Company shall pay to Manufacturer a sum of [***] ([***]) and payment of such amount shall be a full and final settlement of all obligations of Company pursuant to this Agreement.  In the event of any other termination or expiration of this Agreement, Company shall pay Manufacturer’s reasonable and documented costs of providing such assistance.  In the event of termination or expiration of this Agreement, Manufacturer will promptly return to Company all unused Exenatide provided to Manufacturer pursuant to Section 4.1 hereof and Materials paid for by Company as directed by and at the expense of Company.

* Confidential Treatment Request(ed)

4.Manufacturing.

4.1Materials.

(a)Except as stated in Section 4.1(b), Manufacturer will obtain any Materials required for the manufacture of the Product, and shall use commercially reasonable efforts to obtain the best price for such materials, in reasonable quantities consistent with Company’s most recent forecast for the Product. Company shall pay the actual, out-of-pocket cost of the Materials plus the cost of related quality control testing subject to Sections 3.3 and 3.6.  Manufacturer shall store the Materials at no cost to the Company.  All Materials obtained by Manufacturer pursuant to this Section 4.1(a) shall meet the specifications stated in the Quality Agreement and Manufacturer shall order all Materials only from vendors approved in advance by Company.  Manufacturer shall ensure components, excipients and other materials required to manufacture the Batch are released for use, in accordance with Manufacturer’s Quality System and requirements stated in the then current Quality Agreement, prior to the manufacturing of the Batch. Company shall reimburse the Manufacturer all the costs of all the components in stock or on order on behalf of the Company by the Manufacturer, including QC testing costs and disposal costs, if such materials become redundant at any time if: (i) Company or its Collaboration Partner makes a good faith determination not to continue with the commercialization of Product, (ii) Company terminates this Agreement according to Section 9.4, (iii) such materials expire due to insufficient demand for Product, or (iv) such materials become obsolete due to a change of specification advised by the Company; provided, however, Manufacturer shall use commercially reasonable efforts to either utilize such materials in other areas of its business or to return the materials, and Company shall not reimburse Manufacturer for any such utilized or returned materials.  The orders will be placed keeping in view the future forecasts and delivery lead times. Manufacturer will maintain a safety stock level of at least [***] ([***]) calendar [***] and ([***]) calendar [***], but no more than [***] ([***]) calendar [***] of approved materials.  For clarification purposes, safety stock includes materials needed to fulfill forecasts issued by Company pursuant to Section 2.3.  Manufacturer and Company will review safety stock levels on a quarterly basis and will mutually agree to make appropriate changes.

(b)Company shall supply to Manufacturer, free of charge, freight and duties prepaid and with transportation insurance paid by Company, quantities of Exenatide sufficient to enable Manufacturer to manufacture the quantities of the Product ordered by Company.  Exenatide will be sampled according to the Quality Agreement and held by Manufacturer under appropriate storage conditions until such time as it is required for manufacture of Product.  Manufacturer and Company agree that in the case of Product manufactured prior to satisfactory completion of the first [***] commercial full scale batches (including process validation batches) of each of the presentations of Product, Manufacturer shall make commercially reasonable efforts to maximize yields but shall not be held liable for losses of Exenatide occurring as part of the manufacturing process unless otherwise agreed to by the parties.  Company and Manufacturer agree to meet no less than twice per year (12 month period) to review losses of Exenatide occurring as part of the manufacturing process and to negotiate financial responsibility.  For clarity, “satisfactory completion” of a batch will not include a batch with aberrant results.  The Target Yield shall be defined as [***] percent ([***]%) of the Batch

* Confidential Treatment Request(ed)

Yield as set forth on Exhibit A.  All shipments of Exenatide will be accompanied by a Certificate of Analysis indicating the peptide content of such Exenatide and such other information as Amylin may specify and is to arrive approximately [***] days in advance of planned Product manufacture to allow for testing.  Within [***] ([***]) business days of receipt of any Exenatide hereunder, Manufacturer will verify the quantity and identity of such shipment of Exenatide according to test methods approved and provided by Company and shall inspect the Exenatide in accordance with Manufacturer’s incoming material inspection procedures.  If Manufacturer detects any discrepancies in the Exenatide in quantity or in the identity based on the identity testing performed, Manufacturer shall inform Company immediately upon, but no later than [***] ([***]) business days after, having detected such discrepancies.  Manufacturer shall also inform Company of any obvious damage to the Exenatide or container received within [***] ([***]) business days of Manufacturer’s receipt thereof.  Any rejected Exenatide shall be returned at Company’s expense and direction.  Company shall make all final determinations if material is suitable for use in Product manufacturing.

4.2Manufacture of Product.  Manufacturer will manufacture and store Product at the Facilities in accordance with the Quality Agreement, the Specifications, applicable Regulatory Approvals, cGMPs and other Applicable Laws, as then in effect.  Manufacturer shall not rework any Batch of the Product without Company’ prior written consent, which consent shall not be unreasonably withheld.  Manufacturer shall allow an employee of each of Company and Collaboration Partner (and, with Manufacturer’s prior consent, other persons) to be present during all manufacturing of the Product. The Manufacturer shall perform quality control and quality assurance testing to protocols agreed in writing between the Parties prior to shipment of Exenatide Injection to the Company. The Manufacturer shall test a portion of each Batch manufactured for the Company prior to delivering such Batch to the Company, and shall provide a certificate of analysis (i) confirming that the Manufacturer followed the agreed methods for the testing of such Exenatide Injection, (ii) containing the quality control and quality assurance test results for such Batch and (iii) confirming that such Batch has been manufactured in accordance with the Batch records and cGMP. The Manufacturer shall notify the Company immediately of any test failures noted in the manufacture of Exenatide Injection.

4.3Change in Specifications or Manufacturing Process.

(a)Each party shall notify the other in advance of any proposed changes in Specifications, release testing, stability testing, packaging, materials, equipment, facilities, processes or procedures used to manufacture Product under this Agreement.  No changes in Specifications, release testing, stability testing, packaging or the materials, equipment, facilities, processes or procedures used to manufacture Product under this Agreement, except changes required by any applicable Regulatory Authority, will be made unless the parties have agreed to such changes in writing prior to adoption of such changes. Any such changes to the Product Specifications, release testing, stability testing, packaging, materials, equipment, facilities, processes or procedures used to manufacture Product shall be handled in accordance with the procedures established in the Quality Agreement, with costs paid as provided in Section 4.3(b), (c) or (d), as applicable.

* Confidential Treatment Request(ed)

(b)In the event Company requests any such changes be made, other than changes described in Section 4.3(d), Manufacturer shall accommodate Company’s requested changes to the extent technologically feasible.   If such changes would result in material change in the cost of manufacture, then in that event the product price may be suitably modified.  If such changes require the purchase of capital equipment, such costs and any related installation and qualification costs will be to the account of the Company and such capital equipment shall be owned by the Company.

(c)In the event Manufacturer requests any such changes be made, other than changes described in Section 4.3(d), and such changes would result in a material increase in Manufacturer’s cost of manufacture, all costs reasonably required in connection with such changes shall be paid as mutually agreed by the parties.

(d)In the event changes are requested by a Regulatory Authority or required to bring either of the Facilities into compliance with Applicable Laws, or additional changes, activities, or manufacturing is required to bring the manufacturing process into compliance with Applicable Laws, Specifications or other Product Requirements, Manufacturer shall accommodate such changes to the extent technologically feasible, and all costs reasonably required in connection with such changes, activities, or manufacturing shall be borne by the Manufacturer.   In such an event the product price may be suitably revised to accommodate such changes

4.4Regulatory Matters.

(a)Manufacturer shall provide to Company and Collaboration Partner such documentation, data and other information relating to the Facilities, Products, or Manufacturer’s manufacturing processes and procedures for Product as Company or Collaboration Partner may request for submission to Regulatory Authorities.

(b)Company and Collaboration Partner shall be responsible for all filings necessary for Regulatory Approvals.  The parties agree that Company shall be the sole and exclusive owner of all right, title and interest in and to all Drug Approval Applications and Regulatory Approvals related to the Product in the United States and the Collaboration Partner shall be the sole and exclusive owner of all right, title and interest in and to all Drug Approval Applications and Regulatory Approvals related to the Product in any OUS Country. Manufacturer shall assist Company and Collaboration Partner in the preparation of all documents necessary to effectuate Company’s and Collaboration Partners rights in all Drug Approval Applications and Regulatory Approvals related to the Product and agrees to transfer, effect, confirm, perfect, record, preserve, protect and enforce all rights, title and interests transferred hereunder, at the reasonable request and expense of Company.  Manufacturer will use commercially reasonable efforts to assist Company and Collaboration Partner in obtaining such Regulatory Approvals.  For the avoidance of doubt, Company and Collaboration Partner have sole responsibility for the content of all Drug Approval Applications.

4.5Compliance with Quality Agreement and Applicable Laws.  The parties shall comply with the terms and conditions of the Quality Agreement.  Manufacturer shall comply with all Applicable Laws with respect to activities under this Agreement.  Manufacturer represents and warrants to Company that it has and will maintain during the Term all establishment licenses and permits, including without limitation health, safety and environmental permits, necessary for the conduct of Manufacturer’s activities under this Agreement.

4.6Manufacturer Facilities.  Manufacturer warrants and represents that it has, and will maintain, all licenses, permits and approvals necessary to fulfill its obligations under this Agreement.  Manufacturer covenants to design and operate the facilities it uses to manufacture, package, test, or store Product to successfully pass inspections conducted by regulatory authorities. Manufacturer agrees to maintain appropriate security measures at its facilities no less stringent than measures that are customary in the pharmaceutical industry.

4.7QA Audits. Upon written notice of no less than [***] ([***]) Business Days for routine audits to Manufacturer, Company and Collaboration Partner shall have the right to have representatives visit the Facilities during normal business hours to review Manufacturer’s manufacturing operations, assess its compliance with cGMPs and quality assurance standards, and discuss any related issues with Manufacturer’s manufacturing and management personnel.  Manufacturer shall maintain the Facilities in accordance with cGMPs.  Manufacturer’s failure to correct any cGMP deficiency regarding any aspect of Manufacturer’s manufacture within a reasonable time period after notice of such deficiency shall be a material breach of this Agreement. Upon reasonable notice, the Manufacturer will allow employees of the Company and its Collaboration Partner access to the Facility, documentation, and personnel to audit and for observation of the production process and quality control testing of the Exenatide Injection, disposal of waste and adherence to cGMP requirements and this Agreement. During such inspections, employees of the Company and its Collaboration Partner (number of persons should be restricted to not more than [***] ([***])) shall have the right to audit any aspect of the Manufacturers manufacture of Exenatide Injection, and such audit may include, without limitation, verification of Manufacturers maintenance of drug establishment registrations with the FDA and other applicable Regulatory Authorities, and review of conditions and documentation of any aspect of manufacture of Exenatide Injection.

4.8Regulatory Inspections. Manufacturer agrees to permit the FDA and other Regulatory Authorities to inspect any aspect of Manufacturer’s manufacture and testing of the Product including, without limitations, any pre-approval inspection (“PAI”). Manufacturer shall cooperate with Company and Collaboration Partner, and with any Regulatory Authority, as necessary to facilitate prompt approvals by such Regulatory Authority of the Manufacturing Process or testing process for the Product, including preparation and submission of necessary data relating to the manufacturing or testing processes, including without limitation any PAI or subsequent inspection. Manufacturer shall notify Company if either or both of the Facilities are the subject of an inspection by any Regulatory Authority or any compliance inspection relating to, or that could reasonably be expected to, affect the manufacture or storage of the Product or its production at the Facilities.  Manufacturer shall provide such notification, by telephone and fax, as soon as Manufacturer becomes aware of the inspection, but not later than two (2) Business Days from the time Manufacturer becomes aware of the inspection.  In connection with any such inspection, including without limitation a PAI, Manufacturer shall allow employees or representatives of each of Company and Collaboration Partner to be present during the

* Confidential Treatment Request(ed)

inspection.  Manufacturer shall allow Company and Collaboration Partner to participate in the formulation of any response to regulatory inspections or any other issues raised by any Regulatory Authority related to the Product.  Manufacturer will also simultaneously provide Company with photocopies of any responses provided to any Regulatory Authority, including, without limitation, responses to any FDA 483 or similar reports. Manufacturer shall keep Company and Collaboration Partner fully informed as to any Manufacturer communication with any Regulatory Authority related to Product.

4.9Investigation of Failed Batch.  Manufacturer shall investigate, and cooperate fully with Company and Collaboration Partner in investigating any Batch that fails to meet the Product Requirements or that incurs a significant deviation from expected Manufacturing Process.  Manufacturer shall keep Company informed of the status of any investigation and, upon completion of the investigation, shall provide Company and Collaboration Partner with a final written report describing the cause of the failure or deviation and summarizing the results of the investigation.

4.10Documentation.   Manufacturer shall keep complete, accurate and authentic accounts, notes, data and records of the work performed under this Agreement, including, without limitation, master production and control records and Product complaint files, in accordance with Applicable Laws.  In addition, Manufacturer shall retain and store samples of each Batch only as required by Applicable Laws.  The sample size shall be twice the size necessary to conduct quality control testing.  Manufacturer shall retain such records and samples for the periods required by Applicable Laws. Upon Company’s request, Manufacturer shall make available copies of such records and portions of the samples to Company and, if directed by Company, to Collaboration Partner.  After such time period, Manufacturer shall notify Company prior to destroying such records and samples and, at Company’s request and expense, shall provide copies of such records and any remaining samples to Company.  The Manufacturer shall not be obliged to retain any samples thereafter and after due intimation to the company, the Manufacturer shall destroy the remaining samples.

4.11Complaints and Adverse Reaction.  Each party shall promptly advise the other of any complaints, adverse reaction reports, safety issues or toxicity issues relating to Product of which it becomes aware, which may be the result of, or have an effect on, the manufacturing or packaging operations performed by Manufacturer.  Company or Collaboration Partner shall be responsible for all reporting of such information to Regulatory Authorities.

4.12Labeling; Trademark.  Manufacturer shall affix labeling to the Product as and if directed by Company.  Nothing in this Agreement gives Manufacturer the right to use any trademark or trade name of Company or Collaboration Partner except as specified in writing by Company or Collaboration Partner.  Manufacturer shall not affix any label, stamp or other mark identifying Manufacturer as the source of the Product except as instructed in writing by Company or as may be required by Applicable Laws.

5.Delivery and Acceptance.

5.1Delivery.  Unless otherwise agreed by the parties in writing, all shipments shall be shipped FCA (Incoterms 2000) the Facilities by air freight to the destination specified by

Company in the applicable purchase order. Manufacturer shall make each shipment of the Product in the quantity, cartridge size and on the shipment date specified for it on Company’s purchase order, via the mode(s) of transportation and to the party and destination specified on such purchase order. Manufacturer will package and ship the Product in accordance with Manufacturer’s customary practices for pharmaceutical products, unless otherwise specified by Company.  Manufacturer shall deliver Product ordered by Company on the scheduled delivery dates set forth in the relevant purchase orders, subject to the provisions of Section 2.3.  If Company is not ready to accept shipment of Product on the date Manufacturer is prepared to ship Product, then Manufacturer shall store Product in a manner consistent with customary practices for pharmaceutical products and Company shall pay Manufacturer a commercially reasonable storage fee.  Company and Manufacturer agree to negotiate the amount of such storage fee in good faith.

5.2Title.  Title to all Exenatide shall at all times remain in Company.  Title to all Materials other than Exenatide, work in progress to produce Product, and all completed Product (except Exenatide contained therein) shall remain with Manufacturer until delivery of such Product to the carrier designated by Company.  Notwithstanding the foregoing, and regardless of whether delivery of Product to Company has occurred under Section 5.1, Manufacturer shall bear all risk of loss with respect to, and shall insure, all Product until transfer by Manufacturer to a carrier for shipment as directed by Company in the applicable purchase order.

5.3Acceptance and Rejection.

(a)Concurrent with the delivery of any Batch, Manufacturer shall provide Company with all documentation required to be provided to Company under the Quality Agreement, including, without limitation, a Certificate of Analysis and Certificate of Compliance for such Batch.  Company may reject delivery of any Batch that does not conform with the Product Requirements.  Any such notice of rejection shall be in writing and shall indicate the reasons for such rejection.

(b)In order to reject delivery of a Batch, Company must give written notice to Manufacturer of Company’ rejection of any delivery within [***] ([***]) days after receipt of such delivery.  If no such notice of rejection is received, Company shall be deemed to have accepted such delivery of the Batch [***] ([***]) days after delivery of the Batch, except in the case of Hidden Defects.  If Company discovers in a Batch a Hidden Defect, such as a Contaminant, at any time after acceptance of such Batch, Company shall notify Manufacturer within [***] ([***]) days of discovering such Hidden Defect and shall have the right to reject the Batch under the procedures regarding rejection set forth in Section 5.3(c), (d) and (e), as applicable.

(c)After notice of rejection is given, Company shall cooperate with Manufacturer in determining whether rejection is necessary or justified.  Manufacturer shall notify Company as promptly as reasonably possible (and in any event within [***] ([***]) days after notice of rejection from Company) if Manufacturer does not agree that such rejection is

* Confidential Treatment Request(ed)

justified.  If no such notice from Manufacturer is received, Manufacturer shall be deemed to agree that such rejection is justified.  Should Company reject any Batch and Manufacturer agree that such rejection is justified or if applicable, a third party determines such rejection is justified pursuant to the provisions of Section 5.3(d), Manufacturer shall reimburse Company for Company’s cost for (i) any Exenatide used in such rejected Batch, at the rates set forth in and subject to the maximum liability stated in Section 10.3; and (ii) amounts paid to Manufacturer by Company pursuant to Section 3.3.  Compliance with the provisions of this Section 5.3(c) and payment of the costs in Section 5.3(d) and (e) shall be Manufacturer’s sole liability to Company where Company rejects a Batch of and either Manufacturer agrees, or a third party determines under Section 5.3(d), that such rejection is justified, subject only to Section 10.4.

(d)If Manufacturer in good faith disagrees with Company’s determination that rejection of a Batch is justified, certain of the Product in such Batch shall be submitted to a mutually acceptable third party laboratory or expert. Such third party shall determine whether such Product meets the Specifications, and the parties agree that such third party’s determination shall be final and determinative. The party against whom the third party tester/expert rules shall bear all costs of the third party testing and/or determination.  Whether or not Manufacturer accepts Company’s basis for rejection, promptly on receipt of a notice of rejection of a Batch, Manufacturer shall replace such rejected Batch within [***] ([***]) days.  If the third party tester/expert rules that the Batch meets Specifications and the other warranties in Section 8, Company shall purchase that Batch at the agreed-upon price, irrespective of whether Manufacturer has already replaced it. All replacement Product shall be invoiced as well and Company shall pay for such Product as otherwise provided under the terms of this Agreement.  If third party tester/expert agrees that rejection was justified then Manufacturer shall reimburse Company for (i) Company’s cost for any Exenatide used in such rejected Batch, at the rates set forth in and subject to the maximum liability stated in Section 10.3 and (ii) amounts paid by Company pursuant to Section 3.3. Compliance with provisions of this Section 5.3(d) and payment of the costs in Section 5.3(e) shall be Manufacturer’s sole only liability to Company where Company rejects a Batch of and either Manufacturer agrees, or a third party determines under Section 5.3(d), that such rejection is justified, subject only to Section 10.4.  Manufacturer shall have no further liability to the Company in respect of such Batch except to what is stated herein.

(e)Company may not destroy any Batch until [***] ([***]) days after rejection unless, prior to that date, Company receives written notification from Manufacturer that Manufacturer does not agree that such rejection is justified or that Manufacturer requests return of such rejected Batch.  Company shall destroy such rejected Batch promptly at Manufacturer’s cost and provide Manufacturer with certification of such destruction.  Company shall, upon receipt of Manufacturer’s request for return, promptly return such Batch to Manufacturer, at Manufacturer’s cost.

5.4     Recalls and Similar Actions

(a)If there is a recall, withdrawal or field correction with respect to, or any governmental seizure of, Product (“Recall Action”), which Recall Action is considered by the Company or its Collaboration Partner to be due in part to a failure of the Manufacturer to

* Confidential Treatment Request(ed)

comply with its warranties stated in Section 8.3 of this Agreement then Company or, in the case of a Recall Action in an OUS County, Collaboration Partner,  will notify Manufacturer promptly of the details regarding such Recall Action, including providing copies of all relevant documentation concerning such Recall Action. Manufacturer will assist Company and its Collaboration Partner in investigating any such Recall Action, if Company or its Collaboration Partner so requests, and all regulatory contacts that are made and all activities concerning such Recall Action will be initiated and coordinated by Company or, in the case of a Recall Action in an OUS Country, Collaboration Partner with Manufacturer’s involvement and assistance, as reasonably requested by Company or its Collaboration Partner.

(b)If any Recall Action occurs which is considered by the Company or its Collaboration Partner to be due in part to a failure of the Manufacturer to comply with its warranties stated in Section 8.3 of this Agreement and Manufacturer agrees with said consideration then Manufacturer shall, to the extent and only to the extent of its relative responsibility, bear the cost and expense of any such Recall Action. Therefore, if both Manufacturer and Company contribute to the cause of such a Recall Action, the cost and expense thereof will be shared in proportion to each party’s contribution to the problem.

(c)If any Recall Action occurs which is considered by the Company or its Collaboration Partner to be due in part to a failure of the Manufacturer to comply with its warranties stated in Section 8.3 of this Agreement and Manufacturer disagrees with said consideration then the parties shall refer to a mutually acceptable third party expert. Such third party shall determine if Manufacturer has complied with its warranties stated in Section 8.3. If such a determination is made Manufacturer shall have no liability towards the cost and expense of the Recall Action. If the third party determines Manufacturer has not complied with its warranties stated in Section 8.3 Manufacturer shall, to the extent and only to the extent of its relative responsibility, bear the cost and expense of any such Recall Action.

6.Protection of Confidential Information.

6.1Confidentiality.  During the Term and for a period of ten (10) years thereafter, each party (the “Receiving Party”) agrees with respect to any Confidential Information of the other party (the “Disclosing Party”):

(a)To use such Confidential Information only for the purposes set forth in this Agreement;

(b)To receive, maintain and hold the Confidential Information in confidence;

(c)Not to disclose, or authorize or permit the disclosure of, any Confidential Information to any third party without the prior written consent of the Disclosing Party; and

(d)Except as needed to fulfill its obligations hereunder, to return any Confidential Information to the Disclosing Party at the request of the Disclosing Party and to retain no copies or reproductions thereof.

6.2Limitations.  The Receiving Party shall not be obligated to treat as Confidential Information information that the Receiving Party can show by competent written evidence:

(a)was already known to the Receiving Party without any obligations of confidentiality prior to receipt from the Disclosing Party;

(b)was generally available to the public or otherwise part of the public domain at the time of its disclosure to the Receiving Party;

(c)became generally available to the public or otherwise part of the public domain after its disclosure, other than through any act or omission of the Receiving Party in breach of any obligation of confidentiality;

(d)was disclosed to the Receiving Party, other than under an obligation of confidentiality, by a third party who had no obligation not to disclose such information to others; or

(e)was independently discovered or developed by the Receiving Party without the use of the Disclosing Party’s Confidential Information.

6.3Authorized Disclosure.  Notwithstanding Section 6.1, the Receiving Party may disclose Confidential Information, without violating the obligations of this Agreement, to the extent the disclosure is required by Applicable Laws or a valid order of a court or other governmental body having jurisdiction; provided that the Receiving Party gives reasonable prior written notice to the Disclosing Party of such required disclosure and makes a reasonable effort to obtain, or to assist the Disclosing Party in obtaining, a protective order preventing or limiting the disclosure and/or requiring that the Confidential Information so disclosed be used only for the purposes for which the law or regulation requires, or for which the order was issued.  Further, the Receiving Party may disclose Confidential Information of the Disclosing Party solely to the extent (a) such disclosure is reasonably necessary in advising investors and the investment community of the results of the research, development or commercialization activities hereunder (subject to the prior written consent of the Disclosing Party, which consent will not be unreasonably withheld), or (b) such disclosure is made to Affiliates, employees, consultants or agents (or, with respect to Company, to Collaboration Partner), to other third parties in connection with due diligence by such Third Parties, or to potential third party investors in confidential financing documents, provided, in each case, that any such Affiliate, employee, consultant, agent or third party is subject to confidentiality and non-use obligations with respect to such information.

6.4Use of Name/Publicity.  Neither party shall use the other party’s name, nor shall Manufacturer use Collaboration Partner’s name, in connection with any publication or promotion without the other party’s written consent, or, as applicable to Manufacturer, Collaboration Partner’s written consent, except as required by federal, state or local laws, rules and regulations.  Manufacturer shall not disclose the specific content or terms of this Agreement without the prior written consent of Company.

6.5Collaboration Partner.  For purposes of this Agreement, Confidential Information shall include all information confidential and/or proprietary to Collaboration Partner that is provided to Manufacturer under this Agreement and Manufacturer agrees to comply with the confidentiality obligations under this Section 6 with respect to all of such information of Collaboration Partner supplied hereunder.

7.Intellectual Property Rights.

7.1Company Inventions.  All right, title and interest in and to any intellectual property rights in Exenatide and Product shall at all times be and remain the sole and exclusive property of Company.  Company shall solely own, and shall alone have the right to apply for patents, patent rights and inventor’s certificates, on any invention, method, process, discovery or know-how (whether or not patentable) which is conceived solely by Company, its consultants or agents (other than Manufacturer) in the performance of this Agreement (“Company Inventions”).

7.2Manufacturer Inventions.  Manufacturer shall solely own, and shall alone have the right to apply for patents, patent rights and inventor’s certificates, on any invention, method, process, discovery or know-how (whether or not patentable) which is conceived solely by Manufacturer, its consultants or agents in the performance of this Agreement (“Manufacturer Inventions”).

7.3Joint Inventions.  Any invention, method, process, discovery or know-how (whether or not patentable) not conceived solely by either Company and Manufacturer or their respective consultants or agents during the performance of this Agreement (“Joint Inventions”) shall be jointly owned by Company and Manufacturer.  The law of joint ownership of patents of the United States shall apply to joint ownership of any Joint Inventions inside and outside of the United States.  Where appropriate, the Parties may engage outside counsel agreeable to both Parties (the costs of which shall be borne equally by the Parties) to represent them jointly in the prosecution of patent applications and the maintenance of patents with respect to Joint Inventions.

7.4Prosecution.  Should either party not wish to file, prosecute, maintain or issue a patent application or maintain a patent covering such party’s interest in a Joint Invention, then such party (the “Granting Party”) shall, at the other party’s election, grant to the other party (i) a perpetual, irrevocable, exclusive (even as to the Granting Party and its Affiliates), worldwide, fully paid-up royalty-free license under the Granting Party’s interest in the Joint Invention, with the right to grant sublicenses, to develop, make, have made, use, import, offer to sell, have sold and sell products, and (ii) any necessary authority to file, prosecute, maintain and issue such a patent application or maintain such a patent, all at the expense of the party requesting that such filing be made or action be taken.

7.5Assistance.  Upon request, Company and Manufacturer shall each provide the other with reasonable assistance in obtaining patents and, if necessary, enforcing patent rights in Manufacturer Inventions, Company Inventions or Joint Inventions, as applicable.  To that end, each party agrees to assist the other in executing, verifying and delivering such documents and performing such acts as may be reasonably requested by the other party in applying for, obtaining, perfecting, evidencing, sustaining or enforcing the other party’s rights in Manufacturer Inventions, Company Inventions or Joint Inventions, as applicable.  The party requesting such assistance shall reimburse the assisting party for all reasonable out-of-pocket expenses incurred and provide reasonable compensation for time spent in providing such assistance, except in the case of any patent covered by a Joint Invention, in which case no compensation shall be provided and all expenses shall be [***] by the Parties (i.e., [***]% paid by Company and [***]% paid by Manufacturer).

7.6Infringement.  Each party shall promptly notify the other of any potential alleged or threatened infringement of patents claiming any Company Invention, Manufacturer Invention or Joint Invention, or of any allegation by a third party of which it becomes aware that the activity of Company or Manufacturer pursuant to this Agreement infringes a third party’s patent rights.

7.7Manufacturing Process License.  Manufacturer hereby grants Company a perpetual, irrevocable, exclusive, worldwide, royalty-free, fully paid-up license, with the right to sublicense, to all of Manufacturer’s rights in and to the Manufacturing Process, including any Manufacturer Inventions, to use, make, have made, import, offer to sell, have sold and sell Product or any other product containing Exenatide; provided however, if Company or any sublicensee of Company or any successor business or assignee wishes Manufacturer to assist in the transfer of the Manufacturing Process to another manufacturer, Manufacturer shall have the right to charge a commercially reasonable fee based on FTE rates for providing training and other assistance requested by such party in connection with such technology transfer.  Notwithstanding the foregoing, if any such transfer of the Manufacturing Process to a third party results in a transfer of the Manufacturer’s Technology, the parties agree to meet for the purpose of determining the appropriate compensation to be paid to the Manufacturer.

8.Representations and Warranties.

8.1No Inconsistent Obligations.  Each party represents and warrants that the terms of the Agreement are not inconsistent with its other contractual arrangements or obligations.

8.2Due Authorization.  Each party represents and warrants that (a) it has full power and authority to enter into this Agreement, (b) this Agreement has been duly authorized by it, and (c) this Agreement is binding upon it.

8.3Product Warranties.  Manufacturer represents and warrants that Product delivered hereunder will:

(a)be manufactured by Manufacturer in accordance with cGMPs and relevant Regulatory Approvals;

* Confidential Treatment Request(ed)

(b)conform to the Specifications at the time of delivery;

(c)not contain any Contaminant or be adulterated within the meaning of the FDCA or any other Applicable Law in which the definitions of adulteration are substantially the same as those contained in the FDCA, as such laws are constituted and effective at the time of delivery;

(d)not be an article which may not, under the provisions of Sections 404, 505 of 512 of the FDCA, be introduced into interstate commerce; and

(e)be free and clear of any lien or encumbrance.

Company’s remedies and Manufacturer’s liability with respect to the warranties set forth in this Section 8.3 are set forth in Section 5.3(d) above.

8.4The Company represents, warrants and agrees that:

a)The manufacture of Product as contemplated herein, will not, to the Company’s knowledge, infringe any existing patents or any other proprietary rights of third parties, and as of the date hereof Company has not received any notice of any claimed infringement (including without limitation patent infringement) in connection with the Product.

b)The Company, to the Company’s knowledge, and its employees have never been debarred or convicted of a crime for which a person can be debarred, under subsection (a) or (b) of 21 U.S.C. § 335a, as amended, and Company agrees that it does not now and does not intend in the future to use in any capacity the services of any person debarred under subsection (a) or (b) of 21 U.S.C. §335a, as amended.  If, during the term of this Agreement, Company or any other person performing under this Agreement becomes debarred or disqualified, or receives notice of an action or threat of an action with respect to debarment or disqualification, Company shall promptly notify Manufacturer.

8.5No Debarred or Disqualified Persons. Manufacturer represents and warrants that it is not currently and it shall not employ, contract with, or retain any person directly or indirectly to perform any services under this Agreement if such a person (a) is under investigation by the FDA for debarment or is presently debarred by the FDA pursuant to 21 U.S.C. § 335a or its successor provisions or any regulations promulgated thereunder, (b) has a disqualification hearing pending or has been disqualified by the FDA pursuant to 21 CFR § 312.70 or its successor provisions or (c) is subject to similar investigation or disqualification pursuant to any other relevant regulatory authority.  In addition, Manufacturer represents and warrants that it has not engaged in any conduct or activity which could lead to any of the above-mentioned disqualification or debarment actions.  If, during the Term, Manufacturer or any person employed or retained by it to perform any services under this Agreement (i) comes under investigation by the FDA for a debarment action or disqualification, (ii) is debarred or disqualified, or (iii) engages in any conduct or activity that could lead to any of the above-mentioned disqualification or debarment actions, Manufacturer shall immediately notify Company of same.

8.6Disclaimer.  Except as set forth above, NEITHER PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, AND EXPRESSLY DISCLAIMS ALL IMPLIED WARRANTIES OF TITLE, NON-INFRINGMENT, MERCHANTIBILITY, AND FITNESS FOR A PARTICULAR PURPOSE.

8.7Limitation of Liability.  NEITHER PARTY SHALL BE ENTITLED TO RECOVER FROM THE OTHER PARTY ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES IN CONNECTION WITH THIS AGREEMENT OR ANY LICENSE GRANTED HEREUNDER.  This Section 8.7 shall not be construed to limit either party’s indemnification obligations under Section 10 or to limit remedies available for breach of confidentiality and non-use obligations or for infringement or misappropriation of intellectual property rights.

9.Term and Termination.

9.1Term.  The term of this Agreement shall commence on the October 7, 2004 and, unless terminated earlier as provided herein, shall continue until the expiration of the Fifth Period (as defined in Exhibit C), subject to renewal by mutual written agreement of the parties (the “Term”).

9.2Termination by Either Party.  A party may terminate this Agreement:

(a)for material breach of this Agreement by the other party upon sixty (60) days’ written notice specifying the nature of the breach, if such breach has not been cured within such sixty (60) day period; provided, this Agreement may be terminated immediately if the breach is incapable of remedy or has not been corrected by the breaching party within sixty (60) days after written notice; or

(b)immediately upon written notice to the other party, if the other party makes a general assignment for the benefit of creditors, files an insolvency petition in bankruptcy, petitions for or acquiesces in the appointment of any receiver, trustee or similar officer to liquidate or conserve its business or any substantial part of its assets, commences under the laws of any jurisdiction any proceeding involving its insolvency, bankruptcy, reorganization (other than a reorganization without insolvency), dissolution, liquidation or any other similar proceeding for the release of financially distressed debtors or becomes a party to any proceeding or action of the type described above and such proceeding or action remains undismissed or unstayed for a period of more than sixty (60) days.

9.3Termination by Company. Company may terminate this Agreement

(a)at any time after the expiration of the Fifth Period upon one (1) year’s prior written notice to Manufacturer;

(b)at any time prior to the Approval Date in the event that Company makes a good faith determination that it will not continue with the commercialization of Product, upon at least sixty (60) days prior written notice to Manufacturer, and such termination shall be effective at the end of such sixty (60) day period; provided that Company shall remain obligated to pay for Product ordered under any purchase orders issued by Company to Manufacturer prior to such effective termination date

(c)immediately upon written notice to Manufacturer if Manufacturer (i)  has its manufacturing authorizations for the Product suspended or withheld (ii) in the case of a PAI, fails to pass an inspection by a Regulatory Authority (iii) in the case of a regulatory inspection by a Regulatory Authority fails to pass an inspection and has not taken, within one hundred (100) Business Days, such action as is necessary to correct the items cited by the Regulatory Authority.

9.4Automatic Termination. In the event Company notifies Manufacturer that it has terminated development of Exenatide following the receipt by Company of notice of final rejection by the FDA for marketing authorization for commercial sale and distribution of Product in the United States, then this Agreement shall automatically terminate.

9.5Survival Upon Termination.  Expiration or termination of this Agreement will not relieve the parties of any obligation accruing prior to such expiration or termination.  Sections 1, 4.8, 4.9, 4.10, 4.11, 6, 7, 8.3, 8.5, 8.6, 8.7, 9.5, 9.6, 10, 11 and 12 will survive termination of this Agreement.

9.6Remedies.  In the event of any breach of any provision of this Agreement, in addition to the termination rights set forth herein, each party shall have all other rights and remedies at law or equity to enforce this Agreement.

10.Indemnification.

10.1By Company.  Company agrees to indemnify, defend and hold harmless Manufacturer and its Affiliates and their respective officers, employees and agents (“Manufacturer Indemnitees”) from any loss, expense (including reasonable legal counsel fees and expenses), cost, liability or damages (“Losses”) incurred by any Manufacturer Indemnitee as a result of any claim, demand, action or other proceeding by any third party (“Claim”) arising out of or related to (a) Company’s breach of any representation or warranty made by Company in this Agreement or (b) the handling, possession, storage or use of Product by or on behalf of Company following delivery by Manufacturer to Company, except to the extent Manufacturer is obligated to indemnify Company with respect to such Losses under Section 10.2 or the Losses are based on the negligence or willful misconduct of any Manufacturer Indemnitee.  Manufacturer Indemnitees shall promptly and in any event within thirty (30) days notify Company of any known Claim which is the subject of Losses.  Manufacturer Indemnitees shall fully cooperate with Company in the defense or settlement of any claim of Losses under this Section 10.1; provided, however, that no Manufacturer Indemnitee shall be required to admit fault or responsibility in connection with any settlement.  Manufacturer Indemnitee shall have the right to select and to obtain representation by separate legal counsel at its own expense.

10.2By Manufacturer.  Manufacturer shall indemnify and hold harmless Company and Collaboration Partner and their respective Affiliates and their respective officers, employees and agents (“Company Indemnitees”) from and against any and all Losses to which

any Company Indemnitee may become subject as a result of any Claim arising out of or related to (a) Manufacturer’s breach of any representation or warranty made by Manufacturer in this Agreement or (b) the handling, possession, storage or use of Exenatide or Product by or on behalf of Manufacturer prior to delivery of Product by Manufacturer to Company, except to the extent Company is obligated to indemnify Manufacturer with respect to such Losses under Section 10.1 or the Losses are based on the negligence or willful misconduct of any Company Indemnitee.  Company Indemnitee shall promptly and in any event within thirty (30) days notify Manufacturer of any known Claim which is the subject of Losses.  Company Indemnitees shall fully cooperate with Manufacturer in the defense or settlement of any claim of Losses under this Section 10.2; provided, however, that no Company Indemnitee shall be required to admit fault or responsibility in connection with any settlement.  Company Indemnitee shall have the right to select and to obtain representation by separate legal counsel at Company’s own expense.

10.3Loss of Exenatide.  If any Exenatide is destroyed, damaged or lost while in Manufacturer’s custody, control or storage prior to its use in the manufacture of the Product, Manufacturer’s liabilities shall be determined at a rate of [***] US dollars ($[***]) per gram of Exenatide limited to a maximum of [***] US dollars ($[***]) for each individual incidence of loss prior to validation of the increase in batch size (the “Batch Size Increase”) and at a rate of [***] US dollars ($[***]) per gram of Exenatide limited to a maximum of [***] US dollars ($[***]) for each individual incidence of loss after the Batch Size Increase.  For the avoidance of doubt Manufacturer shall not be liable for loss of Exenatide if peptide content has deteriorated and Manufacturer has complied fully with the storage requirements for Exenatide as specified by Company.

10.4Restriction on Limitation of Liability.  Nothing in this Agreement shall limit a party’s liability in respect of death or personal injury caused by the negligence of that party or its liability in respect of fraudulent misrepresentation.

11.Dispute Resolution

11.1Discussions Between the Parties.  If any claim, dispute, or controversy of whatever nature arising out of or relating to this Agreement, including, without limitation, any action or claim based on tort, contract, or statute (including any claims of breach or violation of statutory or common law protections from discrimination, harassment and hostile working environment), or concerning the interpretation, effect, termination, validity, performance and/or breach of this Agreement (“Disputed Claim”), arises between the parties and the parties cannot resolve the dispute within thirty (30) days of a written request by either party to the other party, the parties agree to hold a meeting, attended by the an executive officer or their equivalent of Company and Manufacturer, to attempt in good faith to negotiate a resolution of the dispute prior to pursuing other available remedies.  If, within sixty (60) days after such written request, the parties have not succeeded in negotiating a resolution of the dispute, such dispute shall be resolved by final and binding arbitration in accordance with Section 11.2.

* Confidential Treatment Request(ed)

11.2Arbitration.

(a)Arbitration of Disputed Claims between the parties under this Section 11.2 shall be conducted in accordance the Rules of the International Chamber of Commerce, Court of Arbitration, Paris (the “ICC”), except to the extent the provisions of this Section 11.2 conflict with such Rules, in which case the provisions of this Section 11.2 shall prevail. .

(b)The arbitration shall be conducted by three (3) arbitrators who shall be knowledgeable in the subject matter which is at issue in the dispute has no current or past affiliation with either party or their respective Affiliates.  Each party shall select one of the arbitrators within thirty (30) days after notice of arbitration under this Section 11.2, and the third arbitrator, who shall act as the Chair of the arbitration, shall be appointed by the ICC.

(c)The arbitrators shall determine what discovery will be permitted, consistent with the goal of limiting the cost and time that the parties must expend for discovery; provided that the arbitrators shall permit such discovery as the arbitrators deem necessary to permit an equitable resolution of the dispute.  The arbitrators shall have sole discretion with regard to the admissibility of any evidence.

(d)No later than ninety (90) days after the arbitrators are selected (or such other period of time as agreed to by the parties in writing), the arbitrators will hold the arbitration hearing to resolve each of the issues identified by the parties.  The arbitrators may conduct additional arbitration hearings if the arbitrators deem appropriate; provided that all arbitration hearings will be completed by no later than one hundred twenty (120) days after the arbitrators are selected (or such other period of time as agreed to by the parties in writing).  Each party will have the right to be represented by counsel at any such arbitration hearing.  The arbitration hearings shall be held in London, England.  Collaboration Partner and its counsel shall have the right to be present at all arbitration hearings and review all documents related to or produced as part of the arbitration.

(e)The arbitration will be confidential and the arbitrators will issue appropriate protective orders to safeguard each party’s Confidential Information and, to the extent necessary, Collaboration Partner’s Confidential Information.  Except as required by law, no party will make (or instruct the arbitrators to make) any public announcement with respect to the proceedings or decision of the arbitrators without the prior written consent of the other party.  The existence of any Disputed Claim, and the award of the arbitrators, will be kept in confidence by the parties and the arbitrators, except as required in connection with the enforcement of such award or as otherwise required by applicable law.

(f)The arbitrators shall, within thirty (30) days after the conclusion of the arbitration hearings, issue a written award and statement of decision describing the essential findings and conclusions on which the award is based, including the calculation of any damages awarded.  The arbitrators shall be authorized to award compensatory damages, but shall NOT be authorized to (i) award non-economic damages, such as for emotional distress, pain and suffering or loss of consortium, (ii) award punitive damages, or (iii) reform, modify or materially change this Agreement or any other agreements contemplated hereunder; provided, however, that the damage limitations described in subsections (i) and (ii) of this sentence will not apply if such damages are statutorily imposed.  The arbitrators also shall be authorized to grant any temporary,

preliminary or permanent equitable remedy or relief they deem just and equitable and within the scope of this Agreement, including, without limitation, an injunction or order for specific performance.  The decision of the arbitrators shall be final and binding upon the parties.  Judgment on the award rendered by the arbitrators may be entered in any court having competent jurisdiction thereof.  Nothing herein shall limit or restrict a party’s ability to seek injunctive or other equitable relief in the event of a breach or anticipated breach of Section 6.

(g)Each party has the right before or during the arbitration to seek and obtain from the appropriate court provisional remedies, such as attachment, preliminary injunction or replevin, to avoid irreparable harm, maintain the status quo, or preserve the subject matter of the arbitration.  This Section 11.2 shall not apply to any dispute, controversy or claim that concerns (i) the validity or infringement of a patent, trademark or copyright; or (ii) any antitrust, anti-monopoly or competition law or regulation, whether or not statutory.

11.3Costs and Awards.  Each party shall bear its own attorneys’ fees, costs, and disbursements arising out of the arbitration, and shall pay an equal share of the fees and costs of the arbitrators; provided, however, that the arbitrators shall be authorized to determine whether a party is the prevailing party, and if so, to award to that prevailing party reimbursement for its reasonable attorneys’ fees, costs and disbursements (including, for example, expert witness fees and expenses, photocopy charges, travel expenses, etc.), and/or the fees and costs of the arbitrator.  Absent the filing of an application to correct or vacate the arbitration award under California Code of Civil Procedure Sections 1285 through 1288.8, each party shall fully perform and satisfy the arbitration award within fifteen (15) days of the service of the award.

11.4Waiver and Acknowledgment.  By agreeing to this binding arbitration provision, the parties understand that they are waiving certain rights and protections which may otherwise be available if a Disputed Claim between the parties were determined by litigation in court, including, without limitation, the right to seek or obtain certain types of damages precluded by this provision, the right to a jury trial, certain rights of appeal, and a right to invoke formal rules of procedure and evidence.

12.Miscellaneous.

12.1No Implied Licenses.  No right or license is granted under this Agreement by either party to the other, either expressly or by implication, except those specifically set forth herein.

12.2Non-Solicitation

(a)Manufacturer shall not, during the Term, employ or engage or offer to employ or engage any person who during the [***] ([***]) months prior to the commencement of such employment or engagement was employed by Company or Collaboration Partner.

* Confidential Treatment Request(ed)

(b)Company shall not, during the Term, employ or engage or offer to employ or engage any person who during the [***] ([***]) months prior to the commencement of such employment or engagement was employed by Manufacturer as a [***],[***] (Grade [***] or higher) [***] or a [***]employee

(c)Notwithstanding the foregoing, nothing in this Agreement shall prohibit (i) the general advertisement of employment positions by a party in any trade publication or other publication of general circulation, (ii) the employment of any current employee of Company by Manufacturer if such person initiates contact with Manufacturer without any prior solicitation by Manufacturer or on Manufacturer’s behalf, other than as permitted in clause (i) hereof, or (iii) the employment of any current employee of Manufacturer by Company if such person initiates contact with Company without any prior solicitation by Company or on Company’s behalf, other than as permitted in clause (i) hereof.

12.3Independent Contractor Relationship.  Manufacturer’s relationship with Company will be that of an independent contractor and nothing in this Agreement should be construed to create a partnership, joint venture, or employer-employee relationship.  Manufacturer is not an agent of Company and is not authorized to make any representation, contract, or commitment on behalf of the Company.  Manufacturer will be solely responsible for all tax returns and payments required to be filed with or made to any federal, state or local tax authority with respect to Manufacturer’s performance of services and receipt of fees under this Agreement.  Manufacturer agrees to accept exclusive liability for complying with all applicable state and federal laws governing self-employed individuals, including obligations such as payment of taxes, social security, disability and other contributions based on fees paid to Manufacturer, its agents or employees under this Agreement.  Manufacturer hereby agrees to indemnify and defend Company against any and all such taxes or contributions, including penalties and interest.

12.4Entire Agreement; Amendment.  This Agreement, together with all exhibits attached hereto and hereby incorporated herein, constitutes the final, complete and exclusive agreement of the parties with respect to the subject matter hereof and supersedes all prior understandings and agreements relating to its subject matter.  This Agreement may not be changed, modified, amended or supplemented except by a written instrument signed by both parties.

12.5Severability.  If any provision of this Agreement should be held invalid or unenforceable, the remaining provisions shall be unaffected and shall remain in full force and effect, to the extent consistent with the intent of the parties as evidenced by this Agreement as a whole.

12.6Assignment; Delegation.  This Agreement shall inure to the benefit of and be binding upon the successors and assigns of the parties hereto; provided, however, that neither Company nor Manufacturer shall transfer or assign this Agreement without the prior written consent of the other party.  However, Company may assign this Agreement and its rights and obligations hereunder without such consent to Collaboration Partner or in connection with the transfer or sale of all or substantially all of its assets relating to Exenatide or in the event of Company’s merger or consolidation or change in control of similar transaction.  Manufacturer may not subcontract or otherwise delegate its obligations under this Agreement without Company’ prior written consent.

* Confidential Treatment Request(ed)

12.7Governing Law.  This Agreement shall be governed by the laws of the State of Delaware, excluding its conflict of laws principles.

12.8Headings.  Section headings are for convenience of reference only and shall not be considered in the interpretation of this Agreement.

12.9Days.  Unless otherwise specified herein, references to a number of days shall reference calendar days.

12.10Force Majeure.  Neither party to this Agreement shall be deemed to be in breach of this Agreement or otherwise liable to the other party in any manner whatsoever for any failure or delay in performing its obligations under this Agreement due to Force Majeure (as defined herein).  If a party’s performance of its obligations under this Agreement is affected by Force Majeure, then it shall give written notice to the other party, specifying the nature and extent of the Force Majeure, within seven (7) days of becoming aware of the Force Majeure and will at all times use all reasonable endeavors to mitigate the severity of the Force Majeure.  If the Force Majeure in question prevails for a continuous period in excess of ninety (90) days after the date on which the Force Majeure begins, the party not in default is then entitled to give notice in writing to the defaulting party to terminate this Agreement.  The notice to terminate must specify the termination date, which must not be less than ten (10) days after the date on which the notice to terminate is given.  Once a notice to terminate has been validly given, this Agreement will terminate on the termination date set out in the notice and neither party shall be liable for any claims, damages or penalties for such failure or delay.  For the purposes herein, “Force Majeure” means, in relation to either party, acts of God, acts of war or national emergency, riots, civil commotion, terrorism, fire, explosion, public utilities failure, or flood.

12.11Notices.  Any notices required or permitted hereunder shall be given to the appropriate party at the address specified below or at such other address as the party shall specify in writing.

If to Company:	Amylin Pharmaceuticals, Inc.
	9360 Towne Centre Drive
	San Diego, CA 92121
	Attn: Director, Supply Agreements
	Fax: (858) 552-2212
	With a copy sent to the attention of General Counsel at the same address and fax as above

If to Manufacturer:	Wockhardt UK (Holdings) Ltd.
	Ash Road North
	Wrexham Industrial Estate
	Wrexham LL13 9UF
	United Kingdom
	Attn:  Company Secretary
	Fax:  0044 1978 661676

All notices shall be deemed made upon receipt by the addressee as evidenced by the applicable written receipt or, in the case of a facsimile, as evidenced by the confirmation of transmission, or, in the case of an email, as evidenced by a reply email.

12.12Counterparts.  This Agreement may be executed in multiple counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.

12.13Non-Waiver.  No failure or delay of one of the parties to insist upon strict performance of any of its rights or powers under this Agreement shall operate as a waiver thereof, nor shall any other single or partial exercise of such right or power preclude any other further exercise of any rights or remedies provided by law.

12.14Export.  Manufacturer agrees not to export, directly or indirectly, any U.S. source technical data acquired from Company or any products utilizing such data to countries outside the United States, which export may be in violation of the United States’ export laws or regulations.

12.15Product Liability Insurance. Manufacturer will take out product liability insurance to the extent Company so advises in writing.  Company will in turn reimburse Manufacturer for such insurance premiums within 30 days of the receipt of the invoice for same.  Any product liability claim beyond such amount will be solely on account of Company.

12.16Cooperation with Collaboration Partner. Manufacturer acknowledges that Amylin’s Collaboration Partner will make all sales of Product outside the U.S. and will serve as the regulatory lead in all jurisdictions outside the United States. Manufacturer agrees to cooperate with Collaboration Partner in all matters relating to supply for and regulatory compliance in jurisdictions outside the U.S., and to permit Collaboration Partner access to all facilities, records and information that Collaboration Partner may reasonably request in connection therewith.  Lilly shall be deemed a beneficiary of this Agreement, shall have the right to cure any breach of this Agreement by Amylin, and with the consent of Amylin, which such consent shall not be unreasonably withheld, may institute legal action to enforce the terms of this Agreement.

IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED COMMERCIAL SUPPLY AGREEMENT as of the Effective Date.

AMYLIN PHARMACEUTICALS, INC.				WOCKHARDT UK (HOLDINGS) LTD.
By:	/s/ Paul Marshall			By:	/s/ Sirjiwan Singh
Printed Name:			Paul Marshall	Printed Name:			/s/ Sirjiwan Singh
Title:		Vice President, Operations		Title:		Managing Director

[SIGNATURE PAGE TO AMENDED AND RESTATED SUPPLY AGREEMENT]

EXHIBIT A

Pricing

Exenatide low-dose 1.2 ml cartridge	[***] per naked cartridge bulk packed in Correx trays
Exenatide (Demo) 1.2 ml cartridge	[***] per naked cartridge bulk packed in Correx trays
Exenatide high-dose 2.4 ml cartridge	[***] per naked cartridge bulk packed in Correx trays
Exenatide 3 ml cartridge	[***] per naked cartridge bulk packed in Correx trays

Cartridge Size	Batch Yield
1.2mL	[***]
2.4mL	[***]

Materials, in-process analytical and microbiological testing, finished product sterility/endotoxin testing and packaging are inclusive in the prices set forth above.

Any additional services, such as assistance with regulatory submissions, provision of documentation copies, non-routine quality control testing and component approval, will be charged at a rate of [***] per man-hour.  These services and document copies are in addition to those required to be supplied by the Manufacturer under this Agreement.  All services and copies, and the charges for them, must be agreed in advance by Amylin.

* Confidential Treatment Request(ed)

EXHIBIT B

Title:Specification for Exenatide Injection in Cartridges

Corporate Specification for Exenatide Injection in Cartridges (AC2993-F8)

Description:[***] mg/mL peptide, [***]% (w/v) [***], [***]% (w/v) [***] in [***] mM [***] in 1.2, 2.4, or 3.0 mL cartridges with [***] and [***].

ATTRIBUTE	ALERT LIMIT(1)	SPECIFICATION	METHOD(2)
[***]	[***]	[***]	[***](3) or [***]
[***]	[***] to [***]	[***] to [***]	[***]
[***]	[***]	NMT [***] counts/container NLT [***]µm NMT [***] counts/container NLT [***] µm	[***]
[***]	[***]	[***] to [***]/kg	[***]
[***]	[***]	[***] ± [***] Da	[***]
[***]	[***]	[***]
[***]	[***]	[***]% to [***]%	[***]
[***]	[***]% to [***]%[***]	[***]% to [***]% of [***]
[***]	NLT [***]% [***]	NLT [***]%
Total [***]	NMT[***]% [***]	NMT [***]%
Individual [***] [***]AC2993 [***]AC2993	[***] NMT[***]% NMT [***]%	NMT [***]% NMT [***]%	[***]
[***]	[***]	[***]% to [***]% [***]	[***]
[***]	[***]	LT [***] EU/mL	[***](3) or [***]
[***]	[***]	[***]	[***](3) or [***]
[***]	NMT [***]	[***]	[***](3) or [***]
[***]	NMT [***]	[***]	[***](3) or [***]
[***]	NLT [***]	[***]	[***] or [***]

LT = less than
NLT = not less than
NMT = not more than

(1) [***] represent [***], [***] or [***].  [***] or [***].

(2) [***] are used for [***] and [***], except [***] A, B, C and D are used for [***] or [***], and may be used in [***].

(3) [***] are, for [***],[***] or [***]; for [***],[***] or [***]; for [***],[***] or [***]; and for [***], [***] or [***].

* Confidential Treatment Request(ed)

EXHIBIT B, CONT.

Title:Specification for Exenatide Injection in Cartridges

U.S. Regulatory Specification Exenatide Injection in Cartridges (AC2993-F8)

Description:[***] mg/mL peptide, [***]% (w/v) [***], [***]% (w/v) [***] in [***] mM [***] in 1.2, 2.4, or 3.0 mL cartridges with [***] and [***].

ATTRIBUTE	SPECIFICATION	METHOD(1)
[***]	[***], [***], and [***]	[***](2) or [***]
[***]	[***] to [***]	[***]
[***]	NMT [***] counts/container NLT [***]µm NMT [***] counts/container NLT [***]µm	[***]
[***]	[***] to [***]	[***]
[***]	[***]	[***]
[***]	[***]
[***]	[***]% to [***]%	[***]
[***]	[***]% to [***]% of [***]
[***]	NLT [***]%
[***]	NMT [***]%	[***]
[***]
[***]	NMT [***]%
[***]	NMT [***]%
[***]	[***]% to [***]% of [***]	[***]
[***]	[***]	[***](2) or [***]
[***]	[***]	[***](2) or [***]

LT= less than
NLT = not less than
NMT = not more than

(1) [***] are used for [***], except [***] are used for [***], and may be used in [***].

(2) [***] are, for [***], [***] or [***]; for [***], [***] or [***]; and for [***], [***] or [***].

* Confidentiality treatment request(ed).

EXHIBIT B, CONT.

Title:Specification for Placebo Exenatide Injection in Cartridges

Corporate Specification for PBO-F12

Description:[***] containing [***]% (w/v) [***], [***]% (w/v) [***] in [***] mM [***], in 1.2, 2.4, or 3.0 mL cartridges

ATTRIBUTE	ALERT LIMIT	SPECIFICATION	METHOD
[***]	[***]	[***]	[***] or [***](a)
[***]	[***]	[***]	[***] or [***](a)
[***]	[***] to [***]	[***] to [***]	[***](a)
[***]	[***]	[***]% to [***]%	[***](a)
[***]	[***]	[***]	[***](a)
[***]	[***]	[***] counts/container [***]µm [***] counts/container [***]µm	[***](a)
[***]	[***]	[***] to [***]	[***](a)
[***]	[***]	[***]	[***] or [***](a)
[***]	[***]	[***]	[***] or [***](a)
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]
[***]	[***]	[***]	[***]

(a) [***] used at [***]; [***] may be used during [***].

* Confidential treatment request(ed).

EXHIBIT B, CONT.

Title:Specification for Placebo Exenatide Injection in Cartridges

Regulatory Specification for PBO-F12

Description:[***] containing [***]% (w/v) [***], [***]% (w/v) [***] in [***] mM [***], in 1.2, 2.4, or 3.0 mL cartridges

ATTRIBUTE	SPECIFICATION	METHOD
[***]	[***]	[***] or [***](a)
[***]	[***]	[***] or [***](a)
[***]	[***] to [***]	[***](a)
[***]	[***]% to [***]%	[***](a)
[***]	[***]	[***](a)
[***]	[***] counts/container [***]µm [***] counts/container [***]µm	[***](a)
[***]	[***] to [***]	[***](a)
[***]	[***]	[***]
[***]	[***]	[***]
[***]	[***]	[***]

(a) [***] used at [***]; [***] may be used during [***].

* Confidential treatment request(ed).

EXHIBIT C

MINIMUM ORDERS

Purchase Period	Date Range	Minimum Quantity
Initial Period	4-28-05 to 4-27-06	[***]
2nd Period	4-28-06 to 4-27-07	[***]
3rd Period	4-28-07 to 4-27-08	[***]
4th Period	4-28-08 to 4-27-09	[***]
5th Period	4-28-09 to 4-27-10	[***]

* Confidential treatment request(ed).

EX-10.3

Exhibit 10.3

***Text Omitted and Filed Separately
Confidential Treatment Requested
Under 17 C.F.R. Section 200.80(b)(4)
And 240.24b-2

Addendum to September 19, 2002

U.S. Co-Promotion Agreement

by and between

Amylin Pharmaceuticals, Inc.

and

Eli Lilly and Company

Addendum Effective as of

May 8th, 2008

ADDENDUM TO U.S. CO-PROMOTION AGREEMENT

This Addendum to the U.S. Co-Promotion Agreement (the “Addendum”) is made effective as of the 8^th day of May, 2008 (the “Effective Date”) by and between Amylin Pharmaceuticals, Inc. (“Amylin”), a Delaware corporation having its principal place of business at 9360 Towne Center Drive, San Diego, California, 92121.

and

Eli Lilly and Company, an Indiana corporation having its principal place of business at Lilly Corporate Center, Indianapolis, Indiana, 46285 (“Lilly”).

RECITALS:

Whereas, Amylin and Lilly are parties to a Collaboration Agreement dated September 19, 2002 (the “Collaboration Agreement”), regarding the development and commercialization of Product, and U.S. Co-Promotion Agreement (“Co-Promotion Agreement”) dated September 19, 2002, regarding the promotion of Product;

Whereas, Lilly desires to engage, PharmaBio Development, Inc d/b/a NovaQuest, having its principal place of business at 4709 Creekstone Dr., Durham NC 37703 (hereinafter “NovaQuest”) to provide contract sales services for the Product.

Whereas, the Parties are entering into this Addendum to set forth the terms and conditions of Lilly’s engagement of NovaQuest to promote Product pursuant to the terms and conditions of the Co-Promotion Agreement.

NOW THEREFORE, in consideration of the foregoing premises and the mutual covenants contained in this Addendum, the Parties agree as follows:

Amylin and Lilly wish to append certain additional rights and obligations for each Party in addition to the Party’s respective rights and obligations under the Co-Promotion Agreement.  To the extent not otherwise modified in this Addendum, the rights and obligations of each Party under the Co-Promotion Agreement shall continue in full force and effect.

2

ARTICLE I

DEFINITIONS

As used herein, the following terms shall have the meanings indicated and any capitalized terms used herein and not defined herein shall have the meanings provided in the Co-Promotion Agreement:

“Co-Promotion Start Date” shall mean the date on which the NovaQuest’s Sales Force has received training on the Product in accordance with this Addendum and begins making NovaQuest Details, which shall be not later than July 1, 2008.

“NovaQuest Detail” means a face to face presentation by a representative of the NovaQuest sales force to a healthcare professional in a setting appropriate for a meaningful medical dialogue during which presentation such representative makes a Secondary Detail relating to Product.  A delivery of Samples does not constitute a NovaQuest Detail.

“Sample” shall mean quantities of Product or vouchers allowing patients to acquire Product at no charge given to authorized medical professionals for no or minimal consideration as part of the marketing, advertising and promotion of the Product.

“Third Priority Product”  means the third priority pharmaceutical product for which a sales representative is expected to present the uses and benefits after presenting the First Priority Product and Second Priority Product in his or her face-to-face meetings with health care professionals during which he or she presents the uses and benefits of pharmaceutical products.

“U.S. Ops” shall mean the committee established by Amylin and Lilly as the successor, in part, of the responsibilities and obligations of the JCC.

ARTICLE II

USE OF NOVAQUEST BY LILLY

2.1Product Promotion by NovaQuest.

Pursuant to Section 2.3(d) of the Co-Promotion Agreement, Amylin hereby consents to Lilly’s engagement of NovaQuest as a CSO to help fulfill Product detail obligations in the Co-Promotion Territory; provided, however that Lilly shall remain liable and responsible for the performance and observance of all its duties and obligations under the Co-Promotion Agreement and the obligations of NovaQuest pursuant to this Addendum.

3

2.2Compliance with Law by NovaQuest.

Lilly represents and warrants that NovaQuest will have prior to the Effective Date agreed that they shall comply with all applicable laws, rules and regulations including, but not limited to the Federal Equal Employment Opportunity Act, Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Fair Labor Standards Act, the Immigration Reform and Control Act of 1986, the Food, Drug and Cosmetic Act, Section 1128B(b) of the Social Security Act (42 U.S.C.§ 1320(a)-7(b(b), the Prescription Drug Marketing Act . NovaQuest prior to the Effective Date will agree to and shall comply with all applicable data protection laws and regulations, including without limitation, the Health Insurance Portability and Accountability Act (HIPAA) Privacy Regulations. Further, Lilly represents and warrants that NovaQuest prior to the Effective Date will have certified to Lilly that it has not and will not use in any capacity (either directly or through subcontractors) the services of any person debarred under the Generic Drug Enforcement Act of 1992 (GDEA) (specifically, under 21 USC 335a) in connection with services provided on behalf of Lilly during the term of this Addendum.

2.3Compliance with Agreements and Policies by NovaQuest.

Lilly shall ensure that NovaQuest, in carrying out its responsibilities and activities under this Addendum on behalf of Lilly, complies with the terms and conditions of the Co-Promotion Agreement and Collaboration Agreement as applicable and any applicable company policies outlined by the Parties.  NovaQuest’s breach of imposed duties and obligations shall be deemed to be Lilly’s breach of the Co-Promotion Agreement and/or Collaboration Agreement as applicable for purposes of this Addendum.

2.4NovaQuest Sales Force.

NovaQuest currently has a sales force of sales representatives, district managers and regional sales directors dedicated to promoting products on behalf of Lilly. (“NovaQuest Sales Force”).  Under this Addendum, the Parties agree that Lilly will engage NovaQuest to help fulfill Product detail obligations pursuant to the Co-Promotion Agreement and Collaboration Agreement

(a)Lilly shall cause the NovaQuest Sales Force to Detail Product in the Co-Promotion Territory to Targeted Physicians in accordance with the Promotion Plan and the strategies established by US Ops.   Lilly will be responsible for general sales training and Product related sales training of the NovaQuest Sales Force in accordance with the procedures established by US Ops.  Lilly shall cause NovaQuest not to hold their own sales force meetings regarding Product.

4

(b)Lilly will use its Commercially Reasonable Efforts to ensure that variable pay components of NovaQuest’s compensation structure, including but not limited to incentives, for the NovaQuest Sales Force is consistent with the NovaQuest Detail position the Parties have agreed upon for Product with such sales force.  The NovaQuest Detail position of Products addressed herein and incentive weighting agreed upon by the Parties as of the Effective Date is specified in Exhibit A attached hereto and incorporated by reference

(c)Lilly shall cause NovaQuest to conduct all of its activities under this Addendum, including, but not limited to, training, NovaQuest Detail, Promotional Activities, record-keeping, collection of consumer data (if any), and sampling (if any), in compliance with the FDA-approved package insert and labeling of Product, the applicable Promotional Materials, the Lilly Good Promotional Practice Guidelines or the Amylin equivalent and all Applicable Laws.

(d)Size of the NovaQuest Sales Force.   Lilly shall use its Commercially Reasonable Efforts to have in place as of the Co-Promotion Start Date not less than [***] ([***]) full-time, trained and placed sales representatives in the NovaQuest Sales Force for purposes of detailing Product.  Upon the Parties’ execution of this Agreement, Lilly shall notify Amylin in writing of the exact size of the NovaQuest Sales Force that it intends to field.  Lilly shall use its Commercially Reasonable Efforts to maintain the NovaQuest Sales Force at such size during the term of this Addendum.

2.5Information Lilly and/or NovaQuest Will Provide to Amylin.

Lilly will cause NovaQuest to maintain, in accordance with applicable laws, records regarding the NovaQuest Sales Force Activities under this Addendum and will provide Amylin, following the Co-Promotion Start Date, with the following written reports and such other information as Amylin may from time to time reasonably request:

(i)	Within [***] ([***]) days after the end of each [***]:
	·	[***];
	·	[***];
	·	[***]; and
	·	[***].
(ii)	Within [***] ([***]) days after the end of each Calendar [***]:
	·	[***]; and
	·	[***].

* Confidential treatment request(ed)

5

Lilly will cause NovaQuest to keep records in sufficient detail to enable the accuracy of the information provided under (i) through (ii) of this Section to be verified.  NovaQuest will keep such records for at least one (1) year after the expiration or termination of this Addendum, unless a longer retention period for a particular record is specified in this Addendum or by Applicable Laws.

Lilly shall from time to time provide such information as Amylin may reasonably request in order for Amylin to track NovaQuest’s activities under this Addendum and facilitate promotion of Product to Targeted Physcians by NovaQuest during the Term and by Amylin following the Term; provided, however, that following the Term, Amylin shall reimburse any Third Person out-of-pocket costs reasonably incurred by Lilly in providing such information.  This may include assistance from Lilly in creating and updating prescriber profiles and otherwise transitioning promotional responsibility from Lilly to Amylin after the Term.

ARTICLE III

3.1Distribution of Samples.

(a)Rights.   It is contemplated that in support of NovaQuests’ Detailing of the Product hereunder, an appropriate level of Samples will be supplied to NovaQuest.  US Ops will determine the appropriate level and develop appropriate procedures for delivery of Samples and Sample accountability for the NovaQuest Sales Force.  Amylin will supply, and Lilly will obtain, all such Samples from Amylin.  Lilly shall cause NovaQuest to use Samples strictly in accordance with the then current Commercial Plan and Lilly shall cause NovaQuest to distribute Samples in full compliance with all Applicable Laws.

(b)Lilly’s Responsibilities for Samples.  Lilly shall be solely responsible for the transport, storage, handling, and distribution of Samples (if any)  NovaQuest obtains under this Addendum.  Lilly will cause NovaQuest to transport, store, handle, and distribute all Samples in compliance with all Applicable Laws and with the procedures established by US Ops.

3.2NovaQuest’s Use and Distribution of Promotional Materials.

As part of its efforts under this Addendum, Lilly will cause the NovaQuest Sales Force to use and, as applicable, distribute Promotional Materials to health care professionals to whom it details Product in accordance with the Commercialization Plan.  The Promotional Materials will be used by NovaQuest only for purposes addressed herein.  Lilly will not permit NovaQuest to create any Promotional Materials.  Lilly will not permit NovaQuest to copy or alter in any manner (including rearranging, underlining, highlighting, recording notes, etc.) the Promotional Materials nor will Lilly allow the NovaQuest Sales Force to use any such unauthorized, copied, or altered Promotional Materials.

6

3.3Discontinuation of Materials and Samples.

If Amylin informs Lilly that a Training Material, Promotional Material, or Sample may no longer be used or distributed,or if Lilly determines that a Training Material, Promotional Material or Sample may no longer be used or distributed, Lilly will not allow the NovaQuest Sales Force to use or distribute such Training Material, Promotional Material, or Sample after the no-use date identified Amylin.

Lilly covenants that it will not permit NovaQuest to promote Product for any use not approved by the FDA.  Lilly also covenants that it will not permit NovaQuest to knowingly make any false or misleading representation to any health care professional or others regarding Product and that Lilly will not permit NovaQuest to make, except as contained in the Promotional Materials and the Product’s package insert and labeling, any representation, warranty, or guarantee with respect to the specifications, features, or capabilities of Product.

3.4Financial Provisions

All matters related to the Parties’ compensation for their respective services hereunder and right to reimbursement for expenses and other financial matters shall be as set forth in the Collaboration Agreement; provided, however, the Parties agree that unless otherwise specified hereafter, any and all compensation costs or expenses associated with or related to NovaQuest shall be at the sole cost and expense of Lilly and shall not in any manner be borne by to Amylin.

3.5Information Technology Framework.

To ensure efficient, timely and accurate communication of data and information between the Parties regarding activities under this Addendum, Lilly will cause NovaQuest to have in place and maintain an appropriate information technology infrastructure

3.6Insurance Coverage.

Lilly will cause NovaQuest to maintain insurance coverage on its activities to be carried out pursuant to this Addendum.  Such insurance will be maintained with a reputable insurance carrier(s), and will include, without limitation, errors and omissions insurance and comprehensive general liability insurance for claims for damages arising from bodily injury (including death) and property damages arising out of acts or omissions of NovaQuest under this Addendum.  Such insurance will also be written on a per occurrence basis.  The failure to maintain such insurance coverage will not relieve Lilly of any responsibility under this Addendum for damage in excess of insurance limits or otherwise.  Lilly will also cause NovaQuest to maintain workers’ compensation and employer’s insurance for the NovaQuest Sales Force.

7

ARTICLE IV

CONFIDENTIALITY

4.1Obligations.

Lilly shall cause NovaQuest to hold in confidence Amylin’s Confidential Information consistent with the confidentiality provisions of the Collaboration Agreement and Co-Promotion Agreement.

ARTICLE V

TERM AND TERMINATION

5.1Term.

a)Duration.  The Addendum, unless terminated earlier under this Article 5, will be in effect from the Effective Date until December 31, 2009, unless otherwise extended by mutual agreement of the Parties. (the “Term”).

(b)Consequences upon Expiration of the Term.  If the Addendum has not been terminated earlier, upon the date the Term expires:

(i)The Addendum expires, except as set forth in Section 5.7;

(ii)The NovaQuest Sales Force will cease all activities with regard to Product and;

(iii)All of Lilly’s rights under this Addendum to have NovaQuest promote Product including, but not limited to, use of the Training Materials, Samples and Promotional Materials, shall cease.

8

5.2Termination for an Uncured Material Breach by Amylin.

(a)Procedure.  If Amylin is in breach of any material obligation, agreement, condition, covenant, representation, or warranty under this Addendum, Lilly may give written notice of such breach to Amylin.  If, within five (5) business days after it receives Lilly’s notice, Amylin does not give Lilly written notice disputing, in good faith, that a breach has occurred, Amylin has sixty (60) days (or, in the event that such breach relates to the nonpayment of money, ten (10) days) from receipt of Lilly’s notice to cure such breach. If, within those sixty (60) days (or ten (10) days, as applicable), Amylin has not cured such breach, Lilly may give notice of termination, and termination of this Addendum will be effective immediately upon Amylin’s receipt of such notice or at such later date as Lilly may specify in such notice.

If, within five (5) business days after it receives Lilly’s notice of the breach, Amylin gives Lilly written notice disputing, in good faith, that a breach has occurred, the Parties will meet within fifteen (15) days after Lilly’s notice of such breach to attempt to resolve the dispute.  If, upon the expiration of such fifteen (15) days, the Parties have not agreed upon a resolution to such disputed breach, such dispute will be immediately referred upon the expiration of such fifteen (15) days to a member of the Lilly Policy Committee (or its successor) and to the Chief Executive Officer of Amylin.  If these two individuals cannot agree upon a resolution to such disputed breach within fifteen (15) days of its referral to them, Lilly may again give Amylin written notice of its intent to terminate the Addendum for Amylin’s breach.  If, within thirty (30) days (or, in the event that such breach relates to the nonpayment of money, ten (10) days) after such notice, Amylin has not cured such breach, Lilly may give notice of termination, and termination of this Addendum will be effective immediately upon Amylin’s receipt of such notice or at such later date as Lilly may specify in such notice.

(b)Consequences of Termination.  If, pursuant to Section 5.2 Lilly terminates this Addendum as a result of Amylin’s uncured breach, then, as of the effective date of such termination:

(i)The Addendum terminates, except as set forth in Section 5.7;

(ii)The NovaQuest Sales Force will cease all activities with regard to Product; and

(iii)All of NovaQuest’s rights under this Addendum to promote Product including, but not limited to, use of the Training Materials, Samples and Promotional Materials, shall cease.

9

5.3Termination for an Uncured Material Breach by Lilly or NovaQuest.

(a)Procedure.  If Lilly or NovaQuest is in breach of any material obligation, agreement, condition, covenant, representation, or warranty under this Addendum, Amylin may give written notice of such breach to Lilly.  If, within five (5) business days after it receives Amylin’s notice, Lilly does not give Amylin written notice disputing, in good faith, that a breach has occurred, Lilly has sixty (60) days (or, in the event that such breach relates to the nonpayment of money, ten (10) days) from receipt of Amylin’s notice to cure such breach.  If, within those sixty (60) days (or ten (10) days, as applicable), Lilly has not cured such breach, Amylin may give notice of termination, and termination of this Addendum will be effective immediately upon Lilly’s receipt of such notice or at such later date as Amylin may specify in such notice.

If, within five (5) business days after it receives Amylin’s notice of the breach, Lilly gives Amylin written notice disputing, in good faith, that a breach has occurred, the Parties will meet within fifteen (15) days after Amylin’s notice of such breach to attempt to resolve the dispute.  If, upon the expiration of such fifteen (15) days, the Parties have not agreed upon a resolution to such disputed breach, such dispute will be immediately referred upon the expiration of such fifteen (15) days to a member of the Lilly Policy Committee (or its successor) and to the Chief Executive Officer of Amylin.  If these two individuals cannot agree upon a resolution to such disputed breach within fifteen (15) days of its referral to them, Amylin may again give Lilly written notice of its intent to terminate the Addendum for Lilly’s breach.  If, within thirty (30) days (or, in the event that such breach relates to the nonpayment of money, ten (10) days) after such notice, Lilly has not cured such breach, Amylin may give notice of termination, and termination of this Addendum will be effective immediately upon Lilly’s receipt of such notice or at such later date as Amylin may specify in such notice.

(b)Consequences of Termination.  If, pursuant to Section 5.3 Amylin terminates this Addendum as a result of Lilly’s uncured breach, then, as of the effective date of such termination:

(i)The Addendum terminates, except as set forth in Section 5.7

(ii)The NovaQuest Sales Force will cease all activities with regard to Product; and

(iii)All of NovaQuest’s rights under this Addendum to promote Product including, but not limited to, use of the Training Materials, Samples and Promotional Materials, shall cease.

5.4Termination for Insolvency or Bankruptcy.

(a)  Procedure.   Either Party may, by written notice, terminate this Addendum with immediate effect if the other Party:

(i)makes a general assignment for the benefit of creditors;

10

(ii)files an insolvency petition in bankruptcy;

(iii)petitions for or acquiesces in the appointment of any receiver, trustee or similar officer to liquidate or conserve its business or any substantial part of its assets;

(iv)commences under the laws of any jurisdiction any proceeding involving its insolvency, bankruptcy, reorganization, adjustment of debt, dissolution, liquidation or any other similar proceeding for the release of financially distressed debtors; or

(v)becomes a party to any proceeding or action of the type described above in (iii) or (iv), and such proceeding or action remains undismissed or unstayed for a period of more than sixty (60) days.

(b)  Consequences of Termination.  If this Addendum is terminated pursuant to Section 5.4 then;

(i)The Addendum terminates, except as set forth in Section 5.7;

(ii)The NovaQuest Sales Force will cease all activities with regard to Product; and

(iii)All of NovaQuest’s rights under this Addendum to promote Product including, but not limited to, use of the Training Materials, Samples and Promotional Materials, shall cease.

5.5NovaQuest’s Destruction or Return of Certain Items after Expiration or Termination of the Addendum.

Within thirty (30) days after (i) the expiration of the Term or (ii) the effective date of termination, whichever is applicable, NovaQuest via Lilly will return all Training Materials and Promotional Materials in its possession, except for one (1) copy of such Training Materials and Promotional Materials which may be retained for Lilly’s legal records only and at Amylin’s instruction either destroy or return to Amylin Samples.  Lilly and Amylin shall share in the expense of such destruction or return contemplated under this Section 5.5. Within thirty-five (35) days after (i) the expiration of the Term or (ii) the effective date of termination, whichever is applicable, Lilly will deliver to Amylin an instrument duly executed by an executive officer of Lilly that certifies Lilly’s compliance with this Section.

5.6Termination without Cause.

(a) Procedure.  Either Party shall at any time, without cause terminate this Addendum, effective upon sixty (60) days prior written notice to the other Party.

11

(b)Consequences of Termination.  If, pursuant to Subsection (a), then, as of the effective date of such termination:

(i)The Addendum terminates, except as set forth in Section 5.7;

(ii)The NovaQuest Sales Force will cease all activities with regard to Product; and

(iii)All of NovaQuest’s rights under this Addendum to promote Product including, but not limited to, use of the Training Materials and Promotional Materials, shall cease.

5.7Surviving Obligations.

The rights and obligations of the Parties under Article 1 (Definitions), Article 3.1 (Distribution of Samples), Article 3.2 (NovaQuest’s Use and Distribution of Promotional Materials), Article 3.3 (Discontinuation of Materials and Samples), Article 3.4 (Financial Provisions), Article 3.6 (Insurance Coverage), Article 4 (Confidentiality), Article 5 (Term and Termination), and Article 6 (General Provisions) shall survive any termination or expiration of this Addendum.

Also, termination or expiration of the Addendum will not affect rights and obligations of the Parties that by their nature or by the terms of the particular provision survive.

Finally, except as specifically provided to the contrary in this Addendum, termination or expiration of the Addendum will be without prejudice to any rights that have accrued to the benefit of either Party prior to such termination or expiration and will not relieve either Party of any obligations accrued by it hereunder prior to such termination or expiration.

ARTICLE VI

GENERAL PROVISIONS

6.1Legal Compliance.

Lilly will cause NovaQuest to comply with all Applicable Laws in the performance of its obligations or the exercise of its rights hereunder.

12

6.2Assignment.

This Addendum may not be assigned by either Party without the written consent of the other Party.  Lilly will not permit NovaQuest to assign any of its obligations to promote Product without Amylin’s consent.

6.3Independent Contractors.

It is understood and agreed that NovaQuest is an independent contractor and is engaged in the operation of their own respective business and will not be considered the agent of Amylin for any purpose whatsoever. NovaQuest will not have any authority to enter into any contracts or assume any obligations for Amylin nor make any warranties or representations on behalf of Amylin.

6.4Governing Law.

This Addendum and all amendments, modifications, alterations, or supplements hereto, and the rights of the Parties hereunder, will be construed under and governed by the laws of the state of New York exclusive of its conflicts of laws principles.

6.5Entire Agreement.

This Addendum, including the Collaboration Agreement and Co-Promotion Agreement, any exhibits or attachments attached hereto constitute the entire agreement between Amylin and Lilly with respect to the subject matter hereof, and all previous or other negotiations, representations and understandings with respect to the subject matter hereof between Amylin and Lilly are superseded as of the Effective Date.  This Addendum has been prepared jointly and will not be strictly construed against either Party.

6.6Severability.

If a provision of this Addendum (or portion thereof) is held to be illegal, invalid, or unenforceable by a court of competent jurisdiction, the remaining provisions (and portions thereof) of the Addendum shall remain in full force and effect.  In addition, to the extent feasible and legally permissible, the court of competent jurisdiction will replace the illegal, invalid, or unenforceable provision of this Addendum with a valid provision that eliminates such violation while conforming as closely as possible to the original terms of this Addendum.

If a provision of this Addendum (or portion thereof) that is essential to the commercial purpose of this Addendum is held to be illegal, invalid, or unenforceable by a court of competent jurisdiction and such court cannot replace (either because such replacement is not feasible or not legally permissible) such provision with a valid provision that eliminates such violation while conforming as closely as possible to the original terms of this Addendum, the remaining provisions (and portions thereof) of the Addendum remain in full force and effect, but either Party may terminate the Addendum upon written notice to the other.

13

6.7Notices.

All notices, statements, and reports required to be given under this Addendum shall be given in the manner specified in the Collaboration Agreement.

6.8Counterparts.

This Addendum may be executed in one or more counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.

6.9Waiver.

The failure of either Party to enforce any provision of this Addendum at any time will not be construed as a present or future waiver of such provision or any other provision of this Addendum.

6.10Modifications.

No amendment, waiver or modification of this Addendum will be valid or binding on either Party unless made in writing and signed by duly authorized representatives of both Parties.

6.11Headings.

All headings and captions used in this Addendum are for convenience only, and are not intended to have any substantive effect.

6.12No Other Licenses or Rights

Except as specifically provided for in this Addendum, neither Party grants, expressed or implied, any license or rights to the other Party.

6.13Further Actions.

Each Party agrees to execute, acknowledge, and deliver such further instruments, and to do all other acts, as may be reasonably necessary or appropriate within the contemplation of this Addendum to carry out the purposes and intent of this Addendum.

[Signature Page Follows]

14

IN WITNESS WHEREOF, each Party has executed this Addendum by its respective, duly authorized officer as of the day and year herein written.

AMYLIN PHARMACEUTICALS, INC.		ELI LILLY AND COMPANY
By:	/s/ Joe Young		By:	/s/ John Lechleiter
Name: Joe Young			Name:		John Lechleiter
Title: Sr. Vice President, Marketing			Title:			President and
			Chief Executive Officer

15

Exhibit A

Detail Position and Incentive Weighting

[***] shall be no less than [***]%

[***] shall be no more than [***]%

* Confidential treatment request(ed)

16

EX-10.4

Exhibit 10.4

CONSULTING AGREEMENT

                The following contains all the items of an at-will consulting agreement between AMYLIN PHARMACEUTICALS, INC., a Delaware corporation (the “Company”), located at 9360 Towne Centre Drive, San Diego, California 92121, and Alain Baron (“Consultant”), an individual located at 12863 Baywind Point, San Diego, CA 92130, effective as of June 1, 2008 (the “Effective Date”).

                The nature of the services Consultant will provide as a consultant to the Company, the amount of time committed and Consultant’s compensation are set forth in Exhibit A hereto.  In rendering such services to the Company, Consultant shall act as an independent contractor and not as an employee of the Company and shall be free to dispose of such portion of Consultant’s entire time, energy and skill as Consultant has not agreed to devote to the Company.  The Company or Consultant may terminate this Agreement at any time, with or without cause.

                Consultant understands that as part of the consideration for his retention as a consultant by the Company, he has not brought and will not bring with him to the Company or use in the performance of his responsibilities at the Company any equipment, supplies, facility, or trade secret information of any current or former employer which are not generally available to the public, unless Consultant has obtained written authorization for their possession and use.  Consultant also understands that, in his retention as a consultant with the Company, Consultant is not to breach any obligation of confidentiality that he has to any third party, and Consultant agrees that he shall fulfill all such obligations during his retention as consultant with the Company.

                Consultant understands that the Company possesses and will continue to possess information that has been created, discovered or developed by the Company (or that has otherwise become known to the Company) which has commercial value to the Company.  This information includes, but is not limited to, (a) information created, discovered, developed, or made known by Consultant or to Consultant arising out of or in connection with his retention as a consultant by the Company, and (b) information in which property rights have been assigned or otherwise conveyed to the Company.  All of the aforementioned information is hereinafter called “Proprietary Information.”  By way of illustration, but not limitation, Proprietary Information includes trade secrets, processes, formulae, data and know-how, improvements, inventions, techniques, strategies, and forecasts.

                In consideration of his retention as a consultant to the Company, and the compensation received by him from the Company from time to time, Consultant hereby agrees as follows:

                1.             All Proprietary Information shall be the sole property of the Company and its assigns, and the Company and its assigns shall be the sole owner of all patents and other rights in connection therewith.  Consultant hereby assigns to the Company any rights he may have or acquire in all Proprietary Information.  At all times during his retention as a consultant by the Company and at all times after termination of such retention as a consultant, Consultant will keep in confidence and trust all Proprietary Information, and will not use or disclose any Proprietary Information or anything relating to it without the express written consent of the Company, except as may be necessary in the ordinary course of performing his duties as a consultant of the Company.

1

                2.             Consultant agrees that during the period that he is retained as a consultant to the Company, he will not, without the Company’s express written consent, engage in any employment or activity (whether as a consultant, advisor or otherwise) in any business competitive with the Company.

                3.             All documents, data, records, apparatuses, equipment and other physical property, whether or not pertaining to Proprietary Information, furnished to Consultant by the Company or produced by Consultant or others in connection with his retention as a consultant shall be and remain the sole property of the Company and shall be returned promptly to the Company as and when requested by the Company.  Should the Company not so request, Consultant shall return and deliver all such property upon termination of his retention as a consultant by himself or by the Company for any reason, and Consultant will not take with him any such property or any reproduction of such property upon such termination.

                4.             Consultant agrees that for a period of one (1) year following termination of his retention as a consultant with the Company, he will not solicit or in any manner encourage employees of the Company to leave its employ.

                5.             Consultant will promptly disclose to the Company, or any persons designated by it, all improvements, inventions, discoveries, ideas, formulae, processes, techniques, know-how and data, whether or not patentable, made or conceived or reduced to practice or learned by Consultant, either alone or jointly with others, during the period of his retention as a consultant which (a) are within the scope of the consulting services to be provided by Consultant under this Agreement and are related to or useful in the business of the Company, or (b) result from tasks assigned Consultant by the Company, or (c) are funded by the Company, or (d) result from use of premises owned, leased or contracted for by the Company (all said improvements, inventions, discoveries, ideas, formulae, processes, techniques, know-how and data shall be collectively hereinafter called “Inventions”).  Such disclosure shall continue for one (1) year after termination of this Agreement with respect to anything that would be an Invention if made, conceived, reduced to practice or learned during the term hereof.  Consultant agrees that all Inventions shall be the sole property of the Company and its assigns, and the Company and its assigns shall be the sole owner of all patents and other rights in connection therewith.  Consultant hereby assigns to the Company any rights he may have or acquire in all Inventions.  Consultant further agrees as to all Inventions to assist the Company in every proper way (but at the Company’s expense) to obtain and from time to time enforce patents on the Inventions in any and all countries.

                6.             Consultant represents that his performance of all the terms of this Agreement and that his retention as a consultant by the Company does not and will not breach any agreement to keep in confidence proprietary information acquired by Consultant in confidence or in trust prior to his retention as a consultant by the Company. Consultant has not entered into, and Consultant agrees he will not enter into, any agreement either written or oral in conflict herewith.

2

                7.             Consultant shall perform the services in accordance with all applicable laws, rules and regulations and represents and warrants that he has never been (i) debarred or convicted of a crime for which a person can be debarred, under Section 306(a) or 306(b) of the Generic Drug Enforcement Act of 1992 or (ii) threatened to be debarred or indicted for a crime or otherwise engaged in conduct for which a person can be debarred, under Section 306(a) or (b).  Consultant agrees that he will promptly notify the Company in the event of any such debarment, conviction, threat or indictment.

                8.             Consultant agrees that all writings, reports, drawings, photographs, engineering drawings, sketches, models, sound recordings, software, audio visual recordings and other creative works prepared by Consultant pursuant to this Agreement will be deemed to have been prepared for the Company and will be considered as works made for hire and all rights and the copyrights therefore will be owned by the Company.  Consultant hereby assigns to the Company all rights, titles and interests in and to said copyrights in the United States and elsewhere, including registration and publication rights, rights to create derivative works and all other rights which are incident to copyright ownership.  In the event any court holds such creative works not to be works for hire, Consultant will assign such creative works to the Company, at its request, in consideration for the compensation paid to the Consultant hereunder.

                9.             Consultant agrees that in addition to any other rights and remedies available to the Company for any breach by Consultant of his obligations hereunder, the Company shall be entitled to enforcement of Consultant’s obligations hereunder by court injunction.

                10.           If any provision of this Agreement shall be declared invalid, illegal or unenforceable, such provision shall be severed and all remaining provisions shall continue in full force and effect.

                11.           This Agreement shall be effective as of the Effective Date, and unless earlier terminated as provided hereunder, shall continue until May 31, 2009, when it shall automatically expire.

                12.           The term Company, as used herein, shall include any subsidiary or affiliate of Amylin Pharmaceuticals, Inc.

                13.           Consultant shall not have the right to assign, by operation of law or otherwise, or subcontract any or all of the Services under this Agreement to any third party, without Company’s prior written consent. This Agreement shall be binding upon Consultant, his heirs, executors, assigns and administrators and shall inure to the benefit of the Company, its successors and assigns.

                14.           This Agreement, including any Exhibits attached hereto, represent the entire Agreement between the parties with respect to the subject matter hereof.  The terms and conditions contained in any documents utilized by either party in connection with this Agreement (including, without limitation, any purchase order) at variance with or in addition to those set forth herein, will be of no force and effect with respect to the transactions contemplated under this Agreement.

3

                15.           This Agreement shall be governed by and construed in accordance with the laws of the State of California (except its choice of law rules), and the parties to this Agreement hereby submit to the jurisdiction and venue of the California courts, both state and federal.

                16.           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.  This Agreement may be executed and delivered by facsimile and upon such delivery the facsimile signature will be deemed to have the same effect as if the original signature had been delivered to the other party.

AGREED AND ACCEPTED:	AGREED AND ACCEPTED:
	Amylin Pharmaceuticals, Inc.
/s/ Alain Baron	/s/ Lloyd Rowland
Alain Baron	Lloyd Rowland
	VP, Governance and Compliance,
	and Secretary

4

EXHIBIT A

Nature of Consulting:	Consultant shall consult with and provide to the Company, as may be requested by the Company during the term of this Agreement, the following consulting services: Periodic consultation on projects. Any activity of Consultant with respect to such subject matter shall be deemed to be in connection with his consulting.
Compensation:	In consideration of the maintenance by Consultant of the terms and conditions of this Agreement, including consultation with and provision of services to the Company in the aforementioned subject matter, Consultant shall be paid at an hourly rate of $425.00/hour.
	In addition, Company shall reimburse Consultant for the reasonable expenses incurred by Consultant related to the consulting services, provided that such expenses are pre-approved by Company and documented by receipts. Consultant shall submit invoices on a monthly basis (in order of Amylin preference) to (i) by email to accounts.payable@amylin.com, (ii) by fax to 858-334-1186, or (iii) by mail to Accounts Payable Department, Amylin Pharmaceuticals, Inc., 9360 Towne Centre Drive, San Diego, California 92121 (or to such other address as may be designated by AMYLIN), and such invoice(s) shall be paid by Company within thirty (30) days of Company’s receipt of the invoice. Company will, in accordance with its policy, issue a purchase order for the services hereunder with a purchase order number that shall be referenced by Consultant in each invoice.

5

EX-10.5

Exhibit 10.5

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. Section 200.80(b)(4)

And 240.24b-2

THIRD AMENDMENT TO SUPPLY AGREEMENT

THIS THIRD AMENDMENT to the Supply Agreement originally made and entered into as of October 1, 2003, by and between Amylin Pharmaceuticals, Inc. (“AMYLIN”) and Mallinckrodt Inc. (“MALLINCKRODT”), as amended effective on and as of January 1, 2006 and February 12, 2007, is made and entered into between AMYLIN and MALLINCKRODT effective on and as of January 1, 2008.

WHEREAS, the parties desire to amend the aforementioned Supply Agreement for the third time in certain respects,

NOW, THEREFORE, the parties hereto agree as follows:

1.Section 1.19 of the Supply Agreement shall be deleted in its entirety, and replaced by the text set forth immediately below:

“Exenatide Drug” means finished formulated dosage drug product containing Product.”

2.Section 1.28 of the Supply Agreement shall be amended by removing the period at the end of the sentence, replacing it with a comma and adding the words “which shall be identified by a specific lot number assigned by MALLINCKRODT.”

3.Section 1.32 will be deleted in its entirety and, to avoid difficulties with references in the Supply Agreement, the subsections of Section 1 that follow will not be renumbered.  As a consequence of the deletion of Section 1.32, the phrase “Normal Lot quantity,” as it appears in Section 2.2 of the Supply Agreement shall be deleted.

4.All references to ‘Exenatide Injection Drug” will be replaced with references to “Exenatide Drug”.

5.Clause (iv) of Section 2.3 of the Supply Agreement shall be deleted in its entirety, and replaced by the text set forth immediately below to be inserted immediately after clause (iii) of Section 2.3:

“(iv)  during each of the fourth and fifth Contract Years, either (A) at least [***] percent ([***]%) of the total quantity of Product purchased by AMYLIN during each of such Contract Years for the manufacture of Exenatide Drug for commercial sale anywhere in the world where MALLINCKRODT has authorized reference of its Drug Master File for Product or (B) [***] ([***])[***] of Product, whichever is greater, and

*CONFIDENTIAL TREATMENT REQUEST(ED)

(v)  during the sixth Contract Year and every subsequent Contract Year thereafter, at least [***] ([***])[***] of Product.”

6.Clauses (v) and (vi) of Section 2.4 shall be deleted in their entirety and the following text shall be inserted in Section 2.4 of the Supply Agreement after the end of clause (iv):

“(v) if in any given Contract Year the amount of Product ordered for delivery is greater than [***] ([***])[***] but less than [***] ([***])[***], the price per gram will be $[***],

(vi)  if in any given Contract Year the amount of Product ordered for delivery is greater than or equal to [***] ([***])[***] but less than [***] ([***])[***], the price per gram will be $[***],

(vii) if in any given Contract Year the amount of Product ordered for delivery is greater than or equal to [***] ([***])[***] but less than [***] ([***])[***], the price per gram will be $[***], and

(viii) if in any given Contract Year the amount of Product ordered for delivery is greater than or equal to [***] ([***])[***], the price per gram will be $[***].”

7.The existing text of Section 2.8 of the Supply Agreement shall be deleted in its entirety and replaced with a new text as set forth below:

“On the first day of each calendar [***] (i.e., [***]) during the term hereof, AMYLIN shall submit to MALLINCKRODT, in writing, a rolling forecast for Product covering production of Product hereunder for a [***] ([***])[***] period beginning on the first day of the calendar [***] commencing after the first day of the calendar [***] on which any such rolling forecast is to be submitted (e.g., if a forecast is submitted on [***], the [***] ([***])[***] forecast period will begin on the following [***]).  The first [***] of any rolling forecast submitted by AMYLIN shall be binding and, therefore, in no event shall AMYLIN purchase less than [***] percent ([***]%) of the quantity of Product forecasted for the first quarter of such rolling forecast.  The second [***] of any rolling forecast submitted by AMYLIN shall be partially binding to the extent that in no event shall AMYLIN purchase less than [***] percent ([***]%) of the quantity of Product forecasted for the second [***] of such rolling forecast.  The balance of any rolling forecast (i.e., the portion of the forecast covering the last [***] ([***]) calendar [***]) shall not be binding and will be utilized by MALLINCKRODT for production planning purposes only, but in all circumstances AMYLIN shall act in

*CONFIDENTIAL TREATMENT REQUEST(ED)

2

good faith and with reasonable care to submit rolling forecasts for Product which are as accurate as possible under the circumstances.  If ordered by AMYLIN pursuant to this Agreement, MALLINCKRODT agrees that it will be able to produce for AMYLIN (A) in any [***] ([***]) calendar [***] at least [***] ([***])[***] of Product and (B) in any single calendar [***] at least [***] ([***])[***] of Product.  MALLINCKRODT agrees to use commercially reasonable efforts to produce additional quantities of Product if ordered by AMYLIN pursuant to this Agreement; however, notwithstanding the foregoing provisions of this Section 2.8 or the contents of any rolling forecast submitted by AMYLIN to MALLINCKRODT, in no event shall MALLINCKRODT be required to produce for AMYLIN in any relevant period more than the quantities of Product set forth in the immediately preceding sentence unless specifically agreed to by MALLINCKRODT by its written acceptance of an AMYLIN Purchase Order containing such excess quantities.”

8.In Section 7.1 of the Supply Agreement replace “five (5) Contract Years”, with “nine (9) Contract Years”, thereby extending the initial term of the Supply Agreement by an additional four (4) years.

9.In section 7.2(v) of the Supply Agreement replace “fourth (4^th)” with “eighth (8^th)”, with the effect that the termination right set forth in Section 7.2(v) may not be exercised until after the elapse of the eighth (8^th) Contract Year.

10.Exhibit B of the Supply Agreement (as added by the parties pursuant to their second amendment to the Supply Agreement effective February 12, 2007) shall be deleted in its entirety, and replaced with the updated Exhibit B attached hereto as Schedule A.

Except as expressly amended herein, all of the other terms of the Supply Agreement shall remain unchanged and in full force and effect.

IN WITNESS WHEREOF, the parties hereto have executed this Third Amendment to Supply Agreement effective as of the day above written.

Amylin Pharmaceuticals, Inc.
By:	/s/ Paul Marshall; 6/16/2008
	Paul Marshall
	Vice President, Operations
Mallinckrodt Inc.
By:	/s/ Richard C. Proehl; 5/12/08
	Richard C. Proehl

*CONFIDENTIAL TREATMENT REQUEST(ED)

3

EXHIBIT B

PRODUCT SPECIFICATIONS

Purchase Specification AC2993 (Mallinckrodt)

[***]	[***]	[***]
[***]	[***]	[***]
Ala Arg Asx Glx Gly His Ile Leu Lys Met Phe Pro Ser Thr Trp Val	[***] mole ratio [***] mole ratio [***] mole ratio [***] mole ratio [***] mole ratio [***] mole ratio [***] mole ratio [***] mole ratio [***] mole ratio [***] mole ratio [***] mole ratio| [***] mole ratio [***] mole ratio [***] mole ratio [***] mole ratio [***] mole ratio	[***]
[***]	[***] Daltons	[***]
[***]	Consistent with [***]	[***]
[***]	[***]%[***]	[***]
[***] acid [***] by [***]	[***]%[***]	[***]
[***] [***]	[***]%[***]	[***]
[***] [***] [***] [***] [***] [***]	[***]%[***] [***]%[***] [***]%[***] [***]%[***]. [***]%[***]	[***]

*CONFIDENTIAL TREATMENT REQUEST(ED)

[***]	[***]	[***]
[***] [***]	[***]% [***]	[***]
[***] [***] [***] [***] [***] [***] [***] [***]	[***]% [***] [***]% [***] [***]% [***] [***]% [***] [***]% [***] [***]% [***] [***]% [***]	[***]
[***] by [***]	[***]% - [***]% of [***] ([***]%): [***]% - [***]% [***]	[***]
[***]	[***]% [***]
[***]	[***]% [***]	[***]
[***]	[***]% [***]
[***]	[***]% [***]
[***]	[***] ppm [***] Report individual values	[***]
[***]	[***]	[***]
[***]	[***]	[***]
[***]	Report Result	[***]
[***]	[***] at [***] mg/mL in [***]	[***]
[***]	[***] – [***]%	[***]

*CONFIDENTIAL TREATMENT REQUEST(ED)

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Mark G. Foletta, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Amylin Pharmaceuticals, Inc.;

2.Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; and

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; and

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 31, 2008
	By:	/S/ MARK G. FOLETTA
		Senior Vice President, Finance and
		Chief Financial Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Daniel M. Bradbury, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Amylin Pharmaceuticals, Inc.;

2.Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; and

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; and

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 31, 2008
	By:	/S/ DANIEL M. BRADBURY
		President and Chief Executive
		Officer

EX-32.1

Exhibit 32.1

CERTIFICATION

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350, as adopted), Daniel M. Bradbury, the President and Chief Executive Officer of Amylin Pharmaceuticals, Inc. (the “Company”), and Mark G. Foletta, the Senior Vice President, Finance and Chief Financial Officer of the Company, each hereby certifies that, to the best of his knowledge:

1.The Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2008, to which this Certification is attached as Exhibit 32.1 (the “Periodic Report”), fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and

2.The information contained in the Periodic Report fairly presents, in all material respects, the financial condition of the Company at the end of the period covered by the Periodic Report and results of operations of the Company for the period covered by the Periodic Report.

Dated:  July 31, 2008

/S/ DANIEL M. BRADBURY	/S/ MARK G. FOLETTA
Daniel M. Bradbury	Mark G. Foletta
President and Chief Executive Officer	Senior Vice President, Finance and Chief Financial Officer