UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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(Mark One) |
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the quarterly period ended March 31, 2003 |
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OR |
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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Commission File Number: 0-19700 |
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AMYLIN PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
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Delaware |
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33-0266089 |
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(State or other jurisdiction of |
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(I.R.S. Employer |
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9373 Towne Centre Drive, San Diego, California |
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92121 |
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(Address of principal executive offices) |
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(Zip code) |
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(858) 552-2200 |
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(Registrant’s telephone number, including area code) |
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Not Applicable |
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(Former name, former address and former fiscal year, if changed since last report) |
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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 ý No o
Indicate by check mark whether the registrant is an accelerated filer (as defined in rule 12b-2 of the Exchange Act)
Yes ý No o
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
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Class |
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Outstanding at May 7, 2003 |
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Common Stock, $.001 par value |
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92,772,345 |
AMYLIN PHARMACEUTICALS, INC.
2
AMYLIN PHARMACEUTICALS, INC.
Condensed Consolidated Balance Sheets
(in thousands)
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March 31, |
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December
31, |
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(unaudited) |
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(Note 1) |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
84,526 |
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$ |
69,415 |
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Short-term investments |
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179,907 |
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77,943 |
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Inventories |
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10,818 |
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9,820 |
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Other current assets |
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5,000 |
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3,203 |
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Total current assets |
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280,251 |
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160,381 |
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Property and equipment, net |
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5,758 |
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4,469 |
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Patents and other assets, net |
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3,860 |
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3,695 |
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$ |
289,869 |
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$ |
168,545 |
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Liabilities and Stockholders’ Equity |
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Current liabilities: |
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Accounts payable and accrued liabilities |
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$ |
21,177 |
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$ |
25,370 |
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Current portion of deferred revenue |
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31,735 |
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42,090 |
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Current portion of notes payable and capital lease obligations |
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417 |
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553 |
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Total current liabilities |
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53,329 |
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68,013 |
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Capital lease obligations and other liabilities, net of current portion |
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1,352 |
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811 |
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Deferred revenue, net of current portion |
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23,443 |
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24,515 |
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Note payable, net of discount |
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64,443 |
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62,908 |
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Stockholders’ equity: |
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Common stock, $.001 par value, 200,000 shares authorized, 92,666 and 81,979 issued and outstanding at March 31, 2003 and December 31, 2002, respectively |
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93 |
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82 |
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Additional paid-in capital |
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695,667 |
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530,023 |
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Accumulated deficit |
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(548,341 |
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(517,531 |
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Deferred compensation |
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(361 |
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(443 |
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Accumulated other comprehensive income |
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244 |
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167 |
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Total stockholders’ equity |
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147,302 |
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12,298 |
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$ |
289,869 |
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$ |
168,545 |
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See accompanying notes to condensed consolidated financial statements.
3
AMYLIN PHARMACEUTICALS, INC.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
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Three
months ended |
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2003 |
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2002 |
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Revenue under collaborative agreement |
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$ |
11,885 |
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$ |
— |
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Operating expenses: |
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Research and development |
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28,122 |
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16,523 |
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Selling, general and administrative |
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10,515 |
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4,697 |
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Acquired in-process research and development |
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3,300 |
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— |
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41,937 |
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21,220 |
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Loss from operations |
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(30,052 |
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(21,220 |
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Interest and other income |
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827 |
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603 |
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Interest and other expense |
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(1,585 |
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(1,481 |
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Net loss |
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$ |
(30,810 |
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$ |
(22,098 |
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Net loss per share, basic and diluted |
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$ |
(0.34 |
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$ |
(0.30 |
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Shares used in computing net loss per share, basic and diluted |
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90,032 |
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74,205 |
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See accompanying notes to condensed consolidated financial statements.
4
AMYLIN PHARMACEUTICALS, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
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Three months ended
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2003 |
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2002 |
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Operating activities: |
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Net loss |
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$ |
(30,810 |
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$ |
(22,098 |
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Adjustments to reconcile net loss to net cash used for operating activities: |
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Depreciation and amortization |
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717 |
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433 |
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Amortization of deferred compensation |
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25 |
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22 |
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Amortization of debt discount |
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299 |
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299 |
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Accrued interest added to notes payable |
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1,236 |
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1,160 |
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Changes in operating assets and liabilities: |
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Inventories |
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(998 |
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(907 |
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Other current assets |
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(1,914 |
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(66 |
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Accounts payable and accrued liabilities |
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(4,282 |
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3,193 |
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Deferred revenue |
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(11,427 |
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— |
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Other assets and liabilities, net |
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639 |
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61 |
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Net cash flows used for operating activities |
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(46,515 |
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(17,903 |
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Investing activities: |
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Purchases of short-term investments |
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(176,595 |
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(55,134 |
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Sales and maturities of short-term investments |
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74,825 |
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20,468 |
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Purchase of fixed assets, net |
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(1,871 |
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(819 |
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Increase in patents |
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(306 |
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(96 |
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Net cash flows used for investing activities |
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(103,947 |
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(35,581 |
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Financing activities: |
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Issuance of common stock, net |
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165,712 |
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92,308 |
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Principal payments on capital leases and notes payable |
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(139 |
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(137 |
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Net cash flows provided by financing activities |
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165,573 |
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92,171 |
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Change in cash and cash equivalents |
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15,111 |
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38,687 |
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Cash and cash equivalents at beginning of period |
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69,415 |
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22,395 |
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Cash and cash equivalents at end of period |
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$ |
84,526 |
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$ |
61,082 |
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See accompanying notes to condensed consolidated financial statements.
5
AMYLIN PHARMACEUTICALS, INC.
Notes to Condensed Consolidated Financial Statements
March 31, 2003
(Unaudited)
1. Summary of Significant Accounting Policies
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 March 31, 2003 and for the three months ended March 31, 2003 and March 31, 2002 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, 2002, has been derived from the audited consolidated financial statements at that date but does not include all information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. For more complete financial information, these financial statements should be read in conjunction with the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2002.
Revenue is recognized when all four of the following criteria are met: (i) persuasive evidence that an arrangement exists; (ii) delivery of the products and/or services has occurred; (iii) the selling price is fixed or determinable; and (iv) collectibility is reasonably assured. In addition, the Company follows the provisions of the Securities and Exchange Commission’s Staff Accounting Bulletin No. 101 (“SAB 101”), “Revenue Recognition,” which sets forth guidelines in the timing of revenue recognition based upon factors such as passage of title, installation, payments and customer acceptance. 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. Amounts received for milestones are recognized upon achievement of the milestone, and the expiration of stock conversion rights, if any, associated with such payments. Any amounts received prior to satisfying these revenue recognition criteria will be recorded as deferred revenue in the accompanying consolidated balance sheets.
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 2.9 million and 3.0 million for the three months ended March 31, 2003 and 2002, respectively, are excluded from the calculation of diluted loss per share for all periods presented because the effect is antidilutive.
The Company records compensation expense for employee stock options based upon their intrinsic value on the date of grant pursuant to Accounting Principles Board (APB) Opinion No. 25, “Accounting for Stock Issued to Employees.” Because the Company establishes the exercise price based on the fair market value of the Company’s stock at the date of grant, the options have no intrinsic value upon grant, and therefore no expense is recorded. Each quarter, the Company reports the potential dilutive impact of stock options in its diluted earnings per share using the treasury-stock method. Out-of-the-money stock options (i.e., the average stock price during the period is below the strike price of the option) are not included in diluted earnings per share.
As required under Statement of Financial Accounting Standards No. 123 “Accounting for Stock-Based Compensation,” and SFAS No. 148, “Accounting for Stock-Based Compensation Transition and Disclosure,” the pro forma effects of stock-based compensation on net income and net earnings per common share have been
6
estimated at the date of grant using the Black-Scholes option pricing model based on the following assumptions for the quarters ended March 31, 2003 and 2002, respectively: risk-free interest rate of 1.19% and 2.7%; dividend yield of 0%; volatility factors of the expected market price of the Company’s common stock of 55% and 73% and a weighted-average expected life of the option of 5 years.
For purposes of pro forma disclosures, the estimated fair value of the options is assumed to be amortized to expense over the options’ vesting periods. These pro forma amounts may not be representative of the effects on reported net income (loss) for future periods due to the uncertainty of stock option grant volume and potential changes in assumptions driven by market factors. The pro forma effects of recognizing compensation expense under the fair value method on net income (loss) and net earnings per common share were as follows (in thousands, except for earnings per share):
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Quarters Ended March 31, |
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2003 |
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2002 |
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Net loss, as reported |
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$ |
(30,810 |
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$ |
(22,098 |
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Deduct: Stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects |
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3,065 |
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2,279 |
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Pro forma net loss |
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$ |
(33,875 |
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$ |
(24,377 |
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Earnings per share: |
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Basic and diluted – as reported |
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$ |
(0.34 |
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$ |
(0.30 |
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Basic and diluted – pro forma |
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$ |
(0.38 |
) |
$ |
(0.33 |
) |
The consolidated financial statements include the accounts of Amylin and its wholly owned subsidiary, Amylin Europe Limited. All significant intercompany transactions and balances have been eliminated in consolidation.
2. Investments
The Company has classified its debt securities as available-for-sale, and accordingly, carries its short-term investments at fair value, and unrealized holding gains or losses on these securities are carried as a separate component of stockholders’ equity. The amortized cost of debt securities in this category is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization is included in interest 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. 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 consist primarily of SYMLIN® (pramlintide acetate) bulk drug material, which will be used in the manufacture of finished SYMLIN® drug product in vials for syringe administration and cartridges for pen administration, pending regulatory approvals. At March 31, 2003, total inventories were approximately $10.8 million, of which approximately $0.8 million, net of a valuation allowance of $1.0 million, was in finished form.
7
4. Comprehensive Income (Loss)
Statement of Financial Accounting Standards No. 130, Reporting Comprehensive Income, or SFAS 130, requires reporting and displaying comprehensive income (loss) and its components which, for the Company, includes net loss and unrealized gains and losses on investments. In accordance with SFAS 130, the accumulated balance of other comprehensive income is disclosed as a separate component of stockholders’ equity. For the three months ended March 31, 2003, and 2002, the comprehensive loss consisted of (in thousands):
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Three months ended March 31, |
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2003 |
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2002 |
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Net loss |
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$ |
(30,810 |
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$ |
(22,098 |
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Other comprehensive gain (loss): |
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Unrealized gain (loss) on investments: |
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77 |
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(384 |
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Comprehensive loss |
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$ |
(30,733 |
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$ |
(22,482 |
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5. Stockholders’ Equity
On January 23, 2003 the Company completed a public offering of approximately 10.5 million shares of its common stock at a price of $16.60 per share. This offering was completed pursuant to a $175 million universal shelf registration statement initially filed with the Securities and Exchange Commission in November 2002. This transaction generated net proceeds of approximately $165 million for the Company. The Company intends to use the net proceeds for research and development and general corporate purposes.
6. Acquired In-Process Research and Development
On January 29, 2003, the Company completed an acquisition from Restoragen, Inc. of a Phase 2 program utilizing continuous infusion of glucagon-like peptide 1, or GLP-1, targeted for the treatment of congestive heart failure. In connection with the transaction, the Company also acquired rights to various GLP-1 related patents. The Company paid Restoragen approximately $3.3 million at closing and will pay an additional $0.7 million upon receiving satisfactory results from an on-going Phase 2 clinical trial.
This compound is in early Phase 2 development and no alternative future use was identified. As with many early Phase 2 compounds, launch of products, if approved is not expected in the near term. Accordingly, the Company recorded a charge for acquired in-process research and development of $3.3 million in the quarter ended March 31, 2003.
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Except for the historical information contained herein, the discussion in this report contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed in this report due to a number of risks and uncertainties including, among other things, risks and uncertainties in the United States Food and Drug Administration’s, or FDA’s, review of New Drug Applications, generally, risks and uncertainties regarding the additional ongoing clinical testing of SYMLIN® (pramlintide acetate), risks and uncertainties that approvals of SYMLIN®, if obtained, may be delayed and/or limited to specific indications, uncertainties in the European regulatory process for SYMLIN®, our ability to commercialize SYMLIN®, if approved, our ability to enter into sales distribution, marketing and/or corporate partnering agreements with respect to SYMLIN®, the results of our preclinical and clinical studies of our drug candidates, including SYMLIN®, exenatide, exenatide LAR, AC2592 (GLP-1) and AC3056, risks associated with our exenatide collaboration with Eli Lilly and Company, or Lilly, including our ability to achieve development and commercialization milestones and objectives under the collaboration agreement, the timing for Lilly’s sharing in development cost for exenatide, and potential liability and indemnification obligations arising out of ongoing litigation. Additional factors that could cause or contribute to such differences include, without limitation, those discussed in the section entitled “Liquidity
8
and Capital Resources” herein as well as those discussed in our Annual Report on Form 10-K for the year ended December 31, 2002, under the heading “Risk Factors.”
Amylin Pharmaceuticals, Inc. is a biopharmaceutical company engaged in the discovery, development and commercialization of drug candidates for the treatment of diabetes and other metabolic diseases. We currently have two lead drug candidates in late stage development for the treatment of diabetes, SYMLIN® and exenatide, formerly referred to as AC2993 (synthetic exendin-4). In September 2002, we announced a collaboration agreement with Lilly for the global development and commercialization of exenatide, including sustained release formulations of the product candidate. We have a third drug candidate, AC3056, for the treatment of atherosclerosis-related cardiovascular disease, in early stage clinical development. We recently acquired a Phase 2 program utilizing continuous infusion of GLP-1, referred to as AC2592, for the treatment of patients with severe congestive heart failure. We are studying AC162352 (Peptide YY 3-36), our preclinical candidate for the potential treatment of obesity. We maintain a focused research and development program to discover and in-license additional drug candidates for metabolic diseases.
Since our inception in September 1987, we have devoted substantially all of our resources to our research and development programs. Substantially all of our revenues to date have been derived from fees and expense reimbursements under earlier SYMLIN® collaborative agreements, from interest income, and more recently, our exenatide collaboration agreement with Lilly. We currently have no product sales and have not received any revenues from the sale of our drug candidates. We have been unprofitable since inception, and expect to incur additional operating losses for at least the next few years. As of March 31, 2003, our accumulated deficit was approximately $548 million.
In January 2003, we completed a public offering of approximately 10.5 million shares of our common stock generating net proceeds of approximately $165 million.
Revenue Under Collaborative Agreements
Revenue under collaborative agreements was $11.9 million for the quarter ended March 31, 2003. We reported no such revenues for the comparable period in 2002. The revenue in the current quarter consists primarily of the amortization to revenue of a portion of the $80 million non-refundable, up-front payment made by Lilly to us pursuant to our exenatide collaboration agreement entered into in September 2002. In the quarter ended March 31, 2003, revenues under collaborative agreements also include amounts earned in connection with the Company’s co-promotion of Humatrope®, Lilly’s recombinant human growth hormone product. We began actively co-promoting Humatrope during the first quarter of 2003. We expect to see an increase in revenue under collaborative agreements during the remainder of 2003 as a result of the continued amortization of Lilly’s up-front payments, future payments from Lilly to us for a portion of development costs of exenatide, future payments from Lilly to us for our co-promotion of Humatrope and, pending further success of the exenatide development programs, future milestone payments from Lilly. Recognition of the milestone payments to revenue will be subject to the completion of certain performance requirements and the expiration of stock conversion rights, if any, associated with such payments.
Our total operating expenses for the quarter ended March 31, 2003 increased to $41.9 million from $21.2 million for the comparable period in 2002. Research and development expenses for the quarter ended March 31, 2002 increased to $28.1 million from $16.5 million for the comparable period in 2002. Selling, general and administrative expenses increased to $10.5 million from $4.7 million for the comparable period in 2002. We incurred a $3.3 million charge for acquired in-process research and development in the quarter ended March 31, 2003 and had no such charge for the comparable period in 2002 (Note 6).
9
The $11.6 million increase in research and development expenses in the current quarter, compared to the same period in 2002, reflects primarily costs associated with the three ongoing pivotal Phase 3 clinical trials for exenatide, open label extensions of these trials, an increase in our number of employees and to a lesser extent, costs associated with the recently completed dose titration trial and associated regulatory activities for SYMLIN®.
We expect that research and development expenses will increase from current levels during the remainder of 2003. This expected increase will be driven primarily by the rate of further expansion of the exenatide and exenatide LAR development programs. The planned increase includes additional clinical trials to support our NDA for exenatide, additional Phase 2 trials for exenatide LAR, costs associated with manufacturing scale-up for exenatide and exenatide LAR, costs to further develop drug delivery devices for exenatide and SYMLIN®, costs associated with a potential Phase 3B/4 clinical program for SYMLIN and an increase in our number of employees to support these activities.
The $5.8 million increase in selling, general and administrative expenses in the current quarter reflects primarily an increase in our number of employees, including the December 2002 hiring of a sales force consisting of 45 representatives to co-promote Humatrope®. The increase in selling, general and administrative expenses also reflects costs associated with our commercialization plans for SYMLIN®, increased facilities and other infrastructure costs required to support our growth. Selling, general and administrative expenses are expected to increase slightly in the next few quarters as the Company prepares for possible commercialization of SYMLIN®. More significant increases are dependent upon the timing of regulatory approval of SYMLIN® in the United States, currently projected for the end of 2003. The planned increase includes costs associated with a potential scale-up of our sales and marketing organization, the potential expansion of pre-marketing activities for SYMLIN® and infrastructure costs required to support these activities.
Interest and other income was $0.8 million for the quarter ended March 31, 2003, compared to $0.6 million for the same period in 2002. The $0.2 million increase in interest and other income in the current year reflects higher average balances available for investment, partially offset by lower market interest rates in the quarter ended March 31, 2003 as compared to the same period in 2002.
Interest and other expense was $1.6 million for the quarter ended March 31, 2003, compared to $1.5 million for the same period in 2002. The slight increase in interest and other expense in the current quarter reflects a higher note payable balance due to accrued interest added to principal, partially offset by lower market interest rates in the quarter ended March 31, 2003 as compared to the same period in 2002.
The net loss for the quarter ended March 31, 2003 was $30.8 million compared to a net loss of $22.1 million for the same period in 2002. The increase in the net loss primarily reflects the increased operating expenses partially offset by the increase in revenue under collaborative agreements discussed above. The net loss for the quarter ended March 31, 2003 includes a non-recurring charge of $3.3 million for acquired in-process research and development.
We expect to incur substantial operating losses for at least the next two years due to ongoing expenses associated with the continuation and potential expansion of our research and development programs, including the clinical development of SYMLIN®, exenatide, exenatide LAR, AC2592 and AC3056, preparation for the planned commercialization of SYMLIN® and related general and administrative support. Operating losses may fluctuate from quarter to quarter as a result of differences in the timing of expenses incurred and revenues recognized.
Since our inception, we have financed our operations primarily through private placements of common stock and preferred stock, public offerings of common stock, reimbursement of SYMLIN® development expenses through earlier collaboration agreements, payments received pursuant to our September 2002 exenatide collaboration with
10
Lilly and debt financings. We will consider options to efficiently access capital markets to further fund the development and commercialization of our drug candidates. The level at which we seek to access the capital markets and the timing of any action will depend on a number of factors including progress on our exenatide and SYMLIN® development programs and prevailing market conditions.
At March 31, 2003, we had $264.4 million in cash, cash equivalents and short-term investments as compared to $147.4 million at December 31, 2002. The increase reflects the proceeds from a January 2003 public offering of common stock of approximately $165 million, partially offset by cash expenditures to fund our operations in the quarter ended March 31, 2003.
At March 31, 2003, we owed Johnson & Johnson approximately $65.9 million pursuant to debt incurred in connection with a collaboration agreement that terminated in 1998. The amount presented under the caption “Note Payable” in the condensed consolidated balance sheet at March 31, 2003 of $64.4 million is net of a debt discount of $1.5 million, which represents the unamortized portion of the value assigned to warrants issued to Johnson & Johnson. Repayment obligations on this debt commence in June 2005; however, repayment may be accelerated in the event that we enter into certain specified change in control transactions, specified types of agreements for SYMLIN® or certain types of financing arrangements subsequent to approval of the SYMLIN® NDA by the FDA. Additionally, we owe $0.4 million pursuant to an equipment financing arrangement, which is payable in equal monthly installments through December 2003.
We used cash of $46.5 million and $17.9 million for our operating activities in the quarters ended March 31, 2003 and 2002, respectively. Investing activities used $103.9 million and $35.6 million in the quarter ended March 31, 2003 and 2002, respectively. Investing activities in both periods consisted primarily of purchases and sales of short-term investments, purchases of laboratory and office equipment and increases in patents. Financing activities provided $165.6 million and $92.2 million in the quarters ended March 31, 2003 and 2002, respectively. These amounts consist of proceeds from the sale of common stock, offset by payments on capital leases and notes payable. The majority of the cash provided from financing activities in the quarter ended March 31, 2003 was a public offering of common stock for net proceeds of approximately $165 million.
Our use of cash for our operating activities in the quarter ended March 31, 2003 was $46.5 million which was approximately $15.7 million greater than our net loss of $30.8 million. This is due principally to the amortization of deferred revenue related to the exenatide collaboration of $11.4 million and a net use of cash from our other operating assets of approximately $6.6 million, partially offset by non-cash expenses of $2.3 million. We expect that our operating cash flows will continue to exceed our net loss until Lilly actively begins to share in development costs for exenatide, currently projected for the second half of 2003.
Cash expenditures for research and development activities are expected to continue to increase in 2003, driven primarily by continued expenditures to complete the Phase 3 program for exenatide, planned expenditures associated with manufacturing scale-up for exenatide and exenatide LAR, costs associated with the acquisition and potential expansion of the Phase 2 GLP-1 development program and potential expansion of our earlier stage development programs. Pursuant to our collaboration agreement with Lilly, we are responsible for the first $101.2 million of development costs for exenatide and exenatide LAR subsequent to the consummation of the collaboration agreement. We expect to reach this cumulative amount sometime in the second half of 2003. Subsequent to the time that we reach this cumulative amount, Lilly will equally share with us in U.S. development costs for exenatide and exenatide LAR.
Cash expenditures for selling, general and administrative expenses are expected to continue to increase during 2003 as the Company prepares for the possible approval of SYMLIN®. More significant cash expenditures are dependent on the timing of regulatory approval and possible launch of SYMLIN® in the United States and include costs associated with a potential scale-up of our sales and marketing organization, the potential expansion of pre-marketing activities for SYMLIN® and infrastructure costs required to support these activities.
At March 31, 2003, we are committed to purchase approximately $5.9 million of commercial grade bulk drug material in the subsequent twelve-month period. If FDA approval for SYMLIN® is received, our expenditures to secure commercial grade bulk drug material will increase substantially, including a commitment to purchase
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approximately $9.0 million of additional material pursuant to an agreement with Johnson & Johnson. We are also obligated to purchase this material if we enter into a collaboration agreement for SYMLIN® or if there is a change in control of the Company. If none of these events occur, we have no obligation to purchase this material from Johnson & Johnson.
In 2001, several class action lawsuits were filed against us and certain of our officers and directors alleging securities fraud in connection with various statements and alleged omissions relating to the development of SYMLIN®. These lawsuits were consolidated into a single action. If we are not successful in our defense of this lawsuit, we may be required to make significant payments to our stockholders. The lawsuit is at an early stage and the extent or range of possible damages, if any, cannot yet be reasonably estimated.
We anticipate continuing our ongoing development programs and may begin other long-term development projects. These projects may require many years and substantial expenditures to complete and may ultimately be unsuccessful. Therefore, we may need to obtain additional funds from outside sources to continue research and development activities, fund operating expenses, pursue regulatory approvals and build sales and marketing capabilities as necessary. These sources may include private and/or public offerings of common or preferred stock or debt, revenues and expense reimbursements from collaborative agreements for one or more of our drug candidates, or a combination thereof. There can be no assurances that such financing will be available on reasonable terms, if at all. If adequate funds are not available, we may be required to delay, scale back or eliminate one or more of our product development programs.
Our future capital requirements will depend on many factors; including the timing and costs involved in obtaining regulatory approvals for SYMLIN® and exenatide, whether regulatory approvals for the marketing of SYMLIN® and exenatide are received, our ability to receive milestone payments pursuant to our exenatide collaboration with Lilly, our ability and the extent to which we establish commercialization arrangements for SYMLIN®, our ability to progress with other ongoing and new preclinical and clinical trials, the extent of these trials, scientific progress in our other research and development programs, the magnitude of these programs, the costs involved in preparing, filing, prosecuting, maintaining, enforcing or defending ourselves against patents, competing technological and market developments, changes in collaborative relationships and any costs of manufacturing scale-up.
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
We invest our cash and short-term investments primarily in U.S. government securities and marketable securities of financial institutions and corporations with strong credit ratings. These instruments have various short-term maturities. We do not utilize derivative financial instruments, derivative commodity instruments or other market risk sensitive instruments, positions or transactions in any material fashion. Accordingly, we believe that, while the instruments we hold are subject to changes in the financial standing of the issuer of such securities, we are not subject to any material risks arising from changes in interest rates, foreign currency exchange rates, commodity prices, equity prices or other market changes that affect market risk sensitive investments. Our debt is not subject to significant swings in valuation as interest rates on our debt approximate current market interest rates.
ITEM 4. Controls and Procedures
As of March 31, 2003, an evaluation was performed under the supervision and with the participation of our management, including our Chairman and Chief Executive Officer (our “CEO”) and our Vice President of Finance and Chief Financial Officer (our “CFO”), of the effectiveness of the design and operation of our disclosure controls and procedures. Based on that evaluation, our management, including our CEO and CFO, concluded that our disclosure controls and procedures were effective as of March 31, 2003. There have been no significant changes in our internal controls or in other factors that could significantly affect our internal controls subsequent to March 31, 2003.
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Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
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Description |
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10.54 |
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The Registrant’s 2001 Deferred Compensation Plan, as amended February 19, 2003. |
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99.1 |
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Certifications Pursuant to U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Public Company Accounting Reform and Investor Protection Act of 2002. |
(b) Reports on Form 8-K:
1. The Company filed a report on Form 8-K, dated January 17, 2003, which included the form of Underwriting Agreement with Goldman Sachs & Co., Lehman Brothers Inc., Morgan Stanley & Co., Inc., Banc of America Securities LLC and Fortis Securities Inc., used in connection with a public offering of stock completed in January 2003.
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.
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Amylin Pharmaceuticals, Inc. |
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Date: May 14, 2003 |
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By: |
/s/ MARK G. FOLETTA |
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Mark G. Foletta, |
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Vice President, Finance and |
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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-14 and 15d-14) for the registrant and have:
a. designed such disclosure controls and procedures 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;
b. evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and
c. presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of the registrant’s board of directors:
a. all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and
b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and
6. The registrant’s other certifying officer and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
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Date: May 14, 2003 |
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By: |
/s/ MARK G. FOLETTA |
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Vice President, Finance and |
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I, Joseph C. Cook, Jr., 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-14 and 15d-14) for the registrant and have:
a. designed such disclosure controls and procedures 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;
b. evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and
c. presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of the registrant’s board of directors:
a. all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and
b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and
6. The registrant’s other certifying officer and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
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Date: May 14, 2003 |
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By: |
/s/ JOSEPH C. COOK, JR. |
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Chairman and Chief Executive Officer |
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