Amylin Pharmaceuticals, Inc.

views updated

Amylin Pharmaceuticals, Inc.

9360 Towne Centre Drive, Suite 110
San Diego, California 92121
U.S.A.
Telephone: (858) 552-2200
Fax: (858) 552-2212
Web site: http://www.amylin.com

Public Company
Incorporated: 1987
Employees: 535
Sales: $85.65 million (2003)
Stock Exchanges: NASDAQ
Ticker Symbol: AMLN
NAIC: 541710 Research and Development in the Physical Sciences and Engineering Sciences; 325412 Pharmaceutical Preparation Manufacturing; 621511 Medical Laboratories

Amylin Pharmaceuticals, Inc. develops medicines to treat diabetes, obesity, and cardiovascular disease. The company's two lead drugs are SYMLIN and exenatide, both developed to treat diabetes. SYMLIN and exenatide are in late-stage development, nearing full approval for commercialization. Amylin also has several other drugs in earlier stages of the development and approval process, including pharmaceuticals known as AC2592, AC137, and AC162352. Most of Amylin's financial support comes from a collaboration agreement with Eli Lilly & Co. to develop and market exenatide.

Beginning a Hard Corporate Life in the Late 1980s

Biopharmaceutical companies, particularly those that are publicly held, suffer a somewhat tortuous existence. The costs incurred in developing a drug are immense. The process of guiding a drug through the various stages of regulatory approval is excruciatingly lengthy. While waiting to get the green light to begin marketing a drug, companies invest hundreds of millions of dollars without the ability to recoup their investment. All the while, investors critically assess every move of the company, trying to anticipate failure and share in success, holding the market value of the company hostage while its potential is subjected to the vagaries of a drug's development. Amylin experienced the pains and the pleasures of a publicly held biopharmaceutical company. More than 15 years after its formation, the company, racking up substantial debt through the years, did not have a marketable product. Along the way, the company experienced the roller-coaster ride of an investor-backed venture in the pharmaceutical industry. At times, the company's potential excited industry observers, fueling optimism that Amylin was destined for great success. At other times, the company appeared headed toward collapse, its troubles portending bankruptcy and the nullification of research that promised to help millions of patients. Amylin, during its formative years, typified the struggle of a biopharmaceutical company trying to establish itself.

Amylin's work in helping diabetes patients centered on a namesake peptide named amylin, discovered by researchers at Oxford University in 1987, the year of Amylin's formation. Researchers at Oxford discover that amylin was made in and secreted from the same cells—beta cells—that make and secrete insulin. In someone not afflicted with diabetes, amylin complements the actions of insulin, with the two hormones working together with another pancreatic hormone, glucagon, to maintain normal glucose concentrations. In normal physiology, insulin and amylin concentrations increase after food is ingested. Glucagon levels, in contrast, decrease after food is ingested. In diabetic patients, the complementary functions of the three pancreatic hormones are thrown out of balance. The disease is manifested in two forms: Type I (juvenile-onset) consists of patients whose insulin-producing pancreatic beta cells have been destroyed; Type II (maturity-onset) includes diabetics whose insulin-producing cells do not produce enough insulin. Insulin deficiency in both forms results in abnormally high blood-glucose concentration, or hyperglycemia, which causes degenerative complications such as blindness, kidney failure, nerve damage, and, according to many authorities, heart disease.

Amylin was formed in September 1987 to develop further the amylin research of the Oxford scientists. A founder of the company, Howard E. Greene, Jr., wanted to continue the work begun in England to develop a drug to treat both Type I and Type II diabetics, a drug that would be a synthetic analog of amylin. In the late 1980s, Greene was an executive of note, having participated in either the founding or management of 11 medical technology companies during the previous two decades. An alumnus of Harvard University, where he earned an M.B.A., Greene served as the chief executive officer of Hybritech for most of the 1980s. He joined the company in 1979 and co-invented the company's patented monoclonal antibody assay technology. He left the company in March 1986, when Hybritech was acquired by the giant pharmaceutical company Eli Lilly & Co. Greene's next venture, Amylin, put him in a position to help millions of people and make millions of dollars. An estimated 16 million people suffered from diabetes in the United States, with the incidence of diagnoses as a percentage of the country's population tripling between the late 1950s and late 1980s. Diabetes ranked as the fourth or fifth leading cause of death in most developed countries. The cost of treating diabetics in the United States was estimated to be more than $100 billion annually, accounting for one in seven healthcare dollars spent during the early 1990s. Starting out in 1987, Green and Amylin's team of scientists were intent on making a drug to improve the treatment of diabetes and, by consequence, to garner a sizable share of the money spent on treating diabetes.

1995 Collaboration Agreement with Johnson & Johnson

Amylin focused on the synthetic equivalent of amylin, pramlintide—a drug developed to improve glucose control in Type I and Type II diabetics. The company, whose progress became public knowledge after it completed its initial public offering of stock in 1992, began the methodical, slow journey through development and federal approval at great cost. Amylin was sustained by investments in the potential of pramlintide, racking up heavy annual losses as it engaged exclusively in research and development activities. Amylin's first major breakthrough as a drug developer and the first surge in investor confidence in the company occurred in June 1995, when Johnson & Johnson, through its subsidiary LifeScan Inc., signed a worldwide collaboration agreement with Amylin. Johnson & Johnson agreed to support financially the development and commercialization of pramlintide, giving Amylin its first meaningful stream of revenue. Between 1992 and 1994, the company registered a total of $1.8 million in research fees associated with an agreement with Glaxo-Wellcome. In 1995, Amylin recorded $17 million in revenue, a total derived from Johnson & Johnson's one-half share of development expenses and a license fee paid at the signing of the collaboration agreement.

With the backing of Johnson & Johnson, Amylin's fortunes improved significantly. The massive healthcare products company agreed to invest more money once certain points were reached in pramlintide's development, known as "milestone payments" in the drug development industry. Amylin received its first milestone payment in August 1996, when, after reviewing data of pramlintide's development, Johnson & Johnson agreed to give Amylin $22 million and to continue with the collaboration. Revenues for the year reached $35.8 million, by which point Amylin had accumulated a $155 million deficit.

Reaching the first milestone in the collaboration agreement with Johnson & Johnson fueled confidence at Amylin. "We remain on track to achieve our goal of filing regulatory applications in North America and Europe during 1998," Greene remarked in an August 19, 1996 interview with San Diego Business Journal. Pramlintide, which became known as SYMLIN, was in Phase III clinical trails, the last of three progressive testing stages required by the Food and Drug Administration (FDA) before a drug is considered for final approval. After years of research and development, the company was nearing commercialization of its first product, but much remained to be accomplished. The closer a drug came to gaining approval for introduction to the public, the more stringent the testing became, often making the late-stage development process a slow crawl to the finish line.

Amylin suffered a severe setback in SYMLIN's passage through the product pipeline exactly two years after the company achieved its first milestone. In August 1998, after investing more than $170 million in SYMLIN's development, Johnson & Johnson terminated its collaboration agreement with Amylin. Greene's company was rocked by Johnson & Johnson's departure. Revenue, which totaled $42.6 million in 1997, fell to $16.2 million in 1998 before disappearing altogether the following year. The financial community took a giant step back from Amylin, causing its stock value to plummet to $.68 per share by October 1998.

Amylin kept its faith in SYMLIN after Johnson & Johnson terminated the collaboration agreement and pressed ahead with bringing the drug to market. Joseph C. Cook, Jr., a 28-year veteran at Eli Lilly & Co. and an Amylin board member since 1994, came out of retirement in 1998 to help the company recover its footing, taking the title of chief executive officer. Under Cook's stewardship, Amylin dealt with the blow incurred by the loss of its drug development partner and began to effect a turnaround. Cook reduced the company's workforce by 75 percent to conserve cash and raised capital from investors to keep SYMLIN moving through the regulatory pipeline. He also had to be mindful of Wall Street's perception of the company, a critical item on his checklist. In this area, Cooke achieved success not long after he took control of the company. In 1999, intrigued by the announcement of positive results on clinical trials of SYMLIN, the financial community renewed its interest in Amylin. The company's stock was trading at $7 per share at the end of the year, increasing 1,568 percent in value in 1999. By the beginning of 2000, shares in Amylin hovered in the $14 range. The return of investors' faith was an important achievement for Cook, but his greatest test arrived in 2001, when the fate of SYMLIN, and with it most probably the fate of Amylin, hung in the balance.

Company Perspectives:

Amylin Pharmaceuticals is committed to improving the lives of people with diabetes and other metabolic diseases through the discovery, development, and commercialization of innovative, cost-effective medicines.

SYMLIN Going Before an FDA Panel in 2001

In 2001, SYMLIN was scheduled for review by the FDA's Endocrinologic and Metabolic Drugs and Advisory Committee (EMDAC). The drug's existence was at stake. SYMLIN, slated to be the first drug to work with insulin to lower levels of blood glucose without having the side effect of weight gain, needed to gain EMDAC's approval if it had any chance of passing through final regulatory review and entering the market. The FDA not only typically heeded the rulings of EMDAC, but also was more conservative than its panel, often ruling against a drug EMDAC had approved. As the July 2001 review with EMDAC neared, Cook and other executives went to great lengths to ensure SYMLIN earned EMDAC's approval. The company rehearsed its presentation of SYMLIN, creating a simulated setting that followed the exact configuration of the tables and chairs in EMDAC's presentation room in Washington, D.C. The company invited diabetes specialists from throughout the country to ask Amylin's staff the same type of questions the panel's specialists were expected to ask. "We trained our people to use slides and how to present," Cook said in an April 7, 2003 interview with San Diego Business Journal. "We wanted them to be totally comfortable with the physical surroundings of the event so that when they went in front of the panel they wouldn't have stage fright." Amylin staged a final rehearsal in Washington, D.C., before appearing before EMDAC.

Amylin's team of SYMLIN presenters made their case before EMDAC in July and waited for the nine-member panel's findings. EMDAC voted 8–1 that SYMLIN's trials proved efficacy, but the panel ruled 8–1 against using the drug for Type I diabetes and 6–3 against using it for Type II diabetes. EMDAC also voted 8–1 that SYMLIN appeared not to be safe. The panel's findings portended disaster, suggesting that nearly 15 years of work had been in vain. "The jury is still out," Cook told reporters after the panel's votes were revealed, as quoted in the April 7, 2003 issue of San Diego Business Journal, but few observers shared his muted optimism.

Amylin appeared on the verge of collapse. The deathblow of a drug developer had been delivered, but in October 2001, three months after EMDAC's ruling, a stunning announcement offered a lifeline. In a decision the April 7, 2003 issue of San Diego Business Journal described as "baffling," the FDA voted against the recommendations of EMDAC and issued an "approvable letter" for SYMLIN. Although the FDA said it wanted to see more data before approving SYMLIN for market, the unusual reversal renewed hope that the drug, which one analyst claimed could generate $260 million in worldwide revenue annually, would give Amylin its first marketable product.

Amylin and Eli Lilly & Co. in 2002

Amylin received additional good news not long after the FDA's reversal breathed new life into the company. By September 2002, the company had about one year left of funding when Cook secured another collaboration agreement. Eli Lilly & Co., where Cook had spent nearly three decades, agreed to a $300 million collaboration agreement with Amylin to develop another diabetes drug, exenatide, which was designed to treat Type II diabetics. Eli Lilly & Co. agreed to an initial $80 million payment and to split the development costs and U.S. profits with Amylin, with Cook's company getting up to $300 million in milestone payments. The deal sparked new excitement in the financial community. "The fact that Joe (Cook) got a profit-sharing deal out of Eli Lilly as opposed to a royalty-based deal makes the terms much more generous for Amylin," an analyst remarked in an April 7, 2003 interview with San Diego Business Journal.

With SYMLIN under regulatory review and exenatide undergoing Phase III clinical trials, Amylin was edging closer to having two drugs on the market. Cook, after engineering a remarkable turnaround at the company, decided to step down in 2003 and hand the opportunity of guiding Amylin toward a future of potential prosperity to another board member. Ginger Graham, an Amylin board member since 1994, was named president and chief executive officer in September 2003. Formerly an executive at Guidant Corp. and Eli Lilly & Co., Graham took charge of the company at yet another critical point in its development. In the not too distant future, Amylin would discover the commercial and medical worth of more than 15 years of research and development. The existence of the company depended on a successful denouement.

Key Dates:

1987:: Amylin is formed.
1992:: The company completes its initial public offering of stock.
1995:: Amylin and Johnson & Johnson sign a collaboration agreement.
1998:: Johnson & Johnson terminates its collaboration agreement.
2001:: The Food and Drug Administration issues an "approvable letter" for SYMLIN.
2002:: Amylin signs a collaboration agreement with Eli Lilly & Co.
2003:: Ginger Graham is appointed president and chief executive officer.