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Article by DailyStocks_admin    (09-24-08 04:23 AM)

Filed with the SEC from Sep 11 to Sep 17:

Amylin Pharmaceuticals (AMLN)
Carl Icahn has increased his stake to 7.33% (10.06 million shares) from 6.54%.

BUSINESS OVERVIEW

We are 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 are marketing two first-in-class medicines to treat diabetes, BYETTA ® (exenatide) injection and SYMLIN ® (pramlintide acetate) injection. Our near-term strategy is to drive BYETTA and SYMLIN sales growth while investing in other development opportunities, such as a sustained-release formulation of exenatide which we refer to as exenatide once weekly (formerly referred to as exenatide LAR) and our obesity program, to drive mid-term and long-term growth.



BYETTA is the first and only approved medicine in a new class of compounds called incretin mimetics. It is approved as an adjunctive therapy to improve glycemic control in patients with type 2 diabetes who have not achieved adequate glycemic control using metformin, a sulfonylurea and/or a thiazolidinediene (TZD), three common oral therapies for type 2 diabetes. Net product sales of BYETTA were $636.0 million in 2007, $430.2 million in 2006 and $75.2 million in 2005.



We have an agreement with Eli Lilly and Company, or Lilly, for the global development and commercialization of exenatide. This agreement includes BYETTA and other formulations of exenatide such as exenatide once weekly. Under the terms of the agreement, operating profits from products sold in the United States are shared equally between Lilly and us, and Lilly will pay us royalties for product sales outside of the United States. Lilly has primary responsibility for developing and commercializing BYETTA outside of the United States including any sustained-release formulations of exenatide such as exenatide once weekly. In late 2006, BYETTA was approved in the European Union, or EU, and, by the end of 2007, was commercially launched in 23 countries worldwide.



SYMLIN is the first and only approved medicine in a new class of compounds called amylinomimetics. It is approved as an adjunctive therapy to improve glycemic control in patients with either type 2 or type 1 diabetes who are treated with mealtime insulin but who have not achieved adequate glycemic control. We own 100% of the global rights to SYMLIN. Net product sales of SYMLIN were $65.5 million in 2007, $43.8 million in 2006 and $11.5 million in 2005.



We have a field force of approximately 600 people dedicated to marketing BYETTA and SYMLIN in the United States. In addition, Lilly co-promotes BYETTA 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 to our marketed products, we have ongoing programs in pharmaceutical discovery and development, including a late-stage program to develop exenatide once weekly, to enable once weekly administration of exenatide for the treatment of type 2 diabetes. We are working with Lilly and Alkermes, Inc., or Alkermes, to develop exenatide once weekly. In October 2007, we announced positive results of a 30-week pivotal comparator study that showed a statistically significant improvement in A1C, a standard measure of blood glucose control, of approximately 1.9 percentage points from baseline for exenatide once weekly patients, with three out of four patients achieving an A1C of 7% or less. We plan to complete our manufacturing scale-up activities in 2008 and to submit a new drug application, or NDA, to the U.S. Food and Drug Administration, or FDA, no later than the end of the first half of 2009, although we are aggressively pursuing strategies which may allow an earlier submission. In 2008 we also plan to initiate three studies to demonstrate the superiority of exenatide once weekly over insulin and several oral medications used in the treatment of type 2 diabetes.



Our long-term growth strategy includes our Integrated Neurohormonal Treatment of Obesity, or INTO, strategy. In November 2007, we announced that overweight or obese subjects in a 24-week proof-of-concept study treated with a combination of pramlintide, an analog of human amylin and the same active ingredient in SYMLIN, and metreleptin, an analog of human leptin, lost an average of 25 pounds from baseline, resulting in reduced body weight on average of 12.7%. In 2008 we will focus on the development of a potential obesity medicine that is a combination of pramlintide and metreleptin.



We also have other early stage programs for diabetes, obesity and other therapeutic areas. We maintain an active discovery research program focused on novel peptide therapeutics and are actively seeking to in-license additional drug candidates. We have also entered into a number of strategic alliances and business initiatives that support our expansion into new therapeutic areas.



On March 1, 2007 Ginger L. Graham stepped down as our chief executive officer and continues to serve as a member of our board of directors. Daniel M. Bradbury, our former president and chief operating officer, became our president and chief executive officer effective March 1, 2007.



Our principal executive offices are located at 9360 Towne Centre Drive, San Diego, CA 92121, and our telephone number is (858) 552-2200. We were incorporated in Delaware in September 1987. We maintain a website at www.amylin.com . The reference to our worldwide web address does not constitute incorporation by reference into this report of any of the information contained on our website.



Our periodic and current reports that we file with the SEC are available free of charge on our website at www.amylin.com as soon as reasonably practicable after we have electronically filed them with, or furnished them to, the SEC.



Diabetes



Diabetes is a major health problem both in the United States and worldwide and is the fifth leading cause of death by disease in the United States. Diabetes is a complex, metabolic disorder of carbohydrate, fat and protein metabolism, primarily resulting from the failure of pancreatic beta cells to produce sufficient insulin to match the demands for insulin in the body. Insulin is a hormone that plays a central role in helping the body process, convert and store energy from glucose. In those with diabetes, the relative shortage of insulin impairs the ability of glucose to enter and fuel the body’s cells and as a result, glucose builds up in the bloodstream causing hyperglycemia (high blood sugar). Longstanding elevation of blood glucose may result in damage to the kidney, retina and nerves — and may lead to kidney failure, permanent nerve damage, blindness and amputation. High glucose also increases the risk of cardiovascular disease. Conversely, too much insulin in the bloodstream can cause hypoglycemia (low blood sugar). Individuals who manage their diabetes with insulin or other oral antidiabetic medication are especially vulnerable to swings of high to low blood sugar level and the risk of very low blood sugar which, if left untreated, can be fatal.



It is estimated that nearly 200 million people worldwide have diabetes. Of that population, it is estimated that approximately 90-95% have type 2 diabetes, previously known as adult-onset diabetes, and the remainder have type 1 diabetes, previously known as juvenile-onset diabetes. In the United States alone, in 2005 there were approximately 20.8 million people, or 7% of the population, with diabetes and there were approximately 20.6 million over the age of 20, or 9.6% of all people in this age group, with diabetes. However, in 2005 only 14.6 million people in the United States had been diagnosed with diabetes and approximately 1.5 million new cases were diagnosed. From 1997 through 2004, new cases of diagnosed diabetes among Americans aged 18-79 increased by 54%. In addition, there are currently approximately 54 million people in the United States with pre-diabetes, a condition that raises the risk of developing type 2 diabetes, heart disease and stroke. People with pre-diabetes have blood glucose levels higher than normal but not high enough to establish a diagnosis of diabetes.



Long term control of blood glucose is known to limit the risk of developing diabetes related retinal, renal and neurologic complications. Glycated hemoglobin (A1C) is the most widely used measure of long-term blood glucose control.

A1C level is a recognized indicator of an individual’s average blood glucose concentrations over the preceding three- to four-month period. Lower A1C levels indicate better average blood glucose control, with values in people without diabetes usually being less than 6%. The American Diabetes Association, or ADA, suggests that people with diabetes should aim for an A1C value that is lower than 7%. It is estimated that nearly half of Americans being treated for diabetes are failing to achieve recommended blood glucose levels and, according to research studies conducted in the United States and abroad, these patients would significantly benefit from improved glycemic control. In general, for every one-point reduction in A1C, the risk of developing microvascular diabetic complications (eye, kidney and nerve disease) is reduced by up to 40%. Additionally, aggressive use of insulin and some oral medications to reduce glucose levels can be associated with an increased risk of hypoglycemia and weight gain. Consequently, there has long been a need to develop new treatment strategies that safely improve glucose control, improve the overall health profile of patients with diabetes and reduce the risk of complications.



In people without diabetes, the beta cells of the pancreas produce two hormones, insulin and amylin. Type 1 diabetes, which is most often diagnosed in children and young adults, results in a deficiency of both hormones due to a destruction of beta cells. Replacement of beta cells through islet transplant therapy can, in some cases, temporarily render patients insulin-independent; however, life-long daily insulin therapy is usually required to sustain life for people with type 1 diabetes. The addition of SYMLIN therapy to insulin treatment reduces the characteristic rise in blood sugars after meals and further reduces A1C levels.



Type 2 diabetes results from the body’s inability to produce sufficient insulin, or to properly use available insulin, or both. Secretion of the hormone amylin is also impaired in people with type 2 diabetes. Historically, type 2 diabetes occurs later in life. However, primarily as a result of changes in diet and lifestyle, type 2 diabetes is now occurring much earlier in life for many people. Diet and exercise therapy, oral medications, BYETTA, insulin, and insulin with SYMLIN are currently used to treat type 2 diabetes.



While insulin resistance – the inability of the body’s cells to properly respond to the insulin signal – is felt to be a core defect in those with type 2 diabetes, as the disease progresses a reduction in the beta cells’ ability to make and release insulin plays a key role. Because of the progressive nature of the disease (in great part the result of this decline in insulin release), no single therapy has been shown to consistently control blood glucose over time. A majority of individuals with type 2 diabetes will eventually require additional medications, and even these additional treatments can become less effective in regulating blood glucose levels over time. Historically, insulin therapy is then initiated; however, given the progressive nature of the decline in the body’s production of insulin over time, insulin dosage and the number of insulin injections needed to maintain glucose control is also increased. Even with additional insulin doses and injections, many individuals are unable to control their blood glucose levels, or do so at the expense of significant weight gain and an increased risk of low blood glucose or hypoglycemia.



In 2005, we introduced two new treatment options for the management of diabetes, BYETTA and SYMLIN. BYETTA offers patients with inadequate glycemic control using oral medications the opportunity to better control their blood glucose levels and lose weight. SYMLIN offers patients with inadequate glycemic control using mealtime insulin a treatment option that can both improve glucose control and result in weight loss. These novel first-in-class medicines provide new options in disease management and glucose control to millions of people suffering with diabetes.



For people suffering from diabetes, poor control of blood glucose levels has been shown to result in severe long-term complications. For instance, the United States Centers for Disease Control, or CDC, has stated that complications due to diabetes include:



• heart disease and stroke;



• high blood pressure;



• blindness due to retinopathy, a condition manifested by damage to the retina;



• nephropathy, or kidney disease;



• neuropathy, a condition where there is damage to the nervous system;



• amputations due to peripheral vascular disease; and



• periodontal disease.

Obesity is common in patients with type 2 diabetes and weight control is a major problem for many patients with both type 1 and type 2 diabetes. Weight gain is particularly common in those using insulin and certain oral medications as part of their treatment regimen. In addition, patients with diabetes frequently have wide fluctuations in blood sugar following meals. These fluctuations in blood sugar can significantly affect a patient’s quality of life. Blood glucose fluctuations, weight gain and diabetes complications may each contribute to substantial disability, reduced quality of life, reduced productivity in the workplace, increased pain and suffering and premature death.



Marketed Products


BYETTA ® (exenatide) injection



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 as an add-on therapy to improve glycemic control in patients with type 2 diabetes who have not achieved adequate gylcemic control and who are taking metformin and/or a sulfonylurea, two common oral therapies for type 2 diabetes. Lilly also co-promotes BYETTA in the United States. In December 2006, the FDA approved BYETTA as an add-on therapy to improve glycemic control in people with type 2 diabetes who have not achieved adequate glycemic control by using a TZD. We estimate the number of people in the United States currently using metformin, sulfonylurea and/or a TZD to be approximately 8.2 million. Approximately one half of all diabetes patients using oral medications are believed to have an A1C higher than the ADA’s recommendation of less than 7% and the vast majority of these patients could be candidates for BYETTA.



BYETTA provides self-regulating glucose control by augmenting the body’s natural physiologic processes, allowing the body to respond to blood glucose changes as they occur. BYETTA directly affects the beta cells’ responses to elevated glucose by enhancing insulin secretion; this effect dissipates as glucose levels approach the normal range. BYETTA also restores first-phase insulin response, an effect which is evident following the initial dose. BYETTA is administered twice a day by using a fixed dose injection, and requires no dose adjustments due to changes in meal size or composition, exercise or other variables. No additional glucose monitoring is required with BYETTA therapy.



The most common adverse effect of BYETTA is mild to moderate nausea, which tends to dissipate with time. Mild to moderate hypoglycemia has also been observed, primarily when used in conjunction with a sulfonylurea, agents that are known to cause hypoglycemia.



By the end of 2007, our field force expanded to approximately 600 individuals and, together with the Lilly field organization, our goal is to provide education, through both one-on-one interactions and educational programs, to ensure that physicians understand BYETTA, including its mechanisms of action, potential benefits and important use considerations. In 2007 we saw a shift in prescribers of BYETTA. Early adoption of BYETTA was primarily by diabetes specialists, however in 2007 utilization in that segment declined and, we believe, has stabilized. Importantly, we believe BYETTA is increasingly being prescribed by primary care physicians, a much larger prescribing segment that tends to adopt products later in the product life cycle. Primary care physicians write approximately 80% of diabetes prescriptions in the United States. Beginning in 2007 and continuing through 2008, we are refining our marketing efforts to remind primary care physicians of BYETTA’s unique benefits of glucose control with weight loss. Additionally, as we begin 2008, we have increased access to health care plan reimbursement for BYETTA to approximately 85% coverage nationally on tier 2, which requires a relatively low co-payment from patients who are covered under such plans.



We and Lilly piloted a direct-to-customer advertising program in the fourth quarter of 2007. Although the program increased patient awareness of BYETTA, we now believe our efforts are best focused on supporting physicians and patients starting BYETTA therapy. In December 2007 we launched a patient support initiative to facilitate the successful initiation of therapy by primary care physicians. This effort includes: increased patient educational material for health care providers to distribute in their offices; a network of approximately 450 diabetes educators to work with physicians and their patients within their local communities; direct support to patients through the BYETTA easy start line, which provides a toll-free number that allows patients to contact trained medical professionals to better understand the benefits of BYETTA therapy and to get assistance starting and using the BYETTA pen; a pharmacy support component partnering with managed care plans designed specifically to assist patient refills; and an enhanced BYETTA website. We believe this support will prove helpful to patients who may be on their first injectable therapy and to primary care providers who may be less accustomed to treating patients with an injectable product earlier in the disease cycle and who have fewer resources in their offices.

In February 2007, we announced that the FDA approved more convenient patient storage instructions for BYETTA. BYETTA pens can now be kept at room temperatures (below 77 degrees Fahrenheit) after first use. Prior to first use, BYETTA pens should continue to be refrigerated at temperatures between 36 and 46 degrees Fahrenheit.



Lilly has primary responsibility for developing and commercializing BYETTA outside the United States, including any sustained-release formulations such as exenatide once weekly. In late 2006, we announced that the European Commission granted marketing authorization for BYETTA for the treatment of type 2 diabetes. Lilly commercially launched BYETTA in various EU member states and other countries in 2007 and by the end of 2007, BYETTA was launched in 23 countries worldwide.



BYETTA Development Activities



In June 2007, we announced the results of a three-year, open-label study which showed treatment with BYETTA was associated with sustained blood sugar control and progressive weight loss in people not achieving adequate blood sugar control on oral medications alone. Study participants treated with BYETTA and oral medication(s) showed sustained reductions in A1C of approximately 1% and reduced fasting blood glucose levels. After three years of BYETTA treatment, 46% of study participants achieved an A1C of 7% or less and 30% of patients achieved an A1C of 6.5% or less. Weight loss observed in this study was progressive, with participants losing on average approximately 11 pounds from baseline. In addition, one in four patients lost an average of approximately 28 pounds. In this study, BYETTA treatment was also assessed for improvements in pancreatic beta-cell function in a subset of 92 participants. Homeostasis Model Assessment, or HOMA-B, a measure of pancreatic beta-cell function, improved by 17 % from baseline over three years.



In June 2007, we announced results from a 16-week open-label study comparing treatment with BYETTA versus insulin glargine in people with type 2 diabetes who were also taking oral medications. Study findings showed comparable A1C reductions of approximately 1.4% in patients using BYETTA or insulin glargine therapies, with weight loss and a lower incidence of hypoglycemia associated with BYETTA therapy. BYETTA treatment with metformin resulted in a statistically significant lower risk of hypoglycemia than treatment with insulin glargine and metformin. There were seven episodes of severe hypoglycemia in three patients taking insulin glargine and no severe episodes during treatment with BYETTA, reflecting a lower overall risk of hypoglycemia. BYETTA treatment was also associated with a 4.3 pound weight loss from baseline, compared with a 0.8 pound weight gain among individuals in the insulin glargine group.



In June 2007, we also announced results from a study that showed treatment with BYETTA in patients sustained improvements in A1C of approximately 0.8%, reduced fasting glucose and progressive weight loss of approximately 11 pounds through three and a half years of therapy. BYETTA therapy was also associated with improvements in cardiovascular risk factors in people with type 2 diabetes, including improved triglyceride levels and lower systolic and diastolic blood pressure. Results also showed an increase in HDL, or “good”, cholesterol levels after three and a half years and a decrease in LDL, or “bad”, cholesterol levels.



In April 2005, concurrently with BYETTA’s initial approval, the FDA issued an approvable letter for BYETTA when used as a monotherapy (stand-alone therapy) for people with type 2 diabetes. In December 2007, we announced the results of a 24-week BYETTA monotherapy study in drug-naïve patients. In this study participants taking 5 micrograms, or mcg or 10 mcg of monotherapy BYETTA twice daily showed reductions in A1C by 0.7% and 0.9%, respectively, from an average baseline A1C ranging from 7.8% to 7.9%. In addition, approximately 60% of study participants on either 5 mcg or 10 mcg of monotherapy BYETTA at the conclusion of the study had an A1C of 7% or less. Weight loss from baseline was significant and similar to that observed in previous BYETTA studies. There was a low incidence of nausea reported in both treatment arms of the study of approximately 3% and 13% in the 5 mcg and 10 mcg arms, respectively. There were no instances of severe hypoglycemia in this study. Overall hypoglycemia was similar to that seen in studies where BYETTA was used in conjunction with metformin only. We currently plan to file a regulatory submission to the FDA for BYETTA use as monotherapy in the first half of 2008.



SYMLIN ® (pramlintide acetate) injection



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 as adjunctive therapy to mealtime insulin to treat diabetes. Other than insulin and insulin analogues, SYMLIN is the first FDA-approved medication addressing glucose control for patients with type 1 diabetes since the discovery of insulin over 80 years ago. SYMLIN is intended to improve blood glucose control in people treated with insulin alone or, in the case of patients with type 2 diabetes, treated with insulin with or without one or more oral medications.

SYMLIN is indicated for use in adults with type 2 or type 1 diabetes to control blood sugar. SYMLIN works with insulin to smooth out the peaks in blood glucose levels to give patients more stable blood glucose levels after meals and throughout the day. SYMLIN also lowers the A1C levels of most patients beyond what insulin alone can achieve. SYMLIN induces satiety, which leads to eating less and weight loss in most patients. In addition, because SYMLIN works with insulin to control blood sugar, patients often need less insulin to achieve desired blood sugar levels after meals.



SYMLIN is used with insulin and has been associated with an increased risk of insulin-induced severe hypoglycemia. The risk can be reduced by appropriate patient selection, careful patient instruction and insulin dose adjustments. Other adverse effects commonly observed are primarily gastrointestinal, including nausea, which decrease over time in most patients.



Our SYMLIN marketing is focused on a target physician population of approximately 21,000, with a goal of educating these physicians on SYMLIN, including its mechanisms of action, potential benefits, use considerations, and appropriate patient selection for initiating SYMLIN therapy. These physicians write approximately 40% of all insulin prescriptions in the United States. In October 2007, we announced that the FDA approved the SymlinPen ™ 120 and the SymlinPen ™ 60 pen-injector devices for administering SYMLIN. The new pre-filled pen-injector devices feature fixed dosing to improve mealtime glucose control and are now available to patients. The devices can be stored at room temperature not to exceed 86 degrees F (30 degrees C) after first use. We are now educating physicians about the SYMLIN pen and believe the SYMLIN pen will not only enable patients to more easily deliver proper dosing than using a vial and syringe but will also improve the convenience of administering SYMLIN.



SYMLIN Development Activities



In late 2006, we announced results from a 16-week study designed to evaluate the efficacy and safety of adding SYMLIN at mealtime to an established regimen of once-daily basal insulin. Patients receiving SYMLIN on average had better overall A1C, reduced glucose fluctuations, used less insulin and experienced weight loss, compared to those using basal insulin without SYMLIN. In June 2007, we announced that additional analysis of data from this study demonstrated that weight loss also was associated with a significant reduction in C-reactive protein levels, a marker for increased risk of cardiovascular disease. The overall results of this study formed the basis of an NDA submitted by us in the fourth quarter of 2006 seeking approval for the use of SYMLIN at mealtime in patients with type 2 diabetes treated with once-daily basal insulin (without mealtime insulin). In October 2007, we announced that the FDA issued a “Not Approvable” letter for SYMLIN use with basal insulin. We are continuing our discussions with the FDA with respect to its response regarding the use of SYMLIN with basal insulin alone.



During 2007, we continued an open-label observational study of SYMLIN. This study is designed to evaluate SYMLIN use in the marketplace. Patients receive SYMLIN as part of their routine diabetes management and are followed in this real-world setting for a period of six months. In addition, in 2007 we completed a small pharmacokinetic study in pediatric patients (ages 12 to 16) with type 1 diabetes requested by the FDA that was designed to provide insight into dosing in a pediatric population.

CEO BACKGROUND

Mr. Bradbury has been our Chief Executive Officer since March 2007, serving as President since June 2006 and as Chief Operating Officer since June 2003. He has served as a director since June 2006. He previously served as Executive Vice President from June 2000 until his promotion in June 2003. He joined Amylin in 1994 and has held officer-level positions in Corporate Development and Marketing during that time. Prior to joining Amylin, Mr. Bradbury spent ten years at SmithKline Beecham Pharmaceuticals, where he held a number of sales and marketing positions. He is a member of the board of directors of Illumina, Inc. and Novacea, Inc. He also serves as a board member for PhRMA, BIOCOM, the Keck Graduate Institute’s Board of Trustees and the San Diego Regional Economic Development Corporation. Mr. Bradbury is a member of the Royal Pharmaceutical Society of Great Britain and serves on the UCSD Rady School of Management’s Advisory Council. He received a Bachelor of Pharmacy from Nottingham University and a Diploma in Management Studies from Harrow and Ealing Colleges of Higher Education.



Mr. Cook has been our Chairman of the Board since March 1998 and serves on our Finance Committee. He served as Chief Executive Officer from March 1998 until September 2003. From 1994 to 1998, Mr. Cook served as a member of our Board and a consultant to us. Mr. Cook is a founder and serves as Chairman of the Board of Microbia, Inc., a privately held biotechnology company. He also serves as a director of Corcept Therapeutics Incorporated. Mr. Cook is a founder of Mountain Group Capital, LLC, Clinical Products, LLC, and Mountain Ventures, Inc. He serves on the Board of Mercy Ministries, Inc. and is past Chair of the Advisory Board of the College of Engineering, University of Tennessee. Mr. Cook retired as a Group Vice President of Eli Lilly & Company in 1993 after more than 28 years of service. Mr. Cook received a B.S. in Engineering from the University of Tennessee.



Mr. Adams has served as a director since October 2007 and serves on the Compensation and Human Resources Committee. Mr. Adams is President and Chief Executive Officer of Sepracor, Inc., a position he has held since May 2007, and serves as a member of Sepracor’s board of directors. Mr. Adams joined Sepracor in March 2007 as President and Chief Operating Officer. Most recently, he was with Kos Pharmaceuticals, Inc., where he served as President and Chief Operating Officer from April 2001, prior to becoming President and Chief Executive Officer in January 2002. Mr. Adams served as President and Chief Executive Officer of Novartis-UK from 1999 until his tenure began at Kos. For the previous seven years, he was with SmithKline Beecham Pharmaceuticals, last serving as President and CEO of the company’s Canadian subsidiaries. Previous assignments at SmithKline Beecham included Vice President and Director of Worldwide Marketing in the U.S., and Director and Vice President of Sales and Marketing in the United Kingdom. Mr. Adams began his career at ICI Pharmaceuticals, where he rose from research laboratory assistant to Director of Sales and Marketing. Mr. Adams serves as a board member of PhRMA. He is a graduate of Manchester University in the United Kingdom with a Bachelor of Science degree.



Mr. Altman has served as a director since March 2006 and serves on the Compensation and Human Resources Committee. He currently serves as President of QUALCOMM Incorporated. He joined QUALCOMM in 1989 as Corporate Counsel responsible for licensing and acquisitions and was appointed Vice President and General Counsel in 1992. He became General Manager of QUALCOMM Technology Licensing (QTL) at the formation of the group in 1995 and was named Senior Vice President in 1996. In 1998, Mr. Altman was named Executive Vice President of QTL and in 2002 he was named President, a position he held until his appointment as President of QUALCOMM in 2005. Mr. Altman serves on the Board of Trustees of The Salk Institute. He received his law degree from the University of San Diego.

Ms. Beck has served as a director since March 2007 and serves on the Audit Committee. From 1998 to 1999, Ms. Beck served as President of American Stores Company, and previously served as its Chief Financial Officer from 1993 to 1998. Prior to her appointment as Chief Financial Officer, Ms. Beck served in various finance and accounting related positions with American Stores from 1982 to 1993. Before joining American Stores, Ms. Beck was the controller of Steiner Financial Corporation and she served as an audit manager for Ernst & Whinney (currently Ernst and Young LLP). Ms. Beck currently serves as a director for Questar Corporation and Lexmark International, Inc. In addition, she serves as a member of the Board of Trustees of Intermountain Healthcare, The Nature Conservancy and the Nature Conservancy of Utah. She is also Vice-Chairman of the University of Utah National Advisory Council. Ms. Beck received a B.S. and an M.B.A. from the University of Utah.



Ms. Eastham has served as a director since September 2005 and serves as the chair of the Audit Committee. She has over 25 years experience in financial and operations management, primarily in life sciences companies. She currently serves as Executive Vice President and Chief Operating Officer, and as a member of the Board of Trustees of the Burnham Institute for Medical Research, a non-profit corporation engaged in basic biomedical research. From April 1999 to May 2004, Ms. Eastham served as Senior Vice President, Finance, Chief Financial Officer, and Secretary of Diversa Corporation. She previously held similar positions with CombiChem, Inc., a computational chemistry company, and Cytel Corporation, a biopharmaceutical company. Ms. Eastham also held several positions, including Vice President, Finance, at Boehringer Mannheim Corporation, from 1976 to 1988. Ms. Eastham also serves as a director for Tercica, Inc., Illumina, Inc., and SGX Pharmaceuticals, Inc. Ms. Eastham received a B.S. and an M.B.A. from Indiana University and is a Certified Public Accountant and a Certified Director.



Dr. Gavin has served as a director since December 2005 and serves as chair of the Corporate Governance Committee. Dr. Gavin is CEO & Chief Medical Officer, Healing Our Village, Inc. He also serves as Clinical Professor of Medicine, Emory University School of Medicine and Clinical Professor of Medicine at the Indiana University School of Medicine. He was President of the Morehouse School of Medicine from 2002 to 2004. Dr. Gavin is a member of the board of directors of Baxter International Inc., Anastasia Marie Laboratories, Inc., and Nuvelo, Inc. Dr. Gavin was Chairman of the board of directors of Equidyne Corporation from August 2001 to 2003. He was also a member of the board of directors of Taste for Living, Inc. from 1999 to 2002. From 1991 to 2002, Dr. Gavin was a Senior Scientific Officer of the Howard Hughes Medical Institute. From 2002 until 2005, he served as National Chairman of the National Diabetes Education Program. He completed his B.S. in Chemistry at Livingstone College, a Ph.D. in Biochemistry at Emory University and his M.D. at Duke University Medical School. Dr. Gavin has received numerous civic and academic awards and honors.



Ms. Graham has served as a director since November 1995 and currently serves on the Finance Committee. Ms. Graham served as President and Chief Executive Officer from September 2003 until June 2006, serving as Chief Executive Officer from June 2006 until March 2007. She previously served on the Audit Committee and the Nominating and Governance Committee. From February 2000 until June 2003, Ms. Graham held various positions with Guidant Corporation, notably as Advisor to the President, Group Chairman; Office of the President; and President of the Vascular Intervention Group and Vice President. Ms. Graham held various positions with Eli Lilly and Company from 1979 to 1992 including sales, marketing and strategic planning positions. She serves on the board of directors of the American Diabetes Research Foundation Board, Proteus Biomedical Pharmaceutical Systems Division, ICAT Managers, the Harvard Business School Health Advisory Board, the Harvard Business School Dean’s Advisory Board, the Advisory Board for the Kellogg Center for Executive Women, the Advisory Board for the California Council on Science and Technology, and the University of California, San Diego Health Sciences Advisory Board. Ms. Graham received an M.B.A. from Harvard University.


Mr. Greene is our co-founder and has served as a director since our inception in 1987. He serves on the Finance Committee. Mr. Greene is an entrepreneur who has participated in the founding and/or management of eleven medical technology companies over two decades, including three companies for which he served as chief executive officer. From 1987 to 1996, Mr. Greene served as our Chief Executive Officer. From 1986 until 1993, Mr. Greene was a founding general partner of Biovest Partners, a seed venture capital firm. He was Chief Executive Officer of Hybritech from 1979 until its acquisition by Eli Lilly and Company in 1986, and he was co-inventor of Hybritech’s patented monoclonal antibody assay technology. Prior to joining Hybritech, he was an executive with the medical diagnostics division of Baxter Healthcare Corporation from 1974 to 1979 and a consultant with McKinsey & Company from 1967 to 1974. Mr. Greene received an M.B.A. from Harvard University.



Dr. Skyler has served as a director since August 1999 and serves on the Corporate Governance Committee. He is Professor of Medicine, Pediatrics and Psychology, in the Division of Endocrinology Diabetes and Metabolism; and Associate Director for Academic Programs at the Diabetes Research Institute; all at the University of Miami Miller School of Medicine in Florida, where he has been employed since 1976. He is also Study Chairman for the National Institute of Diabetes & Digestive & Kidney Diseases of the Type 1 Diabetes TrialNet clinical trial network, and serves on the board of directors of DexCom, Inc., and various private companies. Dr. Skyler has served as President of the American Diabetes Association and as Vice President of the International Diabetes Federation. Dr. Skyler serves on the editorial board of several diabetes and general medicine journals and the advisory panel of several pharmaceutical companies. He received his B.S. from The Pennsylvania State University, his M.D. from Jefferson Medical College, and completed postdoctoral studies at Duke University Medical Center.



Mr. Sullivan has served as a director since September 2003 and serves on the Audit Committee and as chair of the Finance Committee. Mr. Sullivan is currently Chairman of the Board of Advisors of RAND Health and Chairman of the Board of Advisors of the UCLA Medical Center. From 2000 to 2003, Mr. Sullivan served as Chairman, Chief Executive Officer and a director of Protocare, Inc. From 1993 until November 1999, he served as Chairman, Chief Executive Officer and a director of American Health Properties, Inc. For the previous twenty years, Mr. Sullivan was an investment banker with Goldman Sachs. Mr. Sullivan also currently serves on the board of directors of Cymetrix Corporation, HCP, Inc. (a real estate investment trust) and AutoGenomics, Inc. Mr. Sullivan received his M.B.A. from the Harvard Graduate School of Business Administration and his J.D. from the University of Minnesota Law School.



Mr. Wilson has served as a director since March 2002 and serves as the chair of the Compensation and Human Resources Committee and on the Corporate Governance Committee. He is a director and Chairman of the Board of both Corcept Therapeutics Inc. and NuGEN, Inc. From 1996 to 2001, Mr. Wilson was Chairman of the Board of Amira Medical, Inc. From 1990 to 1994, Mr. Wilson served as President and Chief Operating Officer of Syntex Corporation. Prior to 1990, he served in various senior management positions, including Chief Executive Officer for Neurex Corporation and LifeScan, Inc. Mr. Wilson serves on the board of directors of the Palo Alto Medical Foundation, and A Stepping Stone Foundation (pre-school education). Mr. Wilson received his B.A. and M.B.A. from the University of Arizona.



Dr. Baron has served as our Senior Vice President, Research since September 2004, and previously served as Senior Vice President, Clinical Research since June 2002. He previously served as Vice President, Clinical Research since December 1999. Dr. Baron has been clinical Professor of Medicine at the University of California, San Diego, and Clinical VA Staff Physician at the VA Medical Center, San Diego, since 2001. From 1989 to 2000, Dr. Baron worked for the Indiana University School of Medicine, where he served as Professor of Medicine and Director, Division of Endocrinology and Metabolism. Earlier, Dr. Baron held academic and clinical positions in the Division of Endocrinology and Metabolism at the University of California, San Diego, and the Veterans Administration Medical Center in San Diego. He is the recipient of several prestigious awards for his research in diabetes and vascular disease, including the 1996 Outstanding Clinical Investigator Award from the American Federation for Medical Research, several awards from the American Diabetes Association, and is a current National Institutes of Health MERIT award recipient. He received an M.D. from the Medical College of Georgia, Augusta, and completed postdoctoral studies at the University of California, San Diego.



Mr. Eberhard has served as Vice President, Sales since May 2003. Prior to joining us, Mr. Eberhard was Regional Vice President, Sales, at Pharmacia Corporation, for which he had worked for 21 years. During his career with Pharmacia Corporation and its related pre-merger companies, he held positions in sales, sales management, corporate training, sales operations, and managed care before assuming the Vice President, Sales position. Mr. Eberhard received a B.S. in Biology from California Lutheran University.

Mr. Foletta has served as Senior Vice President, Finance and Chief Financial Officer since March 2006 and he previously served as Vice President, Finance and Chief Financial Officer from March 2000 to March 2006. Mr. Foletta previously served as a Principal of Triton Group Management, Inc. from 1997 to 2000. From 1986 to 1997, Mr. Foletta held a number of management positions with Intermark, Inc. and Triton Group Ltd., the most recent of which was Senior Vice President, Chief Financial Officer and Corporate Secretary. From 1982 to 1986, Mr. Foletta was with Ernst & Young, most recently serving as an Audit Manager. He is a director of Anadys Pharmaceuticals, Inc. Mr. Foletta received a B.A. in Business Economics from the University of California, Santa Barbara. He is a Certified Public Accountant and a member of the Financial Executives Institute.



Mr. Gergen has served as Senior Vice President, Corporate Development since August 2006 and previously served as Vice President of Business Development from May 2005 to August 2006. Prior to joining us, Mr. Gergen was an independent consultant to biotech and medical technology companies for strategy, financing and corporate development. From 2003 to 2005, Mr. Gergen was Executive Vice President at CardioNet, Inc. He held various positions at Advanced Tissue Sciences, Inc. from 2000 to 2003 most recently as Chief Restructuring Officer and Acting CEO. He also served as Senior Vice President, Chief Financial and Development Officer and Vice President, Development, General Counsel and Secretary. From 1999 to 2000, Mr. Gergen was employed at Premier, Inc. and from 1994 to 1999 he held various positions with Medtronic, Inc. From 1990 to 1994 he held various corporate development positions at Jostens, Inc. and from 1986 to 1990, he practiced law at various law firms. Mr. Gergen serves on the Board of Directors of a privately held company. Mr. Gergen received a B.A. in Administration from Minot State University and a J.D. from the University of Minnesota Law School.



Dr. Kolterman has served as Senior Vice President, Clinical and Regulatory Affairs since August 2005. He previously served as Senior Vice President, Clinical Affairs from February 1997 to August 2005, Vice President, Medical Affairs from 1993 to 1997, and Director, Medical Affairs from 1992 to 1993. From 1983 to 1992, he was Program Director of the General Clinical Research Center and Medical Director of the Diabetes Center, at the University of California, San Diego Medical Center. Since 1989, he has been Adjunct Professor of Medicine at the University of California, San Diego. From 1978 to 1983, he was Assistant Professor of Medicine in the Endocrinology and Metabolism Division at the University of Colorado School of Medicine, Denver. He was a member of the Diabetes Control and Complications Trial Study Group and presently serves as a member of the Epidemiology of Diabetes Intervention and Complications Study. He is also a past-president of the California Affiliate of the American Diabetes Association. Dr. Kolterman received his M.D. from Stanford University School of Medicine.



Ms. Lloyd has served as our Senior Vice President, Legal and Corporate Affairs, and General Counsel since February 2007. Prior to joining us, Ms. Lloyd served as Group Senior Vice President, Chief Administrative Officer, General Counsel and Secretary of VHA Inc. from November 2004 to February 2007. Previously, she served as VHA’s General Counsel and Secretary from May 1999 to November 2004. From 1993 to April 1999, Ms. Lloyd was Vice President and Assistant General Counsel of Medtronic, Inc. and served as Medtronic’s Assistant General Counsel from 1991 to 1993. From 1978 to 1991, Ms. Lloyd held various legal positions with Medtronic. Prior to joining Medtronic, Ms. Lloyd served as counsel to Pillsbury Company and Montgomery Ward & Co. and she taught Business Law at the University of Minnesota Business School. Ms. Lloyd is Chairperson of the Executive Leadership Foundation and an associate of the Women Business Leaders of the United States Health Care Industry Foundation. She received a B.S./B.A. from Knox College and a J.D. from Northwestern University.



Mr. Marchetti has served as our Senior Vice President, Human Resources and Information Management since July 2007 and previously served as Senior Vice President, Human Resources and Corporate Services from November 2005 to July 2007. Prior to joining us, he served as Vice President, Human Resources for Guidant Corporation from July 2002 to October 2005. Prior to this role, he served as Vice President, Finance and Information Systems, Guidant Europe, Middle East, Africa, and Canada, since the beginning of 2001. From 1999 through 2000, he served as Vice President, Human Resources for Guidant’s Vascular Intervention group, and served as Guidant’s Corporate Controller and Chief Accounting Officer from 1994 to 1999. He joined Eli Lilly and Company’s Medical Devices and Diagnostics division in 1988. In 1992, he became Financial Manager of Lilly’s pharmaceutical manufacturing operations in Indianapolis. From 1980 to 1986, he was with the audit staff of Touche Ross & Co. (currently Deloitte). He is a director of Emphasys Medical, a privately-held medical device company. He received a B.A. from LaSalle University in Philadelphia and an MBA from the Ross School of Business at the University of Michigan. He is a Certified Public Accountant.

Mr. Marshall has served as Vice President, Operations since December 2006. Prior to joining us, he was Vice President of Corporate Manufacturing at Amgen, Inc. From 2002 to 2005, Mr. Marshall served as President of Manufacturing at Recombinant Proteins at the Bioscience Division of Baxter International. From 1999 to 2002, he was Site Head of the Baxter International Thousand Oaks facility. He joined Creative BioMolecules in 1992, first as Head of Process Development and Clinical Manufacturing and then as Head of Operations. From 1988 to 1992, Mr. Marshall held various management positions with Welgen Manufacturing Partnership (now Amgen, Rhode Island), Repligen Corporation and Damon Biotech. He serves on the board of directors of Medicago, Inc. and is a member of ISPE and ASCB. Mr. Marshall received a B.S. and an M.S. in Biology from the University of Massachusetts at Dartmouth and completed three years of post-graduate work concentrating in hematology and coagulation research at Brown University.



Mr. Rowland has served as our Vice President, Governance and Compliance, Secretary, and Chief Compliance Officer since February 2007. He previously served as our Vice President, Legal, Secretary and General Counsel from September 2001 to February 2007. Prior to joining us, Mr. Rowland served in various positions at Alliance Pharmaceutical Corp., including as Vice President, General Counsel and Secretary, beginning in 1993. Earlier, Mr. Rowland served as Vice President and Senior Counsel, Finance and Securities, at Imperial Savings Association for four years. For the previous eight years, he was engaged in the private practice of corporate law with the San Diego, California law firm of Gray, Cary, Ames & Fry, and the Houston, Texas law firm of Bracewell & Patterson. He received a J.D. from Emory University.



Mr. Young has served as Senior Vice President, Marketing since October 2006. Prior to joining us, Mr. Young served as Vice President, Diabetes Brand Marketing at Novo Nordisk where he managed the marketing activities of Novo Nordisk’s injectable insulin business. From 2000 to 2004, Mr. Young held global and U.S. commercial leadership roles at Aventis for a variety of metabolic/diabetes compounds. Prior to working at Aventis, Mr. Young held product and sales management positions at Parke-Davis. Mr. Young received a B.S. from Texas A&M University with a concentration in pre-medicine and business.

MANAGEMENT DISCUSSION FROM LATEST 10K
Results of Operations

Net Product Sales

Net product sales for the years ended December 31, 2007, 2006 and 2005 were $701.5 million, $474.0 million and $86.7 million, respectively, and consisted of sales of BYETTA and SYMLIN, less allowances for product returns, rebates and wholesaler chargebacks, wholesaler discounts, and prescription vouchers.

The increases in net product sales for BYETTA and SYMLIN for the year ended December 31, 2007 as compared to the same period in 2006 and for the year ended December 31, 2006 as compared to the same period in 2005, primarily reflects continued growth in patient use.


Revenues under Collaborative Agreements

Substantially all of the revenue recorded in these periods consists of amounts earned pursuant to our BYETTA collaboration agreement with Lilly and consists primarily of the continued amortization of up-front payments, milestone payments and cost-sharing payments to equalize development expenses for BYETTA and exenatide once weekly.

The $42.7 million increase in revenues under collaborative agreements in 2007, as compared to 2006, primarily reflects increases in milestone and cost-sharing payments related to our collaboration agreement with Lilly. Milestone payments in 2007 consisted of the recognition of milestones earned primarily associated with Lilly’s launch of BYETTA in the EU. The increase in cost-sharing payments in 2007, as compared to 2006 primarily reflects Lilly’s reimbursement to us of increased development expenses incurred by us for exenatide once weekly.



The $17.0 million decrease in revenues under collaborative agreements in 2006, as compared to 2005, primarily reflects a reduction in milestone payments, partially offset by an increase in cost-sharing payments. Milestone payments in 2005 consisted of the recognition of $35 million of milestones earned in connection with the regulatory approval and commercial launch of BYETTA in the United States. The increase in cost-sharing payments in 2006, as compared to 2005 primarily reflects increased development expenses for exenatide once weekly.



In future periods, revenues under collaborative agreements will consist of ongoing cost-sharing payments from Lilly to equalize development costs, possible future milestone payments and the continued amortization of the up-front payment.


Cost of Goods Sold


Cost of goods sold was $65.5 million, representing a gross margin of 91%, $50.1 million, representing a gross margin of 89%, and $14.8 million, representing a gross margin of 83%, for the years ended December 31, 2007, 2006 and 2005, respectively. Costs of goods sold is comprised primarily of manufacturing costs associated with BYETTA and SYMLIN sales during the period. The improvement in gross margin in 2007 as compared to 2006 and in 2006 as compared to 2005 primarily reflects a higher average net sales price per unit for BYETTA and lower unit costs for BYETTA resulting from higher production volumes. Quarterly fluctuations in gross margins may be influenced by product mix and the level of sales allowances.



Selling, General and Administrative Expenses



Selling, general and administrative expenses were $391.0 million, $282.0 million and $171.5 million in the years ended December 31, 2007, 2006 and 2005, respectively.



The $109.0 million increase in 2007 as compared to 2006 reflects the full annual effect of the expansion of our sales force during the fourth quarter of 2006, increased promotional expenses for BYETTA and SYMLIN, increased business infrastructure to support our growth and an increase in stock-based compensation including costs associated with the adoption of our employee stock ownership plan, or ESOP, and increased expense from stock options due to growth in our number of employees.



The $110.5 million increase in 2006 as compared to 2005 primarily reflects the full annual effect of the 2005 expansion of our commercial capabilities to support the launches of BYETTA and SYMLIN, the continued expansion in 2006 of these capabilities, including the addition of approximately 150 individuals to our field force, increased marketing activities, including medical education, market research and product sampling for BYETTA, growth in our business infrastructure and $29.0 million of stock-based compensation.



We, along with Lilly, are jointly responsible for the co-promotion of BYETTA within the United States, and share equally in sales force costs and external marketing expenses. Accordingly, our selling, general and administrative expenses include our 50% share of these costs in the United States.



Selling general and administrative expenses are expected to continue to increase in 2008 due to continued investment in promotional activities for BYETTA and SYMLIN, investment in prelaunch education activities for exenatide once-weekly, and increases in business infrastructure to support our growth.



Research and Development Expenses



Currently, our research and development efforts are focused on programs for the treatment of diabetes and obesity in various stages of development. From inception through 1998, we devoted substantially all of our research and development efforts to SYMLIN. Beginning in 1999, our research and development costs started to include costs for our other drug candidates, primarily BYETTA and exenatide once weekly. In 2004 we initiated our program for the treatment of obesity with pramlintide and in 2006 we commenced our INTO clinical research program for obesity.



The drug development process in the United States includes a series of steps defined by the FDA. The process begins with discovery and preclinical evaluation leading up to the submission of an IND to the FDA, which allows for the initiation of the clinical evaluation of a potential drug candidate in humans. Clinical evaluation is typically comprised of three phases of study: Phase 1, Phase 2 and Phase 3. Generally, the majority of a drug candidate’s total development costs are incurred during Phase 3, which consists of trials that are typically both the longest and largest conducted during the drug development process. Successful completion of Phase 3 clinical testing is followed by the submission of an NDA to the FDA for marketing approval. It is not uncommon for the FDA to request additional data following its review of an NDA, which can significantly increase the drug development timeline and expenses. Following initial regulatory approval for a drug candidate, companies generally initiate additional clinical trials aimed at expanding product labeling and market potential.



The timing and costs to complete the successful development of any of our drug candidates are highly uncertain, and therefore difficult to estimate.



Our research and development expenses are comprised of salaries, benefits, bonus, stock-based compensation; license fees, and 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 overall pharmaceutical development capabilities. These consist primarily of facilities costs and other internally-shared resources related to the development and maintenance of systems and processes applicable to all of our programs.

Research and development expenses increased to $276.6 million for the year ended December 31, 2007 from $222.1 million for the year ended December 31, 2006. The $54.5 million increase in 2007 as compared to 2006 primarily reflects increased expenses associated with our diabetes programs. The increase in expenses for our diabetes programs primarily reflects increased expenses for exenatide once weekly associated with manufacturing scale-up at third-party manufacturers and our manufacturing facility in Ohio and expenses associated with the recently completed comparator study discussed above.



Research and development expenses increased to $222.1 million for the year ended December 31, 2006 from $132.1 million for the year ended December 31, 2005. The $90.0 million increase in 2006 as compared to 2005 primarily reflects increased expenses associated with our diabetes, obesity, research and early-stage programs, and indirect costs. The increase in expenses for our diabetes programs primarily reflects costs associated with the development of exenatide once weekly, including the recently completed comparator study discussed above and manufacturing scale-up for exenatide once weekly; and label expansion activities for BYETTA, including costs associated with the recently completed monotherapy study discussed above. The increase in expenses for our obesity programs primarily reflects costs associated with our acquisition of the rights to leptin from Amgen in early 2006. The increase in research and early-stage programs primarily reflects costs associated with an increase in discovery research activities. The increase in indirect costs primarily reflects increased facilities costs to support growth in our research and development activities.

Research and development expenses are expected to continue to increase in 2008 due to increases in the level of our spending on our exenatide franchise, including exenatide once weekly, and investment in our obesity programs.



Collaborative Profit-Sharing



Collaborative profit-sharing was $290.9 million, $194.2 million and $31.4 million for the years ended December 31, 2007, 2006 and 2005, respectively, and consists of Lilly’s 50% share of the gross margin for BYETTA sales in the United States.



Make-whole Payment on Debt Redemption



In July 2006, we called for the redemption on August 24, 2006 of all our outstanding convertible senior notes due June 2008, or the 2003 Notes, under a provisional redemption based upon the market price of our common stock exceeding certain thresholds. All holders elected to convert their 2003 Notes into shares of our common stock. In connection with the conversion, we issued approximately 5.6 million shares, including 180,005 shares as a make-whole payment, representing $112.94 per $1,000 principal amount of the 2003 Notes converted less interest actually paid. In connection with this make-whole payment, we recorded a non-cash, non-operating charge of $7.9 million during the third quarter of 2006.


Interest and Other Income and Expense


Interest and other income consists primarily of interest income from investment of cash and investments. Interest and other income was $47.0 million in 2007, $34.9 million in 2006 and $13.2 million in 2005. The increase in 2007 compared to 2006 primarily reflects higher average investment balances due to net proceeds of $558.7 million from our 2007 Notes issued in June 2007. The increase in 2006 primarily reflects higher average cash balances available for investment and higher interest rates in 2006 as compared to 2005.



Interest and other expense consists primarily of interest expense resulting from long-term debt obligations and includes interest payments and the amortization of debt issuance costs. Interest and other expense was $15.1 million in 2007, $8.5 million in 2006 and $10.7 million in 2005. The increase in 2007 compared to 2006 primarily reflects an increase in additional interest expense for our 2007 Notes issued in June 2007. The decrease in 2006 compared to 2005 reflects lower interest expense following the August 2006 redemption of our 2003 Notes.


Net Loss


Our net loss for the year ended December 31, 2007 was $211.1 million compared to $218.9 million in 2006 and $206.8 million in 2005. The decrease in our net loss in 2007 compared to 2006 primarily reflects increased net product sales and revenues under collaborative agreements, partially offset by increased selling, general, and administrative expenses, increased research and development expenses and increased collaborative profit-sharing discussed above. The increase in our net loss in 2006, compared to 2005 primarily reflects the increased costs and expenses and decreased revenues under collaborative agreements, partially offset by the increases in net product sales and interest and other income 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 product sales that we achieve for BYETTA and SYMLIN. In addition, ongoing and potential increased expenses associated with the commercialization of BYETTA and SYMLIN, and expenses associated with the continuation and potential expansion of our research and 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.


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 December 31, 2007, we had $1,130.4 million in cash, cash equivalents and short-term investments, compared to $767.3 million at December 31, 2006.



We used cash of $125.2 million, $126.0 million and $182.0 million for our operating activities in the years ended December 31, 2007, 2006 and 2005, respectively. Our cash used for operating activities in 2007 included uses of cash due to increases in accounts receivable and inventories of $15.5 million and $40.9 million, respectively. The increase in accounts receivable reflects growth in our net product sales and the increase in inventories reflects increased inventory purchases to support this growth. Our cash used for operating activities in 2007 included sources of cash for increases in our current liabilities, including an increase of $28.1 million in accounts payable and accrued liabilities, an increase of $17.2 million in accrued compensation, and an increase of $13.8 million in payable to collaborative partner. The increase in accounts payable and accrued liabilities primarily reflects growth in our expenses generally, and accounts payable timing differences. The increase in accrued compensation primarily reflects an accrual of $17.2 million for the 2007 contribution to the ESOP. The increase in payable to collaborative partner, which represents Lilly’s 50% share of BYETTA gross margins in the United States, reflects increased net product sales for BYETTA and an improvement in gross margins.



Our investing activities used cash of $296.1 million, $425.9 million and $169.0 million in the years ended December 31, 2007, 2006 and 2005, respectively. Investing activities in all three years consisted primarily of purchases and sales of short-term investments and purchases of property, plant and equipment. Purchases of property, plant and equipment increased to $268.7 million in 2007, from $97.9 million in 2006 and $29.6 million in 2005. The increase in 2007 primarily reflects costs associated with our manufacturing facility for exenatide once weekly and, to a lesser extent, purchases of tenant improvements, computer software, office equipment and scientific equipment to support our growth. We expect that our capital expenditures will continue to increase in 2008 due primarily to costs associated with ongoing construction of our manufacturing facility for exenatide once weekly. We expect to complete the commercial-scale manufacturing process in the second half of 2008, at a total cost of approximately $500 million, including costs associated with the construction of the facility, purchase and installation of equipment and capitalized labor and materials required to validate the facility. Through December 31, 2007, we had expended approximately $262 million associated with the construction of this facility. The full expansion of this project is dependent upon on the continued progress of exenatide once weekly through the development process. In addition, we anticipate continued investments in tenant improvements, office equipment and scientific equipment. The $18.3 million increase in other long-term assets primarily reflects our investments in Psylin, BioSeek and Xenome.



Financing activities provided cash of $776.9 million, $546.5 million and $362.5 million in the years ended December 31, 2007, 2006 and 2005, respectively. Financing activities in 2007 included $558.7 million in net proceeds from our issuance of $575 million in aggregate principal amount of our 2007 Notes, the exercise of stock options and proceeds from our employee stock purchase plan and proceeds of $30.0 million for a contingent share-settled obligation to Lilly. The contingent share-settled obligation to Lilly relates to the $30.0 million of milestones received by us in December 2007 for which Lilly is entitled to and elected to convert into shares of our common stock in February 2008. Financing activities also included $123.5 million of net proceeds related to a term loan provided by the credit agreement entered into in December 2007.



At December 31, 2007, 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 of 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 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 December 31, 2007 we had an outstanding balance of $125 million under the term loan and had issued $5.2 million of 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 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.

CONF CALL

Michael York - Senior Director, Investor Relations

Good afternoon. Welcome to Amylin Pharmaceuticals quarterly update conference call. Today's discussion will contain forward-looking statements that involve risk and uncertainties. These risks and uncertainties are outlined in today's press release and in our recent filings with the Securities and Exchange Commission. Our actual results could differ materially from what is discussed on today's call.

Let me introduce the other members of the Amylin management team here today, Daniel Bradbury, President and Chief Executive Officer; Mark Foletta, Senior Vice President, Finance and Chief Financial Officer. I will now turn the call over to Dan Bradbury.

Daniel M. Bradbury - President and Chief Executive Officer

Thanks, Michael. Good afternoon and thank you for joining us today. We made steady progress in the second quarter of 2008 across our near, mid, and long-term opportunities, executing against the strategy to build Amylin's diabetes portfolio and establish our presence in the obesity field. This strategy is consistent with our goal of creating a company that can increase shareholder value over time by producing sustainable growth. The importance of our focus on diabetes was once again highlighted this month when the Centers for Disease Control announced their latest estimate for the number of patients with diabetes in the United States.

Clearly, the diabetes pandemic is growing at a faster rate than the overall population as the CDC updated the number of patients with diabetes in the US in 2007 to 23.6 million from 20.8 million in 2005, an increase of 13% over just two years. Also, one of the key takeaways from this year's American Diabetes Association meeting was that not only is glucose control important in managing diabetes; but how you manage it is critical too. A medicine such as BYETTA, which provides powerful durable glucose control with progressive weight loss and other benefits is uniquely poised to take advantage of the growing market.

It was certainly an exciting ADA meeting for Amylin. We had more than 30 abstracts with eight oral presentations, including two of the five in the prestigious late breaking session. This demonstrates the breadth and depth of Amylin's scientific and clinical programs for both diabetes and obesity and reflects the tremendous interest among the medical community to our novel approach for developing first-in-class medicines. We're poised to take advantage of this interest, as starting earlier this year we undertook a number of initiatives to drive BYETTA revenue and we expect to see the impact of these changes in the second half of the year.

SYMLIN continued to show steady growth in the second quarter with total prescriptions growing more than 5% quarter-over-quarter. Now, as you are fully aware, our mid-term plans focused on the exenatide once weekly program. Recently, commercial scale material from our Ohio facility has been produced and shipped for use in ongoing and planned clinical trials in the coming weeks. And I am also pleased to report that we had our pre-NDA meeting with FDA in the second quarter to discuss the open items for our regulatory submission. The meeting went well, and I'll discuss our regulatory path forward in a moment.

Additionally, we are continuing to execute DURATION, the strong clinical superiority program designed to position exenatide once weekly for market dominance. For the long-term, we continue to make prudent investment decisions based on strong clinical data to advance our obesity program, and we'll continue to manage our expenses appropriately leveraging our assets to increase efficiency and assessing financing or partnership alternatives to offset expenses.

I'll now turn things over to Mark Foletta to review our financial results.

Mark G. Foletta - Senior Vice President, Finance and Chief Financial Officer

Thank you, Dan, and good afternoon.

Earlier this afternoon, we announced our financial results for the quarter ended June 30, 2008. We reported total revenue of $222 million for the second quarter, which includes net product sales of $200.3 million. Product sales are made up of $177.5 million for BYETTA and $22.8 million for SYMLIN, resulting in second quarter growth in product sales of nearly 20% compared to the second quarter of 2007, and an increase of 12% from the first quarter of 2008. As a reminder, BYETTA sales last quarter were impacted due to the reversal of wholesaler stocking that occurred in the fourth quarter of 2007. We believe that product revenues in the second quarter reflect patient demand and the channel inventory levels are comparable with where they were at the end of the first quarter.

Our revenue under collaborative agreements was $21.7 million compared to $29.6 million for the same period in 2007. Collaborative revenues for the second quarter consists primarily of cost sharing payments from Eli Lilly and Company for development expenses associated with the exenatide franchise. As a reminder, collaborative revenues for the second quarter of 2007 included a $15 million milestone payment associated with Lilly's launch of BYETTA in the European Union.

Cost of goods sold was $24.7 million reflecting a gross margin of approximately 88%. This compares to cost of goods sold of $14.4 million for the second quarter of 2007 and a gross margin of approximately 91%. Gross margin decreased year-over-year primarily because of increased discounting, higher production cost for BYETTA and our product mix including the introduction of the SymlinPen, which has a higher cost of goods sold in the vial presentation.

Selling general and administrative expenses for the second quarter of 2008 were $111.1 million compared to $93.1 million for the same period in 2007. The increase primarily reflects sales and marketing expenses including expenses associated with the recent expansion of our field force, promotional expenses for BYETTA and SYMLIN, expenses associated with exenatide once weekly market development and modest increases in business infrastructure to support growth.

Research and development expenses were $75.4 million for the second quarter of 2008 compared to $71.7 million for the same period in 2007. The increase primarily reflects higher development expenses for exenatide once weekly and to a lesser extent growth in our research capabilities. Research and development expenses net of cost sharing payments from Lilly on the exenatide portfolio decreased of $54.8 million for the second quarter compared to $58.2 million for the same period in 2007. As a reminder, we are reimbursed by Lilly to share exenatide development cost and we believe that this net R&D number is a better indicator of R&D activities at Amylin.

Lilly's share of the gross margin for BYETTA, which we refer to as collaborative profit sharing was $79 million for the second quarter of 2008 compared to $70.4 million for the same period in 2007. We reported a net loss of $64.8 million or $0.47 per share for the quarter ended June 30th, 2008 compared to a net loss of $45 million or $0.34 per share for the same period in 2007. At the end of the second quarter, we held approximately $890 million of cash, cash equivalents and short-term investments.

I will now quickly review top and bottom line results for the six months ended June 30th, 2008. Total revenue was $419.3 million dollars consisting of product sales of $379.1 million, which grew 15% over the prior year and revenue under collaborative agreements of $40.2 million. This compares to total revenue of $368.9 million and product sales of $329.3 million in 2007. Net product sales for 2008 consist of $336 million for BYETTA and $43.1 million for SYMLIN. Our net loss for the six months ended June 30, 2008 was $133.6 million, or $0.98 per share compared to $94.4 million, or $0.72 per share for the same period in 2007.

I'd now like to highlight some information regarding key trends and assumptions for the remainder of 2008. We have included in these numbers non-cash stock based compensation expense, an estimated $85 million in aggregate, covering expenses for both stock options and our employee stock ownership plan. Our previous guidance for total revenues in 2008 of $900 million to $950 million included collaborative revenue of $100 million to $125 million.

Our expectations for product revenue remain unchanged. And we now expect the collaborative revenue will be at the bottom of the range, consistent with expected decreases in research and development expenses, which I will discuss in a moment. Based on our assessment of gross margins in the first half of the year, we believe that we will maintain gross margins of approximately 88% for the remainder of the year. We continue to expect that our selling, general and administrative expenses for 2008 will be towards the lower end of our previous range of $425 million to $475 million. This range reflects costs associated with continued investment in commercial activities for BYETTA and SYMLIN, investments in pre-launch education activities for exenatide once weekly and appropriate investments in infrastructure to support our growing business.

Our SG&A expense guidance also includes approximately $50 million of stock-based compensation expense. Consistent with our lowered expectation of collaborative revenue discussed previously, we now expect that our research and development expenses for 2008 will also be towards the lower end of our previous range of $325 million to $375 million. This includes approximately $35 million of stock-based compensation expense. Furthermore, we are pursuing options to offset the R&D expense associated with our obesity and early stage programs through potential partnerships and/or project financing.

Finally, I would like to reaffirm our net interest income guidance of approximately $5 million in 2008. I'll be available at the end of the call to answer to any questions, and I will now turn the call back to Dan for an update on recent business activities.

Daniel M. Bradbury - President and Chief Executive Officer

Thanks, Mark. First, I will provide a commercial update on BYETTA, the first and only FDA approved incretin mimetic, a new class of drug that mimics the action of the human hormone glucagon-like peptide-1. We have marketed BYETTA for more than three years and has been used by approximately 1 million patients. Importantly, BYETTA is the only medicine currently available that addresses the significant unmet need for the Type 2 diabetes treatment that achieves powerful, durable glucose control with progressive weight loss and a favorable safety profile.

In the second quarter, we maintained a steady level of BYETTA prescriptions compared to the first quarter. Today, I am going to report on key market accelerators, our enhanced marketing approach, and our more closely aligned sales organization. Together we believe these factors will drive BYETTA sales and ensure we can effectively launch once weekly exenatide when approved. We got a tremendous assist in the second quarter towards building momentum for BYETTA and for exenatide once weekly. New market accelerators were prominent at the American Diabetes Association meeting in June. Simply put, exenatide was the news of ADA 2008.

First, this year, we saw more scientific presentations about exenatide and the class to ADA than ever before. As these topics were featured in more than 159 independent and company-scientific presentations. Second, the influential Banting Lecture put BYETTA firmly in the spotlight. The 2008 Banting Medal recipient Dr. Ralph DeFronzo advocated for a new paradigm in the treatment of Type 2 diabetes and called for a change to the ADA treatment algorithm. His recommendations included in A1C target of less than 6% achieved by lifestyle modifications along with a triple combination therapy of metformin, PCDs and exenatide as early initial therapy to correct known pathophysiologic defects in Type 2 diabetes patients.

The ADA is now funding a research study by Dr. DeFronzo to compare his proposed algorithm with the existing ADA algorithm in respect to long-term health benefits. Third, shortly as discussed and generally consented because it matters how doctors achieved tight glycemic control for patients with Type 2 diabetes. These discussions are an outcome from the seemingly contradictory findings of large scale trials including the ACCORD trial, Advanced trial and the veterans administration diabetes trial. These studies show the aggressive treatment of diabetes with older therapies can come with a price such as the risk of hyperglycaemia, weight gain or increased cardiovascular risk.

We believe doctors are now more center typed to these issues and are looking at BYETTA and other treatment approaches that did not incur these risks. In fact, data presented from the ACCORD trial suggest that the mortality hazard ratio was reduced only for patients on BYETTA, which is confirmed is indicative of a strong trend towards decreased cardiovascular events for the medicine.

Now, while the ACCORD study was not powered to look at this end point, many in the medical community have commented that this further supports the benefits of BYETTA. These events are notable because for the first time, it is the medical community and not Amylin or Lilly driving the conversation about the shifts that are needed in the treatment of type 2 diabetes and the potential of the class and the benefits of BYETTA.

Specifically, we are starting to see that physicians, patients and payers are beginning to advocate for a new definition of efficacy, glucose control with weight loss and safety in the type 2 diabetes medicine. For safety, there is a new emphasis on medicines showing a low risk of hypoglycemia and low potential for exacerbating cardiovascular risk factors. Amylin is in an enviable position as we have the only available medicines that meet these criteria.

We are in a position to leverage this emerging tide of support from the medical community and to translate it into BYETTA sales. In the second quarter, we executed a range of marketing and sales initiatives to better communicate with doctors and patients. First, during the quarter, we implemented the expanded and more closely aligned sales organization with our partner Lilly. As part of that execution, we initiated the BYETTA-CIALIS co-promotion at the end of the quarter. Second, we introduced an expanded program to communicate with primary care physicians about the benefits of BYETTA.

Let me first discuss the expanded and more closely aligned sales organization. We optimized the sales force in concert with Lilly by expanding the overall number of representatives by 40% through the BYETTA-CIALIS co-promotion agreement. Concurrently, we expanded our primary care field force by 15% to allow alignment of our territories with Lilly to improve the reach and frequency of code on high prescribing primary care physicians.

We also rolled out expanded physician and patient support programs for the primary care market. These programs are designed to better support patient new starts and to improve the long-term patient adherence. Further we are recruiting sales representatives with a targeted access education program for primary care physicians that reinforces the over 85% of access for BYETTA across commercial managed care providers.

Next, I will discuss the messages to primary care physicians. The messages complement our expanded and more closely aligned sales force and will continue to evolve as we gain additional insights into what impact prescribing behaviors. In the first quarter, we began to emphasize that BYETTA provides powerful glucose control along with the products known weight benefits. We track key metrics and so about that message began to resonate early in the second quarter. These metrics included improved primary care physician recall of BYETTA brand messages. Looking closely for a recall of glycaemic control as the number one message followed by weight. Improved primary care physician comfort with prescribing BYETTA, which correlates to a greater understanding of what to expect from the medicine. Our research shows that doctors who have clearer expectations of BYETTA prescribed more. As we were raising the awareness about the potential for powerful glucose control with BYETTA, we learnt something rather surprising. Weight as a clinical parameter in the treatment of type 2 diabetes is undervalued by primary care physicians. To address this we evolved BYETTA messages and marketing tools to include education on the importance of weight as a clinical parameter in the treatment of type 2 diabetes. This complements the data demonstrating that BYETTA is a unique solution with opposite vantages of a reduction in A1C and a reduction in weight. We expect to start to see the impact of this latest message evolution during the second half of this year. In order to determine we are on the right track towards increased prescription, we will be watching for one, an increased understanding of the importance of treating both A1C and weight in the treatment of type 2 diabetes. Two, increased record of BYETTA's core messages and three, increased new patient stocks on BYETTA. To be clear we look forward to seeing the results of the market accelerated and our enhanced marketing and sales efforts in the second half of 2008. Now lets move on to SYMLIN. A synthetic analog of human Amylin and naturally occurring hormone that is made in the beta cells of the pancreas.

The same cells that make Insulin. Symlin is the first and only Amylin mimetic. Its key benefits are that it provides mealtime glucose control and weight loss to patients who use mealtime insulin. Symlin continued to show steady growth, with total prescriptions growing 5% for the second quarter over the first quarter. In the second quarter, Symlin Pen accounted to nearly 60% of new Symlin prescriptions and 40% of total Symlin prescriptions. Total sales for Symlin grows 13% quarter-over-quarter. In the same pain of improving the BYETTA patient experience we've continued to Symlin's support program. We have the live telephone support from medical professional is to aid new SYMLIN patients in the first few weeks of therapy and beyond. We are also pleased to report that within six months of the SymlinPen launch, we already have nearly 80% open access for SymlinPen with over 60% of covered lifes at Tier 2.

Now I want to share with you the latest developments regarding exenatide once weekly, the next planned medicine in our pipeline. This product candidate is poised to become the first once weekly therapy to treat type 2 diabetes with unprecedented duel efficacy defined as powerful glycaemic control and sustained weight loss. This is durable control that is offered in just one dose per week, a break through in convenience.

In the second quarter, we had our pre-NDA meeting with the FDA and continue to plan on submitting an NDA before the end of the first half of 2009. However, I want to underscore that Amylin and our partners are focused on moving the submission date forward. To that end, we have made great progress by finalizing the commercial scale manufacturing process at our Ohio facility. Indeed, we've already produced and shipped commercial scale material, which we will use in ongoing and planned clinical trials in the coming weeks.

As I've already mentioned, we met with the agency in the second quarter to discuss the open items for our regulatory submission. I'm pleased to say that following these discussions, we believe that the DURATION-1 study we reported last year provides the necessary safety and efficacy data for a submission.

As a reminder, exenatide once weekly is a line extension product and the DURATION-1 study was designed in consultation with the FDA. Our regulatory strategy is based on leveraging the existing safety database for BYETTA. The rate limiting step to a regulatory submission is showing comparability between the material manufactured and our facility in Ohio and the intermediate scale material used in clinical studies to date.

During our pre-NDA meeting, we received more clarity on our strategy for showing comparability. We continue to execute this strategy and data from our in vitro-in vivo correlation or IVIVC studies will be reviewed in the next few months. If this stays as accepted, we can accelerate the submission. However, as we've said in the past, this is a data driven process and until we are able to demonstrate to the FDA that this data is sufficient to show comparability, we are reiterating our previous guidance on timing of a submission.

We have discussed the other parts of the strategy to demonstrate comparability, one, the crossover of patients from the extension of our pivotal study and, two, a new pharmacodynamic bridging study with a clinical endpoint. These studies are moving forward. To be clear, our guidance on the timing of an NDA submission is based on the conservative path of completing the latter study.

Now I should understand there are specifics of our interactions with the FDA and elements of the pre-NDA meeting that we are not able to share with you at this time. This is consistent with ensuring that we meet the requirements of the agency. We will not speculate on potential FDA action regarding the date of dependent nature of our regulatory path going forward. Now, moving on to clinical data, DURATION-1 findings, both the 30-week pivotal study and the 52-week extension study were presented at ADA 2008. The data showed the continuous steady state levels of exenatide on board 24 hours a day, seven days a week provides durable glycemic control with weight loss. I will quickly summarize the findings of this landmark study.

At ADA, we provided detail that in the 30 week study Type 2 diabetes patients treated with exenatide once weekly showed statistically significant improvements in A1C and fasting plasma glucose from baseline compared with BYETTA. Patients in both treatment groups also reported significant weight loss averaging 8 pounds and 77% of patients treated with exenatide once weekly achieved an A1C at 7% or less. After one year of treatment, patients taking exenatide once weekly sustained improvements in glycemic control and weight. Additionally, improved glucose control was seen in patients switching after 30 weeks to exenatide once weekly from exenatide taking twice a day.

Specifically, patients in both treatment groups experienced an average A1C decline of 2.0%. This level of A1C decline is unprecedented in a study of this type in patients with a mean baseline A1C of 8.3%. 74% of all patients achieved an endpoint A1C of 7% or less at 52 weeks. Furthermore, patients in both treatment groups reported a sustained average weight loss of 9.5 pounds over 52 weeks. Based on our confidence from these data, we put in place an aggressive clinically relevant program that compares exenatide once weekly against competing products that demonstrates superiority. The objective of these studies is to support the launch and demonstrate the transformational nature of exenatide once weekly therapy. These trials are on track. DURATION-2 comparing exenatide once weekly against the TCP and DPP-4 inhibitor on a background of metformin therapy and DURATION-3 continued exenatide once weekly against insulin glargine on a background of oral agent therapy are currently in rolling patients. We look forward to reporting results of those studies in the first half of 2009. DURATION-4, looking at exenatide and as a standalone therapy against either metformin, TZD or DPP-4 inhibitor will begin later this year.

Additionally, given the positive effect from cardiovascular surrogate outcomes seen with exenatide, the encouraging data seen in the ACCORD trial and the current regulatory interest in cardiovascular outcomes, we have initiated discussions with outside experts to help design a robust post-marketing cardiovascular outcomes trial. Clearly, we are actively positioning the exenatide franchise for near and long-term success with an eye to addressing the potential entrants of competitors in our class. The powerful durable results from the exenatide trial, the three years of BYETTA's experience in the market and the stellar results from DURATION 1 trial are compelling proof to exenatide is the best molecule in a class as a twice a day product now and as a once week product in the future. Also I would note that given exenatide's potency, we are continuing to study with our partners the potential for less frequent dosing regimens as well as non-invasive dosing forms.

Transitioning now to the broader regulatory environment, I will comment quickly regarding our perspective on the impact of the recent FDA Advisory Committee meeting focused on safety issues in developing medicines for the treatment of diabetes. We are pleased that the FDA is considering the importance of cardiovascular health in the treatment of type 2 diabetes. We do not see the potential new guidance as having an impact on the commercialization timeline for exenatide once weekly. The draft guidance is designed to address new chemical entities, while the regulatory strategy for exenatide once weekly is a line extension referencing the BYETTA label. We do believe, however, that the guidelines may create a higher hurdle for new entrants into the market.

Now I will move on to describe our significant opportunities in obesity. We believe peptide hormones provide a unique opportunity to create a meaningful product that produces clinically important weight loss safely. We previously announced our commitment to pursue a medicine for obesity that is a combination of pramlintide, an analog of human amylin and metreleptin, an analog of human leptin. This commitment is based on impressive study results, 12.7% reduction in body weight over 24 weeks when pramlintide and metreleptin were used together.

In the second quarter, we initiated a Phase 2b study to evaluate different dosing combinations of pramlintide and metreleptin. This is a six month multi-arm study that will enroll approximately 600 patients and will take about a year to complete. We believe this product candidate has the promise to meet the unmet medical need for a highly effective and safe weight loss therapy.

Additionally, we look forward to having a significant presence as the Obesity Society's Annual Scientific Meeting in the beginning of October. And as Mark mentioned earlier, we are actively pursuing options to offset the R&D expenses associated with our [inaudible] early stage programs through potential partnerships and/or project financing.

Now, I'll add a few more comments before we close. As a member of Pharma, we are proud to support the newly revised pharma guidelines on interactions with health care professionals, which demonstrates our industry's commitment to high ethical standards and transparency. I'm also pleased to announce that consistent with our mission of putting the patient first. In the second quarter, we submitted a treatment IND for leptin, as a treatment for severe lipodystrophy, which is a rare, but very serious disorder and we're pleased to be able to make leptin available to these patients.

It is an exciting time here at Amylin as we position the company for sustained value creation and growth. I want to make it clear, that this year we are focused on one driving BYETTA and SYMLIN growth. And I would emphasize that our expectations for product revenue in 2008 remains unchanged. And two, accelerating the NDA submission for exenatide once weekly.

With that I'll conclude the formal portion of today's call and turn things back over to the operator for your questions.

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