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Article by DailyStocks_admin    (06-20-08 07:30 AM)

Filed with the SEC from May 22 to May 28:

Amylin Pharmaceuticals (AMLN)
Carl Icahn said he recently had discussions with AMLN management and may seek to do so again on ideas to enhance shareholder value (for more, see Spotlight at right). Icahn believes AMLN stock is undervalued; he and his affiliates beneficially own 8.96 million shares (6.54%), including about 2.17 million underlying call options, which expire on March 10, 2010.

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.



Research and Development



Product Pipeline Programs



We have late-stage development programs in the therapeutic areas of diabetes and obesity and multiple early-stage programs in diabetes and obesity. Our years of research in diabetes and deep understanding of peptide hormones — their physiology, functionality and impact on the disease — are being leveraged to develop potential treatments for obesity. The metabolic components of these diseases are linked in numerous ways, which are reflected in the impact each has on the other.


Diabetes

Exenatide Once Weekly


Exenatide once weekly is our late stage development program in diabetes. Exenatide is the active ingredient in BYETTA and is combined with proprietary technology developed by us and our partner, Alkermes, to provide a sustained release delivery of exenatide. The combination of potency and the glucose-dependent mechanism of action inherent in exenatide makes it well suited to development of a once weekly formulation. We have an agreement with Alkermes to assist us in the development, manufacture and commercialization of exenatide once weekly and this program is included in our collaboration agreement with Lilly. We are aggressively working with Lilly and Alkermes to develop exenatide once weekly for the treatment of type 2 diabetes.



In October 2007, we announced positive results of a 30-week pivotal comparator study comparing treatment with exenatide once weekly to treatment with BYETTA. The study enrolled 295 patients not achieving adequate glucose control with either diet and exercise or with use of oral glucose-lowering agents. Exenatide once weekly showed a statistically significant improvement in A1C of approximately 1.9% from baseline, compared to an improvement of approximately 1.5% for BYETTA. Approximately three out of four subjects treated with exenatide once weekly achieved an A1C of 7% or less.



After 30 weeks of treatment, both exenatide once weekly and BYETTA treatment resulted in an average weight loss of approximately eight pounds. Nearly 90% of subjects in both groups completed the study. There was no major or severe hypoglycemia regardless of background therapy. As expected, based on prior BYETTA studies, minor hypoglycemia with exenatide once weekly use was limited to subjects using background sulfonylurea therapy. Exenatide once weekly was associated with approximately 30% less nausea than twice-daily BYETTA. Approximately one out of five subjects receiving exenatide once weekly reported treatment-related nausea during the 30-week study. In both groups nausea was predominately mild and transient.



We are currently completing the building of a facility in West Chester, Ohio to manufacture exenatide once weekly. We expect to complete the commercial scale-up manufacturing process for exenatide once weekly and the commissioning of the facility in the second half of 2008. We are also working aggressively to provide sufficient data to the FDA to demonstrate comparability between exenatide once weekly clinical trial material manufactured by our partner, Alkermes, in its facility and exenatide once weekly produced in our West Chester, Ohio facility. We currently plan to submit an NDA to the FDA by not later than the end of the first half of 2009, although we are actively pursuing strategies which may allow an earlier submission. To do that, we continue to dialogue with the FDA and are taking multiple approaches to develop the necessary data. As our conversation with the FDA continues and we provide additional data on comparability, we will finalize the timing of our NDA submission.



We are in the process of initiating three additional superiority trials to support the commercialization of exenatide once weekly. The first of these trials is underway and is a blinded controlled trial comparing exenatide once weekly versus a TZD and a DPP-4 inhibitor in patients on metformin background therapy. We also plan to undertake a superiority trial comparing exenatide once weekly with insulin glargine in patients using oral medications. Results of these two studies are expected in the first half of 2009. In the second half of 2008, we intend to start a third superiority trial comparing exenatide once weekly to either metformin, a TZD or a DPP-4 inhibitor as stand-alone therapy. We believe that this clinical program may provide powerful data that will demonstrate the value of this potential medicine to physicians, payors and patients.



Nasal Exenatide



In June 2006, we entered into an agreement with Nastech Pharmaceutical Company, or Nastech, to develop a nasal spray formulation of exenatide. We and Nastech are jointly developing the nasal spray formulation using Nastech’s proprietary nasal delivery technology. We have the responsibility for the development program including clinical, non-clinical and regulatory activities, while Nastech is focusing on drug delivery and chemistry, and manufacturing and controls activities. In 2007, we completed a Phase 1 clinical trial with nasal exenatide. We are evaluating our future options for this program.


Obesity



Obesity is a chronic condition that affects millions of people and is linked to increased health risk of several medical conditions including type 2 diabetes, high blood pressure, heart disease, stroke, osteoarthritis, sleep disorders and several types of cancers. Obesity is also rapidly becoming a major health problem in all industrialized nations and many developing countries. According to NAASO (The Obesity Society), obesity is the second leading cause of preventable death in the United States. It is estimated that 64% of the adult population in the United States are overweight and nearly 60 million adult Americans are considered obese. It is also estimated that the total direct and indirect costs attributed to overweight and obesity health issues exceed $100 billion in the United States each year.

CEO BACKGROUND

Mr. Bradbury has served as our President and Chief Executive Officer since March 2007. He has served as a director since June 2006 and serves on the Finance Committee. Mr. Bradbury was our President and Chief Operating Officer from June 2006 to March 2007 and our Chief Operating Officer from June 2003 to June 2006. He previously served as Executive Vice President from June 2000 until his promotion to Chief Operating Officer in June 2003. He joined us in 1994 and has held officer-level positions in Corporate Development and Marketing prior to 2003. 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 serves on the board of directors of the Pharmaceutical Research and Manufacturers of America, or PhRMA. He also serves as a board member for BIOCOM and the Keck Graduate Institute's Board of Trustees. 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. He is currently employed by us and serves on the 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 also a founder of Mountain Group Capital, LLC, Clinical Products, Inc., and Mountain Ventures, Inc. Mr. Cook serves as a trustee on the Board of Mercy Ministries, International, the University of Tennessee Research Foundation and is a member and former Chair of the Advisory Board of the College of Engineering, University of Tennessee. Mr. Cook retired as a Group Vice President of Eli Lilly and 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, a position he has held since 2005. In 2002, Mr. Altman was named President of QUALCOMM Technology Licensing, or QTL, and previously served as QTL's Executive Vice President from 1998 to 2002 and as its Senior Vice President from 1996 to 1998. He became QTL's General Manager at the formation of the group in 1995. Mr. Altman joined QUALCOMM in 1989 as Corporate Counsel responsible for licensing and acquisitions and was appointed Vice President and General Counsel in 1992. Mr. Altman serves on the Board of Trustees of The Salk Institute. He received his J.D. 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. 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 Health Care and as a member of the board of directors of The Nature Conservancy and The Nature Conservancy of Utah. Ms. Beck received a B.S. in accounting 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 and on the Compensation and Human Resources 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.

Dr. Gavin has served as a director since December 2005 and serves as the chair of the Corporate Governance Committee. Dr. Gavin is currently Chief Executive Officer and Chief Medical Officer of 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. From 1991 to 2002, Dr. Gavin was the 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 received a B.S. in Chemistry at Livingstone College, a Ph.D. in Biochemistry at Emory University and an 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 2005 and currently serves on the Finance Committee. Ms. Graham was our Chief Executive Officer from September 2003 to March 2007 and also served as our President from September 2003 to June 2006. Prior to joining Amylin, Ms. Graham held various positions with Guidant Corporation, including 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, finance 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 California Council on Science and Technology, the Harvard Business School Health Industry Advisory Board, the Harvard Business School Dean's Advisory Board, the Advisory Board for the Kellogg Center for Executive Women, 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. Mr. Greene 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. He is a director of Biosite Incorporated. 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 privately-held 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 various pharmaceutical companies. He received a B.S. from Pennsylvania State University, an 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 as chair of the Finance Committee and on the Audit Committee. Mr. Sullivan is currently Chairman of the Board of Advisors of RAND Health and Vice Chairman of the Board 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 to 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, HCP, Inc. (a real estate investment trust) and AutoGenomics, Inc. Mr. Sullivan received an M.B.A. from Harvard University and a 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, A Stepping Stone Foundation (pre-school education). Mr. Wilson received a B.A. and an M.B.A. from the University of Arizona.

MANAGEMENT DISCUSSION FROM LATEST 10K

Executive Summary


Amylin Pharmaceuticals, Inc. is a biopharmaceutical company committed to improving the lives of people with diabetes, obesity and other diseases through the discovery, development and commercialization of innovative medicines. We have developed and gained approval for two first-in-class medicines to treat diabetes, BYETTA ® (exenatide) injection and SYMLIN ® (pramlintide acetate) injection, both of which were commercially launched in the United States during the second quarter of 2005. BYETTA has also been approved in the European Union, or EU, and our collaboration partner, Eli Lilly and Company, or Lilly launched BYETTA in 22 countries outside of the United States during 2007. We expect Lilly to continue to launch BYETTA in additional EU member states and other countries in 2008.



BYETTA is the first and only approved medicine in a new class of compounds called incretin mimetics. We began selling BYETTA in the United States in June 2005. BYETTA is approved in the United States for the treatment of patients with type 2 diabetes who have not achieved adequate glycemic control and are using metformin, a sulfonylurea and/or a thiazolidinedone, or TZD, three common oral therapies for type 2 diabetes. Net product sales of BYETTA were $636.0 million, $430.2 million and $75.2 million for the years ended December 31, 2007, 2006 and 2005, respectively.



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



SYMLIN is the first and only approved medicine in a new class of compounds called amylinomimetics. We began selling SYMLIN in the United States in April 2005 for the treatment of patients with either type 1 or type 2 diabetes who are treated with mealtime insulin but who have not achieved adequate glycemic control. Net product sales of SYMLIN were $65.5 million, $43.8 million and $11.5 million for the years ended December 31, 2007, 2006 and 2005 respectively.



We have a field force of approximately 600 people dedicated to marketing BYETTA and SYMLIN in the United States. Our field force includes our specialty and primary care sales forces, a managed care and government affairs organization, a medical science organization and diabetes care specialists. In addition, Lilly co-promotes BYETTA in the United States and has primary responsibility for developing and commercializing BYETTA outside of the United States, and any sustained-release formulations of exenatide such as exenatide once weekly.



In addition to our marketed products, we are working with Lilly and Alkermes, Inc. to develop exenatide once weekly. We are also working with Alkermes and Parsons, Inc. on the construction of a manufacturing facility for exenatide once weekly in Ohio. We expect to complete the commercial scale manufacturing process in this facility in the second half of 2008 and we are also working aggressively to provide sufficient data to the United States Food and Drug Administration, or FDA, to demonstrate comparability between exenatide once weekly clinical trial material manufactured by our partner, Alkermes, in its facility and exenatide once weekly produced in our West Chester, Ohio facility.



We also have other early stage programs for diabetes, obesity, and other therapeutic areas. We have a number of compounds in development for the potential treatment of obesity which are part of a broader clinical strategy which we refer to as INTO: Integrated Neurohormonal Therapies for Obesity. We also maintain an active discovery research program focused on novel peptide therapeutics. We are actively seeking to in-license additional drug candidates. We have partnered with PyschoGenics, Inc., to form Psylin Neurosciences, Inc., a company that will focus on the discovery and development of peptide hormones for treatment of psychiatric indications. During the second quarter of 2007, we made a strategic equity investment in BioSeek, Inc., or BioSeek, a company that specializes in predictive human cell-based disease models, and contracted with BioSeek to assess the potential utility of Amylin’s peptide hormones in immune/inflammatory disorders. During the fourth quarter of 2007, we made a strategic equity investment in Xenome Ltd., or Xenome, a company with largely venom-based peptide libraries, and contracted with Xenome to discover and develop novel peptide therapeutics for a range of metabolic and musculoskeletal diseases.

Recent Developments



Diabetes



• Announced positive results from a 30-week comparator study of exenatide once-weekly injection and BYETTA taken twice daily in patients with type 2 diabetes. We anticipate a regulatory submission to the FDA by the end of the first half of 2009.



• Announced positive results from a 24-week study of monotherapy, or stand alone, BYETTA in drug naïve patients with Type 2 diabetes. We plan for a regulatory submission for a monotherapy indication to the FDA in the first half of 2008.



• Received FDA approval of the SymlinPen(TM) 120 and the SymlinPen(TM) 60 pen-injector devices for administering SYMLIN. These new pre-filled pen-injector devices feature simple, fixed dosing to improve mealtime glucose control. This new product presentation was commercially launched in the United States in January 2008.



• Announced plans for a clinical program for exenatide once weekly consisting of three trials designed to show superiority of exenatide once weekly for the treatment of type 2 diabetes over common medications used in the treatment of type 2 diabetes, including TZDs, DPP-IV inhibitors and insulin glargine. The first of these trials is underway. Results from the first two studies are expected during the first half of 2009 and results from the third study are expected by early 2010.



• Made continued progress and expanded the scope of the construction of our manufacturing facility for exenatide once weekly in Ohio. We remain on schedule to complete the commercial-scale manufacturing process at this facility in the second half of 2008.



Obesity



• Positive results from a 24-week proof-of-concept study with pramlintide, an analog of human amylin, and recombinant human leptin (metreleptin) combination treatment in overweight or obese subjects, validating our novel INTO strategy. We plan for additional development in 2008, including the initiation of a Phase 2B study and development work on a formulation that will provide both pramlintide and metreleptin in a single injection.



Financial and Operational



• In June 2007, we issued $575.0 million in aggregate principal amount of 3.0% convertible senior notes due in 2014, referred to as the 2007 Notes, generating net proceeds of approximately $558.7 million.



• In December 2007, we entered into a $140.0 million credit agreement. The credit agreement provides for a $125.0 million term loan, which generated net proceeds of approximately $123.5 million, and a $15.0 million revolving credit facility.



Since our inception in September 1987, we have devoted substantially all of our resources to our research and development programs and, more recently, to the commercialization of our products and the ongoing construction of our manufacturing facility for exenatide once weekly. All of our revenues prior to the second quarter of 2005 were derived from fees and expense reimbursements under our BYETTA collaboration agreement with Lilly, previous SYMLIN collaborative agreements, and previous co-promotion agreements. During the second quarter of 2005, we began to derive revenues from product sales of BYETTA and SYMLIN. We have been unprofitable since inception and may incur additional operating losses for at least the next few years. At December 31, 2007, our accumulated deficit was approximately $1.4 billion.



At December 31, 2007, we had $1.1 billion in cash, cash equivalents and short-term investments. We may not generate positive operating cash flows for at least the next few years and accordingly, we may need to raise additional funds from outside sources. Refer to the discussions under the headings “ Liquidity and Capital Resources ” below and “ Cautionary Factors That May Affect Future Results ” in Part I, Item 1A for further discussion regarding our anticipated future capital requirements.


Critical Accounting Policies and Estimates


Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, stock-based compensation, inventory costs, research and development expenses and income taxes. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.



We believe the following critical accounting policies affect the significant judgments and estimates used in the preparation of our consolidated financial statements (see Note 1 to our consolidated financial statements on page F-7).


Revenue Recognition


We recognize revenue from the sale of our products, license fees and milestones earned and for reimbursement of development costs based on contractual arrangements.



Net Product Sales



We sell our products primarily to wholesale distributors, who in turn, sell to retail pharmacies, pharmacy benefit managers and government entities. Decisions made by these wholesalers and their customers regarding the level of inventories they hold, and thus the amount of product they purchase, can materially affect the level of our product sales in any particular period.



We recognize revenue from the sale of our products when delivery has occurred and title has transferred to our wholesale customers, net of allowances for product returns, rebates and wholesaler chargebacks, wholesaler discounts and prescription vouchers. We are required to make significant judgments and estimates in determining some of these allowances. If actual results differ from our estimates, we will be required to make adjustments to these allowances in the future.



Product Returns



We do not offer our wholesale customers a general right of return. However, we will accept returns of products that are damaged or defective when received by the wholesale customer or for any unopened product during the period beginning six months prior to and up to 12 months subsequent to its expiration date. We estimate product returns based on our historical returns experience, and industry trends for other products with similar characteristics. Additionally, we consider several other factors in our estimation process including our internal sales forecasts, the expiration dates of product shipped and third party data to assist us in monitoring estimated channel inventory levels and prescription trends. Actual returns could exceed our historical experience and our estimates of expected future returns due to factors such as wholesaler and retailer stocking patterns and inventory levels and/or competitive changes. To date actual returns have not differed materially from our estimates.



Rebates and Wholesaler Chargebacks



Allowances for rebates include mandated discounts under the Medicaid Drug Rebate Program and contracted discounts with commercial payors. Rebates are amounts owed after the final dispensing of the product by a pharmacy to a benefit plan participant and are based upon contractual agreements or legal requirements with private sector and public sector (e.g. Medicaid) benefit providers. The allowance for rebates is based on contractual discount rates, expected utilization under each contract and our estimate of the amount of inventory in the distribution channel that will become subject to such rebates. Our estimates for expected utilization for rebates are based on historical rebate claims and to a lesser extent third party market research data. Rebates are generally invoiced and paid quarterly in arrears so that our accrual consists of an estimate of the amount expected to be incurred for the current quarter’s activity, plus an accrual for prior quarters’ unpaid rebates and an accrual for inventory in the distribution channel.



Wholesaler chargebacks are discounts that occur when contracted customers purchase directly from an intermediary wholesale purchaser. Contracted customers, which currently consist primarily of Federal government entities purchasing off the Federal Supply Schedule, generally purchase the product at its contracted price, plus a mark-up from the wholesaler. The wholesaler, in-turn, charges back to the Company the difference between the price initially paid by the wholesaler and the contracted price paid to the wholesaler by the customer. The allowance for wholesaler chargebacks is based on expected utilization of these programs and reported wholesaler inventory levels. Actual rebates and wholesaler chargebacks could exceed historical experience and our estimates of future participation in these programs. To date, actual rebate claims and wholesaler chargebacks have not differed materially from our estimates.



Wholesaler Discounts



Wholesaler discounts consist of prompt payment discounts and distribution service fees. We offer all of our wholesale customers a 2% prompt-pay discount within the first 30 days after the date of the invoice. Distribution service fees arise from contractual agreements with certain of our wholesale customers for distribution services they provide to us and are generally a fixed percentage of their purchases of our products in a given period. Prompt payment discounts and distribution service fees are recorded as a reduction to gross sales in the period the sales occur. The allowance for wholesaler discounts is based upon actual data of product sales to wholesale customers and not on estimates.



Prescription Vouchers



Prescription vouchers result in amounts owed to pharmacies that have redeemed vouchers for a free prescription. We provide prescription vouchers to physicians, who in turn distribute them to patients. Patients may redeem a voucher at a pharmacy for a free prescription. We reimburse the pharmacy for the price it paid the wholesaler for the medicine and record this reimbursement as a reduction to gross sales. The allowance for prescription vouchers is based on the number of unredeemed vouchers in circulation, and the estimated utilization rate. The estimated utilization rate is based on our historical utilization rates experience with prescription vouchers. The allowance for prescription vouchers could exceed historical experience and our estimates of future utilization rates. To date, actual prescription voucher utilization has not differed materially from our estimates.



Revenues under collaborative agreements



Amounts received for upfront product and technology license fees under multiple-element arrangements are deferred and recognized over the period of such services or performance if such arrangements require on-going services or performance. Non-refundable amounts received for substantive milestones are recognized upon achievement of the milestone and the expiration of stock conversion rights, if any, associated with such payments. Amounts received for equalization of development expenses are recognized in the period in which the related expenses are incurred. Any amounts received prior to satisfying our revenue recognition criteria are recorded as deferred revenue in the accompanying consolidated balance sheets.

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.

MANAGEMENT DISCUSSION FOR LATEST QUARTER

Results of Operations
Three Months Ended March 31, 2008

Net Product Sales

Net product sales for the three months ended March 31, 2008 and 2007 were $178.7 million and $162.0 million, respectively, and consisted of shipments of BYETTA and SYMLIN, less allowances for product returns, rebates and wholesaler chargebacks, wholesaler discounts, and prescription vouchers.

Revenues Under Collaborative Agreements



Revenues under collaborative agreements for the three months ended March 31, 2008 were $18.5 million compared to $10.0 million for the same period in 2007. Substantially all of the revenue recorded in these periods consists of amounts earned pursuant to our BYETTA collaboration agreement with Lilly. The $8.5 million increase in revenues under collaborative agreements in the current quarter compared to the same period in 2007 reflects higher cost-sharing payments from Lilly due primarily to increased development expenses for exenatide once weekly.

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



Cost of Goods Sold



Cost of goods sold for the three months ended March 31, 2008 and 2007 was $22.0 million, representing a gross margin of 88%, and $15.2 million, representing a gross margin of 91%, respectively, and is comprised primarily of manufacturing costs associated with BYETTA and SYMLIN sales during the period. The decrease in gross margin for the three months ended March 31, 2008, compared to the same period in 2007 primarily reflects increased product costs for BYETTA due to lower production volumes, and product mix, including the introduction of the SymlinPen during the three months ended March 31, 2008, partially offset by a higher net sales price per unit for BYETTA. Quarterly fluctuations in gross margins may be influenced by product mix, pricing, and the level of sales allowances.



Selling, General and Administrative Expenses



Selling, general and administrative expenses increased to $98.2 million for the three months ended March 31, 2008, from $87.8 million for the same period in 2007. The increase primarily reflects higher promotional expenses for BYETTA and SYMLIN, increased expenses associated with our sales force, prelaunch education activities for exenatide once weekly, and increased business infrastructure to support our growth.



Research and Development Expenses



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



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

The $17.6 million increase in research and development expenses for the three months ended March 31, 2008 as compared to the same period in 2007 primarily reflects increased expenses of $9.7 million and $4.3 million for our diabetes programs and our research and early-stage programs, respectively. The increase in expenses for our diabetes programs primarily reflects increased expenses for exenatide once weekly including costs associated with manufacturing scale up at third party manufacturers and at our manufacturing facility in Ohio. The increase in expenses for our research and early-stage programs primarily reflects continued investment in our early stage discovery and preclinical research programs.



Collaborative Profit Sharing



Collaborative profit sharing was $69.9 million and $66.9 million for the three months ended March 31, 2008 and 2007, respectively, and consists of Lilly’s 50% share of the gross margin for BYETTA in the United States. The $3.0 million increase in collaborative profit sharing for the three months ended March 31, 2008 as compared to the same period in 2007 primarily reflects increased net product sales for BYETTA, partially offset by reduced gross margin for BYETTA.



Interest and Other Income and Expense



Interest and other income consist primarily of interest income from investment of cash and other investments. Interest and other income increased to $11.0 million for the three months ended March 31, 2008, from $9.4 million for the same period in 2007. The increase primarily reflects higher average investment balances due to net proceeds of $559 million from our 2007 Notes issued in June 2007.



Interest and other expense consist primarily of interest expense resulting from our long-term debt obligations. Interest expense in the three months ended March 31, 2008 consists of interest on our $775 million of outstanding convertible senior notes and our $125 million of outstanding long-term note payable, and the amortization of associated debt issuance costs. Interest and other expense was $9.7 million and $1.3 million for the three months ended March 31, 2008 and 2007, respectively. The increase reflects additional interest expense for our 2007 Notes issued in June 2007 and long-term note payable entered into in December 2007 and recognized losses on an interest rate swap associated with the long-term note payable.



Net Loss



Our net loss for the three months ended March 31, 2008 was $68.8 million compared to a net loss of $49.4 million for the same period in 2007. The increase in net loss primarily reflects the increased selling, general and administrative expenses, increased research and development expenses, increased collaborative profit-sharing and increased interest and other expense, partially offset by the increased net product sales and the increased revenues under collaborative agreements discussed above.

CONF CALL

Michael York - Senior Director, Investor Relations

Good morning, and welcome to Amylin Pharmaceuticals' quarterly update conference call. Today's discussion will contain forward-looking statements that involve risks 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 Amylin’s management team here today. Daniel Bradbury, President and Chief Executive Officer; Mark Foletta, Senior Vice President, Finance and Chief Financial Officer; Orville Kolterman, Senior Vice President, Development.

I will now turn the call over to Dan Bradbury.

Daniel M. Bradbury - President and Chief Executive Officer

Thanks, Michael. Good morning, and thank you for joining us today. We have made steady progress in the first quarter of 2008 across near, mid and long-term opportunities, executing against the strategy that we detailed earlier this year to build Amylin's diabetes portfolio and establish our presence in the obesity field.

However, this quarter's BYETTA sales were lower than planned and we know we need to improve our execution. Although BYETTA has not met our expectations this quarter, the other aspects of our business showed strong results. We are pleased to announce that we completed the regulatory submission for the use of BYETTA as monotherapy in the first quarter, with a target for approval in the second half of the year. We are also excited by the rapid uptake of SymlinPen, which was launched in January.

Our mid-term plans focus on the exenatide once-weekly program, which includes completing our Ohio manufacturing facility, initiating a strong clinical program to position exenatide once-weekly for market dominance, and working aggressively towards submitting an NDA as soon as possible. We are now manufacturing exenatide once-weekly at commercial scale at our facility in Ohio, an important step in completing this facility. We plan to have this material in ongoing and planned clinical trials by the third quarter of this year.

For the long-term, we have made prudent investment decisions based on strong clinical data to advance our obesity program and continue supporting discovery research. As we make our investment decisions, we will continue to manage our expenses appropriately, leveraging our assets and assessing financing or partnership alternatives to offset expenses.

Having completed these summary comments, 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 morning. Earlier this morning, we announced our financial results for the quarter ended March 31st, 2008. We reported total revenue of $197.2 million for the first quarter, which includes net product sales of $178.7 million. That is made up of $158.5 million for BYETTA and $20.2 million for SYMLIN, resulting in first quarter growth in net product sales of 10% compared to the first quarter of 2007 and a decline of 10% from the fourth quarter of 2007.

We believe that the decline in BYETTA sales from the last quarter, despite comparable prescription demand, primarily reflects the reversal of wholesaler stocking that occurred in the fourth quarter. You may recall that on our 2007 year-end call, I noted that BYETTA sales growth exceeded prescription growth, primarily due to wholesaler year-end buying patterns. As a result, sales that would have occurred in the first quarter of 2008 occurred in the fourth quarter of 2007 instead. In addition, first quarter 2008 sales were further reduced by wholesaler draw-down of the additional inventory purchased at the end of the year to levels comparable to those prior to the fourth quarter stocking. We believe this impact was approximately $20 million to $25 million in the first quarter. This impact was partially offset by a price increase for BYETTA in early January.

First quarter sales for BYETTA were also impacted by a slight increase in discounting, as we increased our managed care Tier 2 access over 2007 levels while maintaining prescription demand from the prior quarter. Our revenue under collaborative agreements was $18.5 million compared to $10 million for the same period in 2007. The increase primarily reflects higher cost-sharing payments from Eli Lilly and Company to equalize development expenses for the exenatide products portfolio.

Cost of goods sold was $22 million, reflecting a gross margin of approximately 88%. This compares to cost of goods sold of $15.2 million for the first quarter of 2007, and a gross margin of approximately 91%. Gross-margin decreased year-over-year primarily because of increased discounting, higher production costs for BYETTA, and our product mix including the introduction of the SymlinPen, which has the higher cost of goods sold in the vial presentation.

Selling, general and administrative expenses for the first quarter of 2008 increased to $98.2 million compared to $87.8 million for the same period in 2007. The increase primarily reflects higher promotional expenses for BYETTA and SYMLIN and increased business infrastructure to support our growth.

Research and development expenses increased to $77.2 million for the first quarter of 2008 compared to $59.6 million for the same period in 2007. The increase primarily reflects higher expenses for exenatide once-weekly, growth in the company's research capabilities, and continued investment in the company's early-stage obesity programs. Research and development expenses net of cost-sharing payments from Lilly on the exenatide program also increased with a lower rate than the reported research and development expenses. Net research and development expenses increased to $59.8 million for the quarter-ended March 31st, 2008 compared to $50.7 million for the same period in 2007. As a reminder, we are reimbursed by Lilly to equalize exenatide development costs, and we believe that this net R&D number is a better indicator of the true growth in R&D activities at Amylin.

Lilly's share of the gross margin for BYETTA, which we will refer to as collaborative profit sharing [ph], was $69.9 million for the first quarter of 2008 compared to $66.9 million for the same period in 2007. We reported a net loss of $68.8 million or $0.51 per share for the quarter-ended March 31st, 2008, compared to a net loss of $49.4 million or $0.38 per share for the same period in 2007. And at the end of the first quarter, we held over $1 billion of cash, cash equivalents, and short-term investments.

I would now like to highlight some information regarding key trends and assumptions for the remainder of 2008. We've included in these numbers the estimates for non-cash stock-based compensation expense of $80 million to $90 million in aggregate. This includes expenses for both stock options and our employee stock ownership plan. Based on our assessment of recent trends, we are narrowing our previous guidance for total revenues in 2008 to a range of $900 million to $950 million from $900 million to $1 billion. Our total revenue guidance includes collaborative revenue of $100 million to $125 million. Planned collaborative revenues for 2008 consist primarily of cost-sharing payments from Lilly to equalize development expenses for the exenatide portfolio. Collaborative revenue will increase throughout the year as additional activities for exenatide once-weekly begin. No milestone payments are expected in 2008.

Where we fall within the collaborative revenue range will depend on the amount of development expenses we incur and the mix of spending between Amylin and Lilly. I will talk about research and development expense guidance in a moment, but you should think of collaborative revenues moving in tandem with exenatide development expenses in 2008 such that if we incur higher development expenses our collaborative revenue will also be higher.

With regard to our operating expenses, we are adjusting our previous guidance downward slightly to be more in line with expected revenues. We expect that our selling, general, and administrative expenses for 2008 will be toward the lower end of our previous range of $425 million to $475 million. This range is slightly above our first quarter exit rate and reflects costs associated with the continued investment in commercial activities for BYETTA and SYMLIN, investments in pre-launch activities... 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 to $55 million of stock-based compensation expense.

We expect that our research and development expenses for 2008 will be towards the mid-point of our previous range of $325 million to $375 million. This includes approximately $30 million to $35 million of stock-based compensation expense. Where we fall within this range of development expenses will depend primarily upon our level of spending on the exenatide portfolio and the level of investment in our obesity programs. I would also like to comment that we are actively pursuing options to offset the R&D expense associated with our obesity programs through potential partnerships.

Finally, I'd like to adjust net interest income guidance to approximately $5 million in 2008 from the previous guidance of $5 million to $10 million. This is due to lower expected interest rates since our previous guidance. I will be available at the end of the call to answer any questions.

I will now turn you back to Dan for an update on our recent business activities.

Daniel M. Bradbury - President and Chief Executive Officer

Thanks, Mark. First of, I would like to give you a commercial update on BYETTA, the first and only FDA approved incretin mimetic, a new class of drugs that mimics the action of the human hormone, glucagon-like peptide-1. BYETTA is indicated for patients with type 2 diabetes using oral medication and provides sustained glucose control, a low incidence of hypoglycemia, and progressive weight loss.

In the first quarter, we maintained a steady level of BYETTA prescriptions over the fourth quarter. The first quarter has historically been the lowest quarter of the year and the total diabetes market declined approximately 1% over the fourth quarter. We saw a 2% growth in new prescriptions of the 10-microgram dose quarter-over-quarter, an indicator of continued product adoption. Despite maintaining prescription levels in a challenging market, we are not satisfied with these results. Growth is not happening as quickly as we'd planned. We need to improve our execution to achieve the full potential of BYETTA in an increasingly competitive marketplace adversely impacted by safety concerns. Indeed, we are finding the primary-care market especially a greater challenge than we anticipated. Our growth in late adopters, who are predominantly primary care physicians, has slowed. Meanwhile early adopters, who are primarily specialists, continue to maintain a steady level of prescriptions.

We and our partner, Lilly, believe in our strategy of leveraging the unique dual benefits of BYETTA, glucose control and weight loss. We are taking action and are extremely focused on executing our commercial strategy to improve BYETTA performance. To drive broader and deeper primary care adoption, we are expanding and better aligning our sales forces. To that end, we are increasing our field force by approximately 15% during this quarter, which broadens our reach into the primary-care market and expands our physician targets to 75,000. These physicians account for over 80% of diabetes prescriptions. This expansion will also enable us to coordinate our call plans to a greater degree with Lilly to better target high-prescribing physicians.

We believe this optimization will allow the Amylin and Lilly sales forces to more effectively act as one organization and to improve the reach and frequency of customer contact. We know we are on the right track, as we've already seen individual territories where strong execution in the field produces results. Accordingly, we will be closely monitoring the metrics driving sales force effectiveness and we'll continue evaluating ways to optimize both the size and the deployment of the sales force.

Additionally, new programs are being launched emphasizing peer-to-peer interaction and glycemic control efficacy. And as we discussed at the beginning of the year, we initiated patient support programs to facilitate the successful initiation of therapy by primary-care physicians. With these programs, we strive to maximize the clinical benefit for new patients and ensure patient adherence to therapy. We have received positive feedback on our efforts and will continue expanding these support programs.

We also continued to educate physicians on the board Tier 2 access for BYETTA with over 85% access among commercial managed-care providers. Now, despite of this broad access, some physicians continued to have the perception that BYETTA as a newer innovative product has limited reimbursement. As a result, both the Amylin and Lilly sales forces are proactively informing physicians of specific access for BYETTA in their local plans.

To summarize, BYETTA prescription growth is lower than planned. We are not pleased with this, but we are confident in the overall commercial strategy. We have identified in our addressing key issues and we're taking action to improve execution. Both Amylin and Lilly are placing significant resources behind this first-in-class product.

Moving on to BYETTA expansion opportunities, we are pleased to announce the submission of our regulatory application for the use of BYETTA as monotherapy in the first quarter of 2008, with a target for approval in the second half of this year. When approved, healthcare professionals will have the freedom to expand BYETTA usage along with treatment continuum as either standalone or combination therapy. The monotherapy indication will also allow broader payer coverage in some plans, increasing patient access to BYETTA beyond the already wide availability.

In addition to the monotherapy indication, there is potential for significant BYETTA market penetration worldwide. So far in 2008, Lilly has launched BYETTA in six countries including Italy, Belgium, Brazil and the United Arab Emirates, and France began reimbursing for BYETTA in April. We anticipate that BYETTA will be in 60 countries by the end of 2008.

Now let's move on to SYMLIN, a synthetic analog of human amylin, a 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 for patients who use mealtime insulin.

In January, we launched SymlinPen, which offers patients the ability to get SYMLIN in a convenient, transportable, fixed-dose pen injector system. The easy-to-use pen is particularly helpful for patients taking multiple injections. We are excited by the rapid uptake of SymlinPen, which now accounts for 39% of new SYMLIN prescriptions and 21% of total SYMLIN prescriptions. Total prescriptions for SYMLIN grew 6% for the first quarter over the fourth quarter, demonstrating that SymlinPen growth is not all coming at the expense of the vial/syringe format. The SYMLIN brand is growing. Total sales of SYMLIN grew 14% over the same period. These results verify our market research, showing that SymlinPen would be viewed very favorably by patients due to improved convenience. Efforts to drive current and new patients to SymlinPen are paying off. These efforts include pen-only sampling, an entirely new patient starter kit, and a revamped website for patients and healthcare providers. Early feedback on the new healthcare provider campaign shows that the powerful new messaging and imagery is resonating with MDs.

In the same vein, as efforts to improve the BYETTA patient experience, we've launched the SYMLIN support program, offering live telephone support for medical professionals to aid new SYMLIN patients in the first few weeks of therapy and beyond. Early feedback from this program is very positive. We are also pleased to report that within three months of the SymlinPen launch, we already have 85% open access for SymlinPen, with approximately 65% of covered lives at Tier 2. We continue to further develop the brand and create market expansion opportunities in the near and mid-term.

With that, I will now turn the call over to Orville for an update on our upcoming research and development milestones. Orville?

Orville G. Kolterman - Senior Vice President, Clinical and Regulatory Affairs

Thanks, Dan. I want to share with you the latest developments regarding exenatide once-weekly, the next planned medicine in our pipeline. This product candidate has the potential to bring unprecedented efficacy, improved tolerability, and enhanced convenience in the treatment of type 2 diabetes, as it would be the first once-a-week medicine for this significant and growing patient population. I'm pleased to say that we are on track to finalize the commercial-scale manufacturing process at our new Ohio facility during the second half of 2008 and plan to submit in NDA before the end of the first half of 2009. We wish to underscore that Amylin and our partners are working with determined focus to move this submission date forward. In this update, I will address the status of the manufacturing facility and the regulatory filing milestones that are intertwined. In general, we cannot characterize the remaining risk associated with the development of exenatide once-weekly as manufacturing and regulatory.

Turning first to manufacturing, given the scale and site change for exenatide once-weekly manufacturing there are certain regulatory conditions that must be satisfied. With regards to scale, we are very pleased to report that we have manufactured material at commercial scale at our manufacturing facility in Ohio. Furthermore, and importantly the process has performed consistently and met our expectations, and we plan to have this material in ongoing and planned clinical trials by the third quarter.

In regards to site change, we continued gathering data to support a planned submission, which includes moving forward with a range of options and a continuous dialog with the FDA on the most appropriate path forward. On the chemistry, manufacturing and control front, stability lots have been manufactured and are in [ph] place and are not rate limiting to the submission of exenatide once-weekly. Thus, the risk profile for the development of exenatide once-weekly is improving as we continue to achieve the manufacturing milestones.

Now, turning to the regulatory front, today we are announcing that the exenatide once-weekly clinical trial program has been named DURATION. The data generated by our 30-week pivotal study now called DURATION - 1 met the primary clinical efficacy endpoint and safety profile requirements for the study. We continue to believe this meets the agency requirement and we intend to submit the NDA based on these clinical data. 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 exenatide. And existing… in addition, we have now put in place an aggressive clinically relevant program that pits exenatide once-weekly against competing products to demonstrate superiority. The objective of these studies is to support the launch and demonstrate the transformational nature of exenatide once-weekly therapy. I would like to point out that most products are compared on a non-inferiority basis, meaning that studies are designed to demonstrate that the product is the same in terms of efficacy of the product to which they are being compared.

In the DURATION program, we are striving to demonstrate superiority. Superiority studies are designed to demonstrate that the product is superior to the comparison product. We believe our clinical program for exenatide once-weekly will provide powerful data that will demonstrate the value of the medicine to physicians, patients and payers. We anticipate this superiority strategy will allow exenatide once-weekly to stand out and favorably position the product for market success.

Here are some details on the clinical program. The first of these superiority studies, named DURATION - 2, is a blinded, controlled trial comparing exenatide once-weekly with a TZD, pioglitazone, and a DPP-4 inhibitor, sitagliptin, in approximately 400 to 500 patients on metformin background therapy. This study is currently enrolling patients, and we are on track to report results in the first half of 2009. DURATION - 3 is an open-label superiority trial comparing exenatide once weekly with insulin glargine where it will be added on the background of oral agent therapy in approximately 400 to 500 patients. This study is anticipated to start in the first half of this year and results are expected the first half of 2009.

DURATION - 4 is a blinded superiority study in which exenatide once-weekly will be compared to either metformin, TZD, pioglitazone or a DPP-4 inhibitor, sitagliptin, as standalone therapies for approximately 800 patients with type 2 diabetes.

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 and patient safety. In November of 2007, we announced our commitment to pursue a medicine for obesity that is a combination of pramlintide, an analog of human amylin, and metreleptin, an analogue of human leptin. Both molecules are well known to us and have a well-characterized safety profile. This commitment is based on impressive study results that we reported in November, a 12.7% reduction in body weight over 24 weeks when pramlintide and metroleptin were used together.

In 2008, we are continuing our development of a delivery system that will provide both pramlintide and metroleptin in a single injection. Further, we are initiating a Phase IIb study to evaluate different dosing combinations of pramlintide and metroleptin. This is a six-month multi-arm study that will enroll approximately 600 patients and will take approximately a year to complete.

We believe this product candidate has a promise to meet the unmet medical need for a highly effective and safe weight loss therapy. Such a medicine would be a breakthrough for patients, physicians, and payers, the latter of which has repeatedly signaled the need for clinically-meaningful, double-digit percentage weight loss from baseline, which is a threshold targeted by this product.

At our R&D Day last November, we also shared with you that we continue to explore new delivery methods for our peptide hormones. As a result of this exploration, we are pleased to have finalized a license agreement with Pacira to develop sustained-release injectable products based on the Depo [ph] technology platform. Given that not all peptides and proteins are compatible with a single delivery technology, we believe that it is important to explore an array of alternative delivery technologies to optimize the delivery of all of our product candidates.

And now, I would like to pass you back to Dan to conclude the call.

Daniel M. Bradbury - President and Chief Executive Officer

Thanks, Orville. We're looking forward to sharing results of those important programs in the future. I will add just a few more comments before we close. The American Diabetes Association's Scientific Meeting is coming up in June of this year in San Francisco. And once again, we are planning to have a significant scientific and commercial presence at that meeting. We have had more than 30 abstracts accepted at the meeting. These studies reflect the breadth and depth of our scientific and clinical programs and the trem1us interest among the medical community for our novel approach to developing first-in-class medicines to address diabetes and obesity.

We have provided educational grants to support two medical education symposia, and we will have a commercial exhibit where attendees can learn about Amylin and our two first-in-class products. Of particularly note, please mark your calendars for a webcast of our Annual Investor Reception on Sunday, June 8th, at 7:45 PM Pacific Time to review meeting highlights. We look forward to seeing many of you in San Francisco. A preliminary list of abstracts and other activities of ADA will be posted shortly on our corporate website.

In addition, I would like to remind you that our annual meeting of stockholders will take place on Friday, May 30th, at 11:00 AM Pacific Time at our corporate headquarters in San Diego.

It is an exciting time here at Amylin as we execute to position the company for sustained value creation and growth. I want to make it clear that this year we are laser-focused on, one, driving BYETTA and SYMLIN growth; 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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