Lisa Seachrist

Washington Editor

WASHINGTON — Amylin Pharmaceuticals Inc. opted to draw a $30.6 million loan from collaborator Johnson & Johnson in order to fund its one-half cost of the development of the diabetes drug candidate pramlintide.

The sum is a portion of the $57 million available in loans to Amylin from Johnson & Johnson for the development of pramlintide, which the companies currently have in four Phase III trials to enhance glucose control in Types I and II diabetes.

"This was one of the options that we had to finance the costs associated with the development of pramlintide," said Richard W. Krawiec, director of corporate communications at Amylin. "It allows us to do it under very favorable conditions."

Under terms of the agreement, Amylin will receive the $30.6 million loan at a 9 percent interest rate. Both principal and accrued interest are payable out of future pramlintide profits. In addition, Amylin has issued Johnson & Johnson warrants for 1,530,950 shares of common stock with a fixed exercise price of $12 per share. The warrants may be exercised at any time over the next ten years.

The provision for the loan came from the original collaboration between Amylin, of San Diego, and Johnson & Johnson, which began in June 1995. At the time, analysts estimated the collaboration could mean up to $100 million for Amylin in licensing fees, equity investment and milestone payments. To date, Johnson & Johnson, of New Brunswick, N.J., has invested more than $155 million in the collaboration.

"Johnson & Johnson has made a substantial monetary investment in Amylin and pramlintide," Krawiec said. "We are looking for regulatory approval for pramlintide in the latter half of 1999."

That approval will be based on the results of the four ongoing clinical trials of the drug. Pramlintide is a synthetic analogue of the human hormone amylin. Amylin, in concert with insulin, provides glucose control by controlling the rate at which food enters the intestine and the bloodstream. Diabetic patients are typically deficient in both hormones.

In August, initial results of a Phase III trial of pramlintide failed to show significant results in Type II diabetes. A study in Type I diabetes found that amylin did provide metabolic control while lowering weight and improving cholesterol profiles.

Those trials serve as the basis for the four current studies that focus on Type I and Type II diabetic patients with poor glucose control. The companies reasoned that a wide range of insulin dosing in the Type II trial as well as a number of patients who had good glucose control created the equivocal results.

"We were able to fine tune our clinical program with those results," Krawiec said. "We really improved our clinical design."

Amylin's stock (NASDAQ:AMLN) closed at $8.687, up $0.25. *