Amylin Pharmaceuticals, Inc Q4 2008 Earnings Call Transcript

Amylin Pharmaceuticals, Inc (AMLN)

Q4 2008 Earnings Call

January 27, 2009 5:00 pm ET

Executives

Michael York - SD of IR

Daniel Bradbury - President and CEO

Mark Foletta - SVP, Finance, and CFO

Analysts

Thomas Wei - Piper Jaffray

Matthew Osborne - Lazard Capital Markets

Jason Butler - Rodman & Renshaw

Salveen Kochnover - Collins Stewart

Jim Birchenough - Barclays Capital

Cory Kasimov - JPMorgan

Steve Harr - Morgan Stanley

Presentation

Operator

Good day, ladies and gentlemen, and welcome to the fourth quarter 2008 Amylin Pharmaceuticals Incorporated earnings conference call. My name is Stacey and I will be your conference moderator for today. (Operator Instructions)

I would now like to turn the presentation over to your host for today’s call, Mr. Michael York, Senior Director of Investor Relations. Please proceed.

Michael York

Good afternoon 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 releases and in our recent filings with the Securities and Exchange Commission. Our actual results could differ materially from what is discussed on today’s call.

Let me introduce the other members of the Amylin management team here today: Daniel Bradbury, President and Chief Executive Officer; Mark Foletta, Senior Vice President, Finance, and Chief Financial Officer.

I’ll now turn the call over to Dan Bradbury.

Daniel Bradbury

Thanks, Michael. Good afternoon and thank you for joining us today. The New Year is off to a busy start. Today, we will brief you with current progress with the business in 2008 and then, the majority of our time, we’ll focus on the company's plans for the coming year.

In 2009, we plan to create value for stakeholders through five areas. One, for BYETTA, we have the opportunity to retain the product's growth with the modern therapy indication approval and an updated label, in addition to our efforts to capitalize on the shifting diabetes market and BYETTA's addition to the revised ADA/EASD consensus treatment guidelines.

Two, with Exenatide Once Weekly, which demonstrated unprecedented efficacy in the DURATION-1 study, we are leveraging knowledge gained from BYETTA to submit the NDA and are executing a clinical program based on demonstrating superiority of existing agents, which will position Exenatide Once Weekly for successful launch when approved.

Three, we intend to continue growing SYMLIN prescriptions by highlighting how the product addresses the key unmet needs of patients using mealtime insulin.

Four, in our obesity program, we intend to complete our two clinical trials with Amylin and Leptin Analog and finalize our funding and development strategy to these compounds.

And five, we took action in the fourth quarter of 2008 to lower our cost structure and in 2009 we will continue to reduce expenses and improve operating results, and we will make significant progress toward achieving positive operating cash flow by the end of 2010.

With our growing market, innovative products gaining momentum, and disciplined management, we see 2009 providing many value-creation opportunities for patients, physicians, payers, and our shareholders.

Before I get into a more detailed discussion of recent activities, I'll now turn things over to Mark Foletta to review our financial results released earlier today.

Mark Foletta

Thank you, Dan, and good afternoon. Today we announced our financial results for the quarter and year-ended December 31, 2008. I'll start by reviewing the results for the fourth quarter. We reported total revenue of $202.5 million for the fourth quarter, which includes net product sales of $184.9 million.

Product sales are made up of a $162.7 million for BYETTA and $22.2 million for SYMLIN. The 9.6% sequential decline in BYETTA revenue from the third quarter reflects an appropriate 9% reduction in total prescription for BYETTA quarter-over-quarter, following the FDA alert in August 2008.

While we did implement an 8% price increase for BYETTA in the fourth quarter, we believe the impact of this was partially offset by a slight drawdown in channel inventories.

Our revenue under collaborative agreements was $17.6 million, compared to $27.3 million for the same period in 2007. The decrease reflects lower cost sharing payments from Eli Lilly and Company for BYETTA and Exenatide Once Weekly development expenses.

Cost of goods sold was $21.5 million, reflecting a gross margin of approximately 88%. This compares to cost of goods sold of $22.1 million for the fourth quarter of 2007 and the gross margin of approximately 89%.

Selling, general and administrative expenses for the fourth quarter of 2008, decreased to $86.1 million, compared to $122.4 million for the same period in 2007. The decrease primarily reflects lower promotional spending for BYETTA and our reduced cost structure following our November strategic restructuring and workforce reductions.

Research and development expenses decreased to $67 million for the fourth quarter of 2008, compared to $83.9 million for the same period in 2007. The decrease primarily reflects lower development expenses for Exenatide Once Weekly and our reduced cost structure following the restructuring.

I’d like to note that sequential operating expenses in the fourth quarter were approximately $20 million or 12% lower than the third quarter of 2008. This reduction reflects deliberate efforts to reduce spending. I will comment more on this in a moment as we look to 2009.

Eli Lilly share of the gross margin for BYETTA, which we refer to as collaborative profit sharing, was $73.2 million for the fourth quarter of 2008, compared to $78.6 million for the same period in 2007.

Our results for the quarter-ended December 31, 2008 included charge of $54.9 million associated with our restructuring, which consists primarily of one-time expenses related to facility leases including impairments of related tenant improvements and employee termination assets.

Net loss, excluding the restructuring charge, was $49.1 million or $0.36 per share. A key metric to track our progress is non-GAAP operating loss. We believe that this metric is an important measure of the performance of our business as it approximates our use of cash for operations before working capital changes as we drive towards our stated goal of positive operating cash flow by the end of 2010.

This operating metric represents GAAP operating results adjusted for non-cash items including depreciation, amortization and stock-based compensation and the restructuring charge.

Non-GAAP operating loss was $20.2 million for the quarter-ended December 31, 2008 compared to $47 million for the same period in 2007. Including the restructuring charge, our reported GAAP net loss was $104.1 million or $0.76 per share for the quarter-ended December 31, 2008, compared to a net loss of $76.9 million or $0.57 per share for the same period in 2007. At the end of the fourth quarter, we held approximately $817 million of cash, cash equivalents and short-term investments.

I will now quickly review top and bottom line results for the full year. Total revenue for the year was $840.1 million, including net product sales of $765.3 million, resulting in growth and net product sales of 9% over 2007.

BYETTA revenue for 2008 was $678.5 million and SYMLIN revenue was $86.8 million. This compares to total revenue of $781 million for 2007, including net product sales of $701.5 million, consisting of $636 million for BYETTA and $65.5 million for SYMLIN.

Net loss, excluding the restructuring charge, was $260.5 million or $1.90 per share. Non-GAAP operating loss was $137.2 million for the year-ended December 31, 2008 compared to $147.2 million for the same period in 2007. Our reported GAAP net loss for 2008 was $315.4 million or $2.30 per share, compared to 211.1 million or $1.59 per share for 2007.

I’d now like to highlight some information regarding key trends and assumptions as we look to provide guidance for 2009. Most importantly, I want you to know that driving toward positive operating cash flow and maintaining a strong cash position are our top priorities in managing the business.

For a number of reasons, we have unique challenges in forecasting 2009 products sales. In addition to macroeconomic factors that may affect our business, we have a number of uncertainties specific to our business for which we expect to gain more clarity as we move through the year.

Among these uncertainties are the pending label change and mono-therapy indication that we expect for BYETTA later in the first quarter and potential competition in the GLP-1 agonist class later in 2009. As a result, we have elected not to provide revenue guidance for 2009 at this time.

Simply put, there are things that we can control and things that we don't control. We have developed a number of financial scenarios for our business and we are committed to improve our operating results under each. We have the ability and intent to control our expenses and we will manage our operating results through effectively anticipating revenue as we gain more clarity on the uncertainties I discussed a moment ago.

The key measure that we will guide you is to the cash that we expect to use in our operations, which again, we define as non-GAAP operating loss, and which I discussed earlier and was highlighted in today's press release.

To remind you, this measure is defined as our reported GAAP operating loss plus non-cash expenses including stock-based compensation, depreciation and amortization. We believe this is an important to track progress toward our stated goal of being cash flow positive from operations by the end of 2010.

To that end, we expect our non-GAAP operating loss to be $75 million to $100 million in 2009, compared to a non-GAAP operating loss of $137 million in 2008. The midpoint of this range for 2009 represents an improvement of appropriate 40% year-on-year.

Non-cash expenses projected for 2009, are approximately $100 million, and consists of $60 million to $65 million of stock-based compensation and appropriately $35 million to $40 million of depreciation and amortization. Non-cash expenses in 2008 were appropriately $105 million.

As a result, our expected GAAP operating loss for 2009 is between $175 million and $200 million, compared to $242 million in 2008 before the restructuring charge. While non-GAAP operating losses the key measure for 2009, I will now provide some further quantitative and qualitative guidance to assist you in understanding the rest of our income statement.

One, we expect collaborative revenue in 2009 to be comparable to 2008 and will consist primarily of cautionary payments from Lilly to equalize Exenatide development expenses. As to BYETTA performance outside of the United States, Lilly has launched BYETTA in approximately 50 countries.

With the fourth quarter launch of BYETTA in Spain, BYETTA has been launched in all five major European markets. Based on results to-date and forecasted OUS revenues by Lilly, we now expect to begin receiving royalties on BYETTA gross margins from outside the United States in the second half of 2010 from our previous guidance of the second half of 2009.

Two, we expect that our gross margins will remain strong in 2009 at approximately 87%.

Three, with respect to our operating expenses, I remind you, that on our third quarter conference call the midpoint of our combined GAAP operating expense guidance for 2008 was approximately $725 million, which included combined totals for both selling general, and administrative and researching and development expenses.

In November 2008 we announced our strategic restructuring in the attempt to reduce our GAAP operating expenses by over a $100 million from 2008 levels. We plan to deliver on that commitment. In fact, our combined GAAP operating expenses for 2008 reported today were $689 million, well below the guidance we provided last quarter, as we were able to accelerate some cost savings into 2008. Consistent with our prior expected reductions, we believe our total GAAP operating expenses in 2009 will be between $600 million and $625 million.

And four, we expect net interest expense to be $35 million to $40 million for 2009. This guidance reflects approximately $20 million of net cash interest expense, plus an additional $15 million to $20 million of non-cash interest expense associated with the adoption of FASB staff position APB 14-1, which impacts the accounting for our 2007 convertible notes effective January 1, 2009.

To finish up on the cash flow front, we offer the following additional guidance.

One, we expect capital expenditures to be approximately a $100 million in 2009, driven largely by activities necessary to complete and validate our Ohio manufacturing facility. This is down from approximately $300 million in 2008.

Two, maturities of our long-term secured debt will result in payments of approximately $30 million.

And three, we are continuing to pursue options to offset the R&D expense associated with our obesity and early stage programs through potential partnerships and/or project financing.

The cumulative impact of this guidance suggests that we expect to finish 2009 with a substantial cash balance of approximately $600 million with access to an additional $165 million from Lilly, if needed.

In summary, we can control our spending and we have taken deliberate action in our business in late 2008 to reduce spending and we will continue to align our spending with revenue expectations, enabling us to reach specifically stated operating results in 2009 and our goal of positive non-GAAP operating results by the end of 2010.

I will be available at the end of the call to answer any questions, and I will now turn the call back to Dan for an update on recent business activity.

Daniel Bradbury

Thanks, Mark. First, I would like to comment on how excited I am that Vince Mihalik has joined Amylin as Senior Vice President of Sales and Marketing and Chief Commercial Officer. As we announced yesterday, Vince brings a wealth of experience to our Exenatide team and a track record for success in marketing diabetes products. I will talk more about Vince later.

Now, I will provide a commercial update starting with BYETTA and then moving on to SYMLIN.

BYETTA is the first and only FDA approved GLP-1agonist. It is the only medicine available which addresses the significant unmet needs in type 2 diabetes, with the dual benefits of powerful glucose control with weight loss, supported by low risk of hypoglycemia and a favorable cardiovascular risk profile.

2009 will mark BYETTA’s fourth year on the market and has been used by more than 1 million patients since its launch. BYETTA not only has been accepted by patients, but also by efficacy groups and key opinion leaders.

At the end of 2008, the American Diabetes Association and the European Association for the Study of Diabetes treatment guideline endorsed the approach of treating diabetes with glucose control therapy to promote weight loss without increasing hypoglycemia.

The revised treatment guidelines introduced BYETTA as the only new addition, placing it in a much more prominent position and suggesting it as the treatment of choice in patients for whom, both weight management and hypoglycemia are of concern.

This represents 80% to 90% of the 25 million people living with type 2 diabetes in the United States. More importantly, it is further evidenced that the way key opinion leaders new diabetes therapy is shifting, these guidelines have not been updated in over two years and were written after careful consideration of a treatment's efficacy, safety, tolerability, cost and ease of use.

Now let's talk about our results in 2008. Total prescriptions of BYETTA were flat compared to 2007, despite declining in the second half of the year because of the FDA posting on pancreatitis. At the time of this posting, we committed our field resources to educating the medical community on the facts of our BYETTA, pancreatitis and the product's robust safety database as opposed to promoting the product's unique profile.

That's what we have done since the detection of the pancreatitis signal. We continue to thoroughly investigate the details of all reported cases. Today, a closer relationship between BYETTA and pancreatitis has not been proved. We have provided the FDA with epidemiologic data from a very large insurance database that found the patients initiating BYETTA have no increased risk of acute pancreatitis compared with those initiating other diabetes therapies during the same period of observation. We expect this and other data will be published in peer-reviewed journals in the very near future.

Despite the FDA posting, through coordinated education efforts with Lilly and a return to focusing on key messages of the benefits BYETTA offers, we have halted the decline in BYETTA prescriptions and stabilized demand at the end of the fourth quarter.

And as I mentioned earlier, based on current interactions with the FDA, we estimate receiving the mono-therapy indication approval and updated safety labeling language later this quarter, which will remove uncertainty and be a positive signal in the marketplace and support BYETTA’s return to growth. To be clear, however, there is no formal action date from the agency.

Now moving on, let's discuss our enhanced BYETTA sales and marketing efforts. While BYETTA’s inclusion in the consensus treatment guidelines and the mono-therapy indications are important, we are also continuing to take aggressive action to promote BYETTA unique profile, capitalize on the market shift and return the product to growth.

To do this, we continue our focus on improved commercial execution. Indeed, the focused and better aliened Amylin and Lilly sales force has resulted in increased call time with physicians and increased cold dialogue.

Additionally, our physician and patient support programs to the primary care market are having a positive effect. These programs are designed to better support BYETTA new patient starts and improve long-term patient appearance. Further, we continue to educate physicians on the broad 85% Tier II access for BYETTA across commercial managed care providers.

The results of the market shift in the medical community and our enhanced marketing and sales efforts positioned BYETTA well for future growth.

Now, let’s move on to SYMLIN. A synthetic analog of human amylin and naturally occurring hormone, that is made in the beta cells of the pancreas, the same cells that make insulin.

SYMLIN is the first and only FDA approved Amylin agonist and it’s been on the market for nearly four years. It addresses the key unmet needs of insulin therapy by reducing blood glucose fluctuations, improving glucose controls and causing weight loss to people with type 1 and type 2 diabetes that use mealtime insulin.

With the help of the innovative and convenient SYMLIN Pen, which was launched in January 2008, SYMLIN total prescriptions grew 10% in 2008, compared to 2007 and that were approximately 20% more patients on SYMLIN since the Pen launch.

Now, to enable continued growth, our plan is to sharpen focus on physician targeting and patient selection, while managing expectations and supporting patients to increase assistance through a high touch, high support marketing strategy.

In 2009, we plan to grow SYMLIN by increasing the number of people who use SYMLIN and increasing that assistance by further leveraging our customer support program, A Pen and a Partner.

Now, I will share with you the latest regarding Exenatide Once Weekly. In the current regulatory environment, having the opportunity to leverage the knowledge gained through the development and commercialization of an existing product is a real advantage. That’s exactly what we are doing with the development of Exenatide Once Weekly. Leveraging the experience gained with BYETTA.

This product candidate is poised to become the first weekly therapy to treat type 2 diabetes, with unprecedented efficacy through powerful glucose control, sustained weight loss, favorable effects on cardiovascular risk markets and improved tolerability. This unique and compelling value proposition offered in just one dose per week, finally offers patients, payers and physicians the long-term adherent solution needed to improve health outcomes for this disease.

In our DURATION-1 trial, after 52 weeks patients experience an average A1C decline of 2 percentage points. This level of A1C decline is unprecedented in a pivotal study in patients with a mean baseline A1C of 8.3% at entry.

74% of old patients in the study achieved an endpoint A1C of 7% or less which is ADA recommended target. Patients reported a sustained average weight loss of 9.5 pounds accompanied by improvements in blood pressure, cholesterol and triglycerides with no increased risks of hyperglycemia and improved tolerability. A market research not surprisingly indicates doctors are excited by these results and eager for the medicine to come to market.

I want to assure you, we are doing everything we can to bring Exenatide Once Weekly to market as quickly as possible. And I will walk you through our progress on this front in 2008, and more importantly, the key regulatory milestones to look forward in 2009.

Our investors most often ask us about three areas regarding the regulatory pathway for Exenatide Once Weekly: Our pre-NDA meeting with the FDA; the method by which we will show comparability between clinical scale and commercial scale material; and the need to evaluate cardiovascular risk.

First, following the pre-NDA meeting and the ongoing interaction with the FDA, we continue to believe that the DURATION-1 study alone provides the necessary pivotal safety and efficacy data for its submission. With safety, we confirm that we will be able to reference the entire Exenatide database in our submission.

Second, we have discussed strategies with the FDA on how to show comparability between drug products manufactured that unused commercial scale facility, and the intermediate scale material manufactured Alkermes that was used in the DURATION-1 study.

Last month, we received FDA feedback that the amended extension of DURATION0-1 is appropriate as the basis for demonstrating comparability. We anticipate having data from this study by the end of this quarter.

Third, as many of you know, last month the FDA published guidance on requirement for all IND holders of anti-diabetic therapies to show that their product candidates do not increase the risk of cardiovascular events.

As a result of this guidance, we requested agency feedback which, when received, indicated that we can proceed with the meta-analysis of the controlled clinic trial Exenatide safety database to evaluate cardiovascular risk.

I can tell you that a preliminary analysis has already been completed and indicates no increased risk of cardiovascular events associated with Exenatide treatment. All of this means we continue on track to submitting an NDA before the end of the first half of 2009.

Now given our confidence from the DURATION-1 data, we put in place an aggressive head-to-head program that compares Exenatide Once Weekly against alternate therapeutic choices to demonstrate superiority.

The objective of these studies is to support the launch and demonstrate the transformational nature of Exenatide Once Weekly therapy. These trials are on track. DURATION-2 compares Exenatide Once Weekly against the thiazolidinedione, also known as the TZD, or a DPP-4 inhibitor on a background of metformin therapy. We expect results from this study in the second quarter of 2009.

DURATION-3 compares Exenatide Once Weekly against insulin glargine on a background of oral agent therapy, and we expect results of this study in the third quarter of this year.

DURATION-4 which looks at Exenatide as a stand-alone therapy against either metformin, TZD or DPP-4 inhibitor, was initiated last quarter with results expected in 2010.

Lastly, given the positive effects on cardiovascular surrogate outcomes seen with Exenatide, the encouraging data seen in the ACCORD trial, and the importance of cardiovascular outcomes in type 2 diabetes, we have engaged a steering committee composed of outside experts to assist us in designing a robust cardiovascular outcomes trial for Exenatide Once Weekly.

This study will give us the opportunity to demonstrate the effect of Exenatide once weekly on cardiovascular outcomes as well as other endpoints of interest to our stakeholders. This design will be reviewed with agency. We plan to initiate patient enrollment this year with interim data in 2012 and final data in 2016.

Clearly, we're positioning the Exenatide franchise for near and long-term success and addressing the possible entrance of competitors in our class.

In summary, we're excited by the opportunity to transform diabetes treatment with Exenatide Once Weekly. When approved, it will be the first once weekly diabetes therapy ever.

Now, I will move on to describe our opportunities in obesity, which represents the next frontier of Amylin, in addressing metabolic disease. Here, we are leveraging our diabetes and peptide expertise that we gained over the last 20 years by utilizing a risk advantage development strategy, focus-purposed on peptide and protein mimics of human hormones.

We believe this approach will enable us to develop safe and effective obesity treatment that meets the needs of patients, doctors, regulators and payers. We previously announced our commitment to pursue a medicine for obesity that is a combination of analogs of human hormones amylin and leptin: Pramlintide, which is an analog of human amylin, and the same molecule in SYMLIN and metreleptin, an analog of human leptin. This combination is based on an impressive proof-of-concept study result. Patients achieved a 12.7% reduction in body weight over 24 weeks when pramlintide and metreleptin were used together.

In the third quarter of 2008, we completed enrollment of the Phase IIB study to evaluate different dosing combinations of pramlintide and metreleptin. This 6-month multi-arm study with approximately 600 patients will be completed in the third quarter of this year. We believe this product candidate has the promise to meet the unmet medical needs for a safe and highly effective weight loss therapy.

Another exciting opportunity we have in our pipeline is our second generation Amylin analog AC2307, which is now known pramlintide. This compound is in a Phase II trial with results expected in the fourth quarter of 2009. pramlintide is an Amylin analog optimized for obesity with increased potency that offers the potential for enhanced efficacy and less frequent dosing.

Lastly, keeping in mind our earliest statements of regarding a close watch on controlling costs, we are actively managing our R&D expenses. We are also pursuing options to offset R&D expense associated with our obesity and early stage programs through potential partnerships and/or project financing. We anticipate having more to report on our obesity strategy by the end of this year.

Now, I’ll add a few more comments before we close. In the fourth quarter, we promoted Paul Marshall from Vice President to Senior Vice President of Operations. Among his many responsibilities, Paul’s most crucial role, has been managing both our global supply chain and the construction of our manufacturing facility in Ohio.

Recently, Paul also assumed management responsibility of the quality department. And as I mentioned earlier, we announced an important management addition, Vince Mihalik has been appointed Senior Vice President, Sales and Marketing, and Chief Commercial Officer.

Vince brings more than 30 years of experience across multiple commercial roles including global product development, sales and sales management, product launches and brand management. His career has focused on diabetes with numerous leadership roles at leading pharmaceutical company including Roche Diagnostics, Boehringer Ingelheim and Baxter Healthcare.

Before joining Amylin, Vince was Vice President of Global Brand Development Diabetes and Endocrine platform team leader at Lilly where he was responsible for product development beyond Phase IIB to launch life cycle planning and commercialization.

Previously, Vince was Business Unit Head of Diabetes Care for Lilly U.S., where he was responsible for sales and marketing of Actos, Humulin, and Humalog injection pens and the preparation for the launch of Cialis in the United States.

Vince will report to me and will oversee marketing and sales for Amylin’s two marketed products, BYETTA and SYMLIN, as well as the launch and commercialization of Exenatide Once Weekly. He will become a member of Amylin’s executive committee and the Amylin-Lilly alliance steering committee.

So to finish, a goal of Amylin is to create shareholder value and a sustainable profitable company. Our value creation opportunities come from these areas of focus in 2009.

With BYETTA, we have the opportunity to return the product to growth with the mono-therapy indication approval and an updated label in addition to our efforts to capitalize on the shifting diabetes market and BYETTA’s addition to the revised ADA/EASD consensus treatment guidelines.

With Exenatide Once Weekly, which demonstrated unprecedented efficacy in the DURATION-1 study, we are leveraging knowledge gained from BYETTA to submit the NDA and executing a clinical program based on demonstrating superiority over existing agents to position Exenatide Once Weekly for a successful launch when approved. We intend to continue growing SYMLIN prescriptions by highlighting how the product addresses the key unmet needs of patients using mealtime insulin.

In our obesity program, we will complete two clinical trials with Amylin and Leptin analogs and finalize our funding and development strategies for these compounds.

Lastly, we will reduce expenses and improve operating results and make significant progress towards achieving posted operated cash flow by the end of 2010.

With that, I will conclude the formal portion of today's call and turn things back over to the operator for your questions. I would like to ask that we limited to one question per person, so we can take as many questions as possible today. Thank you.

Question-and-Answer Session

Operator

(Operator Instructions).

Your first question comes from the line of Thomas Wei with Piper Jaffray. Please proceed.

Thomas Wei - Piper Jaffray

Hi, thanks very much. I wanted to ask about the discussions with the agency on the new label. I guess, how important is the United Healthcare data and the back and forth with the agency on the pancreatitis question?

And I will flip in, if I can, one here: if you do get a black box warning for pancreatitis, is your assumption that that would lead to pressure on BYETTA sales and is that the big swing factor in preventing you from giving revenue guidance?

Daniel Bradbury

Hi, Thomas, it’s Dan here. Thanks very much for your question. Firstly, Thomas, I think it’s fair to say that we have been very consistent in the past and I will continue with that consistency, and that it's not appropriate for us to comment on interactions and where they stand with the FDA.

I will comment, however, about the importance of the insurance, large healthcare insurance database, after the immunologic study that we’ve done. The reason why we think this is extremely important is because this represents true clinical evidence, which enables us to compare BYETTA against other diabetes agents.

It also enables us to put into context the risk of pancreatitis in people with diabetes relative to those people who don't have diabetes. And as we reported before, there is a significantly increased risk in people with diabetes or pancreatitis over and above those people who don't have diabetes.

Now, with regards to the forecast, I should say, revenue guidance, there were actually, as Mark mentioned in his prepared remark, there is actually a number of reasons that we are not prepared to give that at this time.

I would stretch that, we are living in pretty unusual times; that the microeconomic conditions are pretty significant at the moment in terms of impacting business. There are regulatory challenges in terms of exactly what will be the regulatory outcome with regards to our discussions with the agency.

But also I would point out that there is competitive uncertainty as well, again, linking to the regulatory uncertainty. In that, there are now potential direct competitors in the GLP-1 agonist class that was being considered for regulatory review this year.

Thomas Wei - Piper Jaffray

I guess may be just to press you a little bit on that. You've listed them out. But you must have a sense of quantitatively how those might affect revenue in 2009. Can you give us a sense of order of priority at least?

Daniel Bradbury

Well, I wouldn't give you an order of priority, but I would say that there is a very wide range of potential scenarios that we've look at. The key is, and the guidance that we've given is, towards non-GAAP operating loss, because we think this is the really important measure of our business.

And specifically, what we've guided to is that we will reduce our non-GAAP operating loss by appropriate 40% from 2008 to $75 million to $100 million. The reason why we've guided to that, one of the reasons we've guided to that is, first and foremost, we think it's a primary measure of business performance.

But secondly, because it actually reflects our ability to control our business in that given the wide range of potential revenue scenario there are, that we're able to control our expenses to achieve that operating result.

Thomas Wei - Piper Jaffray

Thanks very much. I'll jump back in the queue.

Daniel Bradbury

Thank you.

Operator

Your next question comes from the line of Matt Osborne with Lazard. Please proceed.

Matthew Osborne - Lazard Capital Markets

Hi, and thanks for taking the question. Dan, can you give us a sense of the number of patients you had put together conducted to perform the meta-analysis, and in the guidance the FDA is specifically looking for high risk individuals. Were there enough patients that you could find that had high risk disease that you’re going to include in that meta-analysis? Thank you.

Daniel Bradbury

Hi, Matt. Yeah, thanks for the question. Just to clarify, I believe you’re talking there about the analysis for cardiovascular events that we conducted on the Exenatide clinical studies database, is that correct?

Matthew Osborne - Lazard Capital Markets

Correct.

Daniel Bradbury

Yeah. So, without getting into a specific numbers then, one of the advantages that we have with the Exenatide Once Weekly submission is that we can leverage the entire Exenatide safety database. So, that includes all the completed clinical studies on BYETTA as well.

So, we are talking several thousands of patients that are in those Phase studies, and that also does include a number of high risk patients as well, and I guess, probably the bottom line is here that the preliminary analysis that we have conducted clearly meet the agencies guideline with regards to fact that it shows that there is no increased risk of cardiovascular events associated with Exenatide use within the confidence into both that the agency has requested.

Matthew Osborne - Lazard Capital Markets

Great, thank you.

Daniel Bradbury

Thank you.

Operator

Your next question comes from the line of Jason Butler with Rodman & Renshaw. Please proceed.

Jason Butler - Rodman & Renshaw

Hi, thanks for taking the question. You said earlier that you have approximately $30 million in long-term notes due in 2009. From your latest filings you had approximately or were approaching a 100 million in 2010. I was just wondering, if you could give us an idea of how you’re looking at those repayments in 2010 and if there’s any potential for restructuring?

Daniel Bradbury

Hi, Jason. This is Dan here. Yeah, let me pass that over to Mark and he will probably give you the best answer on that one.

Mark Foletta

Yeah. Jason, thanks for the question. Mark Foletta here. The $30 million that we referred to in the prepared remarks are scheduled amortizations on our secured debt with the banking group here that will continue as you indicated, it’s actually little less than a $100 million, $95ish million in 2010.

Certainly there are opportunities to look at that. We are conservatively planning, assuming that we fully amortize that debt over the next two years. And our cash plans to 2009 and 2010 provide adequate flexibility for us to do that.

Daniel Bradbury

Maybe, I’d add, for Jason here, Mark indicated that we expect to end 2009 with over $600 million in cash. And at this time, we don’t have any further restructuring plans.

Mark Foletta

Right. And of course I’d also add we have access to $165 million I mentioned in the prepared remarks of additional funds and in the form of the line of credit from Lilly that we could elect to draw at the end of 2009 or beyond.

Jason Butler - Rodman & Renshaw

Thank you.

Operator

Your next question comes from the line of Salveen Kochnover with Collins Stewart. Please proceed.

Salveen Kochnover - Collins Stewart

Thank you for taking my question. Dan, could you may be elaborate on your earlier comments on an expectation for an acceleration in BYETTA scripts on the adjusted labels and mono-therapy indication?

Daniel Bradbury

Yes, thanks Salveen. We are happy to do that. So, in 2008, we were facing a very difficult situation in the second half of the year. And as I commented in my prepared remarks, one of the key things that we did in the first quarter and towards the beginning of the fourth quarter was that we spent a lot of time educating physicians on the adverse event profile of BYETTA and putting into perspective the FDA posting on pancreatitis.

In the second part of the fourth quarter, we directed both the Amylin and Lilly field forces to promoting the benefits of the product. And, in particular, why I think that was most important that happened at the end of the year, last year, was the fact that BYETTA was included in the American Diabetes Treatment Guidelines. It was actually the only new medicine that was added to the American Diabetes Treatment Guidelines.

And one of the key things about that is the fact that in the guidelines, it was specifically highlighted as a product that could be considered when physicians were concerned about managing their patient's weight or in patients who had a high potential for hypoglycemia.

This is actually a very large proportion of the type 2 diabetes marketplace. And I think given these guidelines in place as well as the potential for gaining a mono-therapy indication and clarifying the situation with regard to the safety data on our label, we will have the opportunity, I believe, to take out uncertainty regarding that but also stress the benefits of the product in the context of expert opinion leaders stating that this is important in the treatment of type 2 diabetes.

Salveen Kochnover - Collins Stewart

Thank you.

Daniel Bradbury

Thank you.

Operator

(Operator Instructions).

Your next question comes from the line of Jim Birchenough with Barclays Capital. Please proceed.

Jim Birchenough - Barclays Capital

Yeah, hi guys. Just a question on sufficiency of data to demonstrate comparability, and I think in the past you're confident that the IVIVC data would be sufficient to demonstrate comparability in that, but didn't end up being the case.

And I am wondering if you can comment on, I guess, any experts of opinion you had with FDA at the time of that review. And that leads into a question on the extension of DURATION-1. And that is, how exclusive has FDA been on the parameters you need to show to demonstrate comparability. Could you share those with us, so we can make a judgment when the data comes out?

Daniel Bradbury

Hi, Jim. Thanks very much for the question. So, regarding demonstration and comparability, I think one of the things we've been clear about all along is that there is no real guidelines in place with regards to demonstrating comparability for long-acting injectable product, and that's why we took a kind of a three-form approach to different ways to demonstrate comparability.

You mentioned the IVIVC, actually scientifically we believe the IVIVC approach does demonstrate comparability. Based on feedback we had from the agency, they still want to have actually a clinical study to demonstrate comparability. So I believe scientifically, we feel very strongly that that approach is valid. It doesn't meet the current expectations within the agency.

The good news is, however, that we did have a backup strategy and that's backup strategy was looking at our revision to the DURATION-1 extension study and we've sent this specific protocol amendment to the agency and ask to comments on that. And as I know you are aware that in the fourth quarter, we received feedback from the agency with regards to that protocol amendment and spacing that the protocol amendment as presented to them would results in a study that could provide the necessary data to demonstrate comparability.

And particularly, in terms of endpoints and I don't want to get to this specifics of your question, the agency ask for endpoints relating to pharmacokinetic data as well as clinical endpoints. And indeed, they actually gave us the opportunity to demonstrate comparability through either method, either demonstrating comparability with regards to PK analysis or clinical endpoints. But hopefully that's complete for you. Thank you.

Jim Birchenough - Barclays Capital

And just a follow-up on that, are they looking for antibody data as well?

Daniel Bradbury

Antibody data was not a specific requirement in terms of demonstration of comparability.

Jim Birchenough - Barclays Capital

Okay. I am just trying to understand how specific the data is, have they delineated what margin of difference would be acceptable between the two scales of manufacturing product?

Daniel Bradbury

We’ve submitted a statistical plan to the agency, which is currently under review, and we believe that that is consistent with the agency current guidance from the PK standpoint for oral meds. And with regards to the clinical endpoints, we’ve suggested to the agency the basis for clinical comparability.

Jim Birchenough - Barclays Capital

Okay. Thanks for taking the question, Dan.

Daniel Bradbury

Thank you, Jim.

Operator

Your next question comes from the line of Cory Kasimov with JPMorgan. Please proceed.

Cory Kasimov - JPMorgan

Hi, good afternoon guys. Thanks for taking the question. Dan, I know you spent a quite bit of time in the field lately and I’m wondering if you can talk about the dynamics of actually getting a patient onto BYETTA? And basically, I’m wondering if you think that the primary hurdle here lies actually with the patient, I mean, for example, maybe they are afraid of the injections or the potential nausea? Or do you think this lies with the physician themselves and, especially in the primary care market where the time involved with educating the patient, teaching them how to do the injection and kind of dealing with the patient after the fact if they are calling about nausea and things like that? Thanks.

Daniel Bradbury

Hi Cory. Yeah, thanks very much for the question. Well, there is no doubt about it that the education required for the initiation of patient on BYETTA is greater than it is required for an oral mode. And, in fact in that regard one of the challenges that I do believe that we do we have is that results in that being; it’s a more timely process for physicians.

In that regard, that’s why we have actually initiated and I talked about this on previous calls a lot of support activities for physician to reduce that burden to put physicians at the time of initiations. In particular to that, I pointed out our first BYETTA easy start line, which is basically a 1-800 number, that a patient can call and they can get direct feedback from an educator or pharmacists with regards to how to initiate BYETTA therapy.

Of course in the physicians office, we always provide the physicians with demonstration pens and of course samples to try and encourage the physician to at least initiate the first dose with the patient in the office.

The other initiative that we have undertaken, which I think the key is the BYETTA By Your Side program, is a program which the patients sign up for and on a regular basis the patient gets information about both BYETTA, the disease that it’s being used to treat, diabetes studies and other key aspects of managing that disease such as diet as well as exercise.

So, we’ll try and create a complete product offering which is more than just a medication itself. It’s also the support to the patient as well as the support to the physician to ease the initiation of use.

Cory Kasimov - JPMorgan

All right. Even though it’s not shown up in those script trends yet. You are getting positive feedback on these various programs?

Daniel Bradbury

Certainly on the BYETTA By Your Side program we are seeing positive effects, one of the things that you may know when you look at the NRx state of this, this is a TRx state you will see that the repeat prescriptions are actually increasing and what that indicates is that we ask them increasing the appearance and persistence the patients have to the product.

Cory Kasimov - JPMorgan

Great, thanks for taking the question.

Daniel Bradbury

Yes, thanks Cory.

Operator

Your next question comes from the line of Steve Harr with Morgan Stanley. Please proceed.

Steve Harr - Morgan Stanley

Yes, I wanted to just explore the DURATION-2 and 3 data coming now this year. The two-prong question: Number one, what gives you confidence at the FDA given its ongoing safety scrutiny, when do want to see the data?

And number two, given your own desire for a strong label on the potential of these data could differentiate by the LAR from competition. Why wouldn't you want to wait to incorporate that data into your label?

Daniel Bradbury

Great question Steve. Thanks very much. Well, firstly, I guess the confidence is driven by the feedback that we received from the agency in our pre-NDA meeting with them in the second quarter of last year. That pre-NDA meeting was specifically geared to determine what information we would be required by the agency at the time of submission.

And one key question was: what's the extent of the clinical data that would be required? Now, we have gained very clear support from the agency that the DURATION-1 study would provide adequate data for clinical submission as part of the Exenatide Once Weekly in our program.

Again, I think one of the key things to remember here, is that the Exenatide Once Weekly submission would be a 505(b)(1) application. And that it is leveraging the entire Exenatide database, so, all the data that we have with BYETTA, and that was actually key in that pre-NDA meeting.

Now your second part: The second part of your question was relating to: Wouldn't you want DURATION-2 and DURATION-3 to be available at the time that you will be promoting the product to differentiate it? Well, both studies will complete this year, DURATION-2 in the second quarter of this year and DURATION-3 in the third quarter of this year.

We expect that the data from those studies will be available and published at the time that we launch the product. And so, we do expect to be able to refer to the data from DURATION-2 and DURATION-3 in the promotion of Exenatide Once Weekly.

The regulatory challenge there is that if you are going to use studies which are part of your initial submission, you should be consistent with the data that is used for the basis of approval. And we have no expectation that the data would not be consistent.

Steve Harr - Morgan Stanley

Thank you.

Daniel Bradbury

Thanks Steve.

Mark Foletta

Thanks Steve.

Daniel Bradbury

Well, just a few final remarks to say, thank you to everybody for being on the call today. We appreciate your time and interest in our company. If there are any additional questions, please contact Michael York in Investor Relations. And once again, thank you for joining us today.

Operator

Thank you for your participation in today's conference. This does conclude your presentation. You may now disconnect and have a great day.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: [e-mail]. Thank you!