Axys Pharmaceuticals, Inc. Announces Completion of Merger of its Axys Advanced Technologies Subsidiary with Discovery Partners International.

Business Editors/Health & Medical Writers

SOUTH SAN FRANCISCO, Calif.--(BW HealthWire)--May 16, 2000

Update on Axys' Affiliates Akkadix and PPGx

Axys Pharmaceuticals, Inc. (Nasdaq:AXPH) announced the completion of the merger of its combinatorial chemistry subsidiary, Axys Advanced Technologies, Inc. (AAT) with privately held Discovery Partners International (DPI).

Axys received approximately $60 million in DPI stock as consideration for its interest in AAT, valued at DPI's last round of private financing. On May 9, 2000, DPI filed an S-1 Registration Statement for a public offering of its common stock with the Securities and Exchange Commission.

Axys Advanced Technologies, Inc., which was originally conceived as an extension of the company's integrated small molecule discovery platform, grew out of a collaboration with Pharmacia & Upjohn and became a division of Axys in January of 1998. AAT was organized as a subsidiary of the Company in July of 1999. Axys Advanced Technologies has been part of Axys Pharmaceuticals' defined strategy to provide capital, for its core drug discovery and development activities, through the spin-out of non-core businesses which draw from, or are primarily comprised of, technologies that Axys has developed as part of its integrated drug discovery platform.

In addition to AAT, the Company was instrumental in the May 1998 founding of Akkadix Corporation, which is focused in the agricultural biotechnology market, and in the February 1999 formation of PPGx, Inc., a company focussed on the emerging market in pharmacogenomics.

PPGx, Inc.

PPGx, along with PPD, Inc. (Axys' joint venture partner in PPGx) recently announced that they are collaborating with the internet health website, www.ADoctorInYourHouse.com, to form a web-based pharmacogenomics education and information resource for consumers and their health care providers. PPD and ADoctorInYourHouse.com will furnish the website design, educational material production and marketing infrastructure.

PPGx will contribute its pharmacogenomic technology and services. The website will provide educational videos and chat rooms that focus on various pharmacogenomics issues. There will also be links to other sites of relevance and support groups for consumers. In addition to the educational resources, the site will also request and receive demographic and phenotypic data, i.e. physical characteristics such as hair and eye color, from willing consumers. PPGx will also conduct genotyping, which may provide into how individuals metabolize and respond to drugs. They will retrieve, test, and store DNA from consenting consumers, which will be made commercially available to pharmaceutical and biotechnology companies for use in drug development. In conjunction, PPD will provide on-line and telephone counseling with professionals for those consumers who submit samples for genotyping.

In an additional release, PPGx also announced the execution of an agreement with Aventis Bioservices, a wholly owned subsidiary of Aventis Boerring LLC, to provide PPGx access to thousands of serum samples for use in PPGx's infectious disease and drug metabolism research studies. As the world's largest fully integrated plasma collection company, Aventis Bioservices gathers serum samples from its extensive network of plasma collection centers strategically located throughout the United States. Initially, PPGx will use the samples to complete validation studies in several proprietary SNPs (single nucleotide polymorphisms) in genes discovered at the company's research facility in La Jolla, California. SNPs are responsible for variations in the genetic code of DNA. Testing the function of these SNPs in patient and controlled populations provides valuable information on the mechanisms of drug and disease genes in humans. PPGx currently has discovered more than 1,000 SNPs and candidate genes believed to be involved in a wide range of diseases and drug responses. Once validated, these SNPs will enable the pharmaceutical and biotechnology companies PPGx serves to develop drugs targeted to specific patient groups.

Akkadix Corporation

Akkadix Corporation, an international agricultural discovery company, led by a senior management team with a proven track record in agriculture and agricultural biotechnology has been successfully executing a forward integration strategy to take its gene technologies beyond the proof-of-concept phase and to position them for research development. These technologies relate to the regulation of a number of fundamental processes in plants, including flowering time, cell growth, organ size, systemic disease resistance and modulation of lignin levels. The Company is currently focusing on disease resistance in rice, soybean nematode control and the establishment of new yield benchmarks in corn. Akkadix also owns or has access to proprietary germplasma in a number of crops including corn, cotton, rice, soybeans, sunflower and safflower.

Akkadix recently announced the acquisition of exclusive rights to gene discovery technology developed at the Salk Institute and the University of California at San Diego. In addition, Akkadix announced in a related transaction that it had expanded and extended its research agreement with the University of Edinburgh to undertake a large scale discovery program using a "targeted" activation tagging approach. This novel method will be used to identify gene-controlling traits of crucial importance for agriculture.

Akkadix had announced earlier this year the formation of a research collaboration with Philrice in which each party will employ their respective technologies to develop targeted traits in rice. Akkadix will provide research funding to Philrice and has agreed to provide training and transfer of certain designated technologies to Philrice on a non-exclusive basis. Developments arising under the program will be available to Akkadix on a worldwide basis and to Philrice for use in the Philippines.

Finally, as part of the DPI transaction, Axys is reacquiring certain intellectual property rights from Akkadix in return for Akkadix shares currently owned by Axys. This will generally allow DPI to sell and market combinatorial libraries to the agricultural and animal health industries, and facilitates Akkadix' interest in pursuing a research focus based on functional genomics and the enhancement of input and output traits in crops.

As a result of the closing of the AAT-DPI merger, Axys Pharmaceuticals on-going involvement with all three of its affiliates will be primarily through Board representation. In each instance, separate management and separate capital are being provided to continue to grow these entities to the point where Axys would be able to use its share ownership in providing capital for its primary mission of the discovery and development of novel, breakthrough therapeutics in cancer.

Axys Pharmaceuticals, Inc. is an integrated small molecule drug discovery and development company. Axys has a broad pipeline of products for chronic therapeutic applications that are partnered with world-class pharmaceutical companies and a proprietary product portfolio in oncology. Axys is also building shareholder value through affiliated businesses that leverage the Axys technologies in order to provide capital for Axys' drug discovery and development programs. In addition to the minority interest in DPI resulting from the AAT-DPI merger, Axys' technology leveraging businesses are: PPGx, a majority-owned pharmacogenomics company, and Akkadix Corporation, an agricultural biotechnology company.

Except for the historical information contained herein, this press release contains forward-looking statements that involve risks and uncertainties which could cause Axys' actual results to differ materially from those discussed here, including the risks inherent in early stage development and the reliance on the efforts of collaborative partners, the risk that this or other Axys collaborations will not be successful, the risk that clinical trials will not proceed as anticipated or may not be successful, the risk that Axys will not be successful in entering into new collaborations, competition and marketing risk, the risk of unexpected difficulties and delays in the development of new technologies and in expanding its manufacturing capabilities, and general economic conditions that may affect Axys' actual results and developments. Additional factors that could cause or contribute to such differences include, but are not limited to, those discussed in the sections entitled "What Factors Could Cause Our Results to Differ Significantly from Those You Might Expect?" and "What Other Matters Should Stockholders Consider with Respect to Axys?" in the Axys' SEC Reports, including Axys' report on Form 10-K for the fiscal year ended December 31, 1999.