Axys Pharmaceuticals Announces Bayer AG's Decision to Discontinue Development of BAY 44-3428 for Asthma.

Business Editors/Health & Medical Writers

SOUTH SAN FRANCISCO, Calif.--(BW HealthWire)--May 24, 2000

Axys' Phase II Clinical Trial of APC 2059 in Ulcerative Colitis Will

Not Be Affected by this Decision

Axys Pharmaceuticals, Inc. (Nasdaq:AXPH) announced today that its collaboration partner Bayer AG has decided to discontinue development of BAY 44-3428. Bayer AG had previously selected BAY 44-3428 for development as an oral treatment for asthma based on the demonstrated in vivo efficacy of the compound in primate models of asthma. Bayer's decision to discontinue development of BAY 44-3428 was based on its view that the toxicological properties of this specific compound precluded advancement into clinical development. Axys and Bayer AG are in discussions about the future of their collaboration in tryptase inhibition in light of this decision.

Today's announcement does not affect Axys' Phase II clinical trial of APC 2059, a tryptase inhibitor currently being developed for the treatment of acute inflammatory bowel disease. APC 2059, which is a second generation tryptase inhibitor developed in the collaboration with Bayer AG, is from a chemically distinct class of compounds from the third generation compound BAY 44-3428, and does not demonstrate the toxicological properties that were found with BAY 44-3428. Axys previously demonstrated proof of principle for tryptase as a target in inflammation in two Phase II trials of a first generation compound, APC 366. Those trials, completed in the United Kingdom, demonstrated that APC 366 could alleviate symptoms associated with allergen-induced asthma, with statistically significant results in the reduction of the late airway response as measured against both baseline and placebo.

John Walker, chairman and chief executive officer of Axys, stated, "While we are disappointed with the discontinuation of development of BAY 44-3428, we support Bayer's decision with respect to this compound. We continue to believe that tryptase inhibition is a viable mode of therapeutic intervention for the treatment of asthma, acute inflammatory bowel disease, specifically ulcerative colitis, and other mast cell mediated inflammatory disorders. We are exploring with Bayer AG whether they are interested in pursuing for development as a treatment for asthma other compounds developed in the collaboration that lack the toxicological properties of BAY 44-3428."

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 Discovery Partners International, Inc., which recently acquired Axys Advanced Technologies, Inc., Axys' technology leveraging businesses are: PPGx, a majority-owned pharmacogenomics company, and Akkadix Corporation, a minority-owned 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.