Axys Pharmaceuticals Announces First Quarter 2000 Financial Results.

Business Editors/Health & Medical Writers

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

Axys Pharmaceuticals, Inc. (Nasdaq:AXPH) today announced financial results for the quarter ended March 31, 2000.

Revenues for the quarter were $7.0 million, a decrease from the $11.8 million in revenues reported for the first quarter of 1999. The decrease was due to the wind-up of several collaborations in 1999, which has allowed Axys to focus its internal research & development resources on its proprietary programs in oncology. Cash and receivables totaled $53.3 million as of March 31, 2000 and included proceeds from a $31.5 million private placement completed in February.

First quarter 2000 operating expenses were $15.8 million, a 20% decrease from 1999 first quarter operating expenses. Sales and general and administrative expenses for the first quarter of 2000 increased $0.7 million, or 21.5%, from the same period in 1999. The increase was due to expanded activities within the PPGx subsidiary, whose funding comes from third party sources, and increased sales and marketing efforts of the Company's wholly owned subsidiary, AAT. Research and development expenses decreased $4.6 million, or 29%, for the first quarter of 2000 from the same period in 1999. The decrease was primarily due to the shutdown of the Company's San Diego operations and the conclusion of several collaborations in gene identification.

Axys reported a net loss of $8.5 million, or $0.26 per share, in the first quarter of 2000. This compares to a net loss of $7.7 million, or $0.26 per share reported in the first quarter of 1999.

Company Highlights

"The first months of 2000 have been marked by considerable progress throughout our core Drug Discovery and Development programs and non-core affiliates," said John Walker, chairman and chief executive officer. Developments include:

--  Merger of Axys Advanced Technologies (AAT) with Discovery Partners
    International, Inc. (DPI): Earlier this month, Axys announced the
    signing of a definitive agreement to merge AAT, its combinatorial
    chemistry business, with DPI, a provider of products, services and
    information to augment the internal drug discovery efforts of
    pharmaceutical and biotechnology companies. "This merger
    complements AAT with an expanded product and service offering,
    critical mass and an established infrastructure, " said John
    Walker.

      "The AAT/DPI transaction represents a first stage in the
    successful monetization of Axys ' combinatorial chemistry
    technology and executes on our strategy to leverage Axys
    technology assets through the spin-out of non-core businesses,"
    said John Walker. Following completion of the merger, Axys will
    have a significant minority ownership position in DPI, and will
    have the right to elect three of seven DPI board members.
    "Further, DPI is in the process of filing for its initial public
    stock offering, and, if successfully completed, this will provide
    Axys with a stronger balance sheet and a more liquid asset,"
    commented Walker. Axys will also retain rights to use AAT's
    compound libraries in its drug discovery programs. Axys received
    $60 million in DPI stock as consideration for the company's stock
    in AAT.

--  PPGx Developments: PPGx, a majority-owned joint venture of Axys
    and PPD, Inc. (Nasdaq: PPDI) recently announced an expansion of
    its pharmacogenomics platform through an agreement with Aventis
    Bio-Services, under which PPGx will have access to one of the
    world's largest collections of serum samples. PPGx will initially
    use this collection to complete validation studies on proprietary
    SNPs (single nucleotide polymorphisms) for use in its clinical
    research business. PPGx also announced that it has obtained an
    exclusive worldwide license from St. Jude Children's Research
    Hospital for a test to identify a mutation in the TPMT gene. This
    mutation has been associated with life-threatening reactions to
    some common cancer and immunosuppressive drugs. The test will
    allow physicians to screen patients for TPMT status and
    accordingly protect against adverse events. This test also will be
    used in pharmacogenomics-based evaluations of new drug candidates
    in clinical development.

--  Cytovia Collaboration in Apoptosis: In March, Axys and Cytovia,
    Inc. announced a program to discover and develop anti-cancer
    agents that induce apoptosis (programmed cell death). Cytovia has
    developed a novel screening system that is able to monitor the
    activation of pathways that result in induction of caspase
    activity, the common endpoint in apoptosis. "The Cytovia screening
    technology, combined with Axys' library of diverse small molecule
    organic compounds, is a powerful combination for the discovery of
    new anti-cancer drugs," said Michael C. Venuti, Ph.D., Axys senior
    vice president of research and preclinical development and chief
    technical officer. Axys will have the first right to develop and
    commercialize any drug candidates that result from the
    collaborative research program.

--  Bayer Tryptase Collaboration: Axys has partnered with Bayer to
    develop inhibitors of tryptase, a protease central to the
    inflammatory process in conditions such as asthma and inflammatory
    bowel disease (IBD). "I am pleased to report that we have
    completed patient enrollment in the first stage of the Phase II
    clinical trial of our tryptase inhibitor APC 2059 in IBD
    patients," said Daniel Hoth, M.D., Axys senior vice president and
    chief medical officer.

      "We anticipate that initial results from this trial will be
    available during this summer." Bayer has the option to assume
    clinical development of APC 2059 after Phase II testing, subject
    to certain payments to Axys.

      Based on discussions with the Company's partner, Bayer, Axys now
    believes there may be a delay in the initiation of the human
    clinical studies on BAY 44-3428, an oral tryptase inhibitor for
    the treatment of asthma. The Company has previously reported on
    the statistically significant results of two Phase IIa studies in
    allergen induced asthma demonstrating with an inhaled tryptase
    inhibitor the positive effect on the late airway response versus
    both placebo and baseline.

--  Successful Private Placement: In February, Axys significantly
    enhanced its financial position through the completion of a $31.5
    million private placement of its common stock. The common shares
    issued in connection with this financing have now been registered
    for resale in a filing declared effective by the Securities and
    Exchange Commission.

--  Management Change: Axys also announces that Kathleen Stafford has
    resigned her position as senior vice president and chief financial
    officer to return to her consulting practice. She will continue as
    a consultant to Axys until a replacement is named.

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.

For more information on Axys Pharmaceuticals, Inc., please visit the company's website at http://www.axyspharm.com.

                      Axys Pharmaceuticals, Inc.

                 Consolidated Statements of Operations

(in thousands, except per share amounts)

                                          Three months ended March 31,
                                          ----------------------------
                                                      (unaudited)
                                                  2000           1999

Revenues:

  Collaboration and
   licensing revenues                         $  1,931       $  8,662
  Product and service revenues                   5,060          3,142

     Total revenues                              6,991         11,804

Operating expenses:
  Cost of products sold                          1,124            548
  Research and development                      11,301         15,925
  General and administrative                     3,888          3,201
  Restructuring Charge                            (545)            --

    Total operating expenses                    15,768         19,674


Operating loss                                  (8,777)        (7,870)

Interest income/(expense), net                    (123)           400
Equity interest in
 loss of joint venture                              --           (563)
Minority interest                                  408            285

Net loss                                      $ (8,492)      $ (7,748)

Basic and diluted net
 loss per share                               $  (0.26)      $  (0.26)

Shares used in
 computing basic
 and diluted
 net loss per share                             32,067         30,321


                    Consolidated Balance Sheet Data

(in thousands)
                                             March 31,    December 31,
                                                2000          1999
                                                   (unaudited)


Cash & marketable investments               $   48,484    $   26,657
Accounts receivable                              4,861         4,786
Total assets                                    78,839        55,734
Accumulated deficit                           (285,703)     (277,211)
Total stockholders' equity                      39,827        14,047