Axys Pharmaceuticals Announces Results for Year-End 2000; Tryptase Program Updated.Business/Health & Medical Editors SOUTH SAN FRANCISCO South San Francisco, city (1990 pop. 54,312), San Mateo co., W Calif.; inc. 1908. South San Francisco has several industrial parks; its manufactures include medical supplies and equipment, foods, paint, paper products, consumer goods, and clothing. , Calif.--(BW HealthWire)--March 8, 2001 Axys Pharmaceuticals, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :AXPH) today reported that gains from the sale of two of its non-core subsidiary companies resulted in net income for the year ended December 31, 2000. Net income for the year was $13.7 million, or $0.39 per share. This result compares to a loss of $48.8 million or $1.60 loss per share for the same period in 1999. For the 2000 results, the Company's net income reflected a non-recurring gain of $61.2 million from the sale of Axys Advanced Technologies ("AAT Alpha-1-antitrypsin (AAT) A blood component that breaks down infection-fighting enzymes such as elastase. Mentioned in: Chronic Obstructive Lung Disease ") to Discovery Partners International Inc. (NASDAQ:DPII DPII Discovery Partners International, Inc. ) and the sale of PPGx, Inc. ("PPGx") to DNA DNA: see nucleic acid. DNA or deoxyribonucleic acid One of two types of nucleic acid (the other is RNA); a complex organic compound found in all living cells and many viruses. It is the chemical substance of genes. Sciences, Inc. ("DNAS DNAS Dynamic Network Authentication System DNAS Distributed Network Audio Server DNAS Director Naval Academy Sailing DNAS Dictionary of Nucleic Acid Structures DNAS Deaf Network and Associated Service DNAS Digital Network Access System (TPI) "). Axys reported a loss from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the in 2000 of $41.6 million compared to a loss of $48.5 million in 1999. The 1999 results of the Company's former subsidiaries, Axys Advanced Technologies and PPGx, have been reclassified in accordance with APB APB See Accounting Principles Board (APB). 30 Reporting the Results of Operations - Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions. Axys' total revenues for the full year 2000 were $7.0 million as compared to total revenues of $24.1 million for 1999. Total revenues in fiscal 1999 included approximately $10.6 million from the Company's discontinued positional cloning operations in La Jolla La Jolla (lə hoi`yə), on the Pacific Ocean, S Calif., an uninc. district within the confines of San Diego; founded 1869. The beautiful ocean beaches, in particular La Jolla shores and Black's Beach, and sea-washed caves attract visitors and , as well as non-oncology research programs concluded in 2000. Total operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. for 2000 were $46.0 million compared to operating expenses of $71.2 million for 1999. The reduction was primarily due to the closure of the Company's La Jolla operations. Total assets at December 31, 2000 increased to $118.7 million from $55.7 million at December 31, 1999. Cash and cash equivalents totaled $41.2 million at December 31, 2000 compared to $23.6 million for the same period last year. In addition to the increase in cash and cash equivalents, the Company's assets reflect holdings in DPII and DNAS, which had a carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of $55.4 million at year-end. The market value of the Company's holdings in DPII's common stock was approximately $90 million at December 31, 2000. The Company owns approximately 1.5 million shares of common stock in DNAS, which filed a registration statement on Form S-1 with the Securities and Exchange Commission in January 2001. Finally, the Company's working capital ratio, a measure of liquidity, improved to 4.2 to one in 2000 compared to less than one to one for the same period last year. For the fourth quarter of 2000, Axys reported net income of $7.5 million, or $0.20 per share, compared to a net loss of $7.9 million or a $0.26 loss per share in 1999. The 2000 results included a $26.4 million one-time gain on the sale of PPGx. Total revenue for the quarter was $1.5 million compared to total revenue of $6.5 million in 1999. Total operating expenses for the quarter were $15.2 million compared to $13.6 million for 1999. Axys reported a loss from continuing operations of $17.2 million for the quarter compared to a loss of $6.9 million in 1999. The increased loss from continuing operations was primarily due to the elimination of revenue from the discontinued positional cloning operations in 2000, as well as an increase in the equity losses recorded from Akkadix Corporation, the Company's ag-bio subsidiary. Paul J. Hastings, President and Chief Executive Officer, stated, "Axys' continued progress in medicinal chemistry-based research, its demonstrated success in creating value in non-core subsidiary businesses, and its significantly strengthened balance sheet bear strong testimony to the focus and the commitment of our team. By selling two of the three non-core subsidiaries created several years ago from Axys' technology, we have provided a potential source of capital to fund future research and development." Financial Guidance According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Chief Financial Officer David E. Riggs, Axys intends to manage operations toward an annual cash burn of $25 - $30 million in 2001, and does not expect to remain profitable in 2001. Riggs also projected research and development expenditures of approximately $30 million for 2001. At 10:00 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy , or 7:00 a.m. PST PST Paroxysmal supraventricular tachycardia, see there , as part of the Company's efforts to ensure full disclosure to all parties, Axys will webcast a conference call live on the Company's internet site. Hosting the call will be Paul J. Hastings, President and Chief Executive Officer. To access the live call or the 5-day archive, please log onto http://www.axyspharm.com. Alternatively, the webcast may be logged onto at http://www.vcall.com/NASApp/Vcall/consoleframeset2?ID=68600. Please connect to either website at least 10 minutes prior to the conference call to ensure adequate time for any software download that may be needed to hear the live webcast. Chronic Disease Program Updates ...Tryptase Inhibitor for Ulcerative Colitis ulcerative colitis Inflammation of the colon, especially of its mucous membranes. The inflamed membranes develop patches of tiny ulcers, and the diarrhea contains blood and mucus. In early January 2001, Axys announced the results of its Phase II clinical study of APC (1) (American Power Conversion Corporation, West Kingston, RI, www.apcc.com) The leading manufacturer of UPS systems and surge suppressors, founded in 1981 by Rodger Dowdell, Neil Rasmussen and Emanual Landsman, three electronic power engineers who had worked at MIT. 2059 for the treatment of ulcerative colitis This article concerns the treatment of ulcerative colitis, a form of inflammatory bowel disease (IBD). Ulcerative colitis is a form of colitis, a disease of the intestine, specifically the large intestine or colon, that includes characteristic ulcers, or open sores, in the colon. , and indicated that it was in the process of planning to advance the compound to Phase IIb/III clinical studies. By the end of the Phase II study, there were 53 evaluable patients out of 56 total enrolled, and the encouraging results of the study indicated:
- APC 2059 delivered at 20 mg subcutaneously twice a day appeared to be safe
and well-tolerated;
- 51% of the evaluable patients had improvement indicated by a Disease Activity
Index ("DAI") reduction of four or more;
- 68% had a reduction in stool frequency;
- 68% had a reduction in rectal bleeding;
- 58% achieved "clinically significant benefit" as measured by the
Investigator's Global Assessment;
- 30% achieved a DAI of three or less, of whom 81% maintained that response
during the two-week follow-up period.
The Company also announced that there will be a delay in the initiation of further clinical development of APC 2059 for both asthma and ulcerative colitis. Axys had previously announced plans to initiate a Phase II asthma trial in the first half of 2001 and a Phase IIb/III ulcerative colitis trial in the second half based on the encouraging results of the ulcerative colitis study. The Company has determined that, in order to enable the longer term dosing required for chronic disease therapies, it is necessary to do additional planning of dose-ranging safety pharmacology studies. The Company expects that work to further define the development track for APC 2059 and to delay initiation of clinical trials for APC 2059 until next year. ...Key Milestone in Osteoporosis Collaboration with Merck Also in early January 2001, Axys announced that it had received a $1.5 million milestone payment from Merck & Co., Inc. (NYSE NYSE See: New York Stock Exchange :MRK MRK Merck & Company (stock symbol) MRK Mayer-Rokitansky-Kuster (anomaly) MRK Manual Remote Keying ) for meeting a pre-agreed milestone in the development of a compound being studied for use in the treatment of osteoporosis, a disease that affects 40 percent of women over age 50. The compound selected by Merck is a potent and selective inhibitor of Cathepsin K Cathepsin K, which is defined by its high specificity for kinins, is involved in bone resorption. Cathepsin K's ability to catabolize elastin, collagen, and gelatin allow it to break down bone and cartilage. , a cysteine cysteine (sĭs`tēn), organic compound, one of the 20 amino acids commonly found in animal proteins. Only the l-stereoisomer participates in the biosynthesis of mammalian protein. protease protease /pro·te·ase/ (pro´te-as) endopeptidase. pro·te·ase n. Any of various enzymes, including the proteinases and peptidases, that catalyze the hydrolytic breakdown of proteins. that has been demonstrated to play a key role in bone resorption Bone resorption is the process by which osteoclasts break down bone and release the minerals, resulting in a transfer of calcium from bone fluid to the blood. The osteoclasts are multi-nucleated cells that contain numerous mitochondria and lysosomes. . The research collaboration between Merck and Axys was established in 1996 and in late 2000 was renewed for a fifth year to allow further evaluation of additional compounds. ...Key Milestone in Inflammatory Disease Noun 1. inflammatory disease - a disease characterized by inflammation disease - an impairment of health or a condition of abnormal functioning NEC, necrotizing enterocolitis - an acute inflammatory disease occurring in the intestines of premature infants; Collaboration with Aventis During the fourth quarter of 2000, Axys announced the achievement of an important research milestone in its collaboration with Aventis on Cathepsin S cathepsin /ca·thep·sin/ (kah-thep´sin) one of a number of enzymes each of which catalyzes the hydrolytic cleavage of specific peptide bonds. , a cysteine protease believed to play a critical role in the inflammatory process. A discrete collaboration compound synthesized by Axys successfully demonstrated in-vivo efficacy in a model of asthma, qualifying the compound and its analogs as a lead compound series. This family of compounds was advanced into lead optimization, including pharmacokinetic evaluation, safety pharmacology, chemical scale-up, and formulation studies. Axys believes that upon the successful conclusion of these activities, Aventis will formally nominate a clinical development candidate, while at the same time continuing to pursue related opportunities in additional therapeutic indications for inflammatory and autoimmune disorders Autoimmune Disorders Definition Autoimmune disorders are conditions in which a person's immune system attacks the body's own cells, causing tissue destruction. . Oncology Program Updates ...Maxim Collaboration in Apoptosis apoptosis or programmed cell death Mechanism that allows cells to self-destruct when stimulated by the appropriate trigger. It may be initiated when a cell is no longer needed, when a cell becomes a threat to the organism's health, or for other reasons. In March 2000, Axys and Maxim Pharmaceuticals, Inc. (NASDAQ:MAXM) announced a program to discover and develop anti-cancer agents that induce apoptosis (programmed cell death pro·grammed cell death n. See apoptosis. programmed cell death proposed system of cell death, often including poly(ADP)-ribosylation, ensures that a cell will not survive if it is so badly damaged that its recovery would harm the ). This collaboration was originally initiated between Axys and Cytovia, Inc., a company subsequently acquired by Maxim. In this collaboration, Maxim's novel screening system was used to monitor the activation of pathways that result in induction of caspase activity, the common endpoint in apoptosis. The pairing of this technology and Axys' library of diverse small molecule organic compounds represents a powerful combination for the discovery of new anti-cancer drugs, and during 2000, approximately 400,000 Axys diversity library compounds were screened at Maxim. Under the terms of the agreement, Axys has the right to develop and commercialize any drug candidates that result from the collaborative research program. ...Axys Solves Cancer Protease Structure In September 2000, Axys announced the solution of the three-dimensional crystal structure of Cathepsin V, a protease believed to play a central role in the immune system immune system Cells, cell products, organs, and structures of the body involved in the detection and destruction of foreign invaders, such as bacteria, viruses, and cancer cells. Immunity is based on the system's ability to launch a defense against such invaders. , and which has been more recently associated with certain cancers. In a paper published in Biochemistry, a publication of the American Chemical Society The American Chemical Society (ACS) is a learned society (professional association) based in the United States that supports scientific inquiry in the field of chemistry. Founded in 1876 at New York University, the ACS currently has over 160,000 members at all degree-levels and in (ACS (Asynchronous Communications Server) See network access server. ), Axys scientists described the atomic resolution (1.6 A) X-ray structure of the new therapeutic target, Cathepsin V, complexed with a highly potent inhibitor that delineates the important binding sites on the enzyme. This work is considered useful in helping design potent and selective inhibitors against this therapeutically relevant protease. Axys is currently applying its chemistry and pharmacology expertise to this target, with an eye toward identification of lead compounds designed specifically for Cathepsin V for use in cancer therapy. The achievement validates Axys' expertise in cysteine proteases, the proprietary technology used to identify inhibitors of these enzymes These Enzymes is an American hardcore/punk band featuring members of the All-American Rejects and Sons of Abraham. Biography These Enzymes was formed in late 2003 by All-American Rejects members Mike Kennerty (guitar) and Chris Gaylor (drums) along with former Sons of , as well as a broad base of related intellectual property. Non-Core Subsidiary Businesses During 2000, Axys successfully leveraged two of its three non-core technology companies to create a stronger financial position for the company. In early 2000, Axys announced the merger of its combinatorial chemistry Combinatorial chemistry involves the rapid synthesis or the computer simulation of a large number of different but structurally related molecules. Introduction Synthesis of molecules in a combinatorial fashion can quickly lead to large numbers of molecules. subsidiary AAT with DPII, a provider of drug discovery products, services and bio-information to pharmaceutical and biotechnology companies Top 100 Biotechnology Companies The following is a list of the top 100 biotechnology companies ranked by revenue. The first nine companies qualify for the list of the top 50 pharmaceutical companies. . The merger significantly expanded DPI's capabilities and its infrastructure. This lead to DPII's initial public offering in July. Axys now owns 7.4 million shares of DPI (Dots Per Inch) The measurement of the resolution of display and printing systems. A typical CRT screen provides 96 dpi, which provides 9,216 dots per square inch (96x96). Flat panel displays from 110 to 200 dpi have also been developed. , the approximate fair market value of which on December 31, 2000 was $90 million. Just prior to the year-end, Axys also announced the sale of its pharmacogenomics Pharmacogenomics is the branch of pharmacology which deals with the influence of genetic variation on drug response in patients by correlating gene expression or single-nucleotide polymorphisms with a drug's efficacy or toxicity. subsidiary, PPGx, to DNA Sciences, Inc. PPGx was originally formed in February 1999 by PPD (1) (Parallel Presence Detect) The method used by earlier SIMM memory modules to communicate their capacity to the computer. A binary number coming from a parallel set of pins was read by the system, with each pin representing one bit. Contrast with SPD. , Inc. (NASDAQ:PPDI) and Axys. By combining the scientific expertise and genetic data resources of the two companies, Axys believes that the efforts of DNA Sciences to develop and introduce DNA-based clinical diagnostics and therapeutics will accelerate, enabling its participation in emerging opportunities in pharmacogenomics. As a result of the transaction, Axys recorded a $26.4 million gain in the fourth quarter of 2000, and currently holds an approximate five percent interest in DNA Sciences. The gain recorded during the fourth quarter represents the difference between the fair value of securities received, $20.9 million, less the negative carry value of $5.5 million prior to the sale. Management Team In 2000, Axys announced the appointment of a new President & Chief Executive Officer, Paul Hastings, formerly President of Chiron Biopharmaceuticals, to succeed John Walker, who remained Axys' non-executive Chairman of the Board of Directors. The company also announced the appointments of several other new Vice Presidents representing key functional areas on its executive and operating teams, including: David Riggs, Chief Financial Officer; Douglas Altschuler, Vice President, General Counsel; Michael J. Green, Ph.D., Vice President, Medicinal Chemistry Medicinal or pharmaceutical chemistry is a scientific discipline at the intersection of chemistry and pharmacology involved with designing, synthesizing and developing pharmaceutical drugs. ; Jackie Walling, Vice President, Clinical Oncology; Daniel Makover and Tim McBride, Vice Presidents, Business Development. Axys Pharmaceuticals, Inc., an integrated small molecule drug discovery and development company, 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 minority investments in affiliated businesses that leverage the Axys technologies. Currently, these companies include Discovery Partners International, Inc. (NASDAQ:DPII), a chemistry services company; DNA Sciences, a genetics 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 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, market risk associated with Axys' substantial ownership interest in DPII, competition and marketing risk, 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 Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the fiscal year ended December 31, 1999.
AXYS PHARMACEUTICALS, INC.
Consolidated Statements of Operations
(unaudited)
(in thousands, except per share amounts)
Three months ended Twelve months ended
December 31, December 31,
------------------ -------------------
2000 1999(a) 2000 1999(a)
---- ------- ---- -------
Revenue $ 1,457 $ 6,528 $ 6,990 $ 24,084
------- ------- ------- ---------
Operating expenses:
Research and
development 12,297 14,074 36,575 55,174
General and
administrative 2,890 1,308 9,999 10,872
Restructuring charge 33 (1,833) (592) 5,175
------- ------- ------- --------
Total operating
expenses 15,220 13,549 45,982 71,221
------- ------- ------- ---------
Operating loss (13,763) (7,021) (38,992) (47,137)
Other income
(expense), net (3,458) 112 (2,619) (1,347)
------- ------- ------- ---------
Loss from continuing
operations (17,221) (6,909) (41,611) (48,484)
Discontinued
operations (1,736) (952) (5,941) (279)
Gain on disposal
of segment 26,433 - 61,213 -
------- ------- ------- ---------
Net income (loss) $ 7,476 $ (7,861) $ 13,661 $ (48,763)
======== ========= ========= ==========
Basic and diluted
net loss per share
from continuing
operations $ (0.46) $ (0.23) $ (1.18) $ (1.60)
======== ======== ========= ========
Basic and diluted
net income (loss)
per share $ 0.20 $ (0.26) $ 0.39 $ (1.60)
======== ========= ========= =========
Shared used in
computing basic
and diluted
net income (loss)
per share 37,165 30,446 35,281 30,385
======== ========= ========= =========
(a) The 1999 results of the Company's former subsidiaries, Axys
Advanced Technologies and PPGx, have been reclassified in
accordance with APB 30 Reporting the Results of Operations -
Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and
Transactions.
Consolidated Balance Sheet Data
(unaudited)
(in thousands)
December 31, 2000 December 31, 1999
----------------- -----------------
Cash and cash equivalents $ 41,247 $ 23,577
Total assets 118,696 55,734
Accumulated deficit (263,550) (277,211)
Total stockholders' equity 83,370 14,047
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