Axys Pharmaceuticals Announces Third Quarter 2000 Financial Results.Business Editors/Health & Medical Writers 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)--Nov. 2, 2000 Axys Pharmaceuticals, Inc. (Nasdaq:AXPH) today announced financial results for the quarter ended September 30, 2000 which reflects the Company's strengthened balance sheet and improved operating results driven by the value created in its affiliate businesses; success in its research programs; and its focus in oncology. Axys reported a net loss for the third quarter of $6.7 million, or $0.18 per share, as compared to a net loss of $19.9 million, or $0.66 per share, in the third quarter of 1999. For the nine-month period September 30, 2000, Axys reported net income of $6.2 million versus a net loss of $40.9 million for the same nine-month period of 1999. The significant improvement is primarily due to the recognition of the gain of $34.8 million on sale of Axys' 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, Axys Advanced Technologies, Inc. (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. http://www.discoverypartners.com) in April 2000. DPII is a San Diego-based provider of drug discovery technologies to pharmaceutical and biopharmaceutical companies. Third quarter 2000 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. were $12.3 million, representing a 51% reduction from third quarter 1999's operating expenses of $25 million. Year-to-date operating expenses of $38 million represent a 39% reduction from the $62.5 million reported for the comparable nine months of 1999. The significant expense reduction reflects action taken by management in mid-1999 to focus its research programs on nearer-term oncology research and development. Cash, marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has and receivables totaled $52.5 million as of September 30, 2000, up 64% or $20.5 million from December 31, 1999. Current assets Current Assets Appearing on a company's balance sheet, it represents cash, accounts receivable, inventory, marketable securities, prepaid expenses, and other assets that can be converted to cash within one year. increased $23.1 million with an additional reduction of $22.4 million in current liabilities Current Liabilities Usually appearing on a company's balance sheet, it represents the amount owed for interest, accounts payable, short-term loans, expenses incurred but unpaid, and other debts due within one year. as compared to December 31, 1999. Total assets have increased to $120.8 million, inclusive of inclusive of prep. Taking into consideration or account; including. the value of Axys' holding in DPII. This asset is carried at $40.4 million, as compared to the $143.3 million market value of the DPII stock at the end of the third quarter. John Walker, Chairman and Chief Executive Officer, stated, "The third quarter represents solid performance on all fronts: progress in research, value creation in Axys' affiliated businesses, an improved balance sheet, and a strengthened management team. With the capital to reach our goals, these accomplishments underscore the value of our platform, our programs, and our people. Based on a current burn rate of approximately $25 million a year, Axys is now in a position to fund its proprietary research programs in oncology as well as to enjoy the benefits of the development programs funded by our partners. We believe the success of both the proprietary and partnered pipelines will be the primary value drivers long term, but the current value of Axys should not go unrecognized." Company Highlights Highlights of the quarter's developments include: FORTUNE Magazine Features Axys Affiliate PPGx The October 30, 2000 issue of FORTUNE Magazine prominently featured PPGx, the majority-owned joint venture of Axys and Pharmaceutical Product Development, Inc. (Nasdaq:PPDI), calling PPGx's announced launch of the "first direct-to-consumer genotyping service... a move with revolutionary implications." The nine-page article provided an insightful look at issues surrounding adverse drug reactions adverse drug reaction, n a detrimental outcome from a drug. Two types of ADRs exist: Type 1 results from dosage mismatch and Type 2 from rare conditions often as a consequence of a small dose. See also risk or sensitive type. , in particular, those that occur because an individual's genetic makeup predisposes them to deadly consequences if given certain drugs. PPGx's test for the TPMT TPMT Thiopurine Methyltransferase TPMT Transaction Processing Monitor Technology TPMT Total Preventive Maintenance Time gene lets doctors test children who have leukemia to see if they have a genetic deficiency that renders the most commonly prescribed childhood leukemia drug fatal unless its dosage is modified. In addition, PPGx plans to offer its new 2D6 test free to 5,000 individuals. In collaboration with Spotlight Health's website (www.spotlighthealth.com), PPGx is pilot testing the 2D6 test's ability to identify the gene that FORTUNE says, "helps metabolize me·tab·o·lize v. 1. To subject to metabolism. 2. To produce by metabolism. 3. To undergo change by metabolism. metabolize to subject to or be transformed by metabolism. about half of the 100 bestselling medicines." The 2D6 test, concluded FORTUNE, "represents the leading edge of the personalized medicine  The external links in this article or section may require cleanup to comply with Wikipedia's content policies. revolution." The article can be found on the web at
http://www.fortune.co/fortune/2000/10/30/dru.html.Key Milestone in Aventis/Axys Collaboration On October 3, 2000, Axys announced the achievement of an important research milestone in its collaboration 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. , an enzyme believed to play a critical role in the inflammatory process. A discrete collaboration compound synthesized by Axys successfully demonstrated in vivo in vivo /in vi·vo/ (ve´vo) [L.] within the living body. in vi·vo adj. Within a living organism. in vivo adv. efficacy in a model of asthma, qualifying the compound and its analogs as a lead compound series. This family of compounds has been advanced into lead optimization, including pharmacokinetic evaluation, safety pharmacology, chemical scale-up, and formulation studies. Upon the successful conclusion of these activities, the Company believes that Aventis will formally nominate a clinical development candidate for the treatment of asthma, while continuing to pursue related opportunities in rheumatoid arthritis rheumatoid arthritis Chronic, progressive autoimmune disease causing connective-tissue inflammation, mostly in synovial joints. It can occur at any age, is more common in women, and has an unpredictable course. , COPD COPD chronic obstructive pulmonary disease. COPD abbr. chronic obstructive pulmonary disease Chronic obstructive pulmonary disease (COPD) , and other inflammatory disorders. Axys Solves Cancer 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. Structure On September 26, 2000, we 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 the journal 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 describe 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. Senior author John R. Somoza, Ph.D. of Axys stated, "The structure of Cathepsin V is invaluable in helping design potent and selective inhibitors against this therapeutically-relevant protease. As we apply our chemistry and pharmacology expertise to this target, we hope to be able to identify lead compounds designed specifically for Cathepsin V for use in cancer therapy." The achievement demonstrates the continuing value garnered from Axys' deep expertise in 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. 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. An abstract of the paper is available on the ACS Publications website www.acs.org. Important Plant Technology Licensed by Affiliate Akkadix On September 13, Akkadix announced that it had licensed Pangene Corporation's patent estate of enhanced homologous recombination Homologous recombination is a type of genetic recombination, a process of physical rearrangement occurring between two strands of DNA. Homologous recombination involves the alignment of similar sequences, a crossover between the aligned DNA strands, and breaking and repair of the for commercial use in the plant science field. Pointing to advances in food and fiber production that will be made possible by using this technology together with Akkadix' proprietary Genome Enhancement Methods, Akkadix described the event as a "strong marriage of platform technologies." Homologous recombination is a process used by cells in nature to repair and recombine re·com·bine v. To undergo or cause genetic recombination; form new combinations. 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. . By replicating and accelerating this natural process, scientists at Pangene, a leading functional genomics Noun 1. functional genomics - the branch of genomics that determines the biological function of the genes and their products genomics - the branch of genetics that studies organisms in terms of their genomes (their full DNA sequences) company, have modified and improved the expression of genes efficiently and cost-effectively with high precision. Axys Strengthens Management Team Axys announced a number of new additions to its management team: David Riggs, who was named Chief Financial Officer, and Michael J. Green, Ph.D., who was named 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. . Riggs joined Axys in September from Unimed Pharmaceuticals, Inc. (formerly, Nasdaq:UMED) where he was Senior Vice President, Business Operations Business operations are those activities involved in the running of a business for the purpose of producing value for the stakeholders. Compare business processes. The outcome of business operations is the harvesting of value from assets . At Unimed from 1992 - 1999, Riggs was responsible both for building the company's commercial platform and its integration as a specialty drug company. He was actively involved in product licensing and acquisition activities as well as responsible for the financial management of the company. Dr. Michael J. Green will be responsible for directing medicinal chemistry, managing the 52 chemists currently on staff that will occupy Axys' new medicinal chemistry facility, now under construction and scheduled for completion in mid-2001. Dr. Green joins Axys after 25 years at the Schering-Plough Research Institute, where he specialized in the discovery of inflammatory drugs, and participated on the team that discovered the blockbuster allergy drug, Claritin(R). 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 DPII resulting from the AAT-DPII 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 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. For more information about Axys Pharmaceuticals, Inc., please visit the company's website at http://www.axyspharm.com. For more information about PPGx, Inc., please visit the company's website at http://www.ppgx.com/ For more information about Akkadix Corporation, please visit the company's website at http://www.akkadix.com/
AXYS PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2000 1999 2000 1999
REVENUES
COLLABORATION AND
LICENSING REVENUES $ 2,611 $ 4,493 $ 5,496 $17,556
SERVICE REVENUES 589 304 1,209 646
TOTAL REVENUES 3,200 4,797 6,705 18,202
OPERATING EXPENSES:
RESEARCH AND
DEVELOPMENT 8,573 13,703 28,829 44,771
GENERAL AND
ADMINISTRATIVE 3,737 4,337 9,765 10,693
RESTRUCTURING CHARGE -- 7,008 (625) 7,008
TOTAL OPERATING
EXPENSES 12,310 25,048 37,969 62,472
OPERATING LOSS (9,110) (20,251) (31,264) (44,270)
INTEREST INCOME, NET (73) (57) 150 606
EQUITY INTEREST
IN LOSS OF
JOINT VENTURE (409) (6) (409) (836)
MINORITY INTEREST 368 612 1,156 1,522
OTHER INCOME, NET 713 (1,285) 711 (1,253)
LOSS FROM CONTINUING
OPERATIONS (8,511) (20,987) (29,656) (44,231)
DISCONTINUED OPERATIONS
INCOME (LOSS) FROM
OPERATIONS OF
DISCONTINUED SEGMENT -- 1,047 1,061 3,329
GAIN ON DISPOSAL
OF SEGMENT 1,793 -- 34,780 --
NET INCOME (LOSS) $ (6,718) $(19,940) $ 6,185 $(40,902)
BASIC AND DILUTED
NET LOSS PER SHARE
FROM CONTINUING
OPERATIONS $ (0.23) $ (0.69) $ (0.86) $ (1.46)
BASIC AND DILUTED
NET INCOME (LOSS)
PER SHARE $ (0.18) $ (0.66) $ 0.18 $ (1.35)
SHARES USED IN
COMPUTING BASIC
AND DILUTED
NET INCOME
(LOSS) PER SHARE 36,603 30,359 34,653 30,340
Note: The results of operations for Axys Advanced Technologies, Inc.
(AAT) for 1999 and 2000 are restated and classified as discontinued
operations in these financial results.
AXYS PHARMACEUTICALS, INC.
SELECTED CONSOLIDATED BALANCE SHEET DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
SEPTEMBER 30, DECEMBER 31,
2000 1999
CASH & MARKETABLE INVESTMENTS $ 51,315 $ 26,657
ACCOUNTS RECEIVABLE 1,163 5,340
TOTAL ASSETS 120,823 55,734
ACCUMULATED DEFICIT (271,026) (277,211)
TOTAL STOCKHOLDERS' EQUITY 74,217 14,047
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