Axys Pharmaceuticals and Cytovia, Inc. Enter Collaboration to Develop and Market Small Molecule Anti-Cancer Compounds.

Business Editors/Health & Medical Writers

SOUTH SAN FRANCISCO, Calif. and SAN DIEGO--(BW HealthWire)--March 22, 2000

Axys Pharmaceuticals, Inc. (Nasdaq:AXPH) and privately held Cytovia, Inc. announced today that they have entered into a collaboration to discover and develop anti-cancer agents that induce apoptosis (programmed cell death).

The collaboration will leverage Axys' 700,000 compound combinatorial chemistry library and its medicinal chemistry, pre-clinical and clinical development strengths with the sophisticated high-throughput screening technologies, and molecular and cellular biology of Cytovia. This combination is anticipated to produce multiple novel drug candidates for potential use as oncology therapeutics in a variety of cancers, including existing lead compounds that are inducers of apoptosis discovered by Cytovia using their proprietary systems.

Under the terms of the collaboration agreement, each company will fund its own research as part of the collaboration. Axys is also making an up-front equity investment in Cytovia. Axys will have the first right to develop and commercialize any drug candidates that result from the collaborative research and will pay Cytovia a royalty on product sales. Cytovia may exercise a profit share option at a predetermined point during development in lieu of royalties on product sales. If exercised, Cytovia will share equally in the profits on product sales by Axys by paying an equal share of Axys' development and commercialization costs. If Axys does not choose to develop a drug candidate, Cytovia will have the right to do so with Axys having the right to either a profit share option or a royalty on product sales. Other financial terms of the agreement were not disclosed.

"The combination of this elegant and novel assay system developed by Cytovia with the Axys Advanced Technologies' combinatorial library of hundreds of thousands of diverse proprietary small molecule organic compounds, already tailored for their drug-like characteristics, is a powerful combination for the discovery of new anti-cancer drugs" said Michael C. Venuti, Ph.D., Senior Vice President of Research and Preclinical Development, and Chief Technical Officer of Axys. "This novel screening system is able to monitor the activation of any one of the many biochemical pathways that result in induction of caspase activity, the common endpoint in apoptosis. Cytovia's screening technology has already successfully generated potent lead compounds discovered as inducers of apoptosis, while Axys' proven preclinical capabilities in chemistry, pharmacology, pharmacokinetics and safety assessment allow us to move drug candidates rapidly toward the clinic. If successful, this exciting research and development partnership should, we believe, lead to multiple drug candidates in the very near term."

"Our arrangement with Axys will allow us to rapidly and broadly apply our proprietary caspase screening technology to the field of oncology," commented Eckard Weber, President and CEO of Cytovia. "Through our collaboration with Axys, we will have access to a large number of drug-like combinatorial compounds for discovery of important new cancer therapeutics. In addition, this deal also allows us to have a significant upside opportunity through our profit share option."

Apoptosis, or programmed cell death, is a necessary and normal function used by the body to remove damaged cells in an orderly way. Apoptosis is mediated by caspases, a cascade of interconnected enzymes inside the cell, which are normally dormant, but become activated under certain stimuli. Cytovia's technology has and will continue to identify therapeutic compounds that activate or inhibit apoptosis signaling. For example, most anti-cancer drugs activate the apoptosis cascade using the tumor suppressor gene p53, but over half of all tumors have mutations that render p53 inactive and the tumor drug resistant. The compounds Cytovia has identified overcome these mechanisms of resistance by initiating apoptosis even in cancer cells that have developed resistance to all currently used chemotherapeutic agents.

The research and development collaboration will initially focus on the use of Cytovia's proprietary high throughput cell-based assay system designed to detect inducers of apoptosis that act through p53-independent mechanisms. Axys' proprietary combinatorial diversity library of over 700,000 individual small molecule organic compounds, representing over 100 different chemical families, will be screened using Cytovia's assay system. Axys' extensive library has been, and continues to be, produced by its combinatorial chemistry subsidiary, Axys Advanced Technologies, through the use of highly validated synthesis and production protocols, which allow for rapid analoging in optimization, and immediate scale-up for further development activities. Compounds identified as hits and subsequently confirmed as leads in the Cytovia primary and secondary assays will be then subjected to combinatorial lead expansion and medicinal chemistry optimization to produce candidates for pre-clinical efficacy and safety assessment, and subsequent clinical development. The parties anticipate that the collaboration will produce multiple families of drug development candidates.

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. Axys' technology leveraging businesses are: Axys Advanced Technologies, Inc., a combinatorial chemistry business, PPGx, a majority-owned pharmacogenomics company, and Akkadix Corporation, an agricultural biotechnology company.

Cytovia, Inc. is a San Diego based company focused on discovering and developing small-molecule therapeutics that modulate key cellular signaling pathways involved in programmed cell death, also known as apoptosis. Using its proprietary whole cell screening technology to screen compound libraries, Cytovia already has uncovered several classes of novel small molecule drug compounds that may revolutionize the treatment of a wide range of diseases including drug resistant cancers, myocardial infarction, stroke, liver failure and other degenerative diseases.

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.

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