<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From to
--------------------------------------------------
Commission File Number 0-28290
AKSYS, LTD.
(Exact name of registrant as specified in its charter)
Delaware 36-3890205
(State of incorporation) (I.R.S. Employer
Identification No.)
Two Marriott Drive, Lincolnshire, Illinois 60069
(address of principal executive offices) (Zip Code)
Registrant's telephone number 847-229-2020
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding twelve months, and (2) has been subject to such filing
requirements for the past 90 days. YES X NO
The number of shares of Common Stock, $.01 Par Value, outstanding as of October
20, 1997 was 13,807,580.
<PAGE>
AKSYS, LTD.
FORM 10-Q
For the Quarterly Period Ended September 30, 1997
<TABLE>
<CAPTION>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<S> <C> <C>
PART 1 - FINANCIAL INFORMATION Page
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets as of September 30, 1997
(Unaudited) and December 31, 1996 .............................. 3
Consolidated Statements of Operations for the Three- and Nine-
Month Periods Ended September 30, 1997 and 1996 (Unaudited) .... 4
Consolidated Statements of Cash Flows for the Nine-Month
Periods Ended September 30, 1997 and 1996 (Unaudited) .......... 5
Notes to Consolidated Financial Statements ..................... 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations ...................................... 7-9
PART II - OTHER INFORMATION
Item 2. Changes in Securities .......................................... 10
Item 6. Exhibits and Reports on Form 8-K ............................... 10
SIGNATURES ............................................................... 10
INDEX TO EXHIBITS ........................................................ 11
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
PART 1. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
AKSYS, LTD. AND SUBSIDIARY
(a development stage enterprise)
Consolidated Balance Sheets
- -------------------------------------------------------------------------------------------
September 30, December 31,
Assets 1997 1996
- -------------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 12,582,261 $ 10,900,059
Short-term investments 17,362,633 34,749,875
Interest receivable 437,919 698,124
Prepaid expenses 91,915 81,075
Other current assets 34,951 56,613
- -------------------------------------------------------------------------------------------
Total current assets 30,509,679 46,485,746
- -------------------------------------------------------------------------------------------
Long-term investments 4,037,221 780,000
Property and equipment, net 4,298,568 2,737,620
Other non-current assets 250,175 144,144
- -------------------------------------------------------------------------------------------
$ 39,095,643 $ 50,147,510
- -------------------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
- -------------------------------------------------------------------------------------------
Current liabilities:
Accounts payable $ 453,023 $ 1,141,829
Accrued liabilities 158,191 269,918
Current maturities of lease obligation 1,932 32,039
- -------------------------------------------------------------------------------------------
Total current liabilities 613,146 1,443,786
- -------------------------------------------------------------------------------------------
Other long-term liabilities 63,796 19,630
- -------------------------------------------------------------------------------------------
Total liabilities 676,942 1,463,416
- -------------------------------------------------------------------------------------------
Stockholders' equity:
Preferred stock, par value $.01 per share, 1,000,000
shares authorized, 0 shares issued and outstanding -- --
Common stock, par value $.01 per share, 50,000,000
shares authorized, 13,807,560 and 13,708,555 shares
issued and outstanding in 1997 and 1996, respectively 138,038 137,086
Additional paid-in capital 64,612,965 64,573,686
Foreign currency translation adjustment 11,958 2,921
Deficit accumulated during development stage (26,344,260) (16,029,599)
- -------------------------------------------------------------------------------------------
Total stockholders' equity 38,418,701 48,684,094
- -------------------------------------------------------------------------------------------
$ 39,095,643 $ 50,147,510
- -------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
</TABLE>
3
<PAGE>
AKSYS, LTD. AND SUBSIDIARY
(a development stage enterprise)
Consolidated Statements of Operations
For the Three- and Nine-Month Periods Ended September 30, 1997 and 1996
<TABLE>
<CAPTION>
(Unaudited)
- --------------------------------------------------------------------------------------------------------------------------
Cumulative
from
Jan. 18, 1991
Three months ended Sept. 30, Nine months ended Sept. 30, (inception)
---------------------------- ---------------------------- through
1997 1996 1997 1996 Sept. 30, 1997
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operating expenses:
Research and development $ 2,500,695 $ 1,726,504 $ 8,406,015 $ 4,417,743 $ 21,590,116
Business development 248,202 141,064 741,431 339,455 1,648,728
General and administrative 848,994 864,392 2,936,328 1,726,423 6,968,792
- --------------------------------------------------------------------------------------------------------------------------
Operating loss (3,597,891) (2,731,960) (12,083,774) (6,483,621) (30,207,636)
- --------------------------------------------------------------------------------------------------------------------------
Other income (expense):
Interest income 535,557 746,740 1,769,113 1,108,299 3,822,115
Interest expense -- (4,403) -- (6,807) (23,591)
Other income -- -- -- 67,884
- --------------------------------------------------------------------------------------------------------------------------
535,557 742,337 1,769,113 1,101,492 3,866,408
- --------------------------------------------------------------------------------------------------------------------------
Net loss $(3,062,334) $(1,989,623) $(10,314,661) $(5,382,129) $(26,341,228)
==========================================================================================================================
Net loss per share (pro forma in 1996) $ (0.22) $ (0.15) $ (0.75) $ (0.45)
====================================================================================================
Weighted average shares outstanding 13,787,108 13,685,212 13,766,980 12,020,809
====================================================================================================
See accompanying notes to consolidated financial statements.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
AKSYS, LTD. AND SUBSIDIARY
(a development stage enterprise)
Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 1997 and 1996
(Unaudited)
=========================================================================================================================
Cumulative
from
Jan. 18, 1991
(inception)
through
1997 1996 Sept. 30, 1997
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $(10,314,661) $(5,382,129) $(26,341,227)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 491,522 199,064 1,073,887
Stock option expense -- -- 3,240
Issuance of stock in exchange for services rendered -- 66,003 66,003
Changes in assets and liabilities:
Interest receivable 260,205 (774,745) (437,919)
Prepaid expenses (10,840) (100,256) (91,915)
Other current assets 21,662 (29,883) (34,951)
Accounts payable (688,806) 1,572,927 453,023
Accrued liabilities (111,727) (21,412) 180,742
Other (110,742) (96,889) (299,362)
- -------------------------------------------------------------------------------------------------------------------------
Net cash used in operating activities (10,463,387) (4,567,320) (25,428,479)
- -------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Proceeds from sale of investments 29,788,298 3,386,484 54,158,337
Purchases of investments (15,658,277) (47,849,574) (75,571,865)
Purchases of property and equipment (1,994,556) (1,456,969) (5,133,275)
Organizational costs incurred -- -- (19,595)
- -------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities 12,135,465 (45,920,059) (26,566,398)
- -------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from issuance of common stock, net of
issuance costs 40,231 52,225,025 52,342,631
Proceeds from issuance of preferred stock -- -- 12,336,096
Proceeds from issuance of note payable -- -- 41,792
Repayment of notes payable -- (16,115) (41,792)
Repayment of lease obligation (30,107) (25,424) (101,589)
- -------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 10,124 52,183,486 64,577,138
- -------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 1,682,202 1,696,107 12,582,261
Cash and cash equivalents at beginning of period 10,900,059 570,621 --
- -------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 12,582,261 $ 2,266,728 $ 12,582,261
=========================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
AKSYS, LTD. AND SUBSIDIARY
(a development stage enterprise)
Notes to Consolidated Financial Statements--Unaudited
(1) Basis for Presentation
The consolidated financial statements of Aksys, Ltd. and Subsidiary (the
"Company") presented herein are unaudited, other than the consolidated
balance sheet at December 31, 1996, which is derived from audited financial
statements. The interim financial statements and notes thereto have been
prepared pursuant to the rules of the Securities and Exchange Commission
for quarterly reports on Form 10-Q and do not include all of the
information and note disclosures required by generally accepted accounting
principles. In the opinion of management, the interim financial statements
reflect all adjustments consisting of normal, recurring adjustments
necessary for a fair statement of the results for interim periods. The
operations for the three- and nine-month periods ended September 30, 1997
are not necessarily indicative of results that ultimately may be achieved
for the entire year ending December 31, 1997. These financial statements
should be read in conjunction with the financial statements and notes
thereto for the year ended December 31, 1996, included in the Company's
Annual Report on Form 10-K filed with the Securities and Exchange
Commission on March 3, 1997.
(2) Principles of Consolidation
On April 18, 1996 the Company established a subsidiary in Tokyo, Japan. The
consolidated financial statements include the accounts of the Company and
the wholly-owned subsidiary. All material intercompany transactions and
balances have been eliminated in consolidation.
(3) Computation of Net Loss per Share
Net loss per share is based on the weighted average number of shares
outstanding and excludes unexercised stock options using the treasury stock
method because the effect is anti-dilutive. Pursuant to Securities and
Exchange Commission Staff Accounting Bulletin No. 83, options for common
stock granted by the Company during the twelve months immediately preceding
the offering date (using the treasury stock method and the public offering
price) have been included in the calculation of common and common
equivalent shares as if they were outstanding for all periods through the
date of the initial public offering. The net loss per share for the three
and nine month periods ended September 30, 1996 has been presented on a pro
forma basis in lieu of historical net loss per share as such historical
information is not meaningful due to the mandatory conversion of redeemable
preferred stock in connection with the Company's initial public offering.
6
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Overview
The Company is in the development stage and was formed to provide hemodialysis
products and services for patients suffering from end stage renal disease,
commonly known as chronic kidney failure. The Company has developed a fully-
automated Personal Hemodialysis System ("PHD") dedicated to a single patient and
designed to remove the barriers to performing more frequent hemodialysis safely
and effectively outside of the current dialysis clinic setting, such as the
patient's home or a self-care clinic. By greatly reducing the complexity and
inconvenience of dialysis, the PHD(TM) system allows users to gain the
significant, clinically demonstrated benefits of dialyzing on a more frequent
basis than the traditional standard of three times per week. The Company
believes that its products and services will provide a superior alternative to
currently available kidney dialysis treatment modalities by providing better
clinical outcomes, lower overall costs and improved quality of life for dialysis
patients.
As Aksys pursues regulatory approval in the U.S., the Company is simultaneously
pursuing a number of initiatives outside the U.S. to commercialize the PHD(TM)
system. These initiatives include obtaining the CE mark in Europe and
negotiating with potential partners to open markets around the world.
Comparison of Results of Operations
Net losses for the quarter and nine months ended September 30, 1997 were $3.1
million ($0.22 per share) and $10.3 million ($0.75 per share), respectively,
compared to $2.0 million ($0.15 per share) and $5.4 million ($0.45 per share),
respectively, for the same periods in 1996. The increase in net losses during
the quarter and nine months ended September 30, 1997 compared to the same
periods last year is due to increases in spending in research and development,
hiring of additional personnel, and the support of the Company's development
efforts. Net interest income is comprised of interest earned on the investment
of the net proceeds raised by the Company in the initial public offering
completed during May 1996.
Operating loss. Operating loss for the quarter ended September 30, 1997 was
$3.6 million, compared to $2.7 million for the comparable period in 1996, an
increase of $0.9 million or 32%. For the nine months ended September 30, 1997,
operating loss was $12.1 million, compared to $6.5 million for the same period
last year, an increase of $5.6 million, or 86%. The increases in the operating
loss during the quarter and nine months ended September 30, 1997 compared to the
same periods last year is due to increased research and development spending,
additional hires, and related support for the Company's product development
efforts.
Other income (expense). Net interest income for the quarter ended September 30,
1997 was $0.5 million, compared to $0.7 million for the quarter ended September
30, 1996. The decrease is
7
<PAGE>
attributed to the corresponding decrease in cash and investments which were
used to support the Company's development efforts. Net interest income for the
nine months ended September 30, 1997 increased to $1.8 million, compared to $1.1
million for the same period last year, due to interest earned on the investment
of the net proceeds from the Company's initial public offering in May 1996.
Liquidity and Capital Resources
The Company's primary source of liquidity is from the net proceeds of
approximately $52.2 million from its sale of common stock in May 1996. At
September 30, 1997, the Company had cash, cash equivalents and short-term
investments of $29.9 million and working capital of $29.9 million. The Company
also had long-term investments of $4.0 million with maturity dates ranging
between 12 and 18 months.
The Company expects to incur additional losses in the foreseeable future and
estimates that net cash and investment spending for 1997 will approximate $15
million ($12.5 million of which has been spent through September 30, 1997). The
Company anticipates, based on its current plans and assumptions relating to its
operations (including assumptions regarding the timing and costs associated with
obtaining FDA approval for, and the production and marketing of, the PHD/TM/
system), that the net proceeds of the initial public offering will be sufficient
to satisfy the Company's operating, capital expenditure and working capital
requirements through late 1999. The Company also anticipates that capital
requirements for the commercial-scale production and market launch of the
PHD/TM/ system will be obtained through equipment financing or other liquidity
sources.
The Company expects that U.S. customers will generally choose to purchase
PHD/TM/ systems and enter into a contract whereby the Company will provide all
products and services related to the PHD/TM/ system for a monthly price, which
would include all consumables, service and product support. As an alternative,
U.S. customers may enter into lease agreements for the PHD/TM/ systems, under
which the monthly price would also include a lease payment. The Company's
present commercialization plan for markets outside of the United States is to
develop a partnership in those markets to distribute the PHD/TM/ system and
related consumables and service. Financing production of the PHD/TM/ system in
quantities necessary for commercialization will require significant working
capital. After commercial launch, this need for working capital is likely to
increase as demand for the PHD/TM/ system increases. Accordingly, the Company
may require sources of capital beyond cash generated from operations to finance
production of the PHD/TM/ system. The Company intends to finance its future
working capital requirements through equipment and receivable financing with a
commercial lender. If the Company is unable to obtain such financing, it would
need to seek other forms of financing, through the sale of equity securities or
otherwise, to achieve its business objectives. The Company has not yet obtained
a commitment for such financing, and there can be no assurance that the Company
will be able to obtain such financing or alternative financing on acceptable
terms or at all.
8
<PAGE>
Note on Forward-Looking Information
Certain statements in this Form 10-Q and in future filings made by the Company
with the Securities and Exchange Commission and in the Company's written and
oral statements made by or with the approval of an officer of the Company
constitute "forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934,
and the Company intends that such forward-looking statements be subject to the
safe harbors created thereby. The words "believes," "expects," "estimates,"
"anticipates," and "will be," and similar words or expressions, identify
forward-looking statements made by or on behalf of the Company. These forward-
looking statements reflect the Company's views as of the date they are made with
respect to future events and financial performance, but are subject to many
uncertainties and factors which may cause the actual results of the Company to
be materially different from any future results expressed or implied by such
forward-looking statements. Examples of such uncertainties and factors include,
but are not limited to, (i) whether and when the Company will obtain clearance
from the FDA of a 510(k) pre-market notification, and equivalent regulatory
clearances for Europe and Japan; (ii) the Company's need to develop the
marketing, distribution, customer service and technical support and other
functions critical to the success of the Company's business plan; (iii) the
uncertainty regarding the effectiveness and ultimate market acceptance of the
PHD/TM/ system, the Company's primary product in development; and (iv) the need
to further establish the clinical benefits of daily hemodialysis. The Company
does not undertake any obligation to update or revise any forward-looking
statement made by it or on its behalf, whether as a result of new information,
future events or otherwise.
9
<PAGE>
PART II -- OTHER INFORMATION
Item 2. Changes in Securities
none
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(11) Statement Regarding Computation of Net Loss Per Share
(27) Financial Data Schedule
(99.1) Press Release of the Company, Issued September 26, 1997
(99.2) Press Release of the Company, Issued October 21, 1997
(b) Reports on Form 8-K
none
Signatures
Pursuant to the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto duly
authorized.
Aksys, Ltd.
Date: October 31, 1997 By: /s/ Lawrence H. N. Kinet
---------------- -------------------------
Lawrence H.N. Kinet
Chairman and Chief Executive Officer
and Director
Date: October 31, 1997 By: /s/ Steven A. Bourne
----------------- ---------------------
Steven A. Bourne
Controller (Principal Accounting Officer)
10
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description
----------------------------------------------------------------------------
11 Statement Regarding Computation of Net Loss Per Share
27 Financial Data Schedule
99.1 Press Release of the Company, Issued September 26, 1997
99.2 Press Release of the Company, Issued October 21, 1997
11
<PAGE>
AKSYS, LTD. AND SUBSIDIARY Exhibit 11
(a development stage enterprise)
Statement Regarding Computation of Net Loss Per Share
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Three months ended Nine months ended
--------------------------------- ---------------------------------
Sept. 30, 1997 Sept. 30, 1996 Sept. 30, 1997 Sept. 30, 1996
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net loss $ (3,062,334) $ (1,989,623) $ (10,314,661) $ (5,382,129)
- ------------------------------------------------------------------------------------------------------------
Weighted average shares used
to compute net loss per share:
Weighted average common
shares outstanding* 13,787,108 13,685,212 13,766,980 11,911,057
Additional shares pursuant
to SAB83 computation -- -- -- 109,752
- ------------------------------------------------------------------------------------------------------------
13,787,108 13,685,212 13,766,980 12,020,809
- ------------------------------------------------------------------------------------------------------------
Net loss per share $ (0.22) $ (0.15) $ (0.75) $ (0.45)
- ------------------------------------------------------------------------------------------------------------
</TABLE>
* Includes conversion of preferred shares.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from
the consolidated balance sheet as of September 30, 1997 and the consolidated
statement of operations for the nine months ended September 30, 1997 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 12,582
<SECURITIES> 21,400
<RECEIVABLES> 438
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 30,510
<PP&E> 5,209
<DEPRECIATION> 910
<TOTAL-ASSETS> 39,096
<CURRENT-LIABILITIES> 613
<BONDS> 0
0
0
<COMMON> 138
<OTHER-SE> 38,281
<TOTAL-LIABILITY-AND-EQUITY> 39,096
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 12,084
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (10,315)
<INCOME-TAX> 0
<INCOME-CONTINUING> (10,315)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (10,315)
<EPS-PRIMARY> (0.75)
<EPS-DILUTED> (0.75)
</TABLE>
<PAGE>
Exhibit 99.1
Contacts:
Lawrence H.N. Kinet Rodney S. Kenley
Chairman and CEO Executive V.P. and CTO
Aksys, Ltd. Aksys, Ltd.
(847) 229-2222 (847) 229-2299
For Immediate Release
- ---------------------
AKSYS, LTD. IS ISSUED SIX NEW PATENTS ON PHD/TM/ PERSONAL
HEMODIALYSIS SYSTEM
- Eight Other Patent Applications Allowed -
Lincolnshire, IL, September 26, 1997 - Aksys, Ltd. (Nasdaq/NNM:AKSY) today
announced that, in addition to the five U.S. patents it now either owns or has
exclusive rights to, the U.S. Patent and Trademark Office has recently awarded
the Company six additional patents, and notified the Company that eight other
patent applications have been allowed. The Company expects three of the eight
allowed applications to be issued in October 1997 with the remaining
applications to be issued in two to five months. Also, two foreign patents have
been awarded to the Company.
The PHD/TM/ System is being developed to allow patients to perform hemodialysis
outside of traditional dialysis clinics on a more frequent basis. The
technologies covered by these recently issued patents enhance safety and
convenience when the system is utilized in remote settings such as hospitals,
homes and nursing homes.
"These patents cover several technologies that are essential for developing a
self contained hemodialysis system for use in remote locations," stated Rod
Kenley, the Company's founder and lead inventor on a majority of Aksys' patents.
"Our intellectual property position is becoming increasingly more valuable as
the economic and clinical advantages of frequent, alternate site hemodialysis
gains acceptance in the medical community."
Aksys, Ltd. is developing hemodialysis products and services for patients
suffering from inadequate kidney function. These products and services include
the Company's lead product in development, the PHD/TM/ System, which is designed
to improve clinical outcomes of patients and reduce mortality, morbidity, and
the associated high cost of patient care. Further information is available at
Aksys' website: http://www.aksys.com.
# # #
<PAGE>
Exhibit 99.2
Contact:
Lawrence H. N. Kinet
Chairman and CEO
Aksys, Ltd.
(847)229-2222
FOR IMMEDIATE RELEASE
AKSYS, LTD. REPORTS FINANCIAL RESULTS
FOR THE THIRD QUARTER ENDED SEPTEMBER 30, 1997
Lincolnshire, IL, October 21, 1997 - Aksys, Ltd. (Nasdaq/NNM: AKSY), a leader in
the development of personal hemodialysis products and services, today reported
financial results for the third quarter ended September 30, 1997.
For the third quarter ended September 30, 1997, the Company reported a net loss
of $3,062,000, or $0.22 per share, compared to a net loss of $1,990,000, or
$0.15 per share, for the same quarter last year. Operating expenses increased to
$3,598,000 during the third quarter of 1997, compared to $2,732,000 during the
third quarter of 1996. The increase in operating expenses is due to research and
development spending, new hires, and support for the Company's product
development efforts. Net interest income decreased to $536,000 during the
quarter ended September 30, 1997, compared to $742,000 for the same quarter last
year, as cash and investments were expended on the Company's development
efforts.
"Progress made in product performance validation and documentation on the
PHD/TM/ System keeps us on track for an IDE submission during the third quarter
of 1998," stated Lawrence H.N. Kinet, Chairman and CEO of Aksys, Ltd. "We have
also optimized our spending level and do not anticipate notable increases in
total operating expenses until mid-1998 when we begin preparing for clinical
trials."
For the nine month period ended September 30, 1997, the Company reported a net
loss of $10,315,000, or $0.75 per share, compared to a net loss of $5,382,000,
or $0.45 per share, for the nine month period ended September 30, 1996.
Operating expenses increased to $12,084,000 for the nine month period of 1997,
compared to $6,484,000 for the year earlier period. Net interest income for the
nine months ended September 30, 1997 was $1,769,000 compared to $1,102,000 for
the same period in 1996.
Aksys, Ltd. is developing hemodialysis products and services for patients
suffering from kidney failure. These products and services include the Company's
lead product in development, the Aksys PHD Personal Hemodialysis System/TM/
which is designed to improve clinical outcomes of patients and reduce mortality,
morbidity and the associated high cost of patient care. Further information is
available on Aksys' website: www.aksys.com.
- more -
<PAGE>
AKSYS, LTD. REPORTS FINANCIAL RESULTS FOR THE THIRD QUARTER ENDED
SEPTEMBER 30, 1997
Page 2
This press release contains forward-looking statements that involve a number of
risks and uncertainties. The Company's actual results could differ materially
from the results identified or implied in any forward-looking statement and
these statements are based on the Company's views as of the date they are made
with respect to future events. Factors that could cause such a difference
include, but are not limited to, risks related to the failure to meet
development and manufacturing milestones on a timely basis, changes in GMP
requirements, changing market conditions, risks related to the regulatory
approval process, whether and when the Company will obtain clearance from the
FDA of a 510(K) pre-market notification and what additional clinical and other
data the Company might have to obtain in connection with seeking such clearance,
and risks associated with the timing and scope related to the commencement of
clinical trials based on an approved Investigational Device Exemption (IDE), a
prerequisite for the commencement of such trials.
- financial table to follow -
<PAGE>
AKSYS, LTD. AND SUBSUDIARY
(a development stage enterprise)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Quarter ended September 30, Nine months ended September 30,
--------------------------- -------------------------------
1997 1996 1997 1996
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
Revenues: $ - $ - $ - $ -
Expenses:
Research and development 2,501,000 1,727,000 8,406,000 4,418,000
Business development 248,000 141,000 742,000 339,000
General and administrative 849,000 864,000 2,936,000 1,727,000
----------- ----------- ------------ ------------
Operating loss (3,598,000) (2,732,000) (12,084,000) (6,484,000)
Net interest income 536,000 742,000 1,769,000 1,102,000
----------- ----------- ------------ ------------
Net loss $(3,062,000) $(1,990,000) $(10,315,000) $ (5,382,000)
=========== =========== ============ ============
Net loss per share $ (0.22) $ (0.15) $ (0.75) $ (0.45)
=========== =========== ============ ============
Weighted average shares outstanding 13,787,000 13,685,000 13,767,000 12,021,000
=========== =========== ============ ============
</TABLE>
SELECTED BALANCE SHEET DATA
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- ------------
<S> <C> <C>
Cash and short-term investments $29,945,000 $45,650,000
Working capital 29,897,000 45,042,000
Long-term investments 4,037,000 780,000
Total assets 39,096,000 50,148,000
Total liabilities 677,000 1,464,000
Stockholders' equity 38,419,000 48,684,000
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