<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 March 31, 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 April
30, 1997 was 13,762,977.
<PAGE>
AKSYS, LTD.
FORM 10-Q
For the Quarterly Period Ended March 31, 1997
<TABLE>
<CAPTION>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
PART 1 - FINANCIAL INFORMATION Page
<S> <C>
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets as of March 31, 1997 (Unaudited)
and December 31, 1996....................................... 3
Consolidated Statements of Operations for the Three
Months Ended March 31, 1997 and 1996 (Unaudited)............ 4
Consolidated Statements of Cash Flows for the Three Months
Ended March 31, 1997 and 1996 (Unaudited)................... 5
Notes to Consolidated Financial Statements.................. 6-7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations......................... 8-10
PART II - OTHER INFORMATION
Item 2. Changes in Securities ....................................... 11
Item 4. Submission of Matters to a Vote of Security Holders ......... 11
Item 6. Exhibits and Reports on Form 8-K............................. 11
SIGNATURES ............................................................ 12
INDEX TO EXHIBITS ..................................................... 13
</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
=========================================================================================
March 31, December 31,
Assets 1997 1996
- ----------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 7,854,856 $ 10,900,059
Short-term investments 33,024,171 34,749,875
Interest receivable 639,303 698,124
Prepaid expenses 39,947 81,075
Other current assets 127,831 56,613
- ----------------------------------------------------------------------------------------
Total current assets 41,686,108 46,485,746
- ----------------------------------------------------------------------------------------
Long-term investments 1,634,725 780,000
Property and equipment, net 3,325,105 2,737,620
Other noncurrent assets 214,991 144,144
- ----------------------------------------------------------------------------------------
$ 46,860,929 $ 50,147,510
========================================================================================
Liabilities and Stockholders' Equity
- ----------------------------------------------------------------------------------------
Current liabilities:
Accounts payable $ 1,317,399 $ 1,141,829
Accrued liabilities 233,656 269,918
Current maturities of lease obligation 22,004 32,039
- ----------------------------------------------------------------------------------------
Total current liabilities 1,573,059 1,443,786
- ----------------------------------------------------------------------------------------
Other long-term liabilities 34,352 19,630
- ----------------------------------------------------------------------------------------
Total liabilities 1,607,411 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, 13,762,696 and 13,708,555 shares
issued and outstanding in 1997 and 1996, respectively 137,627 137,086
Additional paid-in capital 64,605,640 64,573,686
Foreign currency translation adjustment 11,344 2,921
Deficit accumulated during development stage (19,501,093) (16,029,599)
- ----------------------------------------------------------------------------------------
Total stockholders' equity 45,253,518 48,684,094
- ----------------------------------------------------------------------------------------
$ 46,860,929 $ 50,147,510
========================================================================================
See accompanying notes to consolidated financial statements.
3
</TABLE>
<PAGE>
AKSYS, LTD. AND SUBSIDIARY
(a development stage enterprise)
Consolidated Statements of Operations
For the Three Months Ended March 31, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
==========================================================================================================================
Cumulative
from
Jan. 18,1991
Three months ended March 31, (inception)
---------------------------------------- through
1997 1996 March 31, 1997
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Research and development expenses $ 2,774,067 $ 1,412,506 $ 15,958,168
Business development expenses 248,584 103,768 1,155,881
General and administrative expenses 1,089,415 385,422 5,121,878
- --------------------------------------------------------------------------------------------------------------------------
Operating loss (4,112,066) (1,901,696) (22,235,927)
- --------------------------------------------------------------------------------------------------------------------------
Other income (expense):
Interest income 640,572 35,826 2,693,574
Interest expense - (1,453) (23,591)
Other income - - 67,884
- --------------------------------------------------------------------------------------------------------------------------
640,572 34,373 2,737,867
- --------------------------------------------------------------------------------------------------------------------------
Net loss $ (3,471,494) $ (1,867,323) $ (19,498,060)
==========================================================================================================================
Net loss per share (pro forma in 1996) $ (.25) $ (.18)
=================================================================================================
Weighted average shares outstanding 13,745,998 10,322,837
=================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
AKSYS,LTD. AND SUBSIDIARY
(a development stage enterprise)
Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 1997 and 1996
(Unaudited)
===============================================================================================================
Cumulative
from
Jan. 18, 1991
(inception)
through
1997 1996 Mar. 31, 1997
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from activities:
Net loss $(3,471,494) $(1,867,323) $(19,498,060)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 147,852 85,873 730,217
Stock option expense - - 3,240
Issuance of stock in exchange for services rendered - - 66,003
Changes in assets and liabilities:
Interest receivable 58,821 8,502 (639,303)
Prepaid expenses 41,128 600 (39,947)
Other current assets (71,218) 2,103 (127,831)
Accounts payable 175,570 129,403 1,317,399
Accrued and other liabilities (13,117) 2,553 279,352
Other assets (88,699) (114,051) (277,319)
- ---------------------------------------------------------------------------------------------------------------
Net cash used in operating activities (3,221,157) (1,752,340) (18,186,249)
- ---------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Proceeds from sale of investments 9,167,611 3,386,484 33,537,650
Purchases of investments (8,296,632) - (68,210,220)
Purchases of property and equipment (717,485) (93,956) (3,856,204)
Organizational costs incurred - - (19,595)
- ---------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities 153,494 3,292,528 (38,548,369)
- ---------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from issuance of common stock,
net of issuance costs 32,495 - 52,334,895
Proceeds from issuance of preferred stock - - 12,336,096
Proceeds from issuance of note payable - - 41,792
Repayment of notes payable - (3,486) (41,792)
Repayment of lease obligation (10,035) (5,098) (81,517)
- ---------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 22,460 (8,584) 64,589,474
- ---------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents (3,045,203) 1,531,604 7,854,856
Cash and cash equivalents at beginning of period 10,900,059 570,621 -
- ---------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 7,854,856 $ 2,102,225 $ 7,854,856
===============================================================================================================
</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 months ended March 31, 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
month period ended March 31, 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>
AKSYS, LTD. AND SUBSIDIARY
(a development stage enterprise)
Notes to Consolidated Financial Statements--Unaudited
(4) Cash Equivalents and Investments
Cash equivalents are comprised of certain highly liquid investments with
maturities of less than three months when purchased. In addition to cash
equivalents, the Company has investments in debt securities that are classified
as short-term (mature in more than 91 days but no more than one year) or long-
term (maturities beyond one year but no more than 18 months). Such investments
are classified as held-to-maturity, as the Company has the ability and intent to
hold such until maturity. Investments held-to-maturity are carried at amortized
cost, adjusted for the amortization or accretion of discounts or premiums
without recognition of gains or losses that are deemed to be temporary.
Discounts and premiums are amortized or accreted over the life of the related
instrument as an adjustment to yield using the straight-line method, which
approximates the effective interest method. Interest income is recognized when
earned. Fair value approximates carrying value for all investments.
(5) Stock Options
The following table summarizes the transactions pursuant to the Company's
Stock Option Plans:
<TABLE>
<CAPTION>
================================================================================
Shares Price Range
- --------------------------------------------------------------------------------
<S> <C> <C>
Outstanding on December 31, 1996 1,715,557 0.1067-16.00
Granted 45,750 8.50-11.75
Exercised (50,491) 0.1067-1.00
Canceled (7,388) 0.1067-0.2533
- --------------------------------------------------------------------------------
Outstanding on March 31, 1997 1,703,428 0.1067-16.00
================================================================================
</TABLE>
7
<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 complexity and
inconvenience, 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.
Aksys continues to make progress in the development and manufacturing of the
PHD(TM) system. Having completed a critical design phase of the PHD(TM) system
development, in the first quarter of 1997 the Company has been focused on making
the transition from an engineering prototype system to a device that can be
manufactured under Good Manufacturing Practices ("GMP") required by the FDA.
The Company plans to complete the production and take delivery of the first lot
of PHD(TM) production prototype systems during the second quarter of 1997.
Validation data from these systems will be included in the Investigational
Device Exemption ("IDE") which must be submitted to the FDA before the
commencement of clinical trials. Management believes that it understands the
FDA's requirements for the clinical evaluation of the PHD(TM) system and is in
the process of finalizing the protocols to be included in the IDE submission.
As Aksys pursues the regulatory approval process 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, building the necessary infrastructure, and negotiating with
potential partners to open markets around the world.
Comparison of Results of Operations
Net loss for the three months ended March 31, 1997 was $3.5 million or $0.25 per
share, compared to $1.9 million, or $0.18 per share, for the prior year period.
The increase in net loss during the three months ended March 31, 1997 compared
to the year earlier period is due to increases in spending in research and
development, hiring of additional personnel, and the relocation of the Company
to consolidate its operations in a larger facility to support future growth.
Interest income earned from the
8
<PAGE>
investment of the net proceeds raised by the Company in the initial public
offering in May 1996 accounts for the increases in other income compared to the
three months ended March 31, 1996.
Operating loss. Operating loss for the three months ended March 31, 1997 was
$4.1 million, compared to $1.9 million for the comparable period in 1996, an
increase of $2.2 million or 116%. The increase in the operating loss during the
three months ended March 31, 1997 compared to the year earlier period is due to
the scale-up in product development and overhead in preparation for
commercialization of the PHD(TM) system.
Other income (expense). Interest income for the three months ended March 31,
1997 was $0.6 million, as compared to less than $0.1 million for the comparable
period in 1996. The increase in interest income during the three months ended
March 31, 1997, compared to the year earlier period is 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 March
31, 1997, the Company had cash, cash equivalents and short-term investments of
$40.9 million and working capital of $40.1 million. The Company also had long-
term investments of $1.6 million with maturity dates ranging between 12 months
and 18 months.
The Company expects to incur additional losses in the foreseeable future and
estimates that during 1997 it will spend approximately $16 million, including
capital expenditures and working capital, for manufacturing scale-up and
commercialization of the PHD(TM) system. 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
contemplated capital expenditure and working capital requirements through 1998,
assuming it is able to obtain equipment financing in 1998 to finance the
commercial scale production and market launch of the PHD(TM) system.
Generally, the Company intends to enter into contracts with its customers to
provide all products and services relating to the PHD(TM) system for a single
monthly price, which would include a lease payment for the PHD(TM) system, or as
an alternative, a purchase price for the PHD(TM) system and a single monthly
price for the consumables, service and support of the PHD(TM) system. Financing
production of the PHD(TM) system in quantities necessary for commercialization,
as well as supplying PHD(TM) systems on a contracted lease basis, will require a
significant investment in working capital. This need for working capital is
likely to increase to the extent that demand for the PHD(TM) system increases
and the Company leases additional units. The Company would, therefore, have to
rely on sources of capital beyond cash generated from operations to finance
production of the PHD(TM) system even if the Company is successful in marketing
its products and services. The Company currently intends to
9
<PAGE>
finance the working capital requirements associated with these arrangements
through equipment and receivable financing with a commercial lender. If the
Company is unable to obtain such equipment 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 equipment financing, and there can be no assurance that the Company
will be able to obtain equipment financing or alternative financing on
acceptable terms or at all.
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 develope 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.
10
<PAGE>
PART II -- OTHER INFORMATION
Item 2. Changes in Securities
none
Item 4. Submission of Matters to a Vote of Security Holders
The Company held its Annual Meeting of Stockholders on April 22, 1997. The
stockholders elected two directors to serve for terms ending in 2000 and
until their successors are elected. The stockholders present in person or
by proxy cast the following numbers of votes in connection with the
election of directors, resulting in the election of all of the nominees of
the Company:
<TABLE>
<CAPTION>
Votes For Votes Against Abstain/Non-Vote
---------- ------------- ----------------
<S> <C> <C> <C>
Rodney S. Kenley 12,644,539 72,139 0
Larry G. Gerdes 12,643,339 73,339 0
</TABLE>
The names of the remaining directors who did not stand for election at the
Annual Meeting and whose terms of office as directors continue after such
meeting are Lawrence H.N. Kinet, Peter H. McNerney, W. Dekle Rountree, Jr.,
and Bernard R. Tresnowski.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(11) Statement Regarding Computation of Per Share Earnings
(27) Financial Data Schedule
(99.1) Press Release of the Company, Issued January 10, 1997
(99.2) Press Release of the Company, Issued January 30, 1997
(99.3) Press Release of the Company, Issued April 22, 1997
(99.4) Press Release of the Company, Issued April 25, 1997
(b) Reports on Form 8-K
none
11
<PAGE>
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: May 9, 1997 By: /s/ Lawrence H. N. Kinet
----------- ------------------------------------
Lawrence H.N. Kinet
Chairman and Chief Executive Officer
and Director
Date: May 9, 1997 By: /s/ Dennis N. Cavender
----------- ------------------------------------
Dennis N. Cavender
Vice President and Chief Financial
Officer
12
<PAGE>
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
- --------------------------------------------------------------------------------
11 Statement Regarding Computation of Per Share Earnings
27 Financial Data Schedule
99.1 Press Release of the Company, Issued January 10, 1997
99.2 Press Release of the Company, Issued January 30, 1997
99.3 Press Release of the Company, Issued April 22, 1997
99.4 Press Release of the Company, Issued April 25, 1997
13
<PAGE>
<TABLE>
<CAPTION>
Exhibit 11
AKSYS, LTD. AND SUBSIDIARY
(a development stage enterprise)
Statement Regarding Computation of Net Loss Per Share
==========================================================================
Three months ended March 31,
----------------------------
1997 1996
- --------------------------------------------------------------------------
<S> <C> <C>
Net loss $(3,471,494) $ (1,867,323)
==========================================================================
Weighted average shares used
to compute net loss per share:
Weighted average common
shares outstanding* 13,745,998 10,109,593
Additional shares pursuant
to SAB83 computation - 213,244
- --------------------------------------------------------------------------
13,745,998 10,322,837
==========================================================================
Net loss per share $ (0.25) $ (0.18)
==========================================================================
</TABLE>
*Includes conversion of preferred shares.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from
the balance sheet as of March 31, 1997 and the statement of operations for the
three months ended March 31, 1997, and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 7,855
<SECURITIES> 34,659
<RECEIVABLES> 639
<ALLOWANCES> 0
<INVENTORY> 42
<CURRENT-ASSETS> 41,686
<PP&E> 3,931
<DEPRECIATION> 606
<TOTAL-ASSETS> 46,861
<CURRENT-LIABILITIES> 1,573
<BONDS> 0
0
0
<COMMON> 138
<OTHER-SE> 45,116
<TOTAL-LIABILITY-AND-EQUITY> 46,861
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,112
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (3,471)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,471)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,471)
<EPS-PRIMARY> (0.25)
<EPS-DILUTED> (0.25)
</TABLE>
<PAGE>
Exhibit 99.1
Contacts:
Lawrence H.N. Kinet Dennis N. Cavender
Chairman and CEO Vice President and CFO
Aksys, Ltd. Aksys, Ltd.
(847) 229-2222 (847) 229-2222
For Immediate Release
- ---------------------
AKSYS, LTD. ANNOUNCES ISSUANCE OF U.S. PATENT FOR
HOT WATER DISINFECTION OF DIALYSIS MACHINES
Lincolnshire, IL, January 10, 1997 -- Aksys, Ltd. (Nasdaq/NNM: AKSY), a pioneer
in the development of personal hemodialysis products and services, today
announced that the U.S. Patent and Trademark Office has awarded the Company U.S.
Patent No. 5,591,344, entitled "Hot Water Disinfection of Dialysis Machines,
including the Extracorporeal Circuit Thereof."
The patent relates to the technique developed by Aksys, Ltd. of using hot water
to disinfect the fluid circuits of a dialysis machine, including the
extracorporeal circuit and water purification fluid pathways. The patented hot
water method is an alternative to using disinfecting chemicals. The issued
patent is the first in what the Company expects to be a series of patents on new
technology developed by Aksys, Ltd. and embodied in its PHD(TM) Personal
Hemodialysis System.
"The Company is very pleased with the granting of the patent and believes the
patent strengthens the Company's intellectual property position on the Aksys
PHD(TM) Personal Hemodialysis System currently under development," stated Rod
Kenley, the President and Chief Operating Officer and lead inventor on the
patent. "We believe that hot water disinfection is an especially desirable
feature of the machine and is a better alternative to the use of chemicals for
disinfection. It also enables the incorporation of a number of patient-
convenience features into the PHD(TM) design, especially important in a self
care setting, such as a patient's home or nursing home."
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 PHD(TM) which is designed to improve clinical
outcomes of patients and reduce mortality, morbidity and the associated high
cost of patient care.
# # #
<PAGE>
Exhibit 99.2
Contacts:
Lawrence H. N. Kinet Dennis N. Cavender
Chairman and CEO Vice President and CFO
Aksys, Ltd. Aksys, Ltd.
(847) 229-2222 (847) 229-2222
For Immediate Release
- ---------------------
AKSYS, LTD. REPORTS FINANCIAL RESULTS FOR THE FOURTH QUARTER ENDED
DECEMBER 31, 1996
Lincolnshire, IL, January 30, 1997 -- Aksys, Ltd. (Nasdaq/NNM: AKSY), a leader
in the development of personal hemodialysis products and services, today
reported financial results for the fourth quarter and twelve month period ended
December 31, 1996.
For the fourth quarter ended December 31, 1996, the Company reported a net loss
of $2,436,908, or $0.18 per share, compared to a net loss of $1,584,145, or
$0.15 per share, for the same quarter last year. Operating expenses increased to
$3,139,072 in the fourth quarter of 1996, compared to $1,643,677 in the fourth
quarter 1995. The increase in operating expenses is due to research and
development spending, new hires, and the development of the necessary
infrastructure to support the growth of the Company. Net interest income
increased to $702,164 in the fourth quarter ended December 31, 1996, compared to
$59,532 for the same quarter last year, as a result of the net proceeds invested
from the Company's sale of shares of Common Stock in May 1996.
"We continue to make progress in the transition from a working prototype to a
medical device that is manufactured under GMP conditions. We are working with
our manufacturing partner, SeaMED Corporation to build the first GMP pre-
production systems for delivery in early second quarter of 1997," stated
Lawrence H.N. Kinet, Chairman and CEO of Aksys, Ltd. "Concurrently, we are
working with the FDA to define an agreed set of protocols for limited clinical
trials planned for the fourth quarter of 1997."
For the twelve month period ended December 31, 1996, the Company reported a net
loss of $7,819,037, or $0.63 per share, compared to a net loss of $5,344,663, or
$0.52 per share, for the same twelve month period in 1995. Operating expenses
increased to $9,622,693 for the twelve month period of 1996, compared to
$5,497,373 for the same twelve month period in 1995. Net interest income for the
twelve month period ended December 31, 1996 was $1,803,656 compared to net
interest income of $152,710 for the same period in 1995.
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.
- more -
<PAGE>
AKSYS, LTD. REPORTS FINANCIAL RESULTS FOR THE FOURTH QUARTER ENDED
DECEMBER 31, 1996
Page 2
This press release contains forward-looking statements that involve a number of
risks and uncertainties. The Company's actual results (including the timetable
for building the first pre-production machines and finalization of protocols for
clinical trials) 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 development and manufacturing milestones, changes in GMP requirements, risks
related to the regulatory approval process, whether and when the Company will
obtain clearance from the FDA of a 510(K) premarket 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
commencement of clinical trials based on an approved Investigative Device
Exemption (IDE), a prerequisite for the commencement of such trials.
- financial table to follow -
<PAGE>
AKSYS, LTD. AND SUBSIDIARY
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
December 31, December 31,
1996 1995 1996 1995
------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
Revenues: $ - $ - $ - $ -
Expenses:
Research and development 2,097,742 1,320,390 6,515,485 4,261,230
General and administrative 1,041,330 323,287 3,107,208 1,236,143
------------- ------------ ------------- ------------
Operating loss (3,139,072) (1,643,677) (9,622,693) (5,497,373)
Other income (expense):
Interest income 703,286 61,969 1,811,585 163,613
Interest expense (1,122) (2,437) (7,929) (10,903)
------------- ------------ ------------- ------------
702,164 59,532 1,803,656 152,710
------------- ------------ ------------- ------------
Net loss $ (2,436,908) $ (1,584,145) $ (7,819,037) $ (5,344,663)
============= ============ ============= ============
Net loss per share $ (0.18) $ (0.15) $ (0.63) $ (0.52)
============= ============ ============= ============
Weighted average number
of common shares outstanding 13,695,296 10,322,837 12,441,718 10,322,837
============= ============ ============= ============
</TABLE>
<TABLE>
<CAPTION>
SELECTED BALANCE SHEET DATA
December 31, December 31,
1996 1995
============= ============
<S> <C> <C>
Cash, cash equivalents and
short-term investments $ 45,649,934 $ 3,937,105
Working capital 45,041,960 3,565,263
Long-term investments 780,000 -
Total assets 50,147,510 4,693,450
Total liabilities 1,463,416 488,637
Redeemable preferred stock - 12,406,761
Stockholders' equity (deficit) 48,684,094 (8,201,948)
</TABLE>
<PAGE>
Exhibit 99.3
Contacts:
Lawrence H.N. Kinet Dennis N. Cavender
Chairman and CEO Vice President and CFO
Aksys, Ltd. Aksys, Ltd.
(847) 229-2222 (847) 229-2222
For Immediate Release
- ---------------------
AKSYS, LTD. REPORTS FINANCIAL RESULTS FOR THE FIRST QUARTER ENDED
MARCH 31, 1997
Lincolnshire, IL, April 22, 1997 -- Aksys, Ltd. (Nasdaq/NNM: AKSY), a leader in
the development of personal hemodialysis products and services, today reported
financial results for the first quarter ended March 31, 1997.
For the first quarter ended March 31, 1997, the Company reported a net loss of
$3,471,494, or $0.25 per share, compared to a net loss of $1,867,323, or $0.18
per share, for the same quarter last year. Operating expenses increased to
$4,112,066 in the first quarter of 1997, compared to $1,901,696 in the first
quarter 1996. The increase in operating expenses is due to research and
development spending, new hires, and the development of the necessary
infrastructure to support the growth of the Company. Net interest income
increased to $640,572 in the first quarter ended March 31, 1997, compared to
$34,373 for the same quarter last year, as a result of the net proceeds invested
from the Company's sale of shares of Common Stock in May 1996.
"We continue to make progress in preparing the system and protocols for
conducting clinical trials for later this year. We are taking delivery of our
first lot of PHD systems, manufactured under GMP conditions, in the second
quarter of 1997," stated Lawrence H.N. Kinet, Chairman and CEO of Aksys, Ltd.
"These systems will be used to complete the testing and collection of data for
submission to the FDA in order to commence clinical trials planned for the
fourth quarter of 1997."
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.
- more -
<PAGE>
AKSYS, LTD. REPORTS FINANCIAL RESULTS FOR THE FIRST QUARTER ENDED
MARCH 31, 1997
Page 2
This press release contains forward-looking statements that involve a number of
risks and uncertainties. The Company's actual results (including the timetable
for building the first pre-production machines and finalization of protocols for
clinical trials) 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 development and manufacturing milestones, changes in GMP requirements, risks
related to the regulatory approval process, whether and when the Company will
obtain clearance from the FDA of a 510(K) premarket 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
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>
<TABLE>
<CAPTION>
AKSYS LTD. AND SUBSIDIARY
(a development stage enterprise)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended March 31,
----------------------------
1997 1996
----------- -----------
<S> <C> <C>
Revenues: $ - $ -
Expenses:
Research and development 2,774,067 1,412,506
Business development 248,584 103,768
General and administrative 1,089,415 385,422
----------- -----------
Operating loss (4,112,066) (1,901,696)
----------- -----------
Net interest income 640,572 34,373
------------ -----------
Net loss $(3,471,494) $(1,867,323)
=========== ===========
Net loss per share $ (.25) $ (.18)
=========== ===========
Weighted average shares outstanding 13,745,998 10,322,837
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
SELECTED BALANCE SHEET DATA
March 31, December 31,
1997 1996
----------- -------------
<S> <C> <C>
Cash and short-term investments $40,879,027 $ 45,649,934
Working capital 40,113,049 45,041,960
Long-term investments 1,634,725 780,000
Total assets 46,860,929 50,147,510
Total liabilities 1,607,411 1,463,416
Stockholders' equity 45,253,518 48,684,094
</TABLE>
<PAGE>
Exhibit 99.4
Contacts:
Lawrence H.N. Kinet Dennis N. Cavender
Chairman and CEO Vice President and CFO
Aksys, Ltd. Aksys, Ltd.
(847) 229-2222 (847) 229-2222
For Immediate Release
- ---------------------
AKSYS, LTD. NAMES CARL KJELLSTRAND MD, Ph.D. VICE PRESIDENT,
MEDICAL AFFAIRS
Lincolnshire, IL, April 25, 1997 -- Aksys, Ltd. (Nasdaq/NNM: AKSY) today
announced the appointment of Carl Kjellstrand, M.D., Ph.D. to the new position
of Vice President, Medical Affairs. Dr. Kjellstrand joins Aksys with 40 years of
experience in kidney dialysis, most recently with the University of Alberta.
"Dr. Kjellstrand, a world renowned patient advocate, will be a tremendous asset
to the Company," stated Lawrence H.N. Kinet, Chairman and CEO of Aksys, Ltd.
"Dr. Kjellstrand's wealth of experience in dialysis should enable us to work
with our partners, clinics and prospective customers to develop programs
worldwide to improve clinical outcomes, quality of life and efficiencies
expected from the use of the Aksys PHD/TM/ System."
Dr. Kjellstrand's experience includes working in dialysis at the University of
Lund, the Karolinska Hospital in Sweden, and with the Universities of Cairo,
Minnesota and Alberta. He has documented his research in dialysis and renal
diseases in over 450 articles. He has won several teaching awards and been
invited to over 100 prestigious institutions on six continents. He has been
cited in the book "The Best Physicians in the USA" since 1980 and is a member of
29 scientific societies and 27 editorial boards. Dr. Kjellstrand has been the
president of the American Society for Artificial Internal Organs, the Canadian
Society of Nephrology, the Canadian Organ Replacement Registry and vice
president of the International Society of Artificial Organs. He has served on
the National Institutes of Health Review Committee for Chronic Uremia and Renal
Grants, and the Veterans Administration's Medical Review Board of Nephrology. He
has been a consultant and member of the Medical Devices Section of the FDA. Dr.
Kjellstrand received his Ph.D. from the Karolinska Institute in 1988. He
received his M.D. from the University of Lund in Lund, Sweden in 1962.
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 PHD/TM/ System which is designed to improve
clinical outcomes of patients and reduce mortality, morbidity and the associated
high cost of patient care.
# # #
