<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, 1998
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 May 1,
1998 was 14,647,436.
<PAGE>
AKSYS, LTD.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998
TABLE OF CONTENTS
- -----------------------------------------------------------------------------
PART 1 - FINANCIAL INFORMATION Page
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets as of March 31, 1998
(Unaudited) and December 31, 1997.............................. 3
Consolidated Statements of Operations for the Three-Month
Periods Ended March 31, 1998 and 1997 (Unaudited).............. 4
Consolidated Statements of Cash Flows for the Three-Month
Periods Ended March 31, 1998 and 1997 (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 4. Submission of Matters to a Vote of Security Holders......... 10
Item 6. Exhibits and Reports on Form 8-K............................ 10
SIGNATURES ............................................................ 11
INDEX TO EXHIBITS........................................................ 12
<PAGE>
PART 1. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
AKSYS, LTD. AND SUBSIDIARY
(a development stage enterprise)
<TABLE>
<CAPTION>
Consolidated Balance Sheets
- -------------------------------------------------------------------------------------------
March 31, December 31,
ASSETS 1998 1997
- -------------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 12,410,909 $ 8,150,612
Short-term investments 16,565,745 21,045,044
Interest receivable 295,474 398,561
Prepaid expenses 147,551 85,326
Other current assets 32,951 34,951
- -------------------------------------------------------------------------------------------
Total current assets 29,452,630 29,714,494
- -------------------------------------------------------------------------------------------
Long-term investments 4,803,395 2,808,349
Property and equipment, net 3,929,354 3,866,157
Other non-current assets 272,222 258,251
- -------------------------------------------------------------------------------------------
$ 38,457,601 $ 36,647,251
===========================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
- -------------------------------------------------------------------------------------------
Current liabilities:
Accounts payable $ 1,263,049 $ 930,880
Accrued liabilities 281,215 351,113
- -------------------------------------------------------------------------------------------
Total current liabilities 1,544,264 1,281,993
- -------------------------------------------------------------------------------------------
Other long-term liabilities 91,054 77,269
- -------------------------------------------------------------------------------------------
Total liabilities 1,635,318 1,359,262
- -------------------------------------------------------------------------------------------
Stockholders' equity:
Preferred stock, par value $.0l per share, 1,000,000
shares authorized, 0 shares issued and outstanding - -
Common stock, par value $.0l per share, 50,000,000
shares authorized, 14,635,624 and 14,002,663 shares
issued and outstanding in 1998 and 1997, respectively 146,356 140,027
Additional paid-in capital 69,811,429 64,673,596
Foreign currency translation adjustment 10,604 10,567
Deficit accumulated during development stage (33,146,106) (29,536,201)
- -------------------------------------------------------------------------------------------
Total stockholders' equity 36,822,283 35,287,989
- -------------------------------------------------------------------------------------------
$ 38,457,601 $ 36,647,251
===========================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
AKSYS, LTD. AND SUBSIDIARY
(a development stage enterprise)
Consolidated Statements of Operations
For the Three-Month Periods Ended March 31, 1998 and 1997
<TABLE>
<CAPTION>
(Unaudited)
- -----------------------------------------------------------------------------------------
Cumulative
from
Jan.18,1991
Three months ended March 31, (inception)
------------------------------- through
1998 1997 March 31, 1998
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating expenses:
Research and development $ 2,922,832 $ 2,774,067 $ 26,993,736
Business development 259,737 248,584 2,210,901
General and administrative 915,424 1,089,415 8,796,588
- -----------------------------------------------------------------------------------------
Operating loss (4,097,993) (4,112,066) (38,001,225)
- -----------------------------------------------------------------------------------------
Other income (expense):
Interest income 488,088 640,572 4,813,859
Interest expense - - (23,591)
Other income - - 67,884
- -----------------------------------------------------------------------------------------
488,088 640,572 4,858,152
- -----------------------------------------------------------------------------------------
Net loss $ (3,609,905) $ (3,471,494) $ (33,143,073)
=========================================================================================
Net loss per share $ (0.25) $ (0.25)
======================================================================
Weighted average shares outstanding 14,499,781 13,745,998
======================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
AKSYS, LTD. AND SUBSIDIARY
(a development stage enterprise)
Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 1998 and 1997
<TABLE>
<CAPTION>
(Unaudited)
- -----------------------------------------------------------------------------------------------------------------------
Cumulative
from
Jan.18,1991
(inception)
through
1998 1997 March 31, 1998
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (3,609,905) $ (3,471,494) $(33,143,073)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 220,529 147,852 1,504,845
Stock option expense - - 3,240
Issuance of stock in exchange for services rendered - - 69,550
Changes in assets and liabilities:
Interest receivable 103,807 58,821 (294,754)
Prepaid expenses (62,225) 41,128 (147,821)
Other current assets 2,000 (71,218) (32,591)
Accounts payable 332,169 175,570 1,263,049
Accrued liabilities (69,898) (13,117) 369,051
Other (19,627) (88,699) (398,199)
- -----------------------------------------------------------------------------------------------------------------------
Net cash used in operating activities (3,103,150) (3,221,157) (30,806,703)
- -----------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Proceeds from sale of investments 12,865,000 9,167,611 74,048,337
Purchases of investments (10,381,466) (8,296,632) (95,428,969)
Purchases of property and equipment (264,249) (717,485) (5,160,242)
Organizational costs incurred - - (19,595)
- -----------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities 2,219,285 153,494 (26,560,469)
- -----------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from issuance of common stock,
net of issuance costs 5,144,162 32,495 57,545,866
Proceeds from issuance of preferred stock - - 12,336,096
Proceeds from issuance of note payable - 41,792
Repayment of notes payable - (41,792)
Repayment of lease obligation - (10,035) (103,521)
- -----------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 5,144,162 22,460 69,778,441
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 4,260,297 (3,045,203) 12,411,269
Cash and cash equivalents at beginning of period 8,150,612 10,900,059 -
- -----------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 12,410,909 $ 7,854,856 $ 12,411,269
=======================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
<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, 1997, 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-month period ended March
31, 1998 are not necessarily indicative of results that ultimately may
be achieved for the entire year ending December 31, 1998. These
financial statements should be read in conjunction with the financial
statements and notes thereto for the year ended December 31, 1997,
included in the Company's Annual Report on Form 10-K filed with the
Securities and Exchange Commission on March 30, 1998.
(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.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
Since its inception in January 1991, the Company has been engaged in the
development of hemodialysis products and services for patients suffering from
end stage renal disease, commonly known as chronic kidney failure. The Company
has developed the Aksys Personal Hemodialysis System (the "PHD(TM) system"),
which is designed to enable patients to perform daily hemodialysis at alternate
sites, such as the patient's home. By greatly reducing the complexity and
inconvenience of dialysis, the PHD 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.
The Company has never generated sales revenue and has incurred losses since its
inception. At March 31, 1998, the Company had a deficit accumulated during the
development stage of $33.1 million. The Company expects to incur additional
losses in the foreseeable future at least until such time, if ever, that it
obtains necessary regulatory clearances or approvals from the FDA to market the
PHD system in the United States or it is able to secure equivalent regulatory
approvals to market the PHD system in countries other than the United States.
COMPARISON OF RESULTS OF OPERATIONS
Net loss for the quarter ended March 31, 1998 was $3.6 million ($0.25 per
share), compared to $3.5 million ($0.25 per share), for the quarter ended March
31, 1997. The slight increase in net loss during the quarter ended March 31,
1998 compared to the same period last year is due to relatively constant
operating expenses for both periods and a reduction in net interest income for
the quarter ended March 31, 1998. 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 expenses. Operating expenses for the quarters ended March 31, 1998 and
1997 were $4.1 million. In comparing the operating expenses for the period ended
March 31, 1998 to the period ended March 31, 1997, increases in research and
development spending were offset by reductions in general and administrative
expenses.
Other income (expense). Net interest income for the quarter ended March 31, 1998
was $0.5 million, compared to $0.6 million for the quarter ended March 31, 1997.
The decrease is attributed to the corresponding decrease in cash and investments
which were used to support the Company's development efforts.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operations to date primarily through public and
private sales of its equity securities. Through March 31, 1998, the Company had
received net offering proceeds from public and private sales of equity
securities of approximately $69.9 million. Since its inception in 1991 through
March 31, 1998, the Company made $5.2 million of capital expenditures and used
$30.8 million in cash to support its product development efforts. At March 31,
1998, the Company had cash, cash equivalents and short-term investments of $29.0
million, working capital of $27.9 million and long-term investments of $4.8
million.
The Company estimates that during 1998 it will spend approximately $16 to $18
million for operations, manufacturing scale-up and commercialization of the PHD
system. The Company expects that substantially all of this amount will be used
to (i) purchase molds, tooling and other assets to be used by independent
contractors to produce the PHD system and pay for other preproduction costs of
such contractors payable by the Company, (ii) fund product testing and
validation including the purchase of PHD systems for use in clinical trials from
such independent contractors, (iii) conduct clinical studies using the PHD
system, (iv) establish and train a sales and marketing staff and (v) establish
and train a customer service and technical support staff. The Company expects to
continue to incur substantial expenses related to manufacturing scale-up and
commercialization of the PHD system and the protection of patent and other
proprietary rights. The Company believes that cash and investments as of March
31, 1998, together with future milestone payments to be received from Teijin
Limited under the terms of the joint development agreement, are sufficient to
finance the Company's operations, except for working capital needs related to
production of machines, through December 31, 1999.
Generally, the Company expects U.S. customers to purchase PHD systems and enter
into contracts whereby the Company will provide all products and services
related to the PHD systems for a single 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 systems, under which the single 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 system and related
consumables and service. Financing production of the PHD system in quantities
necessary for commercialization 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 system increases. The Company would, therefore, have to rely
on sources of capital beyond cash generated from operations to finance
production of the PHD system even if the Company is successful in marketing its
products and services. The Company currently intends to 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.
The Company's funding needs will depend on many factors, including the timing
and costs associated with obtaining FDA clearance or approval, continued
progress in research and development, clinical studies, manufacturing scale-up,
the cost involved in filing and enforcing patent claims and the status of
competitive products. In the event that the Company's plans change, its
assumptions change or prove inaccurate or it is unable to obtain production
financing on commercially reasonable terms, the
<PAGE>
Company could be required to seek additional financing sooner than currently
anticipated. In addition, in the future the Company will require substantial
additional financing to fund full-scale production and marketing of the PHD
system and related services. The Company has no current arrangements with
respect to sources of additional financing. There can be no assurance that FDA
clearance or approval will be obtained in a timely manner or at all or that
additional financing will be available to the Company when needed, on
commercially reasonable terms, or at all.
NOTE ON FORWARD-LOOKING INFORMATION
Certain statements in this Form 10-Q and in the 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) risks related to the failure to meet development and
manufacturing milestones on a timely basis, (ii) whether and when the Company
will obtain clearance from the FDA of a 510(k) premarket notification, and
equivalent regulatory clearances for Europe and Japan, and what additional
clinical and other data the Company might have to obtain in connection with
seeking such clearances; (iii) the Company's need to achieve manufacturing
scale-up in a timely manner with its primary manufacturing contractor, SeaMED
Corporation, and its need to provide for the efficient manufacturing of
sufficient quantities of its products, (iv) changes in GMP requirements, (v) 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, (vi) the uncertainty regarding the effectiveness and ultimate
market acceptance of the PHD system, the Company's primary product in
development, (vii) changing market conditions, (viii) the need to further
establish the clinical benefits of daily hemodialysis, (ix) the capital
requirements necessary to fund the development and commercialization of the
Company's products and services and effectively compete with its competitors,
many of whom have substantially greater resources, (x) the potential adverse
impact of possible changes to Medicare reimbursement policies and rates and (xi)
the Company's dependence on key personnel and on patents and proprietary
information. 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.
<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 21, 1998. The
stockholders elected two directors to serve for terms ending in 2001 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>
Lawrence H.N. Kinet 11,649,107 402,636 0
W. Dekle Rountree, Jr. 11,652,607 399,136 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 Richard B. Egen, Rodney S. Kenley, K. Shan Padda, Peter H.
McNerney and Bernard R. Tresnowski.
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 January 22, 1998
(99.2) Press Release of the Company, Issued February 11, 1998
(99.3) Press Release of the Company, Issued February 26, 1998
(99.4) Press Release of the Company, Issued March 24, 1998
(99.5) Press Release of the Company, Issued April 21, 1998
(b) Reports on Form 8-K
none
<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 14, 1998 By: /s/ Lawrence H. N. Kinet
------------- -------------------------
Lawrence H.N. Kinet
Chairman and Chief Executive
Officer and Director
Date: May 14, 1998 By: /s/ Steven A. Bourne
------------- ---------------------
Steven A. Bourne
Controller
<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 January 22, 1998
99.2 Press Release of the Company, Issued February 11, 1998
99.3 Press Release of the Company, Issued February 26, 1998
99.4 Press Release of the Company, Issued March 24, 1998
99.5 Press Release of the Company, Issued April 21, 1998
<PAGE>
Exhibit 11
----------
AKSYS, LTD. AND SUBSIDIARY
(a development stage enterprise)
Statement Regarding Computation of Net Loss Per Share
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
Three months ended
-------------------------------
March 31, 1998 March 31, 1997
-------------- --------------
<S> <C> <C>
Net loss $(3,609,905) $(3,471,494)
- ----------------------------------------------------------------
Weighted average common
shares outstanding 14,499,781 13,745,998
- ----------------------------------------------------------------
Net loss per share $ (0.25) $ (0.25)
- ----------------------------------------------------------------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet as of March 31, 1998 and the consolidated statement
of operations for the three months ended March 31, 1998 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-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 12,411
<SECURITIES> 21,369
<RECEIVABLES> 295
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 29,453
<PP&E> 5,236
<DEPRECIATION> 1,307
<TOTAL-ASSETS> 38,458
<CURRENT-LIABILITIES> 1,544
<BONDS> 0
0
0
<COMMON> 146
<OTHER-SE> 36,676
<TOTAL-LIABILITY-AND-EQUITY> 38,458
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,098
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (3,610)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,610)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,610)
<EPS-PRIMARY> (0.25)
<EPS-DILUTED> (0.25)
</TABLE>
<PAGE>
Exhibit 99.1
CONTACT:
Lawrence H. N. Kinet
Chairman and CEO
Aksys, Ltd.
(847) 229-2222
FOR IMMEDIATE RELEASE
- ---------------------
AKSYS, LTD. REPORTS FINANCIAL RESULTS FOR
THE YEAR AND FOURTH QUARTER ENDED DECEMBER 31, 1997
-AKSYS CLOSES STOCK PURCHASE AGREEMENT WITH TEIJIN-
LINCOLNSHIRE, IL, JANUARY 22, 1998 - Aksys, Ltd. (Nasdaq/NNM: AKSY), a leader in
the development of personal hemodialysis products and services, today reported
financial results for the year and fourth quarter ended December 31, 1997.
For the year ended December 31, 1997, the Company reported a net loss of
$13,507,000 ($0.98 per share), compared to a net loss of $7,819,000 ($0.63 per
share), for the year ended December 31, 1996. Operating expenses increased to
$15,780,000 for the year ended December 31, 1997, compared to $9,623,000 for
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 for the year ended December 31, 1997 was $2,273,000 compared
to $1,804,000 for 1996.
"We continue on track with our product development plan for the PHD(TM) System,
leading to the submission of an Investigational Device Exemption during the
third quarter of 1998," stated Lawrence H.N. Kinet, Chairman and CEO of Aksys,
Ltd. "We begin 1998 with approximately $37 million in cash and investments and a
strong partnership to commercialize the PHD(TM) System in Japan. We look forward
to working closely with our new partner in Japan over the months ahead with the
opportunity to earn additional milestone payments and to develop the PHD(TM)
System for the Japanese market."
Management noted that on January 7, 1998 the Company established a strategic
alliance with Teijin Limited of Osaka, Japan. The alliance includes a Stock
Purchase Agreement and a Joint Development Agreement. On January 16, 1998, Aksys
received $5 million for the purchase of 493,097 Aksys Common shares,
representing Teijin's purchase price of $10.14 per share, thus closing the Stock
Purchase Agreement. Conditional on the achievement of certain milestones
specified in the Joint Development Agreement, Teijin will make additional cash
payments to Aksys totaling up to $5,000,000.
-more-
<PAGE>
AKSYS, LTD. REPORTS FINANCIAL RESULTS FOR THE
YEAR AND FOURTH QUARTER ENDED DECEMBER 31, 1997
PAGE 2
For the fourth quarter ended December 31, 1997, the Company reported a net loss
of $3,192,000 ($0.23 per share), compared to a net loss of $2,437,000 ($0.18 per
share) for the same quarter last year. Operating expenses increased to
$3,696,000 during the fourth quarter of 1997, compared to $3,139,000 during the
fourth quarter of 1996. Net interest income decreased to $504,000 during the
quarter ended December 31, 1997, compared to $702,000 for the same quarter last
year, as cash and investments were expended on the Company's development
efforts.
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.
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 SUBSIDIARY
(a development stage enterprise)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Quarter ended December 31, Year ended December 31,
--------------------------- ---------------------------
1997 1996 1997 1996
------------ ------------ ------------- ------------
<S> <C> <C> <C> <C>
Revenues: $ - $ - $ - $ -
Expenses:
Research and development 2,481,000 2,098,000 10,887,000 6,516,000
Business development 302,000 209,000 1,044,000 548,000
General and administrative 913,000 832,000 3,849,000 2,559,000
------------ ------------ ------------- ------------
Operating loss (3,696,000) (3,139,000) (15,780,000) (9,623,000)
Net interest income 504,000 702,000 2,273,000 1,804,000
------------ ------------ ------------- ------------
Net loss $(3,192,000) $(2,437,000) $(13,507,000) $(7,819,000)
============ ============ ============= ============
Net loss per share $ (0.23) $ (0.18) $ (0.98) $ (0.63)
============ ============ ============= ============
Weighted average shares outstanding 13,863,000 13,695,000 13,791,000 12,442,000
============ ============ ============= ============
</TABLE>
SELECTED BALANCE SHEET DATA
<TABLE>
<CAPTION>
December 31, December 31,
1997 1996
------------ ------------
<S> <C> <C>
Cash and short-term investments $ 29,196,000 $ 45,650,000
Working capital 28,433,000 45,042,000
Long-term investments 2,808,000 780,000
Total assets 36,647,000 50,148,000
Total liabilities 1,359,000 1,464,000
Stockholders 'equity 35,288,000 48,684,000
</TABLE>
###
<PAGE>
Exhibit 99.2
CONTACTS: Rodney S. Kenley
Lawrence H.N. Kinet Founder and V.P. of
Chairman and CEO Business Development
Aksys, Ltd. Aksys, Ltd.
(847) 229-2222 (847) 229-2299
FOR IMMEDIATE RELEASE
- ---------------------
AKSYS, LTD. IS ISSUED TEN NEW PATENTS ON PHD(TM) PERSONAL HEMODIALYSIS SYSTEM
-PATENT PORTFOLIO NOW INCLUDES A TOTAL OF 21 U.S. PATENTS, 3 U.S. PATENT
ALLOWANCES, AND 4 FOREIGN PATENTS FOR THE PHD(TM) SYSTEM-
LINCOLNSHIRE, IL, FEBRUARY 11, 1998 - Aksys, Ltd. (Nasdaq/NNM: AKSY), today
announced the U.S. Patent and Trademark Office has awarded the Company ten
additional patents, and notified the Company that three other patent
applications have been allowed, on the Aksys PHD(TM) Personal Hemodialysis
System. The PHD(TM) System is being developed to allow patients to perform daily
hemodialysis outside of traditional dialysis clinics. Also, two additional
foreign patents have been awarded to the Company. These patents are in addition
to seven U.S. and two foreign patents it now owns and four U.S. patents to which
the Company has exclusive rights.
"These patents are the latest in a stream of patent awards which we expect to
continue for some time. We are pleased with the return on our significant
investment in technology and our progress in developing a strong patent
portfolio to protect it," stated Rod Kenley, the Company's founder and lead
inventor on most of the patents. "We believe this will become increasingly
valuable as economic and clinical forces favoring frequent, alternate site
hemodialysis continue to gain momentum and the demand for products specifically
designed for this application grow."
Among the technologies covered by these patents are methods of automatically
priming, rinsing, and quantifying the integrity and performance of an artificial
kidney with each use. Also covered are designs for blood tubing set connectors
and the process by which they are disinfected. The Company continues to progress
toward its goals of submitting an investigational device exemption during the
third quarter of 1998 and commencing a clinical evaluation of the PHD(TM) System
during the fourth quarter of 1998.
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:
WWW.AKSYS.COM.
This press release contains forward-looking statements that involve a number of
risks and uncertainties. The Company's actual results (including the timetable
for the first clinical evaluation) 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.
# # #
<PAGE>
Exhibit 99.3
CONTACTS:
Lawrence H.N. Kinet
Chairman and CEO
Aksys, Ltd.
(847) 229-2222
FOR IMMEDIATE RELEASE
K. SHAN PADDA JOINS AKSYS' BOARD OF DIRECTORS
LINCOLNSHIRE, IL, FEBRUARY 26, 1998 - Aksys, Ltd. (Nasdaq/NNM:AKSY) today
announced that K. Shan Padda has been elected to the Company's Board of
Directors. Mr. Padda was elected as a new member to the board of directors,
increasing the total number of members on Aksys' Board to seven.
"Mr. Padda has been successful in taking prototype medical devices and obtaining
regulatory approvals necessary to commercially launch those technologies,"
stated Lawrence H.N. Kinet, Chairman and CEO of Aksys, Ltd. "He has a vision to
take complex medical technologies into the home in a safe, controlled fashion.
This aligns well with Aksys' plan to encourage frequent hemodialysis in the home
setting."
Mr. Padda is co-founder, Chairman, Chief Executive Officer and Treasurer of
Sabratek Corporation, a bio-medical company that produces and markets
technologically-advanced, user-friendly and cost-effective therapeutic and
diagnostic medical systems designed specifically to meet the unique needs of the
alternate-site health care market. Sabratek's multi-therapy infusion and other
systems incorporate advanced communications technology which is designed to
reduce provider operating costs while maintaining the integrity and quality of
care. Sabratek's proprietary health care information system provides remote
programming as well as real-time diagnostic and therapeutic data capture
capabilities, allowing caregivers to monitor patient compliance more effectively
and allowing providers to develop outcome analyses and optimal clinical
protocols. Prior to founding Sabratek, Mr. Padda served as Chief Executive
Officer of Andens of Illinois, Inc., a medical supplies company which assembled
and marketed hospital operating room supply kits. Mr. Padda holds a B.A. degree
in Biology from Harvard University and is a 1995 inductee into the Chicagoland
Entrepreneur Hall of Fame.
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: WWW.AKSYS.COM.
# # #
<PAGE>
Exhibit 99.4
CONTACTS:
Lawrence H.N. Kinet
Chairman and CEO
Aksys, Ltd.
(847) 229-2222
FOR IMMEDIATE RELEASE
- ---------------------
JOHN LALONDE JOINS AKSYS, LTD. AS VICE PRESIDENT
OF RESEARCH AND DEVELOPMENT
LINCOLNSHIRE, IL, MARCH 24, 1998 - Aksys, Ltd. (Nasdaq/NNM:AKSY), a pioneer in
innovative dialysis systems, today announced that John LaLonde, formerly Global
Engineering Manager of Integrated Imaging Systems at GE Medical Systems, has
been appointed Vice President of Research and Development.
"Mr. LaLonde brings a proven track record of product development, advanced
systems management, biomedical engineering and strategic planning to Aksys,"
stated Lawrence H.N. Kinet, Chairman and CEO of Aksys, Ltd. "His
multidisciplinary experience, especially in integrating software into complex
medical systems, will be crucial as we prepare for the clinical evaluation and
global commercialization of the Aksys PHD(TM) Personal Hemodialysis System."
At GE Medical Systems, Mr. LaLonde held several senior management positions,
most recently Global Engineering Manager of Integrated Imaging Solutions, where
he managed a staff of 100 engineers. Key accomplishments during his career at GE
included the introduction of Java software platforms and a new class of
diagnostic workstations that shortened concept-to-product introduction by six
months. He also played a crucial role in corporate business development,
advanced technology planning, technical marketing and coordination of GE
Corporate R&D investments for Integrated Imaging Solutions. Mr. LaLonde
developed a common UNIX software platform for all GE Medical Systems businesses
and reduced overall engineering costs for diagnostic workstation products that
generated annual revenues in excess of $375 million.
Prior to his work at GE Medical Systems, Mr. LaLonde held various management
and engineering positions with Nicolet Instrument Corporation in Madison,
Wisconsin and with NORAN Instruments in Middleton, Wisconsin. Mr. LaLonde
received his B.S. in Physics with Minors in Chemistry, Biology and Mathematics
from the University of Minnesota and his M.S. in Biomedical Engineering from
the University of Wisconsin in Madison.
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: WWW.AKSYS.COM.
# # #
<PAGE>
Exhibit 99.5
CONTACT:
Lawrence H. N. Kinet
Chairman and CEO
Aksys, Ltd.
(847) 229-2222
FOR IMMEDIATE RELEASE
- ---------------------
AKSYS, LTD. REPORTS 1998 FIRST QUARTER RESULTS
LINCOLNSHIRE, IL, APRIL 21, 1998 - Aksys, Ltd. (NASDAQ: AKSY), a pioneer in
innovative dialysis systems, today reported financial results for the first
quarter ended March 31, 1998.
For the quarter ended March 31, 1998, the Company reported a net loss of
$3,610,000, or ($0.25) per share, compared to a net loss of $3,471,000, or
($0.25) per share, for the quarter ended March 31, 1997. Operating expenses
remained relatively constant year to year, as the increase in research and
development expenses was more than offset by the decrease in general and
administrative expenses. Net interest income for the quarter ended March 31,
1998 was $488,000, compared to $641,000 for the quarter ended March 31, 1997. On
March 31, 1998 the Company had total cash and short-term investments of $29
million, and long-term investments of $4.8 million.
"1998 is an important year for Aksys," stated Lawrence H.N. Kinet, Chairman and
CEO of Aksys, Ltd. "We have recently frozen the mechanical and electrical design
of the PHD Personal Hemodialysis System(TM), and we expect that the software
development and validation process will be completed over the next several
weeks. We continue to achieve our intermediate milestones as we prepare to file
for IDE approval and the subsequent clinical evaluation of the PHD(TM) System."
Aksys, Ltd. is developing hemodialysis products and services for patients
suffering from kidney failure. The Company's lead product in development, the
PHD(TM) System, is a next generation hemodialysis system 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 1998 FIRST QUARTER RESULTS
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 SUBSIDIARY
(a development stage enterprise)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Quarter ended March 31,
-----------------------------
1998 1997
------------ ------------
<S> <C> <C>
Revenues: $ - $ -
------------ ------------
Operating expenses:
Research and development 2,923,000 2,774,000
Business development 260,000 249,000
General and administrative 915,000 1,089,000
------------ ------------
Total operating expenses 4,098,000 4,112,000
------------ ------------
Operating loss (4,098,000) (4,112,000)
Net interest income 488,000 641,000
------------ ------------
Net loss $(3,610,000) $(3,471,000)
============ ============
Net loss per share - basic and diluted $ (0.25) $ (0.25)
============ ============
Weighted average shares outstanding 14,500,000 13,746,000
============ ============
</TABLE>
SELECTED BALANCE SHEET DATA
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
----------- -----------
<S> <C> <C>
Cash and short-term investments $28,977,000 $29,196,000
Working capital 27,908,000 28,433,000
Long-term investments 4,803,000 2,808,000
Total assets 38,458,000 36,647,000
Total liabilities 1,636,000 1,359,000
Stockholders' equity 36,822,000 35,288,000
</TABLE>
