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December 15, 1997
To Our Stockholders:
Presumably, you have already received a proxy statement and a proxy card
relating to the formation of AXYS Pharmaceuticals Inc. through the merger of
Sequana Therapeutics and Arris Pharmaceutical. At the time that information was
mailed, we had not completed the selection of members of the Board of Directors
of AXYS. I am pleased to report to you that a new board has been designated,
consisting of nine highly respected individuals, each representing noteworthy
accomplishments in business, science and in public administration. Working
closely with Irwin Lerner, chairman of Sequana's board, we have determined that
the board will consist of the following individuals:
- Brook Byers, General Partner, Kleiner Perkins Caufield & Byers;
- Tony Evnin, Ph.D., General Partner, Venrock Associates;
- Vaughn Kailian, President and Chief Executive Officer, COR Therapeutics;
- Ann Arvin, M.D., Professor, Stanford University School of Medicine;
- Donald Kennedy, Ph.D., Professor and President emeritus, Stanford
University and former FDA Commissioner;
- Kevin Kinsella, Chief Executive Officer, Sequana;
- Irwin Lerner, Chairman of the Board of Directors, Sequana;
- Leighton Reed, M.D., Chief Executive Officer, Aviron, and former Chief
Executive Officer, Affymax; and
- John Walker, President and Chief Executive Officer, Arris.
I hope that you will agree that this is an exceptionally strong and
balanced board. We are particularly fortunate to have Brook Byers and Tony
Evnin, two of the most successful and highly respected venture capitalists in
the health care industry, agree to remain as directors. Vaughn Kailian, whose
background includes many years at Marion Merrell Dow Inc., and Irwin Lerner, who
served as chairman and Chief Executive Officer of Hoffmann-La Roche Inc., bring
many years of experience in the pharmaceutical industry to the new Board of
Directors. In addition, this Board will have the opportunity to tap the wealth
of regulatory and clinical expertise of Donald Kennedy and Dr. Ann Arvin, both
professors at Stanford University. Finally, we look forward to the contributions
of Leighton Reed, formerly at Affymax and Affymetrix and currently at Aviron,
and Kevin Kinsella, formerly a venture capitalist at Avalon Ventures and
currently at Sequana, who have each participated in, and led several biotech
companies to success. In short, we will have a highly qualified Board of
Directors poised to help us establish AXYS as a leader in the biopharmaceutical
industry.
As you consider both this supplement and our proxy statement, I urge you to
support our efforts to merge Sequana and Arris. Although some questions have
been raised relative to valuation issues, you should know that the valuation
decisions were made after extensive due diligence and analysis, including advice
from Morgan Stanley, a global investment bank. If you compare the 30-day
trailing averages of the stock of Arris and Sequana, the price we have offered
to Sequana represents a 19.3 percent premium -- a premium well within the range
of similar merger transactions. You should
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December 15, 1997
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also recall that the offer was made prior to the announcement by Sequana of a
significant, $100+ million deal with Parke-Davis. The Parke-Davis collaboration
recognizes many of the key functional genomics and gene identification
technologies at Sequana and reconfirms the value and potential of Sequana's
technologies that are reflected in the price offered by Arris.
As we move forward to create AXYS -- a company that we believe will for the
first time truly integrate gene finding techniques with those required to make
drugs -- I hope you understand that the heart of our effort is in creating a new
company, one with a market position unlike either of the companies we intend to
merge. There are a host of opportunities before AXYS -- in terms of new
collaborations, in terms of monetizing technologies, and last but not least, in
terms of bringing new products to market. The Board of Directors and I urge you
to vote "yes" to make this vision a reality.
If you have not received a copy of the proxy statement, or if you have any
questions, please feel free to contact me or our Investor Relations Department
at 829-1000.
Your vote is important to us. I thank you in advance for your support.
Sincerely,
/s/ John P. Walker
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John P. Walker
President
Chief Executive Officer
The merger of a subsidiary of Arris with and into Sequana is described more
fully in the Joint Proxy Statement/Prospectus sent to Arris stockholders and the
enclosed supplement. Arris stockholders should read the Joint Proxy
Statement/Prospectus and supplement in their entirety before determining whether
or not to vote in favor of the issuance of shares in connection with the Sequana
transaction and the related proposals at the Arris Special Stockholders'
Meeting. This letter contains forward-looking statements that involve risks and
uncertainties. Arris' and Sequana's actual results may differ materially from
those anticipated in those forward-looking statements as a result of certain
factors, including those discussed in the Joint Proxy Statement/Prospectus and
in the documents incorporated therein by reference. Such risk factors should be
considered carefully by Arris stockholders in determining whether or not to vote
in favor of the issuance of shares of Arris Common Stock in the merger and the
related proposals.
