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EXHIBIT 20.1
Contact:
AXYS PHARMACEUTICALS, INC.
John Walker
Chairman and CEO
(650) 829-1000
FOR IMMEDIATE RELEASE
---------------------
AXYS PHARMACEUTICALS ANNOUNCES
SECOND QUARTER 2000 FINANCIAL RESULTS
QUARTER IS PROFITABLE ON GAIN ON SALE OF AAT SUBSIDIARY
SOUTH SAN FRANCISCO, CA - AUGUST 2, 2000 - Axys Pharmaceuticals, Inc.
(Nasdaq: AXPH) today announced financial results for the quarter ended June
30, 2000. The results for the quarter included a gain on the sale of the
Company's subsidiary, Axys Advanced Technologies (AAT), to Discovery
Partners International, Inc. (Nasdaq: DPII), a San Diego-based provider of
drug discovery technologies to pharmaceutical and biopharmaceutical
companies. Axys reported net income of $21.4 million, or $0.61 per share,
in the second quarter of 2000, as compared to a loss of $13.2 million, or
$0.44 per share, in the second quarter of 1999.
Axys' net income of $21.4 million for the quarter reflected a $33 million
gain that resulted from the April 28, 2000 merger of its AAT combinatorial
chemistry subsidiary into Discovery Partners International (DPII), in which
Axys received 7.425 million shares of DPII common stock, a 40% ownership
interest in DPII. For accounting purposes, the $33 million gain accounts
for approximately 60% of the total gain on the transaction; the remaining
40% has been booked as an offset to the investment in DPII and will be
reported as gain on sale in future quarterly statements as Axys' ownership
interest in DPII declines. Year-to-date, net income of $12.9 million
compared favorably to the $21 million net loss reported for the six-month
period ended June 30, 1999. The results for the quarter and year-to-date do
not include Axys' equity interest in the results of DPII for the two months
ended June 30, 2000.
Second quarter 2000 operating expenses from continuing operations were
$13.1 million, representing a 34% reduction from 1999's second quarter
operating expenses of $19.7 million. Year-to-date operating expenses of
$25.7 million compared favorably to the $37.4 million from continuing
operations reported for the first half of 1999. The results
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reflected action taken by management in mid-1999 to eliminate early stage
research as well as to realign research expertise and programs to focus on
nearer-term oncology research and development opportunities.
General and administrative expenses of $2.8 million for the second quarter
of 2000 were 29% below the same period in 1999. Research and development
expenses of $10.4 million for the current quarter showed a 34% decrease
from the year ago quarter.
Collaboration partner revenues for Q2 2000, comprised primarily of research
funding for Axys' collaborative programs with Merck and Aventis, were $1.9
million, compared to revenues from continuing operations of $4.9 million
for the corresponding quarter a year ago. The difference represented
reduced research funding related to collaborations that were concluded last
year in keeping with the Company's narrowed focus on an oncology pipeline.
Cash, marketable securities and receivables totaled $42 million as of June
30, 2000. This balance does not include the proceeds from the equity
investment from Acqua Wellington announced in July 2000, or the market
value of the shares of DPII stock owned by the Company. On July 27, 2000
DPII stock began trading on Nasdaq following its initial public offering.
John Walker, Chairman and Chief Executive Officer, stated, "At the
beginning of 1998, we launched our strategy to fund ongoing drug discovery
and development activities by incubating several affiliated technology
units, eventually spinning them out as independent value-creating
businesses. Since that time, we have executed on that strategy, with the
spinouts of our agricultural biotech venture, Akkadix; our pharmacogenomics
business, PPGx; and most recently, the merger of AAT with DPII. Based upon
the DPII IPO price last Thursday, the value created by the AAT spinout was
approximately $134 million. As a result, the cash and marketable securities
on hand at July 27 represents over five years of coverage based on a
current projected annual burn rate of $25 million.
"I am personally very pleased at the marriage of our strong science with a
much stronger balance sheet. We can now pursue our strategy of becoming a
vertically integrated oncology company with renewed vigor, knowing that our
partnerships, as well as our affiliates provide a tangible level of support
for our market valuation as well as our cash needs," Walker indicated.
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COMPANY HIGHLIGHTS
Highlights of the quarter's developments include:
o TRYPTASE INHIBITOR FOR ULCERATIVE COLITIS: In June, Axys announced
that, following its review of a planned interim data analysis of its
Phase II clinical study of APC-2059, the study would continue to its
conclusion which involves evaluating 61 patients' clinical endpoints by
the end of this calendar year. The planned interim analysis reviewed a
variety of data from 25 patients, including the safety and tolerability
of the drug, efficacy as measured by the Disease Activity Index (DAI),
a clinically accepted measurement of the severity of ulcerative
colitis; maintenance of the therapeutic benefit 14 days post-therapy;
timing for onset of benefit; and an investigators' assessment after the
course of therapy was completed.
o PPGX DEVELOPMENTS: PPGx, a majority-owned joint venture of Axys and
PPD, Inc. (Nasdaq: PPDI) announced a collaboration to provide a
web-based education and information resource based on important
developments in pharmacogenomics for consumers and healthcare
professionals. PPD and ADOCTORINYOURHOUSE, a premier health and
wellness community Internet company, are providing the site design,
educational material production and marketing infrastructure in
collaboration with the pharmacogenomic technical expertise and services
of PPGx to create a global Internet resource on pharmacogenomics. The
pharmacogenomics site will provide educational videos and chat rooms,
insight to ethical issues, links to related sites and support groups
for consumers.
o ASTHMA COLLABORATION: In May, Axys' collaborative partner Bayer AG
indicated that it was discontinuing development of BAY 44-3428, a
potential oral treatment for asthma due to toxicological properties of
the compound.
Axys Pharmaceuticals, Inc. is an integrated small molecule drug
discovery and development company. Axys has a broad pipeline of
products for chronic therapeutic applications that are partnered with
world-class pharmaceutical companies and a proprietary product
portfolio in oncology. Axys is also building shareholder value
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through affiliated businesses that leverage the Axys technologies in
order to provide capital for Axys' drug discovery and development
programs. In addition to the minority interest in DPII resulting from
the AAT-DPII merger, Axys' technology leveraging businesses are: PPGx,
a majority-owned pharmacogenomics company, and Akkadix Corporation, an
agricultural biotechnology company.
Except for the historical information contained herein, this press
release contains forward-looking statements that involve risks and
uncertainties which could cause Axys' actual results to differ
materially from those discussed here, including the risks inherent in
early stage development and the reliance on the efforts of
collaborative partners, the risk that Axys collaborations will not be
successful, the risk that clinical trials will not proceed as
anticipated or may not be successful, the risk that Axys will not be
successful in entering into new collaborations, market risk associated
with Axys' substantial ownership interest in DPII, competition and
marketing risk, and general economic conditions that may affect Axys'
actual results and developments. Additional factors that could cause or
contribute to such differences include, but are not limited to, those
discussed in the sections entitled "What Factors Could Cause Our
Results to Differ Significantly from Those You Might Expect?" and "What
Other Matters Should Stockholders Consider with Respect to Axys?" in
the Axys' SEC Reports, including Axys' report on Form 10-K for the
fiscal year ended December 31, 1999.
For more information about Axys Pharmaceuticals, Inc., please visit the
company's website at http:\\www.axyspharm.com.
# # #
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AXYS PHARMACEUTICALS, INC.
Consolidated Statements of Operations
(unaudited)
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three months ended June 30, Six months ended June 30,
--------------------------- -------------------------
2000 1999 2000 1999
--------------------- ---------------- ------------------ ---------------
<S> <C> <C> <C> <C>
Revenues
Collaboration and licensing revenues $ 1,488 $ 4,734 $ 2,886 $13,063
Service revenues 366 162 619 342
------------------ -------------- ----------------- -------------
Total revenues 1,854 4,896 3,505 13,405
Operating expenses:
Research and development 10,437 15,865 20,256 31,069
General and administrative 2,757 3,865 6,028 6,356
Restructuring charge (79) - (625) -
------------------ -------------- ----------------- -------------
Total operating expenses 13,115 19,730 25,659 37,425
------------------ -------------- ----------------- -------------
Operating loss (11,261) (14,834) (22,154) (24,020)
Interest income, net 347 295 223 695
Equity interest in loss of joint venture - (267) - (830)
Minority interest 380 625 788 911
Other income, net (2) - (2) -
------------------ -------------- ----------------- -------------
Loss from continuing operations (10,536) (14,181) (21,145) (23,244)
Discontinued operations
Income (Loss) from operations of
discontinued segment (1,056) 967 1,061 2,283
Gain on disposal of segment 32,987 - 32,987 -
------------------ -------------- ----------------- -------------
Net income (loss) $ 21,395 $(13,214) $ 12,903 $(20,961)
======== ========= ========= =========
Basic and diluted net loss per share
From continuing operations $ (0.30) $ (0.47) $ (0.63) $ (0.77)
======== ========= ========= =========
Basic and diluted net income (loss) per share $ 0.61 $ (0.44) $ 0.38 $ (0.69)
======== ========= ========= =========
Shares used in computing basic and diluted
net income (loss) per share 35,289 30,359 33,678 30,340
</TABLE>
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Consolidated Balance Sheet Data
(unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
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(in thousands)
<S> <C> <C>
Cash & marketable investments $39,510 $ 26,657
Accounts receivable 2,396 4,786
Total assets 98,444 55,734
Accumulated deficit (264,308) (277,211)
Total stockholders' equity 64,340 14,047
</TABLE>
Note: Quarterly and year to date results do not include Axys' equity interest
in the results of DPII for the two months ended June 30, 2000.
