<PAGE> 1
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
------------------------
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000
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: 0-22788
AXYS PHARMACEUTICALS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 22-2969941
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
</TABLE>
180 KIMBALL WAY
SOUTH SAN FRANCISCO, CALIFORNIA 94080
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(650) 829-1000
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
The number of outstanding shares of the registrant's Common Stock, $0.001
par value, was 37,142,691 as of October 31, 2000.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE> 2
AXYS PHARMACEUTICALS, INC.
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)*
Consolidated Balance Sheets -- September 30, 2000 and
December 31, 1999........................................... 1
Consolidated Statements of Operations -- Three and nine
months ended September 30, 2000 and 1999.................... 2
Consolidated Statements of Cash Flows -- Nine months ended
September 30, 2000 and 1999................................. 3
Notes to Consolidated Financial Statements -- September 30,
2000........................................................ 4
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 9
Item 3. Quantitative and Qualitative Disclosure About Market Risk... 14
PART II. OTHER INFORMATION
Item 1. Legal Proceedings........................................... 15
Item 2. Changes in Securities....................................... 15
Item 3. Defaults Upon Senior Securities............................. 15
Item 4. Submission of Matters to a Vote of Security Holders......... 15
Item 5. Other Information........................................... 15
Item 6. Exhibits and Reports on Form 8-K............................ 15
Signatures........................................................... 16
</TABLE>
---------------
* The financial information contained herein should be read in conjunction with
the consolidated financial statements and notes thereto included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1999,
filed with the Securities and Exchange Commission on March 8, 2000.
i
<PAGE> 3
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AXYS PHARMACEUTICALS, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
2000 1999(1)
------------- ------------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents................................... $ 40,008 $ 23,577
Marketable investments...................................... 11,307 3,080
Accounts receivable......................................... 1,163 5,340
Due from affiliates......................................... 3,195 31
Prepaid expenses and other current assets................... 2,635 3,197
--------- ---------
Total current assets.............................. 58,308 35,225
Property and equipment, net................................. 13,492 18,873
Investment in equity method investee........................ 40,370 --
Debt issuance costs......................................... 7,068 --
Other assets................................................ 1,585 1,636
--------- ---------
Total Assets...................................... $ 120,823 $ 55,734
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable............................................ $ 1,852 $ 4,563
Accrued compensation........................................ 1,932 2,980
Other accrued liabilities................................... 2,905 7,367
Current portion of capital lease and debt obligations....... 9,499 23,646
--------- ---------
Total current liabilities......................... 16,188 38,556
Debt obligations, net of current portion.................... 26,000 --
Capital lease obligations, net of current portion........... 2,500 57
Minority interest in joint venture.......................... 1,918 3,074
STOCKHOLDERS' EQUITY:
Common stock................................................ 343,171 291,328
Accumulated other comprehensive income (loss)............... 2,072 (70)
Accumulated deficit......................................... (271,026) (277,211)
--------- ---------
Total stockholders' equity........................ 74,217 14,047
--------- ---------
Total Liabilities and Stockholders' Equity........ $ 120,823 $ 55,734
========= =========
</TABLE>
---------------
(1) The balance sheet at December 31, 1999 has been derived from the audited
financial statement at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements.
See accompanying notes.
1
<PAGE> 4
AXYS PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------- --------------------
2000 1999 2000 1999
------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Revenues
Collaboration and license revenues............. $ 2,611 $ 4,493 $ 5,496 $ 17,556
Service revenues............................... 589 304 1,209 646
------- -------- -------- --------
Total revenue.......................... 3,200 4,797 6,705 18,202
Operating expenses Research and development...... 8,573 13,703 28,829 44,771
General and administrative..................... 3,737 4,337 9,765 10,693
Restructuring charge........................... -- 7,008 (625) 7,008
------- -------- -------- --------
Total operating expenses............... 12,310 25,048 37,969 62,472
------- -------- -------- --------
Operating loss................................... (9,110) (20,251) (31,264) (44,270)
Interest income.................................. 458 785 1,212 2,449
Interest expense................................. (531) (842) (1,062) (1,843)
Other............................................ 672 (679) 1,458 (567)
------- -------- -------- --------
Loss from continuing operations.................. (8,511) (20,987) (29,656) (44,231)
Discontinued operations Income from operations of
discontinued segment........................... -- 1,047 1,061 3,329
Gain on disposal of segment.................... 1,793 -- 34,780 --
------- -------- -------- --------
Net (loss) income................................ $(6,718) $(19,940) $ 6,185 $(40,902)
======= ======== ======== ========
Basic and diluted net loss per share from
continuing operations.......................... $ (0.23) $ (0.69) $ (0.86) $ (1.46)
======= ======== ======== ========
Basic and diluted net income per share from
discontinued operations........................ $ 0.05 $ 0.03 $ 1.03 $ 0.11
======= ======== ======== ========
Basic and diluted net (loss) income per share.... $ (0.18) $ (0.66) $ 0.18 $ (1.35)
======= ======== ======== ========
Shares used in computing basic and diluted net
(loss) income per share........................ 36,603 30,359 34,653 30,340
======= ======== ======== ========
</TABLE>
See accompanying notes.
2
<PAGE> 5
AXYS PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
--------------------
2000 1999
-------- --------
(IN THOUSANDS)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)........................................... $ 6,185 $(40,902)
Adjustments to reconcile net income (loss) to net cash and
cash equivalents used in operating activities:
Non-cash restructuring charge............................. (79) 2,920
Gain on disposal of segment............................... (34,780) --
Write off of investment in Genos.......................... -- 1,072
Depreciation and amortization............................. 5,715 8,419
Loss (Gain) on disposal of fixed assets................... 188 (178)
(Gain) on disposal of marketable security................. (712) --
Equity interest in loss of joint venture.................. 409 836
Forgiveness of note receivable from officer............... 186 183
Changes in assets and liabilities:
Accounts receivable..................................... 4,177 (2,030)
Due from affiliates..................................... (3,262) --
Other current assets.................................... 562 1,151
Other long-term assets.................................. (1,548) (135)
Other liabilities....................................... (8,142) (2,788)
-------- --------
Net cash and cash equivalents used in operating
activities........................................ (31,101) (31,452)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Available-for-sale securities:
Purchases................................................. (11,835) (76,569)
Maturities................................................ 5,375 73,846
Minority interest........................................... (1,156) 3,043
Proceeds from sale of marketable securities................. 1,087 --
Net cash proceeds from sale of AAT to DPI................... 600 --
Proceeds from sale of property and equipment................ 14 255
Transaction costs on disposal of segment.................... (1,816) --
Net purchase of property and equipment...................... (5,177) (8,866)
-------- --------
Net cash and cash equivalents (used in) investing
activities................................................ (12,908) (8,291)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common stock.................. 46,144 938
Proceeds from notes payable and capital lease financing..... 66,375 32,308
Principal payments on notes payable and capital leases...... (52,079) (25,665)
-------- --------
Net cash and cash equivalents provided by financing
Activities........................................ 60,440 7,581
-------- --------
Net increase (decrease) in cash and cash equivalents........ 16,431 (32,162)
Cash and cash equivalents, beginning of period.............. 23,577 36,261
-------- --------
Cash and cash equivalents, end of period.................... $ 40,008 $ 4,099
======== ========
</TABLE>
See accompanying notes.
3
<PAGE> 6
AXYS PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The unaudited consolidated financial statements included herein have been
prepared by Axys Pharmaceuticals, Inc. ("Axys" or the "Company") according to
the rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in complete financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations. The
financial statements reflect, in the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary to state fairly the
financial position and results of operations as of and for the periods
indicated. The results of operations for the nine months ended September 30,
2000 are not necessarily indicative of the results to be expected for subsequent
quarters or the full fiscal year.
On April 28, 2000, the Company completed the sale of its combinatorial
chemistry business, Axys Advanced Technologies, Inc. ("AAT"), to Discovery
Partners International, Inc. (Nasdaq: DPII "DPI"). The Company reclassified
operating results previously reported for the three and nine months ended
September 30, 1999 to reflect the results of the combinatorial chemistry
business as a discontinued operation, in accordance with Accounting Principles
Board Opinion No. 30 (APB 30).
These financial statements should be read in conjunction with the audited
financial statements and the notes thereto included in the Company's 1999 Annual
Report on Form 10-K filed with the Securities and Exchange Commission.
Reclassifications
Certain 1999 amounts have been reclassified to conform to the September 30,
2000 presentations.
2. ISSUANCE OF CONVERTIBLE SECURED DEBT
On September 22, 2000, Axys issued $26,000,000 in Senior Secured
Convertible Notes (the "Notes"), which bear interest at 8% per annum. Interest
is payable quarterly and may be paid in cash or in shares of Axys' common stock
at Axys' sole discretion. The Notes are convertible into the Company's common
stock with a conversion price of $7.06 per share. The Notes are secured by
shares of DPI held by Axys. Axys retains the right to substitute other
appropriate collateral.
In connection with these notes, the Company issued warrants to purchase an
aggregate of 1,841,360 of the Company's common stock. These warrants have an
exercise price per share ranging from $8.82 to $10.59, and expire October 1,
2004. The fair value of these warrants (using the Black-Sholes option-pricing
model to value the warrants), of $5.7 million is treated as debt issuance costs
of the Notes, and was capitalized and is being amortized to interest expense
using the effective interest method over the life of the debt. These debt
issuance costs along with other related issuance costs are presented as debt
issuance costs, net of amortization, of $7.1 million on the accompanying
consolidated balance sheet as of September 30, 2000.
3. EQUITY FINANCING
On July 21, 2000, the Company completed the sale of $10 million of its
common stock, par value $.001 per share, under its effective shelf registration
statement. 1,639,345 shares of common stock were sold at a price of $6.10 per
share, resulting in net proceeds of $10 million under the Company's effective
shelf registration statement. Pursuant to a common stock purchase agreement, the
Company may, from time to time, and at its own discretion, issue and sell up to
an additional $40 million of common stock, subject to
4
<PAGE> 7
AXYS PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2000
(UNAUDITED)
certain conditions, at a price per share based on the daily volume weighted
average price of the Company's common stock over a certain period of time less a
discount ranging from 4.5% to 6.0% over the fifteen month period beginning July
21, 2000. For information related to this financing see our registration
statements dated April 28 and July 20, 2000 on file with the Securities and
Exchange Commission.
4. DISCONTINUED OPERATIONS
On April 28, 2000, Axys completed the sale of AAT, its combinatorial
chemistry business, to DPI. Under the terms of the agreement, AAT was merged
with a subsidiary of DPI and the Company received as consideration 7,425,000
shares of common stock of DPI (fair value of $8 per share on the date of
acquisition), $50,000 in cash, $550,000 in the form of a note receivable and a
warrant to purchase 200,000 additional shares of DPI at $8 per share. The
revenues of the combinatorial chemistry business were $5.1 million for the four
months ended April 30, 2000, and $10.9 million for the nine months ended
September 30, 1999. The net income of the combinatorial chemistry business was
$1.1 million for the four months ended April 30, 2000, and $3.3 million for the
nine months ended September 30, 1999.
As a result of the sale of AAT, the Company's combinatorial chemistry
business has been presented as discontinued operations for the nine months ended
September 30, 1999 and through April 30, 2000. The results of operations for the
discontinued segment are included in discontinued operations in the consolidated
statements of operations for the three and nine months ended September 30, 1999.
5. DUE FROM AFFILIATES
At September 30, 2000 due from affiliates consists of $2.3 million in loans
due from its 23% owned affiliate, Akkadix Corporation, and $0.9 million due from
DPI. The loans to Akkadix bear interest at a rate of 8% per year. All unpaid
principal together with all accrued but unpaid interest are due and payable to
the Company at the earlier of August 22, 2001 or the first business day
immediately following such date as the Company receives any cash totaling $8
million or more. Also, Axys has the right to convert $2 million of the loans
into Series E Preferred Stock in Akkadix. The amounts due from DPI bear no
interest.
Also in September 2000, Axys entered into a credit agreement with its 82%
owned subsidiary, PPGx Inc., pursuant to which the Company, at the request of
PPGx, shall from time to time make loans to PPGx in an aggregate outstanding
principal amount not to exceed $3.15 million. The unpaid principal amount of the
loans, which are to be used to fund PPGx operating costs, accrues interest at a
rate of 8%, and matures in June 2001. The loans are evidenced by a promissory
note. As of September 30, 2000, PPGx had borrowed $350,000 under the agreement.
The note with PPGx is eliminated in consolidation.
6. INVESTMENT IN EQUITY METHOD INVESTEE
Investment in equity method investee consists of the Company's investment
in DPI as a result of the merger agreement between DPI and the Company for the
sale of AAT in April 2000. The Company accounts for its investment in DPI under
the equity method of accounting.
In July 2000, DPI completed its initial public offering (IPO) of its common
stock. Prior to the IPO, the Company held 7,425,000 shares of DPI common stock,
which represented a 43% ownership of the outstanding shares of DPI. As a result
of DPI's IPO, Axys' ownership percentage was diluted to approximately 31% as of
September 30, 2000. In connection with this transaction Axys realized a portion
of the unrealized gain from the sale of AAT of $1.8 million. The shares of DPI
are subject to a lock-up arrangement that restricts Axys' ability to sell them,
which expires on January 27, 2001.
5
<PAGE> 8
AXYS PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2000
(UNAUDITED)
The Company has a Key Personnel Stock Option Plan, adopted in 1999, whereby
certain key personnel of the Company have the right to participate in the
increased equity generated from Axys' affiliated companies. If Axys' affiliated
companies meet certain financial equity targets, then the participants in the
plan have the right to acquire as beneficial owners up to 5% of the increased
equity. As a result of this plan, the financial statements reflect a charge of
$1.7 million to the gain on sale of AAT to reflect the key personnel rights to
the increased equity.
The market value of DPI stock held by Axys as of September 30, 2000 was
approximately $150.8 million.
At September 30, 2000 the Company's equity-method investee summarized
balance sheet information is as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30,
DOLLARS IN THOUSANDS 2000
-------------------------------------------------------- -------------
<S> <C>
Current assets.......................................... $117,547
Non-current assets...................................... 60,445
Non-current liabilities................................. 812
</TABLE>
Summarized statement of operations information of the Company's
equity-method investee for the nine month period ended September 30, 2000 is as
follows:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30,
DOLLARS IN THOUSANDS 2000
------------------------------------------------ ------------------------
<S> <C>
Net sales....................................... $ 24,861
Loss from operations............................ (11,454)
Net loss........................................ (11,576)
</TABLE>
7. RESTRUCTURING CHARGE
In December 1999, the Company completed the closing of its San Diego, CA
operations and had finished the relocation of its oncology genomics activities
to its South San Francisco headquarters. As a result of this action, a one-time
charge of $7.0 million was recorded during the third quarter of 1999, of which
$2.2 million related to severance and other employee-related costs, $1.7 million
related to facilities costs, $1.8 million related to the disposal of assets, and
$1.3 million in other costs associated with the restructuring. During the third
quarter of 2000, the restructuring reserve was reduced by actual cash payments.
The following table summarizes the Company's 2000 restructuring charge
activity for the nine months ended September 30, 2000 (in thousands):
<TABLE>
<CAPTION>
RESERVE BALANCE RESERVE BALANCE
AT DECEMBER 31, AT SEPTEMBER 30,
DESCRIPTION 1999 OTHER PAYMENTS 2000
----------- --------------- ----- -------- ----------------
<S> <C> <C> <C> <C>
Severance and benefits...................... $(1,095) $ 79 $ 938 $(78)
Facilities.................................. (748) 546 202 --
Contractual research commitments............ (81) -- 81 --
------- ---- ------ ----
Total............................. $(1,924) $625 $1,221 $(78)
======= ==== ====== ====
</TABLE>
The Company anticipates that the remaining accruals will be utilized by
December 31, 2000.
6
<PAGE> 9
AXYS PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2000
(UNAUDITED)
8. COMPREHENSIVE INCOME (LOSS)
Comprehensive loss is comprised of net loss and unrealized holding gains
and losses on available-for-sale securities. Components of comprehensive loss
are as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------- ------------------
2000 1999 2000 1999
------- -------- ------ --------
<S> <C> <C> <C> <C>
Net income/(loss).................................. $(6,718) $(19,940) $6,185 $(40,902)
Other comprehensive (loss) income.................. (44) 58 2,142 (51)
------- -------- ------ --------
Comprehensive (loss) income........................ $(6,762) $(19,882) $8,327 $(40,953)
======= ======== ====== ========
</TABLE>
9. SEGMENT INFORMATION
Prior to April 28, 2000, the Company operated in three business segments:
drug discovery, combinatorial chemistry and other affiliated businesses. The
drug discovery segment focused its own resources on discovering and developing
therapeutics for the treatment of various types of cancer and collaborates with
large pharmaceutical companies in discovering therapeutics for chronic diseases.
The combinatorial chemistry segment was AAT, a wholly owned subsidiary that
marketed combinatorial chemistry compounds, enabling technology and services.
The other affiliated businesses segment consisted of PPGx, Inc. ("PPGx"), an 82%
owned subsidiary that engaged in the business of providing pharmacogenomic (the
science of how genetic variations among individuals affects drug safety and
efficacy) products and services to the pharmaceutical and biotechnology
industries, and Akkadix Corporation ("Akkadix"), an approximately 23% owned
affiliate in the agricultural biotechnology business. The segments were
strategic business units managed separately, based on the differences in the
technologies of their respective product lines. On April 28, 2000, the Company
completed the sale of its combinatorial chemistry business, AAT to DPI. All
financial results related to the combinatorial chemistry business are accounted
for as discontinued operations in accordance with APB 30.
The accounting policies of the business segments are the same as those
described in the summary of significant accounting policies. The Company does
not currently have a measure of interest income or interest expense by business
segment.
The table below details the segment information prior to the sale of the
combinatorial chemistry business, with a reconciling column to reflect totals
related to continuing operations.
<TABLE>
<CAPTION>
BUSINESS SEGMENTS
------------------------------------------------------------------
OTHER CONTINUING
DRUG AFFILIATED OPERATIONS
DISCOVERY AAT BUSINESSES RECONCILIATION TOTAL
--------- ------- ---------- -------------- ----------
<S> <C> <C> <C> <C> <C>
NINE MONTHS ENDED SEPTEMBER 30,
2000
Revenue............................ $ 5,533 $ 5,071 $1,172 $ (5,071) $ 6,705
Income (loss)...................... (23,235) 1,061 (6,421) (1,061) (29,656)
Identifiable assets................ 117,630 7,758 3,193 (7,758) 120,823
NINE MONTHS ENDED SEPTEMBER 30,
1999
Revenue............................ $ 17,556 $10,909 $ 646 $(10,909) $ 18,202
Income (loss)...................... (39,866) 3,329 (4,365) (3,329) (44,231)
</TABLE>
Other affiliated businesses represent the results of Akkadix's and PPGx's
principal activities, which commenced in 1998 and 1999, respectively. The
Company's ownership of Akkadix was reduced to a level
7
<PAGE> 10
AXYS PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2000
(UNAUDITED)
below 50% in August 1999. Therefore, Akkadix's activities are excluded above for
the nine months ended September 30, 2000.
10. REVOLVING LINE OF CREDIT
The Company has a $30.0 million revolving line of credit with Foothill
Capital Corporation. There was no outstanding balance at September 30, 2000. The
line is subject to the terms of a security agreement and amounts drawn under the
line are required to be fully secured by the Company's cash and cash
equivalents, and marketable investments. Interest is due on the line monthly and
is computed at the reference rate for Wells Fargo Bank, which approximated 9.5%
at September 30, 2000. The line is available through July 2002.
PPGx, Inc. increased its revolving line of credit with a third party bank
from $8.0 million to $9.0 million during the second quarter of 2000. This line
is guaranteed by PPD, Inc. ("PPD"), a minority owner of PPGx. Interest is
accrued monthly and is computed at the LIBOR rate, which approximated 6.62% at
September 30, 2000. The amount outstanding on this line as of September 30, 2000
was $9.0 million. The balance of any unpaid principal and interest is due June
2001.
11. RECENT PRONOUNCEMENTS
In July, 1999, the Financial Accounting Standards Board, or FASB, announced
the delay of the effective date of Statement of Financial Accounting Standards
133, or FAS 133, "Accounting for Derivative Instruments and Hedging Activities"
for one year, to the first quarter of 2001. Also, in June 2000, the FASB issued
FAS 138, "Accounting for Certain Derivative Instruments and Certain Hedging
Activities". FAS 133 as amended by FAS 138 is intended to be comprehensive
guidance on accounting for derivatives and hedging activities. It requires
companies to recognize all derivatives as either assets or liabilities on the
balance sheet and measure those instruments at fair value. Gains or losses
resulting from changes in the values of those derivatives would be accounted for
depending on the use of the derivative and whether it qualifies for hedge
accounting under FAS 133 and 138. Because of the Company's minimal use of
derivatives, management does not anticipate that the adoption of the new
Statement will have a significant effect on earnings or the financial position
of the Company.
On March 31, 2000, the FASB issued Interpretation No. 44, "Accounting for
Certain Transactions involving Stock Compensation", which provides guidance on
several implementation issues related to Accounting Principles Board ("APB")
Opinion No. 25. The most significant of which are clarification of the
definition of employee for purposes of applying Opinion 25 and the accounting
for options that have been repriced. Under the interpretation, a modification
that reduces the exercise price of a fixed stock option award, commonly referred
to as repricing, effectively changes the terms of the award to a variable award
subject to compensation expense. The Company currently does not have any options
that have been repriced since the effective date of APB Opinion 25. The impact
of the interpretation on our financial position and results of operations is not
material.
In June 2000, the Securities and Exchange Commission delayed the
implementation date of Staff Accounting Bulletin No. 101, or SAB 101, "Revenue
Recognition in Financial Statements", until no later than the fourth quarter of
2000. SAB 101 provides guidance on applying generally accepted accounting
principles to revenue recognition issues in financial statements. The Company
has already adopted SAB 101, as required, and its adoption had no significant
effect on the financial results of the Company.
8
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion contains both historical information and
forward-looking statements that involve risks and uncertainties. Forward-looking
statements include projections and other statements about events that may occur
at some point in the future. The Company's actual results could differ
significantly from those described in the forward-looking statements. Factors
that could cause or contribute to such differences include, but are not limited
to, those discussed in this section as well as under "Item 1. Business,"
including, "What Factors Could Cause Our Results To Differ Significantly From
Those You Might Expect" and "What Matters Should Stockholders Consider with
Respect to the Company?", in the Company's Annual Report on Form 10-K for the
year ended December 31, 1999 filed with the Securities and Exchange Commission.
OVERVIEW
The Company is an early-stage biopharmaceutical company focused on the
discovery, development and commercialization of small molecules. The Company
invests its own resources in discovering and developing therapeutics for the
treatment of various types of cancer and collaborates with large pharmaceutical
companies in discovering therapeutics for chronic diseases for which there are
large markets.
After the sale of its AAT subsidiary to Discovery Partners International
Inc. (DPI) the Company currently has two affiliated companies, which were also
formed to provide future capital to Axys for its drug discovery operations:
- Akkadix Corporation ("Akkadix"), an agricultural biotechnology company
founded in 1998, was approximately 23% owned by Axys at September 30,
2000. Akkadix has incurred losses since inception, is separately managed,
and is primarily funded by third parties.
- PPGx, Inc. ("PPGx"), a pharmacogenomics subsidiary founded in 1999, is
82% owned by Axys and 18% owned by PPD, Inc. ("PPD"). Financial results
of PPGx are consolidated into Axys' financial results. It has incurred
losses since inception, is separately managed, and is primarily funded by
third parties.
On July 21, 2000, the Company completed the sale of $10 million of its
common stock, par value $.001 per share, under its effective shelf registration
statement. 1,639,345 shares of common stock were sold at a price of $6.10 per
share, resulting in net proceeds of $10 million under the Company's effective
shelf registration statement. Pursuant to a common stock purchase agreement, the
Company may, from time to time, and at its own discretion, issue and sell up to
an additional $40 million of common stock, subject to certain conditions, at a
price per share based on the daily volume weighted average price of the
Company's common stock over a certain period of time less a discount ranging
from 4.5% to 6.0% over the fifteen month period beginning July 21, 2000. For
information related to this financing see our registration statement dated April
28 and July 20, 2000 on file with the Securities and Exchange Commission.
On September 22, 2000, Axys issued $26,000,000 in Senior Secured
Convertible Notes (the "Notes"), which bear interest at 8% per annum. Interest
is payable quarterly and may be paid in cash or in shares of Axys' common stock
at Axys' sole discretion. The Notes are convertible into the Company's common
stock with a conversion price of $7.06 per share. The Notes are secured by
shares of DPI held by Axys. Axys retains the right to substitute other
appropriate collateral.
In connection with these notes, the Company issued warrants to purchase an
aggregate of 1,841,360 of the Company's common stock. These warrants have an
exercise price per share ranging from $8.82 to $10.59, and expire October 1,
2004. The fair value of these warrants (using the Black-Sholes option-pricing
model to value the warrants), of $5.7 million is treated as debt issuance costs
of the Notes, and was capitalized and is being amortized to interest expense
using the effective interest method over the life of the debt. These debt
issuance costs along with other related issuance costs are presented as debt
issuance costs, net of amortization, of $7.1 million on the accompanying
consolidated balance sheet as of September 30, 2000.
9
<PAGE> 12
Also in September 2000, the Company entered into a financing agreement with
a lease financing company under which Axys has the ability to finance up to $8.0
million of purchases of lab equipment and tenant improvements. At September 30,
2000, Axys had borrowed $2.5 million under this financing line.
In May 2000, Bayer AG ("Bayer"), a collaboration partner of the Company,
decided to discontinue development of the compound known as BAY 44-3428. Bayer
had previously selected BAY 44-3428 for development as an oral treatment for
asthma based on the demonstrated in vivo efficacy of the compound in primate
models of asthma. Bayer's decision to discontinue development of BAY 44-3428 was
based on its view that the toxicological properties of this specific compound
precluded advancement into clinical development. However, Bayer's decision did
not affect Axys' Phase II clinical trial of APC 2059, a tryptase inhibitor
currently being developed for the treatment of inflammatory bowel disease. After
completing a planned interim data analysis of its Phase II clinical study of APC
2059 for the treatment of ulcerative colitis, the Company decided to continue
the Phase II study to its defined clinical endpoints later this year. APC 2059,
which is a second generation tryptase inhibitor developed in the collaboration
with Bayer, is from a chemically distinct class of compounds from the third
generation compound BAY 44-3428, and does not demonstrate the toxicological
properties that were found with BAY 44-3428. The Company previously demonstrated
proof of principle for tryptase as a target in inflammation in two Phase II
trials of a first generation compound, APC 366. Those trials, completed in the
United Kingdom, demonstrated that APC 366 could alleviate symptoms associated
with allergen-induced asthma, with statistically significant results in the
reduction of the late airway response as measured against both baseline and
placebo.
To date, the Company has not generated any product revenue in its drug
discovery programs and does not expect to generate such revenues for at least
several years. The Company expects its primary sources of revenue, if any, for
the next several years to consist of payments under corporate partnerships. The
process of developing the Company's products will require significant additional
research and development, preclinical testing and clinical trials, as well as
regulatory approval. These activities, together with general and administrative
expenses, are expected to result in significant operating losses for the
foreseeable future. The Company expects that losses will fluctuate from quarter
to quarter, that such fluctuations may be substantial, and that results from
prior quarters may not be indicative of future operating results. Axys will not
receive product revenue or royalties in its drug discovery programs unless the
Company or its collaborative partners complete clinical trials and successfully
commercialize one or more of the Company's products. In addition, there can be
no assurance that DPI, Akkadix or PPGx will ever generate funding for the
Company's drug discovery operations. As of September 30, 2000, the Company had
an accumulated deficit of $271 million. Included in the Company's accumulated
deficit at September 30, 2000 was approximately $147 million of acquired
in-process research and development from the acquisition of Khepri
Pharmaceuticals, Inc. in 1995 and the acquisition of Sequana Therapeutics, Inc.
in January 1998.
The Company is subject to risks common to early-stage drug discovery and
development companies, including risks inherent in its research and development
efforts and clinical trials, reliance on collaborative partners, the need for
future capital, enforcement of patent and proprietary rights, potential
competition and uncertainty of regulatory approval. In order for a product to be
commercialized, it will be necessary for the Company, and in some programs, its
collaborators, to conduct preclinical tests and clinical trials to demonstrate
efficacy and safety of product candidates, obtain regulatory clearances and
enter into manufacturing, distribution and marketing arrangements, as well as
obtain market acceptance. There can be no assurance that the Company will
generate revenues or achieve and sustain profitability in the future.
RESULTS OF OPERATIONS
Collaboration and Licensing Revenues
The Company's collaboration and licensing revenues were $2.6 million and
$5.5 million for the three and nine months ended September 30, 2000,
respectively, compared to $4.5 million and $17.6 million for the comparable
periods in 1999. The decrease was primarily due to wind-up of several
collaborations in gene identification in 1999. The collaboration and licensing
revenues for the three and nine months ended
10
<PAGE> 13
September 30, 2000 consisted of research support and license fees from two
collaborative partners, compared to the research support and license fees from
eight collaborative partners for the comparable periods in 1999.
Service Revenues
The Company's service revenues were $589,000 and $1.2 million for the three
and nine months ended September 30, 2000, respectively, compared to $304,000 and
$646,000 for the comparable periods in 1999. The increase was primarily due to
the increase in PPGx's service revenue.
Research and Development
The Company's research and development expenses were $8.6 million and $28.8
million for the three and nine months ended September 30, 2000, respectively,
compared to $13.7 million and $44.8 million for the comparable periods in 1999.
The overall decrease in 2000 was primarily due to the shutdown of the Company's
San Diego operations and the conclusion of several collaborations in gene
identification in 1999.
General and Administrative
The Company's general and administrative expenses were $3.7 million and
$9.8 million for the three and nine months ended September 30, 2000,
respectively, compared to $4.3 million and $10.7 million for the comparable
periods in 1999. The overall decrease in 2000 was primarily due to the shutdown
of the Company's San Diego operations in 1999.
Interest Income and Interest Expense
Interest income was $458,000 and $1.2 million for the three and nine months
ended September 30, 2000, respectively, compared to $785,000 and $2.4 million
for the comparable periods in 1999. The decrease was primarily due to the
decrease in average cash and investment balances for the respective periods.
Interest expense was $531,000 and $1.1 million for the three and nine months
ended September 30, 2000, respectively, compared to $842,000 and $1.8 million
for the comparable periods in 1999. The decrease was primarily due to the lower
debt balances on the Company's revolving line of credit and capital lease
arrangements.
Income from Operations of Discontinued Segment
Income from operations of discontinued segment was $1.1 million for the
nine months ended September 30, 2000, compared to $3.3 million for the
comparable period in 1999. The decrease was primarily due to reporting four
months of operations of AAT in 2000 because of the merger of AAT into DPI on
April 28, 2000, compared to nine months of operations in 1999.
Discontinued Operations
On April 28, 2000, the Company completed the sale of its combinatorial
chemistry business, AAT, to DPI. As a result, the Company's former combinatorial
chemistry business has been accounted for as a discontinued operation and prior
period results have been reclassified to report only continuing operations.
Axys' ownership interest in DPI has been accounted for under the equity method
starting in May 2000. Total revenues on the discontinued operations were $5.1
million for the four months ended April 30, 2000, compared to $6.7 million for
the comparable period in 1999. The net income on the discontinued operations was
$1.1 million for the nine months ended September 30, 2000, compared to $3.3
million for the comparable period in 1999. The Company also recorded a gain of
$33.0 million on the merger of AAT into DPI in the second quarter of 2000, and
an additional gain of $1.8 million for the quarter ended September 30, 2000.
Additional gain up to $16.5 million from the sale of AAT to DPI may be
recognized by Axys as its ownership interest in DPI diminishes as a result of
(1) the sale of Axys' shares in DPI, or (2) the dilution of Axys' ownership
interest in DPI. Financial results of AAT were consolidated with Axys' financial
results through April 2000 when the merger involving AAT was consummated and AAT
became a subsidiary of DPI.
11
<PAGE> 14
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operations since inception primarily through
private and public offerings of capital stock, corporate collaborative research
agreements, and sales of combinatorial chemistry compounds. From inception
through September 30, 2000, the Company realized approximately $228.2 million in
net proceeds from offerings of its capital stock. In addition, over the same
period, the Company realized approximately $210.8 million from its collaborative
research agreements and the sale of compound libraries by AAT.
The Company's principal sources of liquidity are its cash and investments,
which totaled $51.3 million as of September 30, 2000. The Company has a $30.0
million line of credit under which there was no outstanding balance as of
September 30, 2000. The line is available subject to certain conditions through
July 2002. The Company currently does not intend to use this line of credit.
PPGx has a $9.0 million line of credit that is guaranteed by PPD, its minority
shareholder, under which $9.0 million was outstanding as of September 30, 2000.
The Company's cash and investments at September 30, 2000 include the balances
from PPGx, its majority owned subsidiary, some of which is subject to certain
restrictions on use. Currently, PPD has the right to acquire for $6 million from
Axys an equal interest in PPGx, which would also require Axys to become a
co-guarantor of the bank debt of PPGx.
The Company's marketable investments at September 30, 2000 include
approximately 53,175 shares of Maxim Pharmaceuticals, Inc. stock (a publicly
traded company). These shares are subject to a lock-up arrangement that
restricts Axys' ability to sell them, which expires over a nine month period,
from September 2000, at a rate of 17,725 shares per quarter.
Net cash used in operating activities during the nine months ended
September 30, 2000 was $31.1 million, compared to $31.5 million for the
comparable period in 1999. Cash used in operating activities is expected to
fluctuate from quarter to quarter depending in part upon the timing and amounts,
if any, of cash received from existing and any new collaboration agreements.
The Company also spent approximately $3.9 million for the purchase of
property, plant and equipment during the nine months ended September 30, 2000.
The Company expects to acquire or lease additional equipment in connection with
future research and development activities, and has made a commitment to spend
$0.5 million to upgrade information technology infrastructure over the next
eight months. There were no material commitments for capital expenditures
outstanding at September 30, 2000. However, the Company expects to enter into
agreements pertaining to the construction of a 43,000 square foot medicinal
chemistry building on leased property adjacent to its corporate headquarters
commencing the third quarter of 2000.
The Company's material commitments at September 30, 2000 included its
obligations to perform research under its collaboration agreements with Merck
and Aventis (for which the Company is fully funded by its partners) and its
obligations under its convertible debt agreement. The Company believes that its
existing cash and investments (including the proceeds of the $10.0 million stock
issuance described below and the investment in DPI also described below) are
sufficient for the Company to fulfill these commitments.
On July 21, 2000, the Company completed a sale of $10 million of its common
stock, par value $.001 per share, under its effective shelf registration
statement relating to the offer and sale by the Company of up to $50 million of
its common stock pursuant to a common stock purchase agreement, dated as of July
21, 2000 between the Company and Acqua Wellington. The shares of common stock
were sold at a price of $6.10 per share, based on a negotiated discount from the
daily volume weighted average price of the Company's common stock on July 20,
2000. Pursuant to the common stock purchase agreement, the Company may, from
time to time, and at its own discretion, issue and sell to Acqua Wellington up
to an additional $40 million of common stock, subject to certain conditions, at
a price per share based on the daily volume weighted average price of the
Company's common stock over a certain period of time less a discount ranging
from 4.5% to 6.0% over the fifteen month period beginning July 21, 2000. In
addition, the Company may also grant to Acqua Wellington a call option at the
same discount for the applicable period to purchase additional shares of the
Company's common stock up to the applicable amount being sold by the Company in
such period, subject to the overall limit of $40 million described above.
12
<PAGE> 15
On September 22, 2000, Axys issued $26,000,000 in Senior Secured
Convertible Notes (the "Notes"), which bear interest at 8% per annum. Interest
is payable quarterly and may be paid in cash or in shares of Axys' common stock
at Axys' sole discretion. The Notes are convertible into the Company's common
stock with a conversion price of $7.06 per share. The Notes are secured by
shares of DPI held by Axys. Axys retains the right to substitute other
appropriate collateral.
In connection with these notes, the Company issued warrants to purchase an
aggregate of 1,841,360 of the Company's common stock. These warrants have an
exercise price per share ranging from $8.82 to $10.59 and expire October 1,
2004. The fair value of these warrants (using the Black-Sholes option-pricing
model to value the warrants), of $5.7 million is treated as debt issuance costs
of the Notes, and was capitalized and is being amortized to interest expense
using the effective interest method over the life of the debt. These debt
issuance costs along with other related issuance costs are presented as debt
issuance costs, net of amortization, of $7.1 million on the accompanying
consolidated balance sheet as of September 30, 2000.
Axys acquired its interest in DPI in connection with the April 2000 merger
of AAT, the Company's combinatorial chemistry business, into DPI. In July 2000,
DPI effected an initial public offering ("IPO") of its common stock and
commenced trading on the Nasdaq under the symbol "DPII". Prior to the IPO, Axys
held 7,425,000 shares of DPI common stock, which represented approximately 43%
of the outstanding shares. DPI sold 5 million shares of its common stock in its
IPO at a price of $18 per share, raising gross proceeds of approximately $90
million. This reduced the Company's ownership in DPI to approximately 31% after
the IPO. As of September 30, 2000, Axys' investment in DPI has a value of
approximately $150.8 million.
In September 2000, the Company entered into a financing agreement with a
lease financing company under which Axys has the ability to finance up to $8.0
million of purchases of lab equipment and tenant improvements. At September 30,
2000, Axys had borrowed $2.5 million under this financing line.
The Company expects that existing cash and investments, together with the
DPI shares, will enable the Company to maintain current and planned operations
for the foreseeable future. The Company continues to actively pursue a variety
of financing alternatives, including additional draws under the common stock
purchase agreement with Acqua Wellington described above.
The drug development process is expensive and the Company is at an early
stage of development. Therefore, the Company expects that it will continue to
need to raise money in the future until the Company achieves substantial product
or royalty revenues, if ever. The Company expects that it will continue to seek
additional funding from time to time through one or more of the following: new
collaborations, the extension of existing collaborations, the sale of its
interests in its affiliated businesses, or through public or private equity or
debt financings. Furthermore, the Company may obtain funds through arrangements
with collaborative partners or others that require the Company to give up rights
to technologies or products that it would otherwise seek to develop or
commercialize itself. The Company cannot be certain that additional funding will
be available or that, if available, the terms will be acceptable. Existing
stockholders will experience dilution of their investment if additional funds
are raised through private or public stock sales. If adequate funds are not
available, the Company may delay, reduce or eliminate any of its research or
development programs.
CERTAIN BUSINESS RISKS
The Company is at an early stage of development and will need a substantial
amount of additional funding to continue to prosecute its research and
development programs. The Company's proprietary research programs are, in many
cases, several years from clinical development and require substantial
additional research and development. All of its proposed products are in
research or development and will require significant additional research and
development efforts prior to any commercial use, including extensive and costly
pre-clinical and clinical testing, as well as lengthy regulatory approval
involving many complexities. The Company's research and development efforts may
not be successful, our proposed products may not prove to be safe and
efficacious in clinical trials, and no commercially successful products may
ultimately be developed by the Company. In addition, many of the Company's
currently proposed products are subject to development and licensing
arrangements with our collaborators. Therefore, the Company is dependent in many
cases on the research and development efforts of these collaborators. Moreover,
in cases where the Company is the licensor
13
<PAGE> 16
of its research programs, the Company is entitled only to a portion of the
revenues, if any, realized from the commercial sale of any of the proposed
products covered by the collaborations. The Company has experienced significant
operating losses since inception and expects to incur significant operating
losses over at least the next several years. The development of the Company's
proposed products will require a commitment of substantial funds to conduct
these costly and time-consuming activities, which funds may not be available.
Should the Company or its collaborators fail to perform in accordance with
the terms of the applicable agreements, any consequent loss of revenue under the
collaboration agreements could have a material adverse effect on the Company's
business, financial condition and results of operations. The proposed products
under development by the Company have never been manufactured on a commercial
scale and it is possible that proposed products may not be able to be
manufactured at a cost or in quantities necessary to make them commercially
viable. The Company has no sales, marketing or distribution capability for its
proposed products. If any of the products subject to the Company's collaborative
agreements involving licenses or our research programs are successfully
developed, the Company must rely on its collaborators to market the products.
The Company cannot ensure that any collaborator's marketing efforts would be
successful.
If the Company develops any products which are not subject to collaborative
agreements under which the Company's research partner is the marketer, we must
either rely on other pharmaceutical companies to market the products or the
Company must develop a marketing and sales force with technical expertise and
supporting distribution capability in order to market the products directly. The
Company cannot guarantee that its marketing efforts would be successful.
The foregoing risks reflect the Company's early stage of development and
the nature of its industry and products. Also inherent in the Company's stage of
development are a number of additional risks, including competition, the
substantially greater financial resources of a number of its competitors,
uncertainties regarding protection of patents and proprietary rights, government
regulation, uncertainties related to clinical trials and health care reform and
the potential volatility of our stock price. These risks and uncertainties are
discussed further in "Items 1. Business -- What Factors Could Cause Our Results
to Differ Significantly From Those You Might Expect?" and "-- What Other Matters
Should Stockholders Consider with Respect to the Company?" in the Company's
Annual Report on Form 10-K for the year ended December 31, 1999, filed by the
Company with the Securities and Exchange Commission on March 8, 2000.
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The company's exposure to market risk is principally limited to its cash
equivalents and investments that have maturities of less than two years. The
Company maintains a non-trading investment portfolio of investment grade, liquid
debt securities that limits the amount of credit exposure to any one issue,
issuer or type of instrument. The securities in the Company's investment
portfolio are not leveraged, are classified as available-for-sale and are
therefore subject to interest rate risk. The Company currently does not hedge
interest rate exposure.
14
<PAGE> 17
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
In July 2000, the Company issued and sold under its effective shelf
registration statement 1.639 million shares of common stock at $6.10 per share
for an aggregate of $10 million in proceeds. The Company intends to use the
proceeds from this transaction for operating costs, including the Company's
ongoing oncology research programs and other general corporate purposes. The
shares were purchased by Acqua Wellington pursuant to a registration statement
on Form S-3 filed with the Securities and Exchange Commission.
On September 22, 2000, Axys issued $26,000,000 in Senior Secured
Convertible Notes (the "Notes"), which bear interest at 8% per annum. Interest
is payable quarterly and may be paid in cash or in shares of Axys' common stock
at Axys' sole discretion. The Notes are convertible into the Company's common
stock with a conversion price of $7.06 per share. The Notes are secured by
shares of DPI held by Axys. Axys retains the right to substitute other
appropriate collateral.
In connection with these notes, the Company issued warrants to purchase an
aggregate of 1,841,360 of the Company's common stock. These warrants have an
exercise price per share ranging from $8.82 to $10.59 and expire October 1,
2004.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
<TABLE>
<S> <C>
10.128 Common Stock Purchase Agreement by and between Acqua
Wellington North American Equities Fund, Ltd. and Axys
Pharmaceuticals, Inc. dated July 21, 2000(1)
10.129 Note Purchase Agreement, Indenture; Supplemental Indenture;
Class A Common Stock Purchase Warrant; Class B Common Stock
Purchase Warrant(2)
10.130 Credit agreement by and between PPGx, Inc. and Axys
Pharmaceuticals, Inc. dated September 22, 2000
10.131 Bridge Loan by and between Akkadix Corporation and Axys
Pharmaceuticals, Inc. dated September 11, 2000
10.132 Secured/Subordinated Promissory Note by and between
Littlefield Associates and Axys Pharmaceuticals, Inc. dated
September 28, 2000.
27 Financial Data Schedule.
</TABLE>
---------------
(1) Incorporated herein by reference to Exhibit 1.1 to the Current Report on
Form 8-K filed with the Securities and Exchange Commission on July 22, 2000.
(2) Incorporated herein by reference to Exhibit 1.1 to the Current Report on
Form 8-K filed with the Securities and Exchange Commission on September 21,
2000.
(b) REPORTS ON FORM 8-K
None
15
<PAGE> 18
SIGNATURES
Pursuant to the requirements of 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.
AXYS PHARMACEUTICALS, INC.
Date: November 14, 2000 By: /s/ JOHN P. WALKER
------------------------------------
John P. Walker
Chief Executive Officer,
Chairman of the Board, Director
(Principal Executive Officer)
Date: November 14, 2000 By: /s/ DAVID E. RIGGS
------------------------------------
David E. Riggs
Senior Vice President, Chief
Financial Officer
(Chief Accounting Officer and
Principal Financial Officer)
16
<PAGE> 19
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBITS DESCRIPTION
-------- -----------
<S> <C>
10.128 Common Stock Purchase Agreement by and between Acqua
Wellington North American Equities Fund, Ltd. and Axys
Pharmaceuticals, Inc. dated July 21, 2000(1)
10.129 Note Purchase Agreement, Indenture; Supplemental Indenture;
Class A Common Stock Purchase Warrant; Class B Common Stock
Purchase Warrant(2)
10.130 Credit agreement by and between PPGx, Inc. and Axys
Pharmaceuticals, Inc. dated September 22, 2000
10.131 Bridge Loan by and between Akkadix Corporation and Axys
Pharmaceuticals, Inc. dated September 11, 2000
10.132 Secured/Subordinated Promissory Note by and between
Littlefield Associates and Axys Pharmaceuticals, Inc. dated
September 28, 2000.
27 Financial Data Schedule.
</TABLE>
