AXYS Pharmaceuticals Announces Fourth Quarter and Year-End 1997 Financial Results

Business Wire, Feb 26, 1998

SOUTH SAN FRANCISCO, Calif.--(BW HealthWire)--Feb. 26, 1998-- AXYS Pharmaceuticals, Inc. (NASDAQ:AXPH) today announced financial results for the fourth quarter and year-end December 31, 1997.

These financial results represent only Arris Pharmaceutical and do not include the impact of the acquisition of Sequana Therapeutics Inc. (Sequana) and the subsequent formation of AXYS Pharmaceuticals in January 1998.

Contract revenues for the fourth quarter grew 19.3% to $6.4 million from $5.4 million in the final quarter of 1996. Operating expenses for the 1997 fourth quarter were $10.2 million compared to $7.7 million for the same period in the prior year. The increased operating expenses for the fourth quarter were primarily in research and development, which grew to $8.2 million from $6.2 million in the same quarter last year. General and administrative expenses grew to $2.0 million in the recent fourth quarter, from $1.5 million in the fourth quarter last year, reflecting increased costs associated with research and development support. The net loss for the fourth quarter of 1997 was $3.2 million, or $0.21 per share, versus a net loss of $1.6 million, or $0.11 per share, for the fourth quarter of 1996.

For the year ended December 31, 1997, contract revenues were $24.8 million, a 15.1% increase over the $21.6 million reported at year-end 1996. Operating expenses for 1997 totaled $38.2 million, compared to $30.0 million last year. Of these, research and development expenses accounted for $31.1 million, versus $24.3 million in 1996. These increases primarily reflect higher expenditures associated with two Phase IIa clinical trials of APC-366 and investments in proprietary research programs. For the full-year 1997, the company reported a net loss of $11.0 million, or $0.73 per share, compared to a net loss of $5.9 million, or $0.45 per share, in 1996. The Company's cash and investments were $53.4 million as of December 31, 1997.

Giving effect to the acquisition of Sequana, on a pro forma combined basis, had the acquisition been in place for the entire calendar year, revenue would have been $44.4 million, an increase of 41.9% over pro forma combined 1996 revenue of $31.3 million. Cash and marketable investments on a pro forma combined basis at December 31, 1997 would have been $101.5 million.

John Walker, chairman and chief executive officer of AXYS, stated, "1997 was a significant year in our drive to establish the company as the leading drug discovery company in the biotechnology industry. Our revenue increase, as reflected on a pro forma combined basis, shows the support of many of the world's best pharmaceutical companies for our research capabilities. In addition to the achievements of our collaborative research, AXYS made significant progress in business development, in the clinic and in proprietary research."

...Combined 1997 Highlights

Business Development

-- Formed collaboration agreement with Bristol-Myers Squibb to develop protease inhibitors for the hepatitis C virus (HCV).

-- Formed Parke-Davis collaboration targeting schizophrenia and bipolar disorder. This collaboration, which includes gene identification and bioinformatics, had an announced deal value of $103 million, which includes up-front licensing fees, research funding and milestone payments.

-- Formed GlaxoWellcome collaboration in functional screening.

-- Formed Genos Biosciences joint venture with Memorial Sloan-Kettering Cancer Center in the area of cancer genetics.

-- Formed Genecore joint venture with Perkin-Elmer Applied Biosystems. The focus of the joint venture is large scale DNA, genomic sequencing and is located in Shanghai, China. Genecore has been awarded a research contract from China's State Science & Technology Commission to sequence human genes involved in liver cancer.

-- Formed collaboration to transfer specialized screening technologies to Abbott Laboratories for use in an undisclosed proprietary research program.

-- Amended collaboration agreement with Bayer AG to allow AXYS to reacquire the rights to exploit tryptase inhibitors against two indications: inflammatory bowel disease and psoriasis.

Clinical Program

-- Completed two Phase IIa studies in asthma (APC-366). Statistical significance in preventing the late airway response in an allergen induced challenge was demonstrated in the first of these, while a positive trend in reversing bronchial hyperresponsiveness was demonstrated in the second.

-- Selected APC-2059 as a clinical candidate for studies in psoriasis and inflammatory bowel disease.

Research

-- Received a patent providing broad coverage on the company's method of protease inhibition known as the "Delta Technology".

-- Identified a gene responsible for asthma.

-- Published structures for Cathepsin K in NATURE STRUCTURAL BIOLOGY and chymase in BIOCHEMISTRY.

-- Solved structures for Cathepsin S, tissue kallikrein and a cytokine receptor complex.

-- Synthesized from 10mg to 30mg of more than 150,000 individual combinatorial chemistry compounds.