Axys Pharmaceuticals Announces Second Quarter Financial Results; Company Announces Relocation of Oncology Genomics to South San Francisco
SOUTH SAN FRANCISCO, Calif.--(BW HealthWire)--July 29, 1999--
Company to Reduce Spending Rate by Approximately $17 Million
Dollars Per Year
Axys Pharmaceuticals, Inc. (Nasdaq:AXPH) today announced the
consolidated results of operations for the second quarter ended June
30, 1999.
The company reported that total revenues for the second quarter
were $8.3 million, compared with $9.1 million for the same period in
1998. Total revenues for the six month period ended June 30, 1999 were
$20.1 million, compared with $17.5 million, a 15% increase over the
same period in 1998. Operating expenses (including cost of sales) for
the quarter ended June 30, 1999 were $22.2 million, compared with
$17.6 million in the same period in 1998. Year to date, the operating
expenses (including cost of sales) were $41.9 million, compared with
$36.5 million for the same period in 1998 (not including 1998's write
off of $124.9 million for acquired in process research and
development).
The net loss for the second quarter ended June 30, 1999 was $13.2
million, or $0.44 per share, compared to a net loss of $8.2 million,
or $0.27 per share for the same period in 1998. Year to date, the net
loss was $21.0 million, or $0.69 per share, compared to $18.3 million,
or $0.62 per share in 1998 (not including 1998's write off for
acquired in process research and development). Cash, marketable
investments, and receivables totaled $56.5 million as of June 30,
1999.
"Expenses for our core drug discovery and development efforts for
the first six months were essentially even with the first six months
of 1998. The increase in total operating expenses for the quarter and
year to date are attributable to the costs of our independently funded
affiliated businesses, Akkadix and PPGx which are consolidated for
financial reporting purposes," commented John Walker, chairman and
chief executive officer of Axys. "The revenue increase for the first
six months is largely attributable to the $6.7 million in revenue from
Axys Advanced Technologies, our combinatorial chemistry subsidiary,"
continued Walker.
The company also announced that it will relocate its oncology
genomics operations from San Diego to its South San Francisco
headquarters. The company's oncology genomics efforts currently
involve the application of functional genomics technologies, including
gene expression arrays, bioinformatics and whole animal genetic
knockouts, to target identification and target validation. Axys'
application of these technologies is focused on the discovery and
development of small molecule therapeutics. The company plans to
relocate a number of the researchers involved in these efforts from
San Diego to continue their work as part of the company's fully
integrated gene to drug program in oncology.
The company also announced that it is in discussions with
interested parties regarding the disposition of its positional cloning
and related technology programs that will remain in San Diego. Axys
anticipates completing these discussions within the next 60 days in
order to finalize the terms for transferring these programs to others;
Axys will then close any remaining San Diego operations by the end of
this calendar year.
As a result of these actions, the company believes that it will
save approximately $17 million per year in operating costs beginning
next year, with the goal of reducing the annualized cash burn of the
company to the low $20 million range. The company anticipates it will
incur a one time charge of approximately $6.0 million during the third
quarter of 1999 for costs associated with the relocation of its
oncology genomics effort and the transfer or winding up of its
positional cloning and related efforts.
"The genomics technologies we obtained through the acquisition of
Sequana Therapeutics have provided us with the capabilities that led
to the establishment of Akkadix, our agricultural biotechnology
company, and PPGx, our pharmacogenomics joint venture with PPD, Inc.
and have given our oncology efforts a strong position in the
identification of novel targets and a better understanding of the role
that these and other targets play in various cancers," stated Walker.
"Our broader efforts in positional cloning, however, are not core
to our oncology portfolio and have represented a growing area of
unfunded expenditure for the company. These decisions are expected to
significantly reduce our cash consumption in future years while
causing an acceleration of our efforts into discovery and development
of new therapeutics for the treatment of cancer."
"Our decision to consolidate our functional genomics resources at
our South San Francisco campus, alongside our substantial capabilities
in molecular and cellular biology, nematode biology, high throughput
screening, medicinal and combinatorial chemistry, preclinical
pharmacology and clinical development, is intended to ensure
coordination of our oncology drug discovery efforts from target
identification through the handoff to our clinical development group,"
stated Michael C. Venuti, Ph.D., senior vice president of research and
preclinical development and chief technical officer at Axys
Pharmaceuticals.
"As an example, we have made excellent progress in our gene
identification programs in both hypoxia and angiogenesis. We recently
selected five new targets for advancement to our high throughput
screening. These targets will be screened against our combinatorial
chemistry libraries which will approximate 450,000 compounds by year
end. Upon the successful completion of our screening program, we will
apply our medicinal chemistry expertise to the refinement of the
resulting leads for pharmacokinetic and efficacy optimization,
accelerating them into clinical development and building on our
proprietary product pipeline in oncology."
Daniel Petree, President and COO, who is located at the company's
San Diego facility, will have the primary responsibility for managing
both the relocation of the oncology programs as well as the
discussions with outside parties on the disposition of the remaining
genomic assets. With the completion of those assignments, anticipated
to occur by year-end, Mr. Petree has announced that he will leave the
company to pursue other interests.
"Dan has been a great contributor to Axys over the last six
years," commented John Walker. "During that time his responsibilities
have increased within the organization as he moved from finance and
business development to the general management role he has assumed
over the last two years. I fully understand his desire to stay in San
Diego and to pursue opportunities where his experience and skills will
lead to even broader management responsibilities."
The company also highlighted significant events since the start
of the year:
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-- announcement of Daniel Hoth, M.D., former head of the clinical
investigations branch of the National Cancer Institute, as senior
vice president of development and chief medical officer of Axys
Pharmaceuticals
-- completion of phase Ia and Ib and the initiation of phase II
studies on APC 2059 as a treatment for psoriasis
-- completion of phase Ia and Ib and the initiation of phase Ic
studies on a subcutaneous formulation of APC 2059 for the
treatment of ulcerative colitis
-- formation of Axys Advanced Technologies, Inc., a wholly owned
subsidiary, along with the signing of contracts to provide
combinatorial chemistry libraries to Rhone-Poulenc Rorer,
Daiichi, Protein Design Labs and Novalon Pharmaceutical
Corporation
-- establishment of PPGx, Inc., a majority owned subsidiary as a
joint venture with PPD, Inc. The focus of PPGx is the offering of
pharmacogenomics products and services to the clinical
development community.
--- announcement by Akkadix, Inc., Axys' majority-owned agricultural
biotechnology subsidiary, of its acquisition of Global Agro to
forward integrate into crop development
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Axys Pharmaceuticals is a drug discovery and development company
with a proprietary focus in oncology. Axys is building shareholder
value through (1) a broad and diversified pipeline of research and
development programs partnered with world-class pharmaceutical
companies; (2) expansion of a non-partnered research and development
franchise in oncology; and (3) the spin out of affiliated businesses
that leverage the company's technologies in order to provide capital
for Axys' drug discovery and development programs.
Axys' technology-leveraging businesses are: Axys Advanced
Technologies, Inc., a wholly owned combinatorial chemistry oriented
company; PPGx, Inc., a majority owned pharmacogenomics company; and
Akkadix Corporation (formerly Xyris), a majority owned 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 risk of Axys'
early stage of development, the risk of unexpected difficulties and
delays in the development of new therapeutics, the risk that clinical
trials will not proceed as anticipated or may not be successful, the
risk that Axys' collaborations will not be successful, Axys' reliance
on the efforts of its collaborative partners, the risk that Axys will
not be successful in entering into new collaborations, 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?" in the
company's SEC Reports, including the company's report on Form 10-K for
the fiscal year ended December 31, 1998.
For more information on Axys Pharmaceuticals, Inc., please visit
the company's website at axyspharm.com.
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AXYS PHARMACEUTICALS, INC.
Consolidated Statements of Operations
(unaudited)
Three months ended Six months ended
June 30, June 30,
1999 1998(a) 1999 1998(a)
(in thousands, except per share amounts)
Revenues
Collaboration and
licensing revenues $ 6,134 $ 8,299 $ 14,796 $ 16,650
Product and service
revenues 2,193 798 5,335 881
Total revenues 8,327 9,097 20,131 17,531
Operating expenses
Cost of products sold 902 (57) 1,450 387
Research and development 16,740 13,944 32,665 28,987
General and
administrative 4,552 3,690 7,753 7,122
Acquired in process
research & development -- -- -- 124,888
Total operating expenses 22,194 17,577 41,868 161,384
Operating loss (13,867) (8,480) (21,737) (143,853)
Interest income, net 295 749 695 1,562
Equity interest in loss
of joint venture (267) (445) (830) (902)
Minority interest 625 -- 911 --
Net loss $ (13,214) $ (8,176) $ (20,961) $(143,193)
Basic and diluted net
loss per share $ (0.44) $ (0.27) $ (0.69) $ (4.87)
Shares used in computing
basic and diluted net
loss per share 30,359 29,999 30,340 29,390
Consolidated Balance Sheet Data
(unaudited)
June 30, December 31,
1999 1998
(in thousands) (in thousands)
Cash & marketable investments $ 52,355 $ 72,717
Accounts receivable 4,148 2,140
Total assets 89,421 107,262
Accumulated deficit (250,856) (229,895)
Total stockholders' equity 39,979 60,512
(a) Cost of products sold have been restated to conform to the 1999
presentation.
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CONTACT:
Axys Pharmaceuticals, Inc.
John Walker or Helen Swartzbaugh, 650/829-1000
or
Burns McClellan, Inc.
Justin Jackson or John Nugent, 212/213-0006 |
