-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EDYAdUigy8fF0eyIZj3E72wUWScPxIiPA/AFVKXzlQqVjt6VOWhUk6eHIToTPk8X JLz/lwflpXZQNOfkO/0L4Q== 0001095811-01-500367.txt : 20010312 0001095811-01-500367.hdr.sgml : 20010312 ACCESSION NUMBER: 0001095811-01-500367 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20010308 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20010308 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AXYS PHARMECUETICALS INC CENTRAL INDEX KEY: 0000913056 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 222969941 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-22788 FILM NUMBER: 1564091 BUSINESS ADDRESS: STREET 1: 180 KIMBALL WAY CITY: SOUTH SAN FRANCISCO STATE: CA ZIP: 94080 BUSINESS PHONE: 6508291000 MAIL ADDRESS: STREET 1: 180 KIMBALL WAY CITY: SOUTH SAN FRANCISCO STATE: CA ZIP: 94080 FORMER COMPANY: FORMER CONFORMED NAME: ARRIS PHARMACEUTICAL CORP/DE/ DATE OF NAME CHANGE: 19931005 8-K 1 a70298e8-k.txt FORM 8-K 1 - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): MARCH 8, 2001 AXYS PHARMACEUTICALS, INC. (Exact name of registrant as specified in its charter) DELAWARE 0-22788 22-2969941 (State or Other Jurisdiction (Commission File Number) (IRS Employer of Incorporation) Identification Number) 180 KIMBALL WAY 94080 SOUTH SAN FRANCISCO, CALIFORNIA (Zip Code) (Address of principal executive offices) (650) 829-1000 (Registrant's telephone number, including area code) N/A (Former Name or Former Address, if Changed Since Last Report) 2 ITEM 5. OTHER EVENTS On March 8, 2001, Axys Pharmaceuticals, Inc. released its financial results for the three months and full year ended December 31, 2000. These results reflect a non-recurring gain from Axys' sale of PPGx, Inc, which was completed during the fourth quarter of 2000. Axys had an increased loss from continuing operations, for the fourth quarter, primarily due to the elimination of revenue from the discontinued positional cloning operations. Axys' results also include the non-recurring gain from the sale of Axys Advanced Technologies. In addition, Axys announced that there will be a delay in the initiation of further clinical development of APC 2059, the tryptase inhibitor for the treatment of asthma and ulcerative colitis. The foregoing description is qualified in its entirety by reference to the Registrant's Press Release dated March 8, 2001, a copy of which is attached hereto as Exhibit 99.1. ITEM 7. EXHIBITS (c) Exhibits. 99.1 Registrant's Press Release dated March 8, 2001. 3 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 hereunto duly authorized. AXYS PHARMACEUTICALS, INC. Date: March 8, 2001 By: /s/ Douglas Altschuler ----------------------------------- Name: Douglas Altschuler Title: Vice President, General Counsel 4 EXHIBIT INDEX Exhibit Number Description - -------------- ----------- 99.1 Registrant's Press Release dated March 8, 2001. EX-99.1 2 a70298ex99-1.txt EXHIBIT 99.1 1 EXHIBIT 99.1 CONTACT: AXYS PHARMACEUTICALS, INC. Paul Hastings President & CEO (650) 829-1000 FOR IMMEDIATE RELEASE AXYS PHARMACEUTICALS ANNOUNCES RESULTS FOR YEAR-END 2000; TRYPTASE PROGRAM UPDATED SOUTH SAN FRANCISCO, CA -- March 8, 2001 -- Axys Pharmaceuticals, Inc. (NASDAQ: AXPH) today reported that gains from the sale of two of its non-core subsidiary companies resulted in net income for the year ended December 31, 2000. Net income for the year was $13.7 million, or $0.39 per share. This result compares to a loss of $48.8 million or $1.60 loss per share for the same period in 1999. For the 2000 results, the Company's net income reflected a non-recurring gain of $61.2 million from the sale of Axys Advanced Technologies ("AAT") to Discovery Partners International Inc. (NASDAQ: DPII) and the sale of PPGx, Inc. ("PPGx") to DNA Sciences, Inc. ("DNAS"). Axys reported a loss from continuing operations in 2000 of $41.6 million compared to a loss of $48.5 million in 1999. The 1999 results of the Company's former subsidiaries, Axys Advanced Technologies and PPGx, have been reclassified in accordance with APB 30 Reporting the Results of Operations - Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions. Axys' total revenues for the full year 2000 were $7.0 million as compared to total revenues of $24.1 million for 1999. Total revenues in fiscal 1999 included approximately $10.6 million from the Company's discontinued positional cloning operations in La Jolla, as well as non-oncology research programs concluded in 2000. Total operating expenses for 2000 were $46.0 million compared to operating expenses of $71.2 million for 1999. The reduction was primarily due to the closure of the Company's La Jolla operations. Total assets at December 31, 2000 increased to $118.7 million from $55.7 million at December 31, 1999. Cash and cash equivalents totaled $41.2 million at December 31, 2000 compared to $23.6 million for the same period last year. In addition to the increase in cash and cash equivalents, the Company's assets reflect holdings in DPII and DNAS, which had a carrying value of $55.4 million at year-end. The market value of the Company's holdings in DPII's common stock was approximately $90 million at December 31, 2000. The Company owns approximately 1.5 million shares of common stock in DNAS, which filed a registration statement on Form S-1 with the Securities and Exchange Commission in January 2001. Finally, the Company's working capital ratio, a measure of liquidity, improved to 4.2 to one in 2000 compared to less than one to one for the same period last year. --more-- 2 Axys 4Q, YE2000 Results Page 2 For the fourth quarter of 2000, Axys reported net income of $7.5 million, or $0.20 per share, compared to a net loss of $7.9 million or a $0.26 loss per share in 1999. The 2000 results included a $26.4 million one-time gain on the sale of PPGx. Total revenue for the quarter was $1.5 million compared to total revenue of $6.5 million in 1999. Total operating expenses for the quarter were $15.2 million compared to $13.6 million for 1999. Axys reported a loss from continuing operations of $17.2 million for the quarter compared to a loss of $6.9 million in 1999. The increased loss from continuing operations was primarily due to the elimination of revenue from the discontinued positional cloning operations in 2000, as well as an increase in the equity losses recorded from Akkadix Corporation, the Company's ag-bio subsidiary. Paul J. Hastings, President and Chief Executive Officer, stated, "Axys' continued progress in medicinal chemistry-based research, its demonstrated success in creating value in non-core subsidiary businesses, and its significantly strengthened balance sheet bear strong testimony to the focus and the commitment of our team. By selling two of the three non-core subsidiaries created several years ago from Axys' technology, we have provided a potential source of capital to fund future research and development." FINANCIAL GUIDANCE According to Chief Financial Officer David E. Riggs, Axys intends to manage operations toward an annual cash burn of $25 - $30 million in 2001, and does not expect to remain profitable in 2001. Riggs also projected research and development expenditures of approximately $30 million for 2001. At 10:00 a.m. EST, or 7:00 a.m. PST, as part of the Company's efforts to ensure full disclosure to all parties, Axys will webcast a conference call live on the Company's internet site. Hosting the call will be Paul J. Hastings, President and Chief Executive Officer. To access the live call or the 5-day archive, please log onto http://www.axyspharm.com. Alternatively, the webcast may be logged onto at http://www.vcall.com/NASApp/Vcall/consoleframeset2?ID=68600. Please connect to either website at least 10 minutes prior to the conference call to ensure adequate time for any software download that may be needed to hear the live webcast. CHRONIC DISEASE PROGRAM UPDATES ...Tryptase Inhibitor for Ulcerative Colitis In early January 2001, Axys announced the results of its Phase II clinical study of APC 2059 for the treatment of ulcerative colitis, and indicated that it was in the process of planning to advance the compound to Phase IIb/III clinical studies. By the end of the Phase II study, there were 53 evaluable patients out of 56 total enrolled, and the encouraging results of the study indicated: o APC 2059 delivered at 20 mg subcutaneously twice a day appeared to be safe and well-tolerated; o 51% of the evaluable patients had improvement indicated by a Disease Activity Index ("DAI") reduction of four or more; --more-- 3 Axys 4Q, YE2000 Results Page 3 o 68% had a reduction in stool frequency; o 68% had a reduction in rectal bleeding; o 58% achieved "clinically significant benefit" as measured by the Investigator's Global Assessment; o 30% achieved a DAI of three or less, of whom 81% maintained that response during the two-week follow-up period. The Company also announced that there will be a delay in the initiation of further clinical development of APC 2059 for both asthma and ulcerative colitis. Axys had previously announced plans to initiate a Phase II asthma trial in the first half of 2001 and a Phase IIb/III ulcerative colitis trial in the second half based on the encouraging results of the ulcerative colitis study. The Company has determined that, in order to enable the longer term dosing required for chronic disease therapies, it is necessary to do additional planning of dose-ranging safety pharmacology studies. The Company expects that work to further define the development track for APC 2059 and to delay initiation of clinical trials for APC 2059 until next year. ...Key Milestone in Osteoporosis Collaboration with Merck Also in early January 2001, Axys announced that it had received a $1.5 million milestone payment from Merck & Co., Inc. (NYSE: MRK) for meeting a pre-agreed milestone in the development of a compound being studied for use in the treatment of osteoporosis, a disease that affects 40 percent of women over age 50. The compound selected by Merck is a potent and selective inhibitor of Cathepsin K, a cysteine protease that has been demonstrated to play a key role in bone resorption. The research collaboration between Merck and Axys was established in 1996 and in late 2000 was renewed for a fifth year to allow further evaluation of additional compounds. ...Key Milestone in Inflammatory Disease Collaboration with Aventis During the fourth quarter of 2000, Axys announced the achievement of an important research milestone in its collaboration with Aventis on Cathepsin S, a cysteine protease believed to play a critical role in the inflammatory process. A discrete collaboration compound synthesized by Axys successfully demonstrated in-vivo efficacy in a model of asthma, qualifying the compound and its analogs as a lead compound series. This family of compounds was advanced into lead optimization, including pharmacokinetic evaluation, safety pharmacology, chemical scale-up, and formulation studies. Axys believes that upon the successful conclusion of these activities, Aventis will formally nominate a clinical development candidate, while at the same time continuing to pursue related opportunities in additional therapeutic indications for inflammatory and autoimmune disorders. --more-- 4 Axys 4Q, YE2000 Results Page 4 ONCOLOGY PROGRAM UPDATES ...Maxim Collaboration in Apoptosis In March 2000, Axys and Maxim Pharmaceuticals, Inc. (NASDAQ: MAXM) announced a program to discover and develop anti-cancer agents that induce apoptosis (programmed cell death). This collaboration was originally initiated between Axys and Cytovia, Inc., a company subsequently acquired by Maxim. In this collaboration, Maxim's novel screening system was used to monitor the activation of pathways that result in induction of caspase activity, the common endpoint in apoptosis. The pairing of this technology and Axys' library of diverse small molecule organic compounds represents a powerful combination for the discovery of new anti-cancer drugs, and during 2000, approximately 400,000 Axys diversity library compounds were screened at Maxim. Under the terms of the agreement, Axys has the right to develop and commercialize any drug candidates that result from the collaborative research program. ...Axys Solves Cancer Protease Structure In September 2000, Axys announced the solution of the three-dimensional crystal structure of Cathepsin V, a protease believed to play a central role in the immune system, and which has been more recently associated with certain cancers. In a paper published in Biochemistry, a publication of the American Chemical Society (ACS), Axys scientists described the atomic resolution (1.6 A) X-ray structure of the new therapeutic target, Cathepsin V, complexed with a highly potent inhibitor that delineates the important binding sites on the enzyme. This work is considered useful in helping design potent and selective inhibitors against this therapeutically relevant protease. Axys is currently applying its chemistry and pharmacology expertise to this target, with an eye toward identification of lead compounds designed specifically for Cathepsin V for use in cancer therapy. The achievement validates Axys' expertise in cysteine proteases, the proprietary technology used to identify inhibitors of these enzymes, as well as a broad base of related intellectual property. NON-CORE SUBSIDIARY BUSINESSES During 2000, Axys successfully leveraged two of its three non-core technology companies to create a stronger financial position for the company. In early 2000, Axys announced the merger of its combinatorial chemistry subsidiary AAT with DPII, a provider of drug discovery products, services and bio-information to pharmaceutical and biotechnology companies. The merger significantly expanded DPI's capabilities and its infrastructure. This lead to DPII's initial public offering in July. Axys now owns 7.4 million shares of DPI, the approximate fair market value of which on December 31, 2000 was $90 million. --more-- 5 Axys 4Q, YE2000 Results Page 5 Just prior to the year-end, Axys also announced the sale of its pharmacogenomics subsidiary, PPGx, to DNA Sciences, Inc. PPGx was originally formed in February 1999 by PPD, Inc. (NASDAQ: PPDI) and Axys. By combining the scientific expertise and genetic data resources of the two companies, Axys believes that the efforts of DNA Sciences to develop and introduce DNA-based clinical diagnostics and therapeutics will accelerate, enabling its participation in emerging opportunities in pharmacogenomics. As a result of the transaction, Axys recorded a $26.4 million gain in the fourth quarter of 2000, and currently holds an approximate five percent interest in DNA Sciences. The gain recorded during the fourth quarter represents the difference between the fair value of securities received, $20.9 million, less the negative carry value of $5.5 million prior to the sale. MANAGEMENT TEAM In 2000, Axys announced the appointment of a new President & Chief Executive Officer, Paul Hastings, formerly President of Chiron Biopharmaceuticals, to succeed John Walker, who remained Axys' non-executive Chairman of the Board of Directors. The company also announced the appointments of several other new Vice Presidents representing key functional areas on its executive and operating teams, including: David Riggs, Chief Financial Officer; Douglas Altschuler, Vice President, General Counsel; Michael J. Green, Ph.D., Vice President, Medicinal Chemistry; Jackie Walling, Vice President, Clinical Oncology; Daniel Makover and Tim McBride, Vice Presidents, Business Development. Axys Pharmaceuticals, Inc., an integrated small molecule drug discovery and development company, 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 through minority investments in affiliated businesses that leverage the Axys technologies. Currently, these companies include Discovery Partners International, Inc. (NASDAQ: DPII), a chemistry services company; DNA Sciences, a genetics 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. --Tables to follow--- 6 Axys 4Q, YE2000 Results Page 6 AXYS PHARMACEUTICALS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (in thousands, except per share amounts)
Three months ended Twelve months ended December 31, December 31, ---------------------------- --------------------------- 2000 1999* 2000 1999* --------- --------- -------- -------- REVENUE $ 1,457 $ 6,528 $ 6,990 $ 24,084 -------- -------- -------- -------- OPERATING EXPENSES: Research and development 12,297 14,074 36,575 55,174 General and administrative 2,890 1,308 9,999 10,872 Restructuring charge 33 (1,833) (592) 5,175 -------- -------- -------- -------- Total operating expenses 15,220 13,549 45,982 71,221 -------- -------- -------- -------- OPERATING LOSS (13,763) (7,021) (38,992) (47,137) OTHER INCOME (EXPENSE), NET (3,458) 112 (2,619) (1,347) -------- -------- -------- -------- LOSS FROM CONTINUING OPERATIONS (17,221) (6,909) (41,611) (48,484) DISCONTINUED OPERATIONS (1,736) (952) (5,941) (279) GAIN ON DISPOSAL OF SEGMENT 26,433 -- 61,213 -- -------- -------- -------- -------- NET INCOME (LOSS) $ 7,476 $ (7,861) $ 13,661 $(48,763) ======== ======== ======== ======== BASIC AND DILUTED NET LOSS PER SHARE FROM CONTINUING OPERATIONS $ (0.46) $ (0.23) $ (1.18) $ (1.60) ======== ======== ======== ======== BASIC AND DILUTED NET INCOME (LOSS) PER SHARE $0.20 $ (0.26) $ 0.39 $ (1.60) ======== ======== ======== ======== SHARED USED IN COMPUTING BASIC AND DILUTED NET INCOME (LOSS) PER SHARE 37,165 30,446 35,281 30,385 ======== ======== ======== ========
* The 1999 results of the Company's former subsidiaries, Axys Advanced Technologies and PPGx, have been reclassified in accordance with APB 30 Reporting the Results of Operations - Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions. CONSOLIDATED BALANCE SHEET DATA (unaudited) (in thousands) December 31, 2000 December 31, 1999 ----------------- ----------------- Cash and cash equivalents $ 41,247 $ 23,577 Total assets 118,696 55,734 Accumulated deficit (263,550) (277,211) Total stockholders' equity 83,370 14,047 ### -----END PRIVACY-ENHANCED MESSAGE-----