Axonyx Announces Fourth Quarter and Full Year 2004 Financial Results

    Business Editors/Health/Medical Writers

    NEW YORK--(BUSINESS WIRE)--March 16, 2005--AXONYX INC. (NASDAQ: AXYX) today announced its financial results for the fourth quarter and fiscal year ended December 31, 2004. The results for the fourth quarter and the full year 2004 include the results of Oxis International, Inc (Oxis: OB) whereas the comparable numbers for 2003 do not include Oxis.

    Financial Results

    Axonyx reported a net loss of $8,964,000 or $0.17 per share in the fourth quarter of 2004 as compared to $3,481,000 or $0.10 per share in the fourth quarter of 2003. Research and development expenses increased in the fourth quarter of 2004 to $7,853,000 from $2,559,000 in the fourth quarter of 2003. The increase is primarily due to $5,868,000 in Phenserine program expenditures. The Phenserine expenditures reflect an increase of $2,009,000 in Phase IIb and Phase III clinical trial expenses. General and administrative expenses increased in the fourth quarter of 2004 to $2,212,000 from $1,024,000 in the fourth quarter of 2003. The increase is primarily due to an increase of $523,000 in professional fees and the inclusion of Oxis International's general and administrative expenses in our consolidated financial statements.
    For the year ended December 31, 2004, the Company reported a net loss of $28,780,000 or $0.58 per share compared to $8,106,000 or $0.30 per share during the same period in 2003. Revenue for the year ended December 31, 2004 was $2,275,000 as compared to $1,000,000 for the year ended December 31, 2003. Revenue in 2004 was derived from the sale of research assays and fine chemicals at OXIS and a licensing agreement at OXIS for $450,000. In 2003, Axonyx received a $1,000,000 milestone payment from ARS, a subsidiary of Serono International SA under terms of a license agreement. For the year ended December 31, 2004 the Company incurred research and development costs of $23,741,000 compared to $5,821,000 for the year ended December 31, 2003. The increase in 2004 research and development expenses compared with 2003 is primarily attributable to the start of additional Phenserine clinical trials.
    In June 2003 the Company initiated a Phase IIB and first Phase III pivotal trial in Europe. The Phase IIB trial was originally targeted to recruit 75 patients and has subsequently been expanded to recruit 150 patients. The first Phase III trial targeted 375 patients. In June 2004 the Company initiated a second Phase III trial and incurred start up costs including the initial investigators meeting. In September 2004 the Company initiated a third Phase III pivotal trial with similar start up costs. Both the second and third Phase III trials have targeted enrollments of 450 patients each. The 2004 research and development expenses reflect the costs of these four trials, compared to only two in 2003. In 2004 our costs for Phenserine clinical trials were $11,936,000 compared to $2,775,000 in 2003. Additionally, preclinical studies in carcinogenicity and Absorption, Distribution, Metabolism and Excretion (ADME) increased by $2,900,000 from the same period in 2003.
    For the year ended December 31, 2004 the Company incurred general and administrative costs of $8,250,000 compared to $3,459,000 for the year ended December 31, 2003. The increase for year 2004 of $4,791,000 was due to non-cash stock option charges for consultants of $1,848,000 compared $806,000 in 2003, and an increase in professional fees of $909,000 to $1,742,000 in 2004 from $833,000 in 2003. The increase in professional fees results from merger and acquisition activity, increased use of outside council, patent activity, Sarbanes Oxley compliance costs and board member fees. Sales, general and administrative expenses relating to OXIS were $2,525,000.
    As of December 31, 2004, the Company had $90,591,000 in cash and cash equivalents and $84,546,000 in working capital.
    "We finished the year with a strong balance sheet and continue to focus on ways to drive progress in the CNS disease category," stated Gosse B. Bruinsma, M.D., President and Chief Executive Officer of Axonyx. "Looking ahead, we remain committed to maximizing value for both our development programs and shareholders through a disciplined approach to evaluating and executing on sound opportunities."

    Recently announced clinical trial results

    On February 7, 2005 the Company announced the top line outcome of its first Phase III clinical trial with Phenserine and on March 11, 2005 announced the release of additional results from this trial. In addition, the Company also announced on March 11, 2005 the results of an interim analysis of the Phase IIb beta-amyloid trial.

    About Axonyx

    Axonyx Inc. is a U.S.-based biopharmaceutical company engaged in the acquisition and development of proprietary pharmaceutical compounds for the treatment of Central Nervous System disorders.

    This press release may contain forward-looking statements or predictions. These statements represent our judgment to date, and are subject to risks and uncertainties that could materially affect the Company including those risks and uncertainties described in the documents Axonyx files from time to time with the SEC, specifically Axonyx's annual report on Form 10-K. Axonyx cannot assure that the Phase IIb and/or other Phase III clinical trials, amendments thereto or others, if any, with Phenserine will prove successful, that the safety and efficacy profile of Phenserine exhibited in the previous small Phase II and Phase III trials will remain the same, be better or worse in future clinical trials, if any, that the preclinical results related to the regulation of beta-APP will be substantiated by the Phenserine Phase IIb clinical trial and that Phenserine will be able to slow the progression of Alzheimer's disease, that the Phase IIb clinical trial data will differentiate Phenserine from the currently marketed drugs, that any efficacy and safety results of a Phase III trial program, if pursued, will prove pivotal, that Axonyx will obtain the necessary financing to complete the Phenserine or other development programs, that the Company's development work on Phenserine will support an NDA filing, that the results of Phase III trials will allow Phenserine to be approved by the FDA, that the FDA will grant marketing approval for Phenserine, that if Phenserine is approved by the FDA, it will prove competitive in the market, and that Axonyx will obtain licensing or corporate partnership agreements that will enable successful development of or acceleration of the development of and optimize marketing opportunities for, Phenserine. Axonyx cannot assure that it will be able to advance any of its other potential memory enhancing compounds toward IND status or beyond. Axonyx undertakes no obligation to publicly release the result of any revisions to such forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

    -See financial tables-

Condensed Consolidated Statement of Operations

Three Months Ended Year Ended December 31, December 31, ------------------------------------------------ 2004 2003 2004 2003 ------------------------------------------------ Revenue Licensing $450,000 $1,000,000 Product sales $410,000 1,825,000 ------------------------------------------------ Total revenue 410,000 2,275,000 1,000,000 Cost of product sales 381,000 1,167,000 ------------------------------------------------ 29,000 1,108,000 1,000,000

Costs and expenses: Research and development 7,853,000 $2,559,000 23,741,000 5,821,000 General and administrative 2,212,000 1,024,000 8,250,000 3,459,000 ------------------------------------------------ 10,065,000 3,583,000 31,991,000 9,280,000 ------------------------------------------------

Loss from operations (10,036,000)(3,583,000) (30,883,000) (8,280,000)

Interest income 430,000 78,000 1,235,000 137,000 Gain on issuance of subsidiary stock 1,083,000 1,154,000 Other income 19,000 19,000 Financing fees (392,000) (856,000) Interest expense (13,000) (51,000) Gain (loss) on foreign exchange (43,000) 24,000 (83,000) 37,000 ------------------------------------------------

Net loss before minority interest in subsidiary (8,952,000)(3,481,000) (29,465,000) (8,106,000) ------------------------------------------------

Minority interest in loss of subsidiary (12,000) 685,000 ------------------------------------------------

Net loss (8,964,000)(3,481,000) (28,780,000) (8,106,000) ------------------------------------------------

Foreign currency translation adjustment 18,000 (14,000) ------------------------------------------------ Comprehensive loss $(8,946,000)(3,481,000)$(28,794,000)$(8,106,000) ================================================

Net loss per common share - basic and diluted (0.17) (0.10) (0.58) (0.30) ================================================

Weighted average shares - basic and diluted 52,950,000 33,438,000 49,977,000 27,207,000 ================================================

Consolidated Balance Sheets

December 31, ------------------------- 2004 2003 -------------------------

ASSETS Current assets: Cash and cash equivalents $90,591,000 $28,780,000 Accounts receivable 229,000 Stock subscriptions receivable 2,250,000 Inventories 246,000 Other current assets 141,000 -------------------------

Total current assets 93,457,000 28,780,000

Property, plant and equipment 116,000 24,000 Technology for developed products, net 6,807,000 Patents and patents pending, net 995,000 Security deposits 19,000 11,000 -------------------------

$101,394,000 $28,815,000 =========================

LIABILITIES Current liabilities: Accounts payable $6,365,000 $1,284,000 Accrued expenses 2,386,000 880,000 Note payable 160,000 ------------------------- Total current liabilities 8,911,000 2,164,000

Outside interest in OXIS 5,945,000

STOCKHOLDERS' EQUITY Preferred stock - $.001 par value, 15,000,000 shares authorized; none issued Common stock - $.001 par value, 150,000,000 and 75,000,000 shares authorized; 53,645,518 and 33,919,948 shares issued and outstanding in 2004 and 2003, respectively 54,000 34,000 Additional paid-in capital 149,150,000 60,345,000 Unearned compensation (144,000) Accumulated comprehensive loss (14,000) Accumulated deficit (62,508,000)(33,728,000) ------------------------- Total stockholders' equity 86,538,000 26,651,000 -------------------------

$101,394,000 $28,815,000 =========================

--30--JC/ny*

CONTACT: Axonyx Inc. Colin Neill, 212-645-7704 www.axonyx.com or Media: Dawn Lauer, 212-537-8088 dlauer@gcigroup.com

KEYWORD: NEW YORK INDUSTRY KEYWORD: PHARMACEUTICAL MEDICAL BIOTECHNOLOGY EARNINGS SOURCE: Axonyx Inc.

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