ARYx Therapeutics Reports Third Quarter 2009 Results

http://www.businesswire.com/news/home/20091112005292/en

FREMONT, Calif.--(Business Wire)--
ARYx Therapeutics, Inc. (NASDAQ:ARYX) today reported results of operations and
provided a general business update for the third quarter ended September 30,
2009.

"Our highest priority remains completing a partnership with a large
pharmaceutical company on our oral antiarrythmic agent, budiodarone, for its
late-stage development and anticipated commercialization," stated Dr. Paul
Goddard, ARYx chairman and chief executive officer. "We remain confident that a
budiodarone partnership will be completed and that with the recently-executed
$35 million committed equity line financing in place, we have the flexibility to
get the right deal done with the right company. Looking beyond the completion of
a budiodarone partnership, we continue to actively pursue a similar partnership
for our oral gastrointestinal prokinetic agent, ATI-7505, and are seeking
guidance from the United States Food and Drug Administration on the continued
development of tecarfarin, our oral anticoagulant compound."

Company Highlights

* Significant interest and activity by several large pharmaceutical companies is
accelerating in the partnering efforts for budiodarone, leading ARYx to believe
that the compound will be partnered in the near term. The early market
penetration of Multaq in the United States, a recently launched therapy also for
the treatment of atrial fibrillation, continues to demonstrate a growing demand
and interest for antiarrythmic therapies.
* Results were reported in July (see press release dated July 7, 2009) from the
EmbraceAC study, the Phase 2/3 clinical trial comparing our oral anticoagulant
therapy, tecarfarin, against warfarin in a blinded head to head study. At that
time, 104 patients from the tecarfarin arm of the study were continued on
treatment in an open-label safety extension and 95 of these patients will have
remained on tecarfarin through the end of the extension treatment period that
ends November 15, 2009. None of the patients in this extension phase dropped out
due to drug related side effects. A total of 124 patients will have been treated
with tecarfarin for at least one year by the end of this safety extension phase,
a key safety milestone in the investigation of all chronic therapies under ICH
guidelines.

During this additional treatment period, patients continued to be monitored
using the standard measure of anticoagulation, INR (International Normalized
Ratio), at an interval of up to four weeks. The average time within therapeutic
range of INR for these patients in the extension phase is 79% of the time
treated (interpolated), based upon a preliminary interpretation of the results.
This compares to the 74% of the time in range (interpolated) that was
demonstrated in the blinded phase of the trial. Importantly, there were no
serious bleeding events during this safety extension phase, and tecarfarin
continued to be well tolerated. These additional results, while on a small
subset population of those participating in EmbraceAC, suggest once again that
tecarfarin appears to maintain patients within the target INR range between 74%
and 79% of the time treated, whether the dosing is tightly controlled or in an
open label fashion that equates more closely to real world standard of care.
Extending the interval between monitoring to thirty days does not appear to
substantially impact the ability of tecarfarin to maintain patients within the
target therapeutic range of INR. Monitoring less often than once a month has not
been tested with tecarfarin but would appear to be feasible based on the
stability of patients in this open label extension.

* ARYx entered into an agreement with Commerce Court Small Cap Value Fundfor a
committed equity line of financing under which ARYx has the option to sell up to
$35.0 million in value of our common shares over a 24 month period at pre-agreed
discounts to our common shares` open market price ranging from 4.2% to 7%. It is
entirely at ARYx`s option whether to utilize this financing facility and to date
no shares have been sold. Under the terms of the agreement, ARYx is required to
file a Form S-1 registration statement with the US Securities and Exchange
Commission (SEC) by early December 2009 to allow Commerce Court to resell any
common shares that ARYx requires them to purchase.
* ARYx implemented a staffing plan to operate the company that anticipates
licensing its lead development programs and resuming development of earlier
stage product candidates. The staffing changes impacted functions throughout
ARYx and included a reduction in personnel from 73 employees to 56 employees.
ARYx expects to record a charge of less than $500,000 in the fourth quarter of
2009 related to this reduction in personnel. This staffing reduction was
accompanied by changes in the organizational structure that allow ARYx to
improve both the efficiencies and flexibility of operations.

Financial Results

As of September 30, 2009, ARYx had cash, cash equivalents and marketable
securities totaling approximately $14.5 million. For the quarter, ARYx reported
a net loss of $8.2 million or $0.30 per share, compared to net income of $3.2
million or $0.17 cents per diluted share in the same quarter of 2008 that
included a substantial non-recurring revenue amount. ARYx had no revenue in the
third quarter of 2009 compared to revenue of $17.5 million for the third quarter
of 2008. The $17.5 million in revenue was recorded in the third quarter of 2008
because the Company`s former collaborative partner, Procter & Gamble
Pharmaceuticals, terminated its agreement with ARYx in July 2008 and the
remaining portion of the $25.0 million up-front payment that ARYx had previously
received became fully earned. Without this amount, the loss for the third
quarter of 2008 would have been approximately $14.3 million compared to this
quarter`s $8.2 million loss.

Research and development expenses for the third quarter of 2009 were $5.0
million, compared to $11.7 million during the same period of 2008. The decrease
in 2009 is primarily due to completion of both the Phase 2b clinical study of
budiodarone in December 2008 and the Phase 2/3 EmbraceAC clinical study of
tecarfarin completed in July 2009. External clinical expenses for the remainder
of the year are expected to decline significantly since the only remaining
significant clinical costs relate to the ongoing safety-extension study of
EmbraceAC and other study completion costs.

ARYx's general and administrative expenses during the third quarter of 2009 were
$2.6 million compared to $2.4 million for the same period last year. The
increase in expense for 2009 is primarily due to expenses related to
Sarbanes-Oxley regulatory compliance and increased patent filing and maintenance
costs. Our third quarter 2009 general and administrative expense also includes
approximately $345,000 of non-cash stock compensation expense.

Conference Call and Webcast Information

ARYx will host a conference call and simultaneous Webcast on Thursday, November
12, 2009 at 8:00 a.m. Pacific Time to review the results for the third quarter
2009 and to provide a general business update on the company. The Webcast will
be available live via the Internet by accessing the ARYx Website at
http://www.aryx.com. Alternatively, the call can be accessed by dialing
877-718-5101. Participants outside of the U.S. should dial 719-325-4797. The
passcode for the call is 6435509. Replays of the call will be available through
December 15, 2009 at ARYx's Website.

About ARYx Therapeutics, Inc.

ARYx Therapeutics is a biopharmaceutical company focused on developing a
portfolio of internally discovered products designed to eliminate known safety
issues associated with well-established, commercially successful drugs. ARYx
uses its RetroMetabolic Drug Design technology to design structurally unique
molecules that retain the efficacy of these original drugs but are metabolized
through a potentially safer pathway to avoid specific adverse side effects
associated with these compounds. ARYx currently has four products in clinical
development: an oral anti-arrhythmic agent for the treatment of atrial
fibrillation, budiodarone (ATI-2042); an oral anticoagulant agent for patients
at risk for the formation of dangerous blood clots, tecarfarin (ATI-5923); a
prokinetic agent for the treatment of various gastrointestinal disorders,
ATI-7505; and, an agent for the treatment of schizophrenia and other psychiatric
disorders, ATI-9242. Please visit ARYx`s Website at www.aryx.com for additional
information.

Forward-looking Statements

This press release contains forward-looking statements, including, without
limitation, statements related to the potential safety and efficacy and
commercial potential of ARYx`s product candidates, the ability of preliminary
clinical data and trends to be predictive of future data or results, and ARYx`s
ability to find partners to help advance its product candidates through clinical
development. Words such as "believes," "continues," "could," "expects," "may,"
"planning" and similar expressions are intended to identify forward-looking
statements. These forward-looking statements are based upon ARYx's current
expectations. Forward-looking statements involve risks and uncertainties. ARYx's
actual results and the timing of events could differ materially from those
anticipated in such forward-looking statements as a result of these risks and
uncertainties, which include, without limitation, the risk that ARYx will need
substantial additional funding and may be unable to raise additional capital
when needed which would force ARYx to limit or cease its operations and related
product development programs, the risk that collaborative arrangements will
likely place the development of ARYx`s product candidates outside of its
control, the risk that ARYx depends on collaborative arrangements to complete
the development and commercialization of each of its product candidates and ARYx
may have to alter its development and commercialization plans if collaborative
relationships are not established for tecarfarin, budiodarone and ATI-7505, the
risk that ARYx`s product candidates may not demonstrate safety and efficacy or
lead to regulatory approval, the risk that any failure or delay in commencing or
completing clinical trials for its product candidates could severely harm ARYx`s
business, and the risk that third party manufacturers could delay or prevent the
clinical development of ARYx`s product candidates. These and other risk factors
are discussed under "Risk Factors" and elsewhere in ARYx's Quarterly Report on
Form 10-Q for the quarter ended September 30, 2009 and other filings with the
Securities and Exchange Commission. ARYx expressly disclaims any obligation or
undertaking to release publicly any updates or revisions to any forward-looking
statements contained herein to reflect any change in the company`s expectations
with regard thereto or any change in events, conditions or circumstances on
which any such statements are based.

ARYx Therapeutics, Inc.
Condensed Consolidated Balance Sheets
(in thousands)

September 30, December 31,
2009 2008
(unaudited) (note A)
ASSETS
Current assets:
Cash and cash equivalents $ 6,845 $ 35,999
Marketable securities 7,342 8,588
Other current assets 914 1,263
Total current assets 15,101 45,850
Property and equipment, net 2,465 3,198
Other assets 1,721 2,100
Total assets $ 19,287 $ 51,148

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current liabilities $ 3,160 $ 7,584
Current portion of long-term borrowings 6,792 3,404
Current portion of deferred revenue - -
Total current liabilities 9,952 10,988
Long-term borrowings 6,369 11,278
Deferred revenue - -
Other non-current liabilities 1,150 1,436
Stockholders` equity:
Common stock 27 27
Additional paid-in capital and other 183,111 181,330
Accumulated deficit (181,322) (153,911)
Total stockholders` equity 1,816 27,446
Total liabilities and stockholders` equity $ 19,287 $ 51,148

Note A: The balance sheet has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statement presentation.

ARYx Therapeutics, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share amount)

Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
(unaudited)
Revenue:
Collaboration services $ - $ - $ - $ 232
Technology license fees - 17,544 - 19,492
Total revenue - 17,544 - 19,724

Costs and expenses:
Cost of collaboration service revenue - - - 232
Research and development 4,994 11,716 18,054 29,207
Selling, general and administrative 2,638 2,415 7,863 8,166
Total costs and expenses 7,632 14,131 25,917 37,605
Loss from operations (7,632) 3,413 (25,917) (17,881)

Interest and other income, net 1 292 66 1,149
Interest expense (519) (474) (1,515) (1,437)
Loss on investment - - (14) -
Net loss $ (8,150) $ 3,231 $ (27,380) $ (18,169)

Basic net income (loss) per share $ (0.30) $ 0.18 $ (1.00) $ (1.03)
Diluted net income (loss) per share N/A $ 0.17 N/A $ (1.03)

Weighted average shares used to compute:
Basic net income (loss) per share 27,443 17,663 27,387 17,645
Diluted net income (loss) per share - 18,628 - 17,645

ARYx Therapeutics, Inc.
David Nagler, 510-585-2200 ext. 211
Vice President Corporate Affairs
dnagler@aryx.com

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