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SGX Pharmaceuticals Announces Financial Results for the Three and Nine Months Ended September 30, 2007
Date:11/13/2007

Company Provides Update on Oncology Pipeline Progress

SAN DIEGO, Nov. 13 /PRNewswire-FirstCall/ -- SGX Pharmaceuticals (Nasdaq: SGXP) today announced financial results for the three and nine months ended September 30, 2007. For the three months ended September 30, 2007, the Company posted revenues of $7.6 million and a net loss of $4.8 million. For the nine months ended September 30, 2007, revenues were $27.1 million and the net loss was $9.9 million. Cash, cash equivalents and short-term investments totaled $21.4 million at September 30, 2007 compared to $33.9 million at December 31, 2006.

Pipeline Update

* The IND submission for SGX523, the Company's lead MET inhibitor, is

expected to be made prior to year end, with Phase 1 clinical trials

anticipated to begin in early 2008. The Company is also moving

forward a number of other MET inhibitors with differing profiles to

SGX523 to further broaden the scope of the program.

* SGX393, a BCR-ABL inhibitor the Company is developing for the

relapsed/refractory Chronic Myelogenous Leukemia (CML) patient

population, is in formal toxicology studies and an IND submission is

targeted for the first half of 2008. Initial clinical studies are

planned to focus on patients with the most clinically challenging

CML mutation, known as the T315I mutant.

* Other BCR-ABL inhibitors, with potential to target the front-line

patient population, are undergoing preclinical studies in

collaboration with Novartis.

"We are excited about the progress of our pipeline candidates this quarter, particularly in our MET program, with submission of the SGX523 IND now expected to take place ahead of schedule," said Mike Grey, President and Chief Executive Officer. "We are continuing to evaluate partnering opportunities for our MET program and remain committed to maximizing the value of this program for SGX and its stockholders while concurrently focusing our energies on submitting the IND in 2007 and initiating clinical studies of SGX523 in early 2008."

Financial Results for the Three and Nine Months Ended September 30, 2007

Total revenues for the three months ended September 30, 2007 were $7.6 million, compared to $6.8 million for the three months ended September 30, 2006. Total revenues for the nine months ended September 30, 2007 were $27.1 million, compared to $19.3 million in the nine months ended September 30, 2006. The increase of $0.8 million for the three month period was primarily attributable to additional revenues associated with the additional expenditures incurred in connection with our federal research grant and additional services provided under other commercial agreements. The increase of $7.8 million for the nine month period was primarily due to additional revenue earned through our collaboration with Novartis, together with the achievement of a milestone, and additional services provided, under other commercial agreements. The increase for the nine month period ended September 30, 2007 also reflects the recognition of revenue in the first quarter of 2007 related to the reimbursement of overhead costs incurred on grant research efforts since the commencement of the grant in July 2005.

Research and development expenses for the three months ended September 30, 2007 and 2006 were $10.5 million and $8.6 million, respectively. Research and development expenses for the nine months ended September 30, 2007 and 2006 were $31.0 million and $35.6 million, respectively. The increase of $1.9 million for the three month period was primarily attributable to increased costs related to the development of our MET inhibitors. The decrease of $4.6 million for the nine month period was primarily attributable to a decrease of costs incurred for Troxatyl(TM) clinical trial activities, a reduction in subcontractor expenditures associated with our federal research grant, and lower depreciation expense.

General and administrative expenses for the three months ended September 30, 2007 and 2006 were $2.1 million and $1.9 million, respectively. General and administrative expenses for the nine months ended September 30, 2007 and 2006 were $6.4 million and $7.4 million, respectively. The increase of $0.2 million for the three month period was primarily attributable to increased professional services. The decrease of $1.0 million for the nine month period was primarily attributable to a decrease in non-cash stock-based compensation expense, together with a decrease in recruiting, salaries and professional services.

SGX reported a net loss attributable to common stockholders for the three months ended September 30, 2007 of $4.8 million, or $0.31 per share. This compares with a net loss attributable to common stockholders for the three months ended September 30, 2006 of $3.4 million, or $0.23 per share. For the nine months ended September 30, 2007, the net loss attributable to common stockholders was $9.9 million, or $0.65 per share. This compares with a net loss attributable to common stockholders for the nine months ended September 30, 2006 of $23.2 million, or $1.74 per share.

About SGX Pharmaceuticals

SGX Pharmaceuticals is a biotechnology company focused on the discovery, development and commercialization of innovative cancer therapeutics. The SGX oncology pipeline includes drug candidates from its FAST (TM) drug discovery platform, such as next generation BCR-ABL inhibitors being developed by SGX and in partnership with Novartis and MET tyrosine kinase inhibitors, including SGX523, and potent JAK2 inhibitors. More information on the pipeline and drug discovery platform can be found at http://www.sgxpharma.com and in the Company's various filings with the Securities and Exchange Commission.

Forward-looking Statements

Statements in this press release that are not strictly historical in nature are forward-looking statements. These statements include, but are not limited to, statements related to research and development programs, plans for 2007 and 2008, expectations regarding the timing of the filing of INDs and commencement of IND enabling activities and preclinical and clinical studies, partnership opportunities, the potential of the Company's inhibitors as treatments for certain cancers, partnering opportunities for the Company's research and development programs and the ability to discover, develop and commercialize cancer therapeutics. These statements are only predictions based on current information and expectations and involve a number of risks and uncertainties. Actual events or results may differ materially from those projected in any of such statements due to various factors, including the risks and uncertainties inherent in drug discovery, development and commercialization, which include, without limitation, the potential failure of development candidates to advance through preclinical studies or demonstrate safety and efficacy in clinical testing and the ability to file INDs or commence IND enabling activities or preclinical or clinical studies in the referenced time frames. The results of early preclinical studies or clinical trials may not be predictive of future results, and the Company cannot provide any assurances that any of its compounds or development candidates will have favorable results in preclinical studies or future clinical trials. In addition, results may be affected by risks related to the implementation of its collaborations, the failure to successfully complete collaborations or partnerships, the partnering of its research and development programs, competition from other biotechnology and pharmaceutical companies, its effectiveness at managing its financial resources, the level of resources that its collaborative partners devote to development of its product candidates, the scope and validity of patent protection for its products, and its ability to obtain additional funding to support its operations. For a discussion of these and other factors, please refer to the risk factors described in the Company's annual report on Form 10-K for the year ended December 31, 2006, the Company's quarterly report on Form 10-Q for the three and nine months ended September 30, 2007, as well as other filings with the Securities and Exchange Commission. You are cautioned not to place undue reliance on these forward- looking statements, which speak only as of the date hereof. This caution is made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All forward-looking statements are qualified in their entirety by this cautionary statement and SGX undertakes no obligation to revise or update this press release to reflect events or circumstances after the date hereof.

SGX PHARMACEUTICALS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

Three Months Ended Nine Months Ended

September 30, September 30,

2007 2006 2007 2006

Revenue:

Collaborations and

commercial agreements $5,444 $5,014 $16,813 $13,192

Grants 2,142 1,753 10,247 6,151

Total revenue 7,586 6,767 27,060 19,343

Expenses:

Research and development 10,465 8,583 30,997 35,590

General and

administrative 2,050 1,864 6,419 7,420

Total operating expenses 12,515 10,447 37,416 43,010

Loss from operations (4,929) (3,680) (10,356) (23,667)

Interest income (expense),

net 156 282 472 500

Net loss (4,773) (3,398) (9,884) (23,167)

Accretion to redemption

value of redeemable

convertible preferred stock - - - (49)

Net loss attributable to

common stockholders $(4,773) $(3,398) $(9,884) $(23,216)

Basic and diluted net loss

per share attributable to

common stockholders $(0.31) $(0.23) $(0.65) $(1.74)

Shares used to compute

basic and diluted net

loss per share

attributable to

common stockholders 15,392 15,048 15,318 13,323

Three Months Ended Three Months Ended

September 30, 2007 (1) September 30, 2006 (1)

Stock-based Reported Stock-based Reported

compensation GAAP compensation GAAP

non-GAAP expense results non-GAAP expense results

Net loss

attributable to

common

stockholders $(4,084) $(689) $(4,773) $(2,462) $(936) $(3,398)

Basic and

diluted net

loss per share

attributable

to common

stockholders $(0.27) $(0.04) $(0.31) $(0.16) $(0.06) $(0.23)

Research and

development

expenses $10,105 $360 $10,465 $8,222 $361 $8,583

General and

administrative

expenses $1,721 $329 $2,050 $1,289 $575 $1,864

Nine Months Ended Nine Months Ended

September 30, 2007 (1) September 30, 2006 (1)

Stock-based Reported Stock-based Reported

compensation GAAP compensation GAAP

non-GAAP expense results non-GAAP expense results

Net loss

attributable

to common

stockholders $(7,104) $(2,780) $(9,884) $(19,407) $(3,809) $(23,216)

Basic and

diluted net

loss per share

attributable

to common

stockholders $(0.46) $(0.18) $(0.65) $(1.46) $(0.29) $(1.74)

Research and

development

expenses $29,587 $1,410 $30,997 $33,754 $1,836 $35,590

General and

administrative

expenses $5,049 $1,370 $6,419 $5,447 $1,973 $7,420

SGX PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

(unaudited)

September 30, December 31,

2007 2006

Assets

Cash, cash equivalents and

short-term investments $21,429 $33,877

Accounts receivable 2,800 3,532

Other current assets 1,517 1,616

Property and equipment, net 4,162 5,435

Other assets 3,991 4,004

Total assets $33,899 $48,464

Liabilities and stockholder's

equity

Current liabilities $18,168 $21,762

Deferred revenue, long-term 8,681 13,023

Other liabilities, net of

current portion - 66

Stockholder's equity 7,050 13,613

Total liabilities and

stockholder's equity $33,899 $48,464

(1) In addition to disclosing financial results calculated in accordance

with generally accepted accounting principles (GAAP), this

table contains non-GAAP financial measures that exclude the effect of

non-cash stock compensation expense. The Company believes

that the presentation of results excluding non-cash stock compensation

expense provides meaningful supplemental information to both

management and investors that is indicative of the Company's core

operating results. The Company believes these non-GAAP financial

measures facilitate comparison of operating results across reporting

periods, and uses these non-GAAP financial measures when evaluating

its financial results, as well as for internal planning and

forecasting purposes. These non-GAAP financial measures should not be

considered a substitute for, or superior to, financial measures

calculated in accordance with GAAP.


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SOURCE SGX Pharmaceuticals
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