Advanced Polymer Systems Reports Fourth-Quarter and Full-Year 2000 Results.

Business Editors & Medical/Science Writers

REDWOOD CITY, Calif.--(BW HealthWire)--March 13, 2001

Advanced Polymer Systems Inc. (Nasdaq:APOS), an innovator in polymer-based drug delivery systems, today reported its fourth-quarter and full-year 2000 results.

Total revenues from continuing operations for the year ended Dec. 31, 2000, were $3,366,000, compared with $4,697,000 for 1999, a decrease of $1,331,000, due mainly to the absence of the one-time sale of a proprietary product line in the prior year. Net loss from continuing operations for the full-year 2000 was $3,758,000, compared with $2,138,000 for the same period in the prior year.

Net income for full-year 2000 was $8,552,000, or $0.42 per share, compared with $2,372,000, or $0.12 per share, in the prior year. Net income for 2000 included a gain of $11.1 million, or $0.55 per share, from the sale in July 2000 of the company's cosmeceutical product line and certain technology rights for topical pharmaceuticals, net of costs and taxes associated with the disposal.

Research and development expense for the full year was $3,713,000, compared with $2,471,000 in 1999, an increase of $1,242,000, due mainly to the cost of materials for pre-clinical studies and the initiation of preliminary toxicology studies on the company's bioerodible polymer systems.

Total revenues from continuing operations for the fourth quarter ended Dec. 31, 2000, were $880,000, compared with $951,000 for the same period in 1999. Net loss from continuing operations for the fourth quarter was $1,336,000, compared with $777,000 for the same period in the prior year. Net loss for the fourth-quarter 2000 was $1,592,000, or $0.08 per share, compared with net income of $720,000, or $0.04 per share, for the same period in the prior year.

Due to the initiation of preliminary toxicology studies on the company's bioerodible polymer systems, research and development expense for the fourth quarter of 2000 was $1,518,000, compared with $626,000 for the same period in 1999, an increase of $892,000.

Year 2000 highlights include:

-- $22.5 million cash at year end;

-- Successful sale of non-prescription skincare product lines to R.P. Scherer
for $25 million, with the potential of an additional $26.5 million over the
next three years in performance milestones;

-- Refocus of the company on development and commercialization of bioerodible
drug delivery technologies for prescription pharmaceuticals;

-- Leadership changes: Paul Goddard appointed chairman, Michael O'Connell
assumes president/CEO position, Gordon Sangster appointed CFO and John Barr
appointed vice president of R&D;

-- Development agreement with Fujisawa Pharmaceutical; and

-- FDA marketing clearance for Advanced Polymer's patented Microsponge(R) drug
delivery technology to be used in new drug product (Carac(TM)) for actinic
keratoses.

Michael O'Connell, president and CEO, commented: "We are optimistic about a number of feasibility studies utilizing our technology, currently underway with a variety of large and small pharmaceutical companies. We are also looking forward to the public launch in early April 2001 of Carac(TM), our Microsponge-based formulation containing 5-fluorouracil for the treatment of actinic keratoses, by our partner Dermik Laboratories, an Aventis company.

"Actinic keratoses are pre-cancerous skin lesions affecting an estimated 5 million Americans, with an annual market opportunity believed to be $250 million to $300 million. Furthermore, our Retin-A(R) Micro(TM) family of products will continue to provide us with a growing royalty stream, which we can reinvest in our technology and product-development programs.

"Last year marked a turning point for the company as we strategically refocused our business. With the mid-year divestiture of our cosmeceuticals business, we are now positioned to further develop our platform of drug delivery technologies designed for the pharmaceutical industry. Our primary focus is the development and commercialization of our bioerodible injectable and implantable polymer systems under the trade name Biochronomer(TM)," said O'Connell.

"We have initiated GMP manufacturing of our new Biochronomer systems, as well as in vivo toxicology and pharmacology studies. These studies will provide key data to facilitate partnership arrangements and to bring innovative new pharmaceutical products to market. We are confident that our Biochronomer polymers will open up exciting opportunities for us, not only for pharmaceutical products but also for medical devices," concluded O'Connell.

Advanced Polymer Systems is an innovator in polymer-based drug delivery systems and related technologies with a broad proprietary and intellectual property platform. The company is committed to the identification, development and commercialization of proprietary polymer-based drug delivery systems for the pharmaceutical industry.

Working in collaboration with academic researchers, corporate partners and licensees, the company is developing and providing specialized proprietary delivery systems for use in an increasing number of ethical pharmaceutical applications.

Forward-looking Statements

Except for historical information, this news release contains certain forward-looking statements that involve risks and uncertainties, including among others, uncertainty associated with timely development, approval, launch and acceptance of new products; establishment of new corporate alliances; and progress in research and development programs. Other risks and uncertainties associated with the company's business and prospects are identified in the company's filings with the Securities and Exchange Commission. The company does not undertake to revise these forward-looking statements to reflect events or circumstances occurring in the future.

                     ADVANCED POLYMER SYSTEMS INC.
                      Income Statement Highlights
                 (in thousands, except per share data)
                              (Unaudited)

                                Three Months Ended Twelve Months Ended
                                  Dec. 31, Dec. 31,  Dec. 31, Dec. 31,
                                    2000     1999      2000     1999

Royalties                         $   486  $   365   $ 2,081  $ 2,025
License, R&D and Option Fees          122      299       122    1,462
Product Revenues                      272      287     1,163    1,210
          Total Revenues              880      951     3,366    4,697

Cost of Sales                         192      124       497      533
Operating Expenses:
  Research & Development            1,518      626     3,713    2,471
  Selling, General & Administrative   923      914     3,463    3,442

          Total Operating Expenses  2,441    1,540     7,176    5,913

Operating Loss                     (1,753)    (713)   (4,307)  (1,749)

Interest Income (Expense), Net        395      (63)      523     (385)
Other, Net                             22       (1)       26       (4)

Loss from Continuing Operations    (1,336)    (777)   (3,758)  (2,138)

(Loss)/Income from Discontinued
 Operations, net of taxes            (218)   1,497     1,163    4,510
(Loss)/Gain on Disposal of
 Discontinued Operations,
 net of taxes                         (38)       0    11,147        0

Net (Loss)/Income                 $(1,592) $   720   $ 8,552  $ 2,372

Basic (Loss)/Earnings
 Per Common Share:
  Loss from Continuing Operations   (0.07)   (0.04)    (0.19)   (0.11)
  Net (Loss)/Income                 (0.08)    0.04      0.42     0.12

Diluted (Loss)/Earnings
 Per Common Share:
  Loss from Continuing Operations   (0.07)   (0.04)    (0.19)   (0.11)
  Net (Loss)/Income                 (0.08)    0.04      0.42     0.12


                     ADVANCED POLYMER SYSTEMS INC.
                       Balance Sheet Highlights
                            (in thousands)
                              (Unaudited)

                                               Dec. 31,       Dec. 31,
                                                 2000           1999
Assets

Cash, Cash Equivalents and
 Marketable Securities                         $22,523        $ 3,705
Accounts Receivable, Net                         1,691          5,073
Inventory                                           71             61
Other Current Assets                               765            403
Assets Held For Sale                                 0          7,722

Total Current Assets                            25,050         16,964

Property, Plant & Equipment, Net                 1,795          1,991
Other Non-Current Assets                           151            342
Total Assets                                   $26,996        $19,297

Liabilities and Shareholders' Equity

Current Liabilities                            $ 4,963        $ 3,772
Long-Term Deferred Revenues                        874          1,080
Long-Term Debt                                       0          2,409
Shareholders' Equity                            21,159         12,036

Total Liabilities and Shareholders' Equity     $26,996        $19,297