Bio-Technology General Corp. Reports 2001 Third Quarter and Nine-Month Pro Forma EPS of $0.06 and $0.33.

Business Editors

ISELIN, N.J.--(BUSINESS WIRE)--Oct. 17, 2001

Bio-Technology General Corp. (NASDAQ:BTGC) today reported results for the three and nine months ended September 30, 2001.

Results

For the nine months ended September 30, 2001, pro forma net income from operations grew 71% to $19.0 million, or $0.33 per share, on revenues of $82.1 million, compared to $11.1 million, or $0.19 per share, on revenues of $63.1 million, in the nine months ended September 30, 2000. We are gratified that this growth in EPS was achieved while increasing our investment in our promising research and development program and despite the impact of additional shares outstanding, as a result of our acquisition of Myelos on March 19, 2001.

Product sales in the nine months ended September 30, 2001 increased 58% to $70.7 million from $44.8 million in the first nine months of 2000.

Pro forma net income from operations was $3.5 million, or $0.06 per share, on revenues of $20.1 million for the quarter ended September 30, 2001, compared to net income of $4.4 million, or $0.08 per share, on revenues of $21.5 million in the third quarter of 2000. Income before income taxes in the third quarter of 2001 was $5.2 million as compared to $5.0 million in the third quarter of 2000, which benefited from a significantly lower tax rate.

Product sales in the third quarter of 2001 were $15.5 million compared to $18.2 million in the third quarter of 2000.

Pro forma results exclude, for the nine months ended September 30, 2001, the effect of the write-off, in accordance with generally accepted accounting principles, of in-process research and development acquired and, for the three and nine months ended September 30, 2001, the effect of the amortization of negative goodwill in the amount of approximately $0.9 million and $1.9 million, respectively, resulting from the acquisition of Myelos. In addition, pro forma net income from operations for the nine months ended September 30, 2000 excludes the cumulative effect of a change in accounting principle resulting from our adoption of SAB 101.

Despite quarterly variations in EPS in the first, second, and third quarters, total product sales, revenues, and EPS achieved through the nine months are indeed substantial. We anticipate product sales for the year of approximately $85 million and total revenues of approximately $100 million for the first time in our company's history, and we are expecting to deliver solid growth in full year 2001 EPS compared to 2000, although fourth quarter EPS is expected to be lower than third quarter EPS.

Oxandrin Sales

Beginning in late 2000, following the launch of Oxandrin(R) into the long-term care sector for the treatment of patients with involuntary weight loss, a number of significant wholesalers began stocking product. Because of strong script growth recorded upon the launch into the long-term care market and the fact that specific market research information about the value of long-term care scripts was not yet available, it was not initially apparent to us and Gentiva, our national distributor, that these wholesaler purchases were significantly greater than what they needed to meet growing end-user demand. We now believe that while this stocking was undertaken in anticipation of new and accelerated Oxandrin sales in that market sector it also reflects an assumption that an Oxandrin price increase would take place in 2001. As a result, Gentiva's purchases of Oxandrin in the second quarter were higher than the level of its sales to wholesalers and Gentiva's inventory of Oxandrin increased beyond the desired level.

We at BTG and Gentiva have addressed this situation by amending our agreement with the purpose of ensuring that our sales of Oxandrin to Gentiva more properly reflect end-user demand on an ongoing basis. Our third quarter sales of Oxandrin to Gentiva were therefore significantly lower than those of the first and second quarters. Our fourth quarter sales to Gentiva will also be affected by the wholesaler stocking earlier in the year.

The impact of the wholesaler stocking activity in the first part of 2001 resulted in sales of Oxandrin in the three months ended September 30, 2001 of $4.6 million compared to $10.9 million in the comparable period of 2000. However, in the first nine months of 2001, Oxandrin sales increased 76% to $39.2 million from $22.3 million in the comparable period of 2000, and exceeded full year 2000 Oxandrin sales by 22%. These year-to-date Oxandrin sales reflect the impact of anticipatory purchases by wholesalers as well as the launch of Oxandrin into the long-term care sector and, in the 2000 period, the effect of an inventory reduction process completed in May of that year.

Oxandrin Prescriptions

The launch of Oxandrin in late 2000 by the Ross Products Division of Abbott Laboratories into the long-term sector for the treatment of patients with involuntary weight loss led to a dramatic increase in prescriptions derived primarily from that sector. Prescriptions in the first eight months of 2001 exceeded those for the corresponding eight months of 2000 by 32%. Though the average value of long-term care scripts has so far been lower than that of scripts derived elsewhere, underlying demand for Oxandrin has grown and information from wholesalers indicates that their sales to end-users in the first eight months of this year were approximately 40% higher than those of the first eight months of 2000.

However, of concern to us is the fact that while monthly prescriptions are at their historical peak, they remained essentially flat in the months of June through August 2001, due, at least in part, to sales force changes in the long-term care sector.

The long-term care field force contingent detailing physicians, nursing homes, assisted living facilities, and geriatric hospitals was streamlined in the spring of 2001 in an effort to achieve greater efficiency. We believe this inadvertently resulted in a reduction in the number of Oxandrin calls and details being made, which only recently came to our attention. We understand that corrective measures have been taken to increase the number of calls and details being made, which we expect will positively impact prescription levels.

Other Product Sales

Sales of our Bio-Tropin(TM) and BioLon(TM) in the third quarter of 2001 were $8.1 million and $2.8 million, compared to $6.1 million and $1.2 million, respectively, in the third quarter of 2000. There were no sales of Delatestryl in the third quarter.

Human growth hormone, BioLon, and Delatestryl sales through the first nine months were $19.2 million, $6.9 million, and $5.0 million, respectively, or 21%, 47%, and 174%, respectively, ahead of last year's levels for the comparable period. These increases reflect, respectively, (a) increased penetration of the Japanese and European human growth hormone markets, (b) increased sales of BioLon in the U.S. following an upgrade in our manufacturing process (which had negatively impacted 2000 BioLon sales while being implemented), and (c) heavy demand by wholesalers for Delatestryl at the beginning of this year when the anticipated return to the market of a competitor did not materialize, and reduced demand for Delatestryl in 2000.

Commenting on the results, Sim Fass, Chairman and Chief Executive Officer, stated: "While the quarter to quarter earnings have so far this year been inconsistent due to wholesaler purchasing patterns, it is clear that our product sales have demonstrated very satisfactory growth in the first nine months of this year driving our pro forma EPS to $0.33. We expect the corrective measures being taken with respect to the long-term care sector and our own initiatives to further drive Oxandrin prescription growth into 2002 and translate into increased sales of Oxandrin. We are also pleased that our other commercial products have in the first nine months of this year shown appreciable growth."

Products in Development

In addition to our eight commercial products, we are pursuing the development of several new drug candidates. Each of these is a response to a clear and present unmet medical need and each has substantial commercial potential.

They are:

- Puricase(TM) - an enzyme to treat severe gout, targeted for approval in 2004.


- BTG-271 - an anti-leukemic monoclonal antibody, targeted for approval in
2005.

- Prosaptide(TM) - a drug to treat neuropathy pain, targeted for approval in
2006.

- OxSODrol(TM) - an enzyme to reduce respiratory problems in premature infants,
targeted for approval in 2007.

It is our firm belief that we possess the requisite financial resources and stability with which to focus in earnest on developing the proprietary drugs in our product pipeline.

Anticipated Developments

We anticipate the following product developments in the remainder of 2001 and 2002:

- Arthrease(TM) - Broader European commercialization by De Puy by

end of 2001. U.S. FDA approval and launch by De Puy in 2002. - Oxandrin(R) - Launch into the oncology market (for involuntary

weight loss) in 2002. - Tev-Tropin - U.S. launch by Teva in 2002 (human growth hormone to

be manufactured by us utilizing our alternate FDA-approved

expression system). - Puricase(TM) - Phase I and start of Phase II in 2002. - BTG-271 - Completion of all preclinical and toxicology studies in

2002. - Prosaptide(TM)- Phase II(b) in 2002. - OxSODrol(TM) - Phase II(b) in 2002.

Our cash balance continues to grow and our intention to enhance our commercial opportunities through acquisitions remains as strong as ever. This objective is, and continues to be, a key priority. The kinds of transactions we are pursuing involve joint ventures, co-marketing, in-licensing of products, and outright acquisition of products and/or companies. The purpose of such transactions is to enrich our pipeline of commercial opportunities and, thereby, to enhance shareholder value.

We remain very confident in our ability to achieve ongoing growth not only for this year but in the future as well. We will do so by continuing to focus on our agenda:

- to maximize the earnings potential of our current commerical

portfolio; - to enhance our near- to mid-term earnings prospects through

acquisition; and - to successfully bring our proprietary drug candidates through

development to market.

Bio-Technology General Corp., a leading biopharmaceutical company, develops, manufactures and markets genetically engineered and other products for human health care. BTG's products are marketed worldwide. Products sold in the United States are Oxandrin(R) (oxandrolone, USP), marketed by BTG and by the Ross Products Division of Abbott Laboratories under a co-promotion agreement, Delatestryl(R) (testosterone enanthate), marketed by BTG, Mircette(TM) (oral contraceptive), marketed by Organon, Inc., and BioLon(TM) (sodium hyaluronate), marketed by Akorn, Inc. Products sold internationally are Bio-Tropin(TM) (recombinant human growth hormone), BioLon(TM) (sodium hyaluronate), Bio-Hep-B(TM) (hepatitis B vaccine), Silkis(R) (vitamin D derivative), and Arthrease(TM) (sodium hyaluronate for osteoarthritis). BTG's news releases and other information are available on the Company's website at www.btgc.com.

BTG will be offering a live webcast of a discussion by BTG management of the earnings and the Company's business on October 17, 2001, at 10:00 a.m. (EST). The webcast can be accessed via the internet at BTG's website, www.btgc.com, and will be archived and available on our website through October 24, 2001. A telephonic replay will also be available for one week by calling 800-428-6051 (US) or 973-709-2089 (international), passcode 212406.

All earnings-per-share amounts in the text of this news release represent diluted earnings per share as defined under Statement of Financial Accounting Standards No. 128, "Earnings per Share."

Statements in this news release concerning the Company's business outlook or future economic performance, anticipated profitability, revenues, expenses or other financial items; and statements concerning assumptions made or expectations as to any future events, conditions, performance or other matters, are "forward-looking statements" as that term is defined under the Federal Securities Laws. Forward-looking statements are subject to risks, uncertainties and other factors which could cause actual results to differ materially from those stated in such statements. Such risks, uncertainties and factors include, but are not limited to, changes and delays in product development plans and schedules, customer acceptance of new products, changes in pricing or other actions by competitors, patents owned by the Company and its competitors, and general economic conditions, as well as other risks detailed in the Company's filings with the Securities and Exchange Commission.

                 CONSOLIDATED STATEMENTS OF OPERATIONS
                              (Unaudited)
                 (in thousands except per share data)

                                      Three Months Ended September 30
                                      --------------------------------
                                        2001(1)
                                      Pro forma    2001        2000(2)
                                      Adjusted     Actual      Actual
                                      ---------   ---------   --------
Revenues:
Product sales                         $ 15,541    $ 15,541    $ 18,206
Contract fees                              289         289         213
Royalties                                1,677       1,677         778
Other                                    2,624       2,624       2,259
                                      --------     -------    --------
 Total revenues                         20,131      20,131      21,456
                                      --------     -------    --------
Expenses:
Research and development                 5,562       5,562       5,436
Cost of product sales                    2,710       2,710       2,850
General and administrative               2,977       2,062       3,531
Marketing and sales                      3,046       3,046       4,365
Other                                      642         642         299
                                      --------    --------    --------
 Total expenses                         14,937      14,022      16,481
                                      --------    --------    --------

Income before income taxes               5,194       6,109       4,975

Income taxes                             1,664       1,664         555
                                      --------    --------    --------

Net income                             $ 3,530     $ 4,445     $ 4,420
                                      ========    ========    ========

Earnings per common share:
Basic                                  $  0.06     $  0.08     $  0.08
                                      ========    ========    ========
Diluted                                $  0.06     $  0.07     $  0.08
                                      ========    ========    ========

Weighted average number of common
and common equivalent shares:
Basic                                   58,078      58,078      54,493
                                      ========    ========    ========
Diluted                                 59,411      59,411      56,963
                                      ========    ========    ========

(1) Excludes the effect of the amortization of negative goodwill
    resulting from the Myelos acquisition.
(2) BTG adopted the Securities and Exchange Commission's Staff
    Accounting Bulletin No. 101 on Revenue Recognition in the fourth
    quarter of 2000, effective January 1, 2000, and recorded a
    cumulative effect of change in accounting principle related to
    contract revenues recognized in prior periods. The related revenue
    is being recognized over the terms of the agreements.


                 CONSOLIDATED STATEMENTS OF OPERATIONS
                              (Unaudited)
                 (in thousands except per share data)

                                       Nine Months Ended September 30
                                      --------------------------------
                                        2001(1)
                                      Pro forma    2001        2000(2)
                                      Adjusted     Actual      Actual
                                      ---------   ---------   --------
Revenues:
Product sales                         $ 70,731    $ 70,731    $ 44,795
Contract fees                              865         865       9,764
Royalties                                3,370       3,370       2,158
Other                                    7,108       7,108       6,344
                                      --------    --------    --------
 Total revenues                         82,074      82,074      63,061
                                      --------    --------    --------
Expenses:
Research and development                18,677      18,677      16,468
Cost of product sales                   11,668      11,668       7,097
General and administrative               9,928       7,980      10,159
Marketing and sales                     12,344      12,344      12,936
Other                                    1,570       1,570       1,264
Write-off of in-process R&D acquired         -      45,600           -
                                       -------    --------    --------
 Total expenses                         54,187      97,839      47,924
                                       -------    --------    --------

Income (loss) before income taxes       27,887     (15,765)     15,137

Income taxes                             8,926       8,926       4,036
                                       -------    --------    --------
Income (loss) before
 cumulative effect of
 change in accounting principle         18,961     (24,691)     11,101
Cumulative effect of
 change in accounting principle              -           -     (8,178)
                                      --------    --------    --------
Net (loss) income                     $ 18,961   $ (24,691)    $ 2,923
                                      ========   =========    ========

Earnings per common share:
Basic:
Income (loss) before
 cumulative effect of
 change in accounting principle       $   0.33    $  (0.43)    $  0.20
Cumulative effect of
 change in accounting principle              -           -       (0.15)
                                      --------    --------    --------
Net (loss) income                     $   0.33    $  (0.43)    $  0.05
                                      --------    ========    ========
Diluted:
Income (loss) before cumulative
 effect of change in
 accounting principle                 $   0.33    $  (0.43)    $  0.19
Cumulative effect of change
 in accounting principle                     -           -       (0.14)
                                      --------    --------    --------
Net (loss) income                     $   0.33    $  (0.43)    $  0.05
                                      ========    ========    ========
Weighted average number of
 common and common equivalent shares:
Basic                                   56,871      56,871      54,186
                                      ========    ========    ========
Diluted                                 58,072      56,871      57,336
                                      ========    ========    ========

(1) Excludes the effect of the write-off of in-process research and
    development acquired and the amortization of negative goodwill
    resulting from the Myelos acquisition.
(2) BTG adopted the Securities and Exchange Commission's Staff
    Accounting Bulletin No. 101 on Revenue Recognition in the fourth
    quarter of 2000, effective January 1, 2000, and recorded a
    cumulative effect of change in accounting principle related to
    contract revenues recognized in prior periods. The related revenue
    is being recognized over the terms of the agreements.



                 CONSOLIDATED CONDENSED BALANCE SHEETS
                            (in thousands)

                                       Sept. 30, 2001    Dec. 31, 2000
                                        (Unaudited)
                                       --------------    -------------

ASSETS:
Cash, cash equivalents
 and short-term investments              $ 124,648          $ 119,570
Other current assets                        41,798             52,502
                                         ---------          ---------
     Total current assets                  166,446            172,072

Property and equipment, net                 44,484             27,819
Other long-term assets                      25,050             13,334
                                         ---------          ---------
     Total assets                        $ 235,980          $ 213,225
                                         =========          =========


LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities                       $ 26,366          $  18,728
Long-term liabilities and deferred items    51,227             35,144
Stockholders' equity                       158,387            159,353
                                          --------          ---------
                                          $235,980           $213,225
                                          =========         =========