Cell Pathways, Inc. Reports Fourth Quarter and 1998 Financial Results.

HORSHAM, Pa.--(BW HealthWire)--Feb. 19, 1999--Cell Pathways, Inc. (Nasdaq:CLPA) today reported fourth quarter and year end financial results for the periods ended Dec. 31, 1998.

Cell Pathways became a publicly traded company on Nov. 4, 1998 following the financial acquisition of Tseng Labs, Inc. ("Tseng")

The company reported a net loss from operations in the fourth quarter of 1998 of $5.2 million, an increase of $1.8 million from the fourth quarter of 1997. Research and development ("R&D") expenses were $4.2 million in the fourth quarter of 1998, or $1 million higher than the same period of 1997 due principally to increased clinical development and research activities and higher facility expenses for the company's new research facility in 1998.

General and administrative ("G&A") expenses were $1.5 million in the fourth quarter of 1998, an increase of $1.1 million over 1997. The increase in G&A was principally attributable to expenses associated with marketing and commercialization preparations, personnel additions and becoming a public company during the fourth quarter of 1998.

For the year ended Dec. 31, 1998, the company reported a net loss from operations of $19.3 million, an increase of $9 million from 1997. R&D expenses were $16.1 million in 1998, an increase of $7.3 million from 1997 primarily due to the procurement of clinical trial supplies of exisulind, higher expenses associated with the company's ongoing clinical trials, additional personnel in 1998 to support the in-house activities of research, product development and clinical trial management and higher facility expenses.

G&A expenses were $4.3 million in 1998, an increase of $3.3 million from 1997 due principally to additional personnel, a one-time charge recorded in the first half of 1998 for expenses related to the company's planned initial public offering which was not undertaken, expenses associated with marketing and commercialization preparations and higher facility expenses. In 1997, the company recorded a $1 million charge for the redemption of redeemable preferred stock, which was subsequently redeemed in 1998 prior to the Tseng transaction.

"The Company experienced significant growth during 1998," said Robert J. Towarnicki, Cell Pathways' president and chief executive officer. "We expanded our R&D efforts in our new facility in Horsham, Pa., continued our clinical development programs for exisulind, completed a private round of financing which resulted in net proceeds of approximately $21 million and, in November, completed the financial acquisition of Tseng which resulted in net proceeds to the Company of approximately $28 million."

Towarnicki continued, "Our burn rate increased in 1998 as planned and as a result of the expansion of our operations including the addition of personnel, increased in-house R&D efforts, the preparations for commercialization and the added costs associated with the new facility. Through financing transactions, the Company was able to increase its cash position from $8.5 million at the end of 1997 to $37.2 million at the end of 1998."

On Feb. 1, 1999, the company announced that it anticipated a delay in commercialization of exisulind for Adenomatous Polyposis Coli (APC) because a preliminary evaluation suggested that data produced in its recently concluded Phase III study did not provide the overall statistical results which the study was designed to provide. Cell Pathways said at that time that it would be evaluating the data in a process which was expected to continue for some weeks.

"We continue to analyze the data from the Phase III study," said Rifat Pamukcu, M.D., chief scientific officer and senior vice president of research and development. "Upon completion of the analysis, we plan to request a meeting with the FDA to discuss the results of the analysis and to determine the future course of action in seeking approval of exisulind for the treatment of APC.

"Meanwhile, the clinical development of exisulind for APC and other indications continues. Most patients from the Phase III study, both placebo and drug, have elected to participate in a previously established open-label extension protocol and are receiving drug. Also continuing on drug are the patients in the APC Phase II extension study and the patients in the ongoing APC pediatric study."

Cell Pathways, Inc., headquartered in Horsham, is a pharmaceutical company focused on the research development and commercialization of products to prevent and treat cancer.

"Certain Statements made herein, and oral statements made in respect hereof, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are those which express plan, anticipation, contingency or future development and/or otherwise are not statements of historical fact. These statements are subject to risks and uncertainties, known and unknown, which could cause actual results and developments to differ materially from those expressed or implied in such statements. Such risk and uncertainties relate to, among other factors, the costs, delays and uncertainties inherent in basic pharmaceutical research, drug development and clinical trials; the uncertainty of obtaining regulatory approval, and the timing and scope of any approval received; acceptance by providers of healthcare reimbursement; the validity, scope and enforceability of patents; the actions of competitors; dependence upon third parties; product liability; and other risks detailed in Cell Pathways, Inc. reports filed under the Securities and Exchange Act of 1934, including a Registration Statement on Form S-4 filed in September 1998. The Company undertakes no obligation to update or revise the statements made herein."

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                          CELL PATHWAYS, INC.
                     (A development stage company)
                 CONDENSED CONSOLIDATED BALANCE SHEETS
                            (In thousands)
                               (Audited)

                                          December 31,    December 31,
                                             1998            1997
                    ASSETS
Current assets:
 Cash and cash equivalents                 $ 37,232        $  8,461
 Other current assets                           513             179
  Total current assets                       37,745           8,640

Other non current assets                      2,488           2,340
                                             ------          ------
                                           $ 40,233        $ 10,980

Liabilities and
 stockholders' equity (deficit)
  Current liabilities                      $  3,941        $  3,257
  Long-term liabilities                         160               9
  Redeemable preferred stock                    --            1,092
 Stockholders' equity:
  Preferred Stock                               --           32,158
  Common Stock                                  243              30
  Additional paid-in capital                 81,256             456
  Stock subscription receivable
   from issuance of Common Stock                (37)            (37)
  Deficit accumulated during
   the development stage                    (45,330)        (25,985)
     Total stockholders' equity              36,132           6,622
                                             ------           ------
                                           $ 40,233        $ 10,980


                         CELL PATHWAYS, INC.
                     (A development stage company)
            CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
            (In thousands, except share and per share data)

                       Three Months Ended              Year Ended
                           December 31                 December 31
                           (unaudited)                  (audited)
                        1998           1997          1998       1997

Expenses
 Research and
  development       $  4,186        $  3,170      $  16,052  $  8,756
 General and
  administrative       1,486             366          4,254       950
 Provision for
  the redemption
  of the
  Redeemable
  Preferred Stock       --               --             --      1,017
     Total expenses    5,672           3,536         20,306    10,723

Interest income          458             138            960       427

Net loss            $ (5,214)       $ (3,398)    $  (19,346) $(10,296)

Basic and
 diluted net
 loss per
 common share      $   (0.32)       $  (1.14)    $    (3.04) $  (3.63)

Shares used in
 computing
 basic and
 diluted net
 loss per common
 share(note 1)    16,395,558       2,990,012      6,369,006  2,838,814

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Note 1 -- As of Dec. 31, 1998 and 1997 the company had a total of 24,279,526 shares and 13,958,482 shares of stock outstanding, respectively. Basic net loss per common share is in accordance with SFAS 128 and is equal to net income divided by the weighted average common shares outstanding during the period. Diluted net loss per common share is equal to net income divided by the sum of weighted average common shares outstanding during the period plus common stock equivalents. The company's basic and diluted per share amounts are the same since the effect of common stock equivalents would be anti-dilutive.