Cell Pathways, Inc. Reports Third Quarter 2001 Financial Results.

Business Editors/Health & Medical Writers

HORSHAM, Pa.--(BW HealthWire)--Oct. 23, 2001

Cell Pathways, Inc. (Nasdaq:CLPA) today reported financial results for the third quarter of 2001 and nine months ended Sept. 30, 2001.

The net loss for the third quarter of 2001 and nine months ended Sept. 30, 2001 were $6.2 million and $15.9 million, respectively, a decrease of $1.2 million and $5.3 million, respectively, from the same periods in 2000. Net loss per share for the third quarter of 2001 was $0.20 per share on 31.1 million shares outstanding versus a net loss of $0.27 per share on 27.8 million shares outstanding in 2000. Net loss per share for the nine months ended Sept. 30, 2001 was $0.51 per share on 31.1 million shares outstanding versus $0.77 per share on 27.4 million shares outstanding in 2000. The Company ended the third quarter of 2001 with $33.0 million in cash and short-term investments.

Revenues in the third quarter of 2001 and nine months ended Sept. 30, 2001 were $307,000 and $624,000, respectively, related to the promotion of Nilandron(R) (nilutamide) for prostate cancer.

Research and development (R&D) expenses for the third quarter of 2001 and nine months ended Sept. 30, 2001 were $5.2 million and $12.4 million, respectively, a decrease of $699,000 (11.8%) and $4.1 million (24.9%), respectively, from the same periods in 2000. Both period decreases in R&D expenses were due primarily to reductions in 2001 of purchases of raw materials for Aptosyn(TM) (exisulind) offset partially by increases in clinical development expenses in 2001.

Selling, general and administrative (SG&A) expenses for the third quarter of 2001 and nine months ended Sept. 30, 2001 were $1.7 million and $5.6 million, respectively, a decrease of $375,000 (17.9%) and $599,000 (9.7%), respectively, from the same periods in 2000. Both period decreases in SG&A expenses were due primarily to a reduction in pre-commercialization expenses for Aptosyn(TM) in 2001 offset partially by an increase in selling expenses related to the promotion of Nilandron(R) during 2001.

"We are particularly pleased with our progress in moving our clinical trials forward, and in laying the groundwork to initiate and advance several others," said Robert Towarnicki, chairman and chief executive officer of Cell Pathways. "At the same time, we continue with our strategic plan to advance our research and discovery efforts, strengthen our patent estate and expand our clinical and marketing collaborations."

Clinical Trial Progress

CP461

-- The company initiated three phase IIa studies of its second oral
investigational SAAND, CP461. These phase IIa human clinical trials are
investigating the safety and efficacy of CP461 as a single agent in patients
with chronic lymphocytic leukemia (CLL), renal cell (kidney) carcinoma, and
hormone-refractory prostate cancer. In each of these open-label studies,
fourteen to nineteen patients are being evaluated for an objective response to
CP461 treatment by measuring tumor size or tumor burden. Under the protocol,
patients are to be tracked for a minimum of three months.

-- The company is moving forward with plans for a phase IIa investigation of
CP461 in hepatocellular carcinoma (liver cancer).

-- In the beginning of the fourth quarter the company reported positive early
data from the phase IIa study of CP461, in previously untreated patients with
chronic lymphocytic leukemia (CLL). Of the fifteen (15) patients who received
CP461 at a 400 mg total daily dose (200 mg twice daily), nine (9) patients
demonstrated a reduction from baseline in their absolute lymphocyte counts.
Notably, six (6) of these patients achieved reductions of 30% to 48% in their
blood lymphocyte counts. Encouraged by these early indications of anticancer
activity, the company is entering an additional six (6) patients for treatment
at a dose of 800 mg (400 mg twice daily) of CP461 in hopes of demonstrating
greater levels of patient response, as well as a dose-response relationship to
treatment. Participants in the phase IIa trial have currently received drug for
periods ranging from four (4) to fourteen (14) weeks; the reported effects on
lymphocyte counts occurred in all cases within two (2) to six (6) weeks of
treatment.

Aptosyn(TM)(exisulind)

-- Results of a double-blind, placebo-controlled clinical study

of Aptosyn(TM) in the treatment of recurrent prostate cancer

following radical prostatectomy were published in the

September issue of The Journal of Urology. The results of the

phase II/III study, involving 96 patients at multiple centers

throughout the United States, demonstrated that Aptosyn(TM)

inhibited the rise in PSA (prostate specific antigen) levels

in treated men overall and significantly prolonged PSA

doubling time in high-risk patients compared with placebo.

-- The company completed a phase I safety assessment of a study

of Aptosyn(TM) and weekly Taxotere(R) (docetaxel) treatment in

patients with a variety of solid tumors. Based on these

initial results, the company advanced its study of this

treatment regimen to a phase II clinical trial in patients

with advanced non-small cell lung cancer (NSCLC) at the

University of Colorado Cancer Center and the University of

Chicago. Data from the phase I trial suggests that patients

generally tolerated the daily Aptosyn(TM)/weekly Taxotere(R)

combination regimen well, and seven (7) of the fifteen (15)

treated patients exhibited stable disease.

-- The company's phase III study of Aptosyn(TM) and Taxotere(R)

in NSCLC recruited briskly and the FDA required that the

planned interim safety analysis be completed and reviewed by

the agency prior to enrollment of additional patients. The

Data and Safety Monitoring Board is scheduled to review the

data and report its findings and recommendations to the FDA by

early November.

-- Initial trials of Aptosyn(TM) in combination with

Taxotere(R)/carboplatin and TAXOL(R)/carboplatin defined a

safe dose for proceeding with phase II studies of these two

regimens in patients with NSCLC. Based on these early results,

the company expanded each of these investigations to phase II

clinical trials. Both studies investigate the potential use of

Aptosyn(TM) in combination with standard first-line therapies.

The Taxotere(R)/carboplatin combination study receives funding

from Aventis Pharmaceuticals Inc. and the TAXOL(R)/carboplatin

combination study receives funding from Bristol-Myers Squibb

Company.

Cell Pathways, Inc., headquartered in Horsham, is a development stage pharmaceutical company focused on the research, development and commercialization of novel and unique medications to prevent and treat cancer. For additional information on Cell Pathways, Inc., visit the Company's web site at http://www.cellpathways.com.

Editors Note: Aptosyn(TM) is a trademark of Cell Pathways, Inc., Taxotere(R) and Nilandron(R) are registered trademarks of Aventis Pharmaceuticals, Inc. and TAXOL(R) and Paraplatin(R) are registered trademarks of Bristol-Myers Squibb Company.

Certain statements made in this release, and oral statements which may be made with respect to this release, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are those which express plan, anticipation, intent, 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 risks and uncertainties relate to, among other factors; the absence of approved products; history of operating losses and the need for further financing; early stage of development; the costs, delays and uncertainties inherent in scientific research, basic pharmaceutical research, drug development, clinical trials and the regulatory approval process, with respect to both our current product candidates and our future product candidates, if any; dependence on the development, approval and market acceptance of one or more of our product candidates for one or more significant disease indications; the risk that the Company does not conduct the clinical studies it may have planned to conduct or does not pursue development plans it may have planned to pursue; uncertainty that additional studies, if any, may not be positive; limitations on, or absence of, the predictive value of data obtained in laboratory tests, animal models and human clinical trials when planning additional steps in product development; uncertainty of obtaining regulatory approval of any compound for any disease indication whether due to adequacy of the development program, changing regulatory requirements or otherwise; the risks that clinical studies do not result in the safety and efficacy necessary to obtain regulatory approvals; the risks of conducting clinical trials of our drugs in combination with other drug therapies; the risks arising from the clinical hold to new accrual for our Phase III lung cancer study of Aptosyn(TM) in combination with Taxotere(R); the commercial risk and risk of liability in promoting Nilandron(R) (nilutamide) manufactured by Aventis Pharmaceuticals; the risk that the Company may enter into, or may fail to enter into, licensing, partnership or other collaborative arrangements which accord to other companies rights with respect to one or more Company compounds or in which the Company acquires new rights and obligations; the volatility of the market price of our common stock; our ability to sell securities registered under the shelf registration statement; acceptance of any product candidates by physicians and providers of healthcare reimbursement; the actions of competitors; the pace of technological changes in the biopharmaceutical industry; dependence upon third parties; the validity, scope and enforceability of patents; the risk of our pending class action securities litigations; potential product liability claims; and availability and adequacy of insurance. These and other risks are detailed in our reports filed from time to time under the Securities Act and/or the Securities Exchange Act, including the sections entitled "Business," "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Other Events" in our annual reports on Form 10-K, quarterly reports on Form 10-Q and periodic reports on Form 8-K and in such registration statements on Form S-3 as we may file from time to time. You are encouraged to read these filings as they are made. They are available over the Internet from the SEC in its EDGAR database at http://www.sec.gov and from the Company. Given the uncertainties affecting pharmaceutical companies in the development stage, you are cautioned not to place undue reliance on any forward-looking statements, any of which may turn out to be wrong due to inaccurate assumptions, unknown risks, uncertainties or other factors. No forward-looking statement can be guaranteed; actual future results may vary materially. Both forward-looking statements and statements of historic fact must be understood in the context of the risks referred to above which characterize our development-stage business. We undertake no obligation to update or revise the statements made herein or the risk factors that may relate thereto.

                 CELL PATHWAYS, INC. AND SUBSIDIARIES
                     (A development stage company)
                 CONDENSED CONSOLIDATED BALANCE SHEETS
                              (Unaudited)

                                      Sept. 30, 2001    Dec. 31, 2000
                                       -------------    -------------
ASSETS

CURRENT ASSETS
   Cash, cash equivalents and short-
    term investments                   $  33,020,743    $  49,528,407
   Accounts receivable                       306,808          329,694
   Other current assets                    1,161,935        1,328,535
                                       -------------    -------------
     Total current assets                 34,489,486       51,186,636

OTHER ASSETS                               2,707,379        2,894,957
                                       -------------    -------------
                                       $  37,196,865    $  54,081,593
                                       =============    =============


LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES                    $   3,842,263    $   4,994,883
                                       -------------    -------------
LONG TERM LIABILITIES                        325,761          457,800
                                       -------------    -------------
STOCKHOLDERS' EQUITY
   Common Stock                              311,201          310,734
   Additional paid-in capital            140,528,194      140,235,478
   Stock subscription receivable from
    issuance of Common Stock                 (37,000)         (37,000)
   Deficit accumulated during the
    development stage                   (107,773,554)     (91,880,302)
                                       -------------    -------------
     Total stockholders' equity           33,028,841       48,628,910
                                       -------------    -------------
                                       $  37,196,865    $  54,081,593
                                       =============    =============


            CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                              (Unaudited)

                   Three Months Ended           Nine Months Ended
                      September 30,               September 30,
              ---------------------------  --------------------------
                       2001          2000          2001          2000
              -------------  ------------  ------------  ------------
REVENUES:     $     306,808  $         --  $    623,781  $         --

EXPENSES:

Research and
 development      5,210,684     5,909,609    12,408,780    16,527,371
General and
 adminis-
 trative          1,723,016     2,098,450     5,586,409     6,185,328
              -------------  ------------  ------------  ------------
Operating loss   (6,626,892)   (8,008,059)  (17,371,408)  (22,712,699)

INTEREST
 INCOME, net        378,021       528,642     1,478,156     1,542,599
              -------------  ------------  ------------  ------------
NET LOSS      $  (6,248,871) $ (7,479,417) $(15,893,252) $(21,170,100)
              =============  ============  ============  ============
Basic and
 diluted net
 loss per
 Common share $       (0.20) $      (0.27) $      (0.51) $      (0.77)
              =============  ============  ============  ============
Shares used in
 computing
 basic and
 diluted net
 loss per
 Common share    31,114,247    27,794,658    31,101,766    27,350,393
              =============  ============  ============  ============