CombiChem Reports Second Quarter 1999 Financial Results.

SAN DIEGO--(BW HealthWire)--July 20, 1999--

CombiChem Inc. (Nasdaq:CCHM) today reported financial results for the quarter ended June 30, 1999.

During the quarter, the company reported revenues of $3,219,000, down from $4,383,000 for the same period in 1998. The company reported a net loss for the quarter of $3,538,000, or $0.27 per share, compared to a net loss of $307,000 or $0.03 per share, in 1998.

For the six months ended June 30, 1999, the company reported revenues of $6,137,000, down from $7,005,000 for the same period in 1998. The company reported a net loss for the quarter of $6,675,000, or $0.52 per share, compared to a net loss of $1,731,000, or $0.16 per share, in 1998.

"During the second quarter, we made significant progress towards achieving our goals for 1999," said Vicente Anido, Jr., Ph.D., CombiChem's president and chief executive officer. "First, we entered into an expanded collaboration with ICOS Corporation. Second, we extended the application of our technology into new fields by the formation of Aperion LLC, a 50%-owned joint venture with Catalytica Advanced Technologies, Inc., to provide catalytic-based combinatorial discovery services to the materials and process industries. In addition, we launched a new product offering, TargetStar(TM), that allows our pharmaceutical and biotech customers to predict the drugability of drug targets. We continue to emphasize the potential quarter-to-quarter variability in our financial results."

CombiChem Inc., based in San Diego, is a computational discovery company that is applying its proprietary design technology and rapid synthesis capabilities to accelerate the discovery process for new drugs and chemical products. The company believes its approach offers the pharmaceutical and chemical industries the opportunity to conduct their discovery efforts in a more productive and cost effective manner. Using its proprietary Discovery Engine(TM) process, CombiChem focuses on the generation, evolution, and optimization of new lead candidates for its collaborative partners, who will then develop, manufacture, market, and sell the resulting products.

CombiChem has established collaborative agreements with Athena Neuroscience Inc., a wholly owned subsidiary of Elan Corp. plc., ICOS Corp., ImClone Systems Inc., Novartis Crop Protection AG, Ono Pharmaceutical Co. Ltd., Roche Bioscience, Sumitomo Pharmaceuticals Co. Ltd. and Teijin Limited. Additionally, CombiChem has established a 50%-owned joint venture with Chirotech Technology Limited, a member of the Chiroscience Group of companies. The joint venture, ChiroChem Discovery Services LLC, was created to develop and market computationally designed libraries of single-isomer, chiral compounds to the pharmaceutical industry.

Except for the historical and financial information contained herein, the matters discussed in this news release may contain forward-looking statements which involve risks and uncertainties, including significant fluctuations in quarterly financial performance depending on factors such as timing of revenues recognized and achievement of milestones, timing of expenses incurred in establishing new applications or programs, a dependence on the efforts of third parties, a new and uncertain technology employed by CombiChem and its uncertain application to new business ventures, dependence on intellectual property rights, the competitive nature of the company's industry and risks of obsolescence of certain technology. Actual results may differ materially from those projected. Forward-looking statements represent the judgment of the company as of the date of this release. CombiChem disclaims, however, any intent or obligation to update any forward-looking statements.

CombiChem's press releases are on the Web at www.combichem.com. -0-

                            COMBICHEM, INC.
                       STATEMENTS OF OPERATIONS
                 (In Thousands, Except Per Share Data)

                           Three Months Ended        Six Months Ended
                                June 30,                June 30,
                            1999        1998        1999        1998
                            ----        ----        ----        ----
Revenue:
 Project initiation
  fees and
  milestone
  payments               $    300    $  2,300    $    375    $  3,050
 Research and
  development
  funding                   2,254       2,083       4,497       3,955
 Joint venture
  service revenue             665           0       1,265           0

     Total revenue          3,219       4,383       6,137       7,005

Expenses:
 Research and development
     Collaborative          2,723       2,327       5,232       4,250
     Proprietary            1,697       1,400       3,236       2,715

                            4,420       3,727       8,468       6,965
 General and
  administrative            1,467       1,117       2,669       2,009
 Joint venture
  service expense             665           0       1,265           0

     Total operating
      expenses              6,552       4,844      12,402       8,974

Loss from operations       (3,333)       (461)     (6,265)     (1,969)
Interest income               305         290         665         525
Interest expense             (135)       (136)       (275)       (257)
Foreign tax expense             0           0           0         (30)
Equity in net loss
  of 50% owned
  joint ventures             (375)          0        (800)          0

Net loss                 $ (3,538)   $   (307)   $ (6,675)   $ (1,731)

Net loss per share       $  (0.27)   $  (0.03)   $  (0.52)   $  (0.16)

Shares used in
 calculating net
 loss per share            13,086      11,464      12,916      10,799


                  SELECTED BALANCE SHEET INFORMATION
                            (In Thousands)
                          June 30, 1999
                           (Unaudited)        1998
                              ------          ----

Cash, cash equivalents
 and short-term investments   23,927         29,359
Amounts due from
 collaborators                     0          2,825
Working capital               18,704         26,146
Total assets                  34,446         41,980
Stockholders' equity          23,995         30,177