Connetics Reports First Quarter Results.

PALO ALTO, Calif.--(BW HealthWire)--April 16, 1999--

Connetics Corp. (Nasdaq:CNCT) today reported financial results for the first quarter ended March 31, 1999.

The net loss for the first quarter of 1999 was $5.9 million, or ($0.28) per share, compared to a net loss of $5.3 million, or ($0.39) per share, for the first quarter of 1998. The company recorded first quarter product revenues of $2.2 million, a 42% increase over $1.5 million of product revenues for the first quarter of 1998.

In addition to Ridaura(R) revenue, Connetics began recording sales of Actimmune(R) in January 1999. For the first quarter 1999, total revenues of $7.2 million include $5.0 million of contract revenue.

Total operating costs and expenses for the first quarter 1999 increased to $13.1 million as compared to $6.6 million for the same period in 1998 due primarily to increases in development costs for Connetics' relaxin program, commercialization expenses associated with the launch of Luxiq(TM) and costs associated with the sale of Actimmune. As of March 31, 1999, the company had $22.5 million in cash and short-term investments.

"We are delighted with our achievements this past quarter and, given our commercial and development activities, we feel the Company has significant momentum as we move into the second quarter," stated Thomas G. Wiggans, president and chief executive officer, Connetics Corp.

"In the past three months we have entered a major collaboration with Medeva, initiated a pivotal trial for relaxin, entered an attractive promotion agreement with MGI PHARMA and launched Luxiq, our new dermatology product. With these achievements, we expect to see growth in our commercial activities and revenue as we move through 1999."

Relaxin (ConXn) Program

In January, Connetics and Medeva PLC entered into a development, commercialization and supply agreement for ConXn(R) (recombinant human relaxin). Under the terms of the agreement, Medeva will pay license fees, development support and milestone payments. Medeva will be responsible for all development and commercialization activities in Europe and will pay royalties on sales in Europe. Medeva paid $8.0 million upon closing ($4.0 million contract fee and a $4.0 million equity investment).

In addition, Medeva will pay $17 million of milestone payments based upon development progress in the U.S. and Europe and $5 million for the development and approval of each indication in Europe in addition to scleroderma. Medeva will also pay an estimated $10 million of the product development costs in the U.S. and share U.S. co-promotion rights with Connetics for up to five years.

In February, Connetics initiated a Phase II/III pivotal clinical trial of ConXn for the treatment of scleroderma. Scleroderma is a life threatening connective tissue disease resulting from an excessive production of collagen. The disease afflicts approximately 300,000 patients in the U.S. alone, 80 percent of whom are women.

In its severe form (which affects approximately 70,000 patients), the disease results in hardening of the skin and internal organs, and is fatal in 50 to 70 percent of cases within five years.

Luxiq

In March, Connetics announced that the Food and Drug Administration (FDA) granted marketing clearance to Luxiq (betamethasone valerate) Foam, 0.12%, a novel foam formulation for relief of the inflammatory and pruritic manifestations of corticosteroid-responsive dermatoses of the scalp.

Shortly after receiving marketing clearance, Connetics launched Luxiq at the 57th Annual American Academy of Dermatology Conference. The launch of Luxiq, Connetics' first internally developed product, represents Connetics' commercial entrance into the dermatology market.

Upon product approval, Connetics hired 22 experienced dermatology sales representatives bringing its total number of field sales representatives to 40. Connetics began shipping product in early April.

Commercial Activities

In March, Connetics and MGI PHARMA, Inc. entered into promotion agreements for Connetics' Ridaura and Luxiq products. Under the terms of the agreements, MGI PHARMA will promote Ridaura (auranofin) and Luxiq to the rheumatology market in the U.S. in exchange for promotional fees.

This arrangement takes advantage of MGI PHARMA's specialty sales force that calls on rheumatologists and oncologists in the U.S. It will result in an increased promotion effort for Connetics' products in the rheumatology market, while allowing Connetics to focus its attention on launching Luxiq and preparing for the launch of OLUX(TM) to the dermatology market.

Connetics Corp., headquartered in Palo Alto, is focused on the acquisition, development and commercialization of marketed and late-stage products. Connetics markets Ridaura, a treatment for rheumatoid arthritis and Luxiq for the treatment of scalp dermatoses.

Several products are under development including OLUX (clobetasol propionate) for the treatment of certain dermatological indications; ConXn (recombinant human relaxin) for the treatment of certain rheumatologic and fibrotic diseases; and interferon gamma (through its wholly-owned subsidiary, InterMune Pharmaceuticals Inc.) for the treatment of certain congenital, infectious and other diseases.

For more information on Connetics, you may visit Connetics' Web Site at www.connetics.com or call 888/969-2628. For more information on Luxiq, you may visit the Luxiq Web Site at www.luxiq.com.

This news release may contain forward-looking statements or predictions. These statements represent our judgement as of this date and are subject to risks and uncertainties that could cause actual results or events to differ materially from those expressed in such forward-looking statements. Potential risks and uncertainties include, without limitation, those associated with product development, clinical trials, future revenues and profitability, and obtaining marketing approval. These and other factors are discussed in more depth in Connetics' Form 10-K for the fiscal year ended Dec. 31, 1998 and the company's other filings with the SEC. These documents contain and identify important factors that could cause the actual results to differ materially from those contained in the projections or forward-looking statements. -0-

                           Connetics Corp.

                   Condensed Statement of Operations
               (in thousands, except per share amounts)
                               unaudited

                                                 Three Months Ended
                                                       March 31,
                                                 1999            1998
                                         ------------    ------------
Revenues:
     Product revenue                     $      2,161    $      1,519
     Contract revenue                           5,000              --

Total revenues                           $      7,161    $      1,519

Operating costs and expenses:
     Cost of product revenues            $      1,171             295
     License amortization                       1,680           1,680
     Research and development                   4,681           2,178
     Selling, general and
      administrative                            5,594           2,462

Total operating costs and expenses             13,126           6,615
Interest expense and expense (net)                 42            (217)

Net loss                                 $     (5,923)   $     (5,313)

Basic and diluted net loss per share     $      (0.28)   $      (0.39)

Shares used in computation of basic
 and diluted net loss per share            21,088,441      13,489,402


                        Condensed Balance Sheet
                            (in thousands)

                                             March 31,       Dec. 31,
                                                 1999           1998
                                         ------------    ------------
                                          (Unaudited)
Assets:
     Cash and short-term
      investments                        $     22,459    $     23,020
     Accounts receivable and
      other current assets                      2,064             603
     Property and equipment, net                1,613           1,128
      Long-term assets                          4,987           6,643

Total assets                             $     31,123    $     31,394

Liabilities and stockholders' equity:
     Current liabilities                 $     13,959    $     11,159
     Other liabilities                          5,921           7,783
     Stockholders' equity                      11,243          12,452

Total liabilities and
 stockholders' equity                    $     31,123    $     31,394