InSite Vision Distributes Its Most Recent Edition of 'Shareholder Update'.

ALAMEDA, Calif.--(BW HealthWire)--Sept. 21, 1998--InSite Vision Incorporated (AMEX:ISV), as part of its ongoing communications to investors, has disseminated its most recent Shareholder Update.

The Shareholder Update describes several of InSite Vision's recent accomplishments and newsworthy developments.

The text of the most recent Shareholder Update follows: Dear Friend of InSite Vision:

Since you received our Annual Report last spring, we have made considerable progress on a number of fronts. Of course, summer vacations and the recent headline-making declines in the stock market may have obscured the news of our advancements, which target a significant share of the $3 billion ophthalmology industry. Therefore, I would like to take this opportunity to update you on several of the most recent accomplishments of InSite Vision.

During the summer months we announced important progress that included the initiation of a Phase II study on ISV-205, the identification of two more genes associated with open-angle glaucoma, and we have received an important new patent for a primary congenital glaucoma gene. We believe that InSite's technology holds the promise of early prognosis and prompt diagnosis of glaucoma, both of which are critical for improved glaucoma treatments.

Our glaucoma testing technology and the prescription drugs we are developing give InSite Vision an enormous market opportunity. The second leading cause of blindness in the U.S., glaucoma is estimated to afflict between 2 and 4 million Americans. On the diagnostic side, our technology targets a pressing need as currently available methods have major shortcomings. It is believed that more than half of those afflicted with glaucoma today are unaware of it. Our prescription drugs in development are also targeted at a very large market. Frost & Sullivan, a leading international market consulting company, estimated that during 1997, Americans spent about $556 million on glaucoma drugs. An estimated $1.3 billion was expended on all diagnosed eye diseases in 1997.

In recent months, while our ongoing research continues to expand the strong potential value of our product pipeline, our commercialization discussions related to our genetic tests for the diagnosis and prognosis of glaucoma intensified and continued to progress well. These discussions have led to interest in other portions of our product pipeline including our novel glaucoma drug (ISV-205) and our device to deliver drugs to the back of the eye. In July, 1998, we engaged the services of leading Wall Street investment banker PaineWebber, Inc. to help us assess the Company's strategic possibilities.

At the appropriate time we will apprise you fully about these discussions. In the meantime, we are pleased to report continuing progress on all fronts. Today, the potential for InSite Vision remains very substantial.

Now, let's review the last few months.

Phase II Study of ISV-205 has begun.

We have begun a Phase II study of ISV-205, InSite Vision's novel product candidate for the treatment of glaucoma. ISV-205 has the potential to be the first glaucoma treatment product that treats the cause of the disease rather than its symptoms. As you may recall, preclinical studies demonstrated that ISV-205 inhibited the production of a protein that appears to block the outflow of fluids from the eye, resulting in elevated intraocular pressure (IOP) and optic nerve damage associated with glaucoma. This Phase II trial is the initial test of this research in humans.

The possible ways in which the protein might be involved in the pathogenesis of glaucoma were discussed in an article in the March 13, 1998, issue of The Journal of Biological Chemistry and the March 1998 issue of Investigative Ophthalmology & Visual Science.

InSite Vision research collaborators have identified two

additional genes associated with primary open-angle glaucoma.

These results were published in recent issues of American Journal of Human Genetics and American Journal of Ophthalmology. This development is especially noteworthy because InSite Vision holds an option to license exclusive, worldwide rights to these inventions.

One gene (GLC1D) has been linked to a form of glaucoma associated with high eye pressure. The other gene (GLC1E) is associated with glaucoma patients who have normal eye pressure. About one-third of the glaucoma patients in the U.S., and 75% of them in Japan, have normal eye pressure. The GLC1E discovery is important because these patients cannot be identified with standard glaucoma screening tests that only measure a patient's eye pressure. In a 1991 study of approximately 9,000 people in Japan, 95% of the individuals with normal pressure glaucoma had not been diagnosed.

GLC1E will help to identify normal pressure glaucoma patients who would not otherwise be detected, and help them get early treatment and avoid loss of vision. GLC1D and GLC1E will expand our test for glaucoma which currently incorporates the TIGR gene.

InSite Vision receives allowance of patent claims for primary

congenital glaucoma gene.

In July, we received a notice of allowance from the U.S. Patent and Trademark Office of patent claims covering methods for the diagnosis of primary congenital glaucoma using the CYP1B1 gene. InSite Vision is the exclusive worldwide licensee for this patent.

The allowance of these claims broadens and solidifies our genetics-based technology for glaucoma diagnosis and prognosis. We believe we now have the technology to detect a whole spectrum of glaucomas, ranging from primary congenital glaucoma to adult onset primary open-angle glaucoma.

Primary congenital glaucoma (PCG) is an inherited eye disorder effecting infants. It results from birth defects that block the outflow of fluid from the eye, causing rapid increases in eye pressure, optic nerve damage and blindness. Early detection of the disease is therefore critical. Yet PCG is detected at birth only 20% of the time. We believe that the CYP1B1 gene will enable early detection in more than 90% of the cases.

The addition of two significant research collaborations enhance

the development of InSite Vision's glaucoma genetics programs.

These two important collaborations will contribute greatly to the development of new genetically based prognostic tests and treatments for glaucoma. Our research here is particularly important because current diagnostic techniques are limited. Many patients have already lost more than 50 percent of their optic nerve fibers by the time glaucoma is diagnosed. InSite Vision's new collaborations involve glaucoma-related research being conducted in both the United States and France.

1) The company entered into a collaboration that will provide research on the genetic basis for ocular hypertension and glaucoma with a researcher in the Department of Ophthalmology at the University of California, San Diego. This research may enable ophthalmologists to determine which ocular hypertensive patients should be candidates for glaucoma treatment. It may also allow them to avoid unnecessary treatment of other patients.

2) Additionally, InSite Vision entered into an agreement with Henri Jean Garchon, M.D., Ph.D., and Director of Research at INSERM, an internationally renowned research organization in Paris, France. A recognized expert in both ophthalmology and genetics, Dr. Garchon is investigating glaucoma in the French population to improve understanding of hereditary forms of the disease.

Both of these new collaborations are complementary to InSite Vision's existing alliances with other leading researchers working on MYOC (also known as TIGR) gene research and CYP1B1.

We hope that you have found this Shareholder Update informative. We will continue to ensure that our investors are up-to-date on the continuing progress of InSite Vision.

In the meantime, please do not hesitate to contact us when you have any questions. As always, we thank you for your interest -- and your support. Sincerely, S. Kumar Chandrasekaran, Ph.D.

InSite Vision is an ophthalmic product development company with programs based on three platforms: genetic research for diagnosis and prognosis of glaucoma; the development of new and improved ophthalmic drugs using its proprietary DuraSite(R) eyedrop-based delivery system; and the non-surgical delivery of drugs to the back of the eye.

This Shareholder Update contains, among other things, certain statements of a forward-looking nature relating to future events or the future business performance of InSite Vision. Such statements entail a number of risks and uncertainties including the results of preclinical and clinical studies and determinations by the U.S. Food and Drug Administration, as well as the Risk Factors listed from time to time in the Company's SEC filings including, but not limited to, its Form 10-Q for the quarter ended June 30, 1998.