InSite Vision Reports Second Quarter Results.

ALAMEDA, Calif.--(BW HealthWire)--Aug. 12, 1999--

InSite Vision Incorporated (AMEX:ISV) today announced its financial results for the second quarter ended June 30, 1999.

At the close of the quarter, InSite Vision posted a net loss of $1.0 million, or $0.05 per common share. This compares to a net loss of $2.5 million, or $0.17 per common share, for the second quarter of 1998. The Company also reported a decrease in net loss to $2.1 million, $0.11 per common share, from $4.7 million, $0.33 per common share, for the six months ended June 30, 1999 compared to June 30, 1998.

The decrease in net loss is primarily due to payments from Pharmacia & Upjohn (P&U), of $900,000 in each of the first two quarters of 1999. The payments are for product development expenses applicable to the January 1999 licensing of InSite's gene-based glaucoma treatment, ISV-205, the first therapeutic directed at the cause of this debilitating disease rather than its symptoms.

Net research and development expenditures for the second quarter of 1999 were $496,000, compared with $1.7 million in the second quarter of 1998. The decrease reflects not only the payments from P&U, but also a reduction in personnel, which occurred in the fourth quarter of 1998, to concentrate on bringing ISV-205 and the ISV-900 genetic diagnostic test to the point they could be marketed.

As of June 30, 1999, InSite Vision had cash and cash equivalents of $1.6 million, compared to $1.0 million at the end of the 1998. The primary contributor to this increase was the $2.0 million purchase of InSite common shares by P&U as part of the January 1999 agreement. This was partially offset by cash used in operating activities.

"Towards the end of the second quarter InSite Vision reported positive results on the Phase II trial of ISV-205. We anticipate that P&U will begin an additional Phase II trial in the fourth quarter of 1999," said Dr. S. Kumar Chandrasekaran, Chairman and Chief Executive Officer of InSite Vision.

"We look forward to the completion of this trial and the initiation of the next phase. In the meantime we are pressing ahead with serious negotiations on ISV-900, our genetic based system for the prognosis, diagnosis and management of glaucoma.

"We are also progressing with our efforts to take InSite Vision's products into new markets. We recently announced a licensing agreement for the Japanese rights to AquaSite(R) our proprietary, sustained release dry eye treatment to SSP Co., Ltd. of Tokyo, Japan. This has come on the heels of manufacturing and distribution agreements for the product in Korea.

"Even though these are only initial moves, we believe that they will be important in positioning InSite Vision's lead products in the enormous Asian market and elsewhere."

InSite Vision is an ophthalmic product development company focused on genetic research for diagnosis and prognosis of glaucoma and a novel glaucoma treatment using its proprietary DuraSite(R) technology.

This press release 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 involving 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 March 31, 1999. -0-

                      InSite Vision Incorporated
            Condensed Consolidated Statements of Operations
       For the Three and Six Months Ended June 30, 1999 and 1998
          (in thousands, except per share amounts; unaudited)

                           Three months ended        Six months ended
                               June 30,                  June 30,
                            1999        1998        1999        1998

Royalty revenue           $    1      $    3      $    8     $    18

Operating expenses:
Research and
 development,net             496       1,710         951       3,253
General and administrative   549         718       1,187       1,289
                         --------    --------    --------    --------
    Total                  1,045       2,428       2,138       4,542

Loss from operations      (1,044)     (2,425)     (2,130)     (4,524)
Interest and other
 income, net                  22          83          34         182
                         --------    --------    --------    --------
Net loss                  (1,022)     (2,342)     (2,096)     (4,342)
Non-cash preferred
 dividends                     8         185          20         375
                         --------    --------    --------    --------
Net loss applicable to
 common stockholders    $ (1,030)   $ (2,527)   $ (2,116)   $ (4,717)
                         ========    ========    ========    ========

Net loss per share
applicable to common
stockholders            $  (0.05)   $  (0.17)   $  (0.11)   $  (0.33)
Shares used to calculate
 net loss per share
 basic and diluted        18,886      14,465      18,574      14,438


                 Condensed Consolidated Balance Sheets
                At June 30, 1999 and December 31, 1998
                       (in thousands; unaudited)

                                     June 30,      December 31,
                                       1999           1998

Assets:

Cash and cash equivalents           $ 1,604         $ 1,037
Property and equipment, net             686             859
Prepaid expenses and other assets       123             190
                                    -------         -------
  Total assets                      $ 2,413         $ 2,086
                                    =======         =======

Liabilities and stockholders'
 equity (deficit):

Current liabilities                 $ 1,027         $   683
Redeemable preferred stock              444           1,511
Stockholders'equity (deficit)           942            (108)
                                    -------         -------
Total liabilities and
 stockholders' equity (deficit)     $ 2,413         $ 2,086
                                    =======         =======
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