Neoprobe Announces First Quarter Results; Provides Business Update.

Business Editors/Health/Medical Writers

DUBLIN, Ohio--(BUSINESS WIRE)--May 12, 2004

Neoprobe Corporation (OTCBB:NEOP), a diversified developer of innovative oncology and cardiovascular surgical and diagnostic products, today announced consolidated operating results for the first quarter of 2004. First quarter results included revenues of $1.4 million compared to $1.5 million for the first quarter of 2003. In addition, Neoprobe reported a net loss of $589,000 or $0.01 per share compared to a loss of $479,000 or $0.01 per share for the comparable period in 2003. Total operating expenses were $1.4 million for the first quarter of 2004 compared to $1.2 million for the first quarter of 2003.

David Bupp, Neoprobe's President & CEO said, "Our first quarter revenue was impacted by delays in the transfer of manufacturing of our neo2000(R) gamma detection device to our new contract manufacturer that resulted in our accumulating backorders to our primary distributor of over $125,000 at March 31. If we had not been in a backorder position, which has since been corrected, our gamma device revenue would have been consistent with last year as expected. In addition, recent design improvements to the neo2000 have already contributed to an increase in gross margins on device sales to 56% of net sales compared to 36% of net sales in the prior year."

"Revenue from our blood flow line has been lower than planned so far this year," Bupp continued. "The feedback we are receiving from clinicians following marketing clearance of our lead blood flow product, the Quantix/OR(TM), has been gratifying. These early clinical exposures have also brought suggestions for product enhancements that we believe will stimulate a demand from blood flow measurement practitioners and expand our market by attracting surgeons not presently using blood flow measurement technology. We have already initiated efforts to implement the improvements to respond to the suggestions, the first of which will be completed during the second quarter. The Quantix/OR has gained attention in the last four months through two major cardiovascular and vascular tradeshows and we have now completed training seven vascular-specific professional distributor sales teams covering 20 states in the U.S. We are working with additional sales teams that cover an incremental 13 states and are identifying additional representatives to cover the remaining states. We are particularly encouraged by the willingness of North American and European thought leaders to continue their evaluation of the product as these exciting product improvements are implemented."

Operating expenses during the quarter increased over the prior year due primarily to development efforts in three areas. First, we reinitiated our RIGS(R) research efforts and continued to move forward with development of Lymphoseek(TM) (approximately $90,000). Second, we completed final development activities related to an updated version of our neo2000 system (approximately $55,000), and finally, we commenced certain product refinement activities related to the Quantix/OR (approximately $65,000). Bupp continued, "We believe our investments in support of the development of Lymphoseek and RIGS will yield significant future rewards for Neoprobe and complement our successful gamma device products. In addition, we remain positive about the outlook for our Quantix(R) blood flow devices and believe the proposed refinements are primarily user interface in nature and do not detract from the overall value we see in the underlying ADBF(TM) technology platform."

Year-to-date milestones:

    --  RIGS development process reactivated through discussions with
        FDA
        During the first quarter, we prepared for the April 15th
        meeting with FDA to determine the feasibility of reactivating
        the RIGS development program. The April 15th meeting was very
        helpful from a number of aspects: We confirmed that the RIGS
        biologic license application (BLA) remains active and open. We
        believe this will improve both the cost effectiveness and
        timeliness of future regulatory submissions for RIGScan(R)
        CR49. Additionally, FDA preliminarily confirmed that the BLA
        may be applicable to the general colorectal population; and
        not just the recurrent colorectal market as applied for in
        1996. Applicability to a general colorectal population could
        result in a greater market potential for the product than if
        applicable to just the recurrent population. During the
        meeting, FDA indicated that they would consider possible
        diagnostic/prognostic indications for RIGScan CR49 and that
        survival data from one of Neoprobe's earlier Phase III studies
        could be supportive of a prognostic indication. Neoprobe
        believes approval for a diagnostic indication prior to the
        submission of additional prognostic data from a new trial
        could positively impact the approval timeline for RIGScan
        CR49. Neoprobe is working on the development of clinical
        protocols covering both the diagnostic and prognostic
        indications for RIGScan CR49. We plan to submit these
        protocols for review by FDA during the second quarter. To
        support the protocol development, we have engaged some of the
        leading surgical oncologists in the United States and Europe
        to work with us in the development of the RIGScan CR49
        clinical plan. We will be making further announcements on
        these activities in the near future. The April 15th meeting
        with FDA was an important event in the re-activation of the
        RIGS program. Further discussion with FDA is expected and it
        is possible that the regulatory pathway may evolve as Neoprobe
        seeks to reach a consensus with the agency on the reactivation
        of the RIGS filing.

    --  Lymphoseek development
        We continued to prepare our IND for submission to FDA. Efforts
        during the quarter primarily involved the identification of a
        suitable contract manufacturing facility for production of
        commercial grade product for use in the protocol.

    --  Second U.S. patent issued covering the Quantix ADBF technology
        During the first quarter, the second ADBF patent was issued in
        the United States providing further coverage of the critical
        aspects of the Quantix products. In addition, we have received
        favorable input from European patent reviewers on patent
        applications covering the ADBF technology in the European
        Union.

    --  Gross margins on net device sales increased significantly over
        the prior year
        The investment of Neoprobe in the gamma device product
        provided immediate return during the first quarter with the
        improvement of gross margins on net device sales for these
        products. While delays in the transfer of manufacturing of the
        neo2000 caused Neoprobe to miss its sales target for the
        quarter, design modifications and lower manufacturing costs
        increased our gross margin on net sales of devices increased
        significantly from 36% last year to 56% this year. Deliveries
        of the gamma product to our primary distributor are back on
        schedule and we expect the improvement in margins to continue.

    --  Extension of gamma marketing agreement through December 2006
        The marketing agreement for Neoprobe's gamma products was
        extended through December 2006. The agreement extension
        affords Neoprobe access to one of the premier medical sales
        organizations with a expanding global reach. In cooperation
        with the marketing partner, we continue to work on product
        innovations to maintain Neoprobe's leadership position in the
        gamma product arena.

    --  Expansion of Quantix product sales organization and
        thought-leader network
        During the first quarter, Neoprobe began the training of a
        network of independent medical sales organizations concerning
        the Quantix products. Our marketing efforts have been
        concentrated on the Quantix/OR device that we believe will be
        the flagship product of the Quantix family of products. In
        addition to training the sales organizations, Neoprobe
        continued to work with cardiovascular thought-leaders
        regarding the evaluation of the Quantix/OR and Quantix/ND(TM)
        systems. The feedback we received confirmed the desire for
        certain product improvements, such as changes to the probe
        configuration, that were underway but the clinician feedback
        emphasized their urgency. We expect to have initial product
        modifications completed by the end of the second quarter.
        During the coming months we expect to further expand our sales
        coverage through additional external organizations in
        preparation for the introduction of these product
        improvements.

    --  Raised $1.9 million in equity financing
        The addition of $1.9 million in capital provides Neoprobe with
        a strong capital structure to accomplish our near-term goals.
        Approximately $600,000 was obtained through the exercise of
        warrants issued in November of 2003 with the private equity
        placement. In addition, approximately $1.3 million was raised
        through the issuance of common shares to Fusion Capital at an
        average share price of $0.60.

About Neoprobe

Neoprobe develops and provides innovative surgical and diagnostic products that enhance patient care by meeting the critical decision making needs of healthcare professionals. Neoprobe currently markets the neo2000(R) line of gamma detection systems that are widely used by cancer surgeons for intraoperative lymphatic mapping. Neoprobe is also in the process of commercializing the Quantix(R) line of blood flow measurement products developed by its subsidiary, Cardiosonix Ltd., that are designed to be used by cardiovascular surgeons, neurosurgeons and critical care physicians. In addition, Neoprobe holds significant interests in the development of related biomedical systems and agents including Lymphoseek(TM) and RIGScan(R) CR49. Lymphoseek is an investigational drug being developed as a lymphatic tracing agent in conjunction with the University of California, San Diego. The RIGS(R) system is an investigational technology that combines the Company's gamma detection device technology with a proprietary disease-specific radiolabeled cancer targeting agent, and a patented surgical method to get real-time information to locate tumor deposits that may not be detectable by conventional methods. Before surgery, a cancer patient is injected with one of the targeting agents, which circulates throughout the patient's body and binds specifically to cancer cell antigens or receptors. Concentrations of the targeting agent are then located during surgery by the Company's gamma-detection instrument, which emits an audible tone to direct the surgeon to targeted tissue. The Company's strategy is to deliver superior growth and shareholder return by maximizing its strong position in gamma detection technologies and diversifying into new, synergistic biomedical markets through continued investment and selective acquisitions.

Statements in this news release, which relate to other than strictly historical facts, such as statements about the Company's plans and strategies, expectations for future financial performance, new and existing products and technologies, and markets for the Company's products, are forward-looking statements. The words "believe," "expect," "anticipate," "estimate," "project," and similar expressions identify forward-looking statements that speak only as of the date hereof. Investors are cautioned that such statements involve risks and uncertainties that could cause actual results to differ materially from historical or anticipated results due to many factors including, but not limited to, the Company's continuing operating losses, uncertainty of market acceptance of its product, reliance on third party manufacturers, accumulated deficit, future capital needs, uncertainty of capital funding, dependence on limited product line and distribution channels, competition, limited marketing and manufacturing experience, risks of development of new products, regulatory risks and other risks detailed in the Company's most recent Annual Report on Form 10-KSB and other Securities and Exchange Commission filings. The Company undertakes no obligation to publicly update or revise any forward-looking statements.

NEOPROBE CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS
                                             March 31,    December 31,
                                               2004           2003
                                            (unaudited)
                                            ------------  ------------
Assets:

Cash and cash equivalents                   $ 3,390,284   $ 1,588,760
Other current assets                          2,127,005     2,462,575
Intangible assets, net                        2,833,674     2,935,515
Other non-current assets                        404,649       398,192
                                            ------------  ------------

Total assets                                $ 8,755,612   $ 7,385,042
                                            ============  ============


Liabilities and stockholders' equity:

Current liabilities, excluding deferred
 revenue                                    $   728,779   $   654,341
Deferred revenue                                727,091       955,587
Other liabilities                               160,834       516,169
Stockholders' equity                          7,138,908     5,258,945
                                            ------------  ------------

Total liabilities and stockholders' equity  $ 8,755,612   $ 7,385,042
                                            ============  ============


CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                                               Three Months Ended
                                             March 31,     March 31,
                                               2004          2003
                                            (unaudited)   (unaudited)
                                            ------------  ------------
Revenues:
   Net sales                                $ 1,225,617   $ 1,303,646
   License revenue and other                    200,000       235,390
                                            ------------  ------------
      Total revenues                          1,425,617     1,539,036
                                            ------------  ------------

Cost of goods sold                              540,142       839,062
                                            ------------  ------------

Gross profit                                    885,475       699,974
                                            ------------  ------------

Operating expenses:
   Research and development                     583,100       418,769
   Selling, general and administrative          813,393       754,083
                                            ------------  ------------
      Total operating expenses                1,396,493     1,172,852
                                            ------------  ------------

Loss from operations                           (511,018)     (472,878)
Other expenses, net                             (77,559)       (5,690)
                                            ------------  ------------

Net loss                                    $  (588,577)  $  (478,568)
                                            ============  ============

Loss per common share:
   Basic                                    $     (0.01)  $     (0.01)
   Diluted                                  $     (0.01)  $     (0.01)

Weighted average shares outstanding:
   Basic                                     53,049,534    38,258,231
   Diluted                                   53,049,534    38,258,231