PharmaNetics Announces Fourth Quarter and Year-End Results.

Business Editors/Health/Medical Writers

RALEIGH, N.C.--(BUSINESS WIRE)--Feb. 28, 2003

PharmaNetics, Inc. (NASDAQ/NM:PHAR), a leader in theranostic management specializing in managing the delivery of therapeutics affecting coagulation, today announced results for the fourth quarter and year ended December 31, 2002.

John P. Funkhouser, president and chief executive officer of PharmaNetics, said, "Calendar year 2002 has been a pivotal year for PharmaNetics. We have been sustained and motivated by a belief that theranostics - the integration of diagnostics and therapeutics to customize patient care - would impact the practice of medicine. We have always believed that our concept is sound, and we continue to believe in the science. In August 2002, the FDA granted clearance for our ENOX test, a milestone event, validating both the theranostic model and our company."

Revenues for the fourth quarter ended December 31, 2002, were $1.2 million compared with revenues of $1.2 million, in the same period in 2001. Routine test card and analyzer revenues increased compared with the prior year, but were offset by lower specialty card revenue. Operating expenses for the fourth quarter of 2002 totaled $4.8 million compared with $2.7 million in fourth quarter of 2001. Included in the fourth quarter 2002 operating expenses is a non-cash compensation charge of $1.3 million related to extending the termination date of previously granted stock options to a number of employees. In addition, marketing expenses were higher by approximately $263,000, as the Company prepared for the ENOX test launch. Research and development costs increased approximately $600,000 over the prior year related to on-going research projects. After other income and the preferred stock dividend, the resulting net loss attributable to common stockholders for the fourth quarter of 2002 was $4.5 million, or $0.47 per share, compared with $2.6 million, or $0.28 per share, for the same period in the prior year.

Revenues for the year ended December 31, 2002, were $4.1 million compared with revenues of $4.5 million in the same period in 2001. As previously noted, increased analyzer revenue was offset by lower specialty card revenue. Operating expenses for 2002, which include the $1.3 million. non-cash compensation charge, totaled $12.4 million compared with $9.7 million in the prior year. Research and development expenses in 2002, which included clinical trials for the ENOX and TIM cards, experimental test cards and other supplies, increased $2.1 million compared with 2001. The increase was partially offset by lower administrative expenses in 2002 compared with 2001, when moving costs and management information systems expenses were incurred that did not take place in 2002. After other income and the preferred stock dividend, the net loss attributable to common stockholders for the year ended December 31, 2002, was $11.6 million, or $1.21 per share, compared with $9.2 million, or $1.03 per share, for the prior year.

During the fourth quarter, the Company received a final milestone payment of $1.5 million, due under the Company's Collaborative Development Agreement with Aventis Pharmaceuticals Inc. (Aventis), the U.S. pharmaceutical company of Aventis (NYSE: AVE), for development and completion of a rapid bedside enoxaparin test (ENOX). The final payment represents the conclusion of a $5 million two-year test development program, following which PharmaNetics and Aventis are now initiating a new collaborative marketing and promotion program to promote the use of the ENOX test to detect the anticoagulant effects of Aventis Pharmaceuticals' enoxaparin sodium (Lovenox(R)), the number-one selling low-molecular weight heparin (LMWH) in the world.

Mr. Funkhouser continued, "Now we are hard at work on the next stage of our growth cycle - commercialization. The key to PharmaNetics' success will be leveraging the sales force of its pharmaceutical partner to facilitate test sales as a means to drive drug sales. Utilizing the test as a tool for selling physicians and overcoming drug management concerns in certain patient subsets should improve drug penetration in the cardiology market. PharmaNetics and Aventis have agreed to initiate coordinated advertising, marketing and educational programs for the ENOX test. This agreement was of major importance to PharmaNetics because much of the sales development expense is covered by Aventis. By hiring its own 18 person sales force and technical support team, PharmaNetics has the ability to leverage its sales personnel in working with Aventis' 700-person enoxaparin sales force to make joint calls on qualified hospital leads within the top 1000 hospitals doing cardiac catherizations in the US."

In closing, Mr. Funkhouser added, "Responding to a medical need, we developed a proprietary technology platform. We made significant investments in validating and improving, that technology. We forged key partnerships with pharmaceutical companies to optimize the capabilities and usage of their new drugs, to improve clinical results, reduce costs, and participate in a new era in healthcare delivery. And, we are providing physicians, who are embracing this new era, with unprecedented tools that give them the power to improve outcomes for patients on anticoagulant drugs. We have steadily built momentum. Now, we have been officially cleared for commercialization. This is an exciting moment to be part of theranostics and part of PharmaNetics. This is the year we will discover just how far we can go in accelerating the theranostic momentum that will carry us for years to come."

PharmaNetics, Inc., a leading biotech company, conceived the term "theranostics," defining an emerging new field of medicine that enables physicians to monitor the effect of antithrombotic agents in patients being treated for angina, myocardial infarction (heart attack), stroke, and pulmonary and arterial emboli. The Company develops, manufactures and markets rapid turnaround diagnostics to assess blood clot formation and dissolution. PharmaNetics develops tests based on its proprietary, dry chemistry Thrombolytic Assessment System. Its principal target market is the management of powerful new drug compounds, some of which may have narrow therapeutic ranges, as well as monitoring routine anticoagulants.

A listen-only simulcast and 48-hour replay of PharmaNetics' fourth quarter and year-end conference call will be available online at the Company's website at www.pharmanetics.com or at www.companyboardroom.com on February 28, 2003, beginning at 11:00 a.m. Eastern time.

This press release contains forward-looking statements regarding future events and the future performance of PharmaNetics that involve risks and uncertainties such as risks related to market acceptance, clinical trials and dependence on third-party distributors and collaborative partners that could cause actual results to differ materially from those projected in the forward-looking statements. Information concerning these and other of the factors that could cause results to differ materially from those in the forward-looking statements is contained in the Company's filings with the Securities and Exchange Commission, including Form 10-K, Form 10-Q and Form 8-K reports.

                          PHARMANETICS, INC.
                    Selected Financial Information
                 (In thousands, except per share data)

                                 Three Months Ended     Year Ended
                                    December 31,       December 31,
                                  ----------------  -----------------
                                    2002     2001     2002      2001
                                  -------  -------  --------  -------

Consolidated Income (Loss) Statement
Net revenue                        $1,173   $1,180    $4,090   $4,539
Cost of goods sold                    948    1,182     3,495    4,046


Gross profit                          225       (2)      595      493
Operating expenses                  4,840    2,681    12,405    9,683
                                  -------  -------  --------  -------

Loss from operations               (4,615)  (2,683)  (11,810)  (9,190)
Other income, net                     263      201       694      588
                                  -------  -------  --------  -------

Net loss                           (4,352)  (2,482)  (11,116)  (8,602)
Preferred stock dividends            (145)    (141)     (482)    (566)
                                  -------  -------  --------  -------

Net loss attributable
 to common stockholders           $(4,497) $(2,623) $(11,598) $(9,168)
                                  =======  =======  ========  =======

Net loss before preferred
 stock charges per basic
 and diluted share                 $(0.45)  $(0.26)   $(1.16)  $(0.97)
Preferred stock charges per
 basic and diluted share            (0.02)   (0.02)    (0.05)   (0.06)
                                  -------  -------  --------  -------

Net loss per basic and
 diluted common share              $(0.47)  $(0.28)   $(1.21)  $(1.03)
                                  =======  =======  ========  =======

Weighted average common
 shares outstanding                 9,610    9,420     9,567    8,877
                                  =======  =======  ========  =======


                                                    Dec. 31,  Dec. 31,
                                                      2002      2001
                                                    --------  --------
Condensed Consolidated Balance Sheets
Cash, cash equivalents and investments                $9,294   $14,967
Other current assets                                   3,464     2,842
Total assets                                          21,702    27,014
Current liabilities                                    3,309     1,974
Total liabilities                                      7,543     3,386
Shareholders' equity, preferred stock
 and redeemable common stock                          14,159    23,628