ADVANCED POLYMER SYSTEMS REPORTS 1998 RESULTS


                       Operating Income Up $2.4 Million
                           R & D Investment Up 17%


REDWOOD CITY, Calif., March 4 /PRNewswire/ -- Advanced Polymer Systems,
Inc. (Nasdaq: APOS) today reported fourth quarter and year-end 1998 financial
results, reflecting continuing progress in all areas of its business. 
Total Revenues Excluding Milestone Payments Up 19% 
Total revenues excluding milestone payments increased by 19% to
$19,991,000 compared to $16,833,000 in 1997. Royalties, License fees and
Research and Development fees for 1998 increased by 45% to $6,355,000 compared
with $4,390,000 in 1997. Product revenues for 1998 increased by 10% to
$13,636,000 from $12,443,000 in 1997. 
Total revenues for the fourth quarter of 1998 increased by 11% to
$5,169,000 compared to $4,649,000 in the fourth quarter of the prior year.
Royalties, License fees and Research and Development fees for the fourth
quarter of 1998 increased by 18% to $2,126,000 compared with $1,808,000 in the
year-ago period. Product revenues for the fourth quarter of 1998 increased by
7% to $3,043,000 compared to $2,841,000 in the year-ago period. 
$2.6 Million Improvement to Net Income of $1.9 Million 
Advanced Polymer achieved four quarters of profitability in 1998, with net
income for the year of $1,896,000, or $0.10 basic earnings per share, or
$0.09 diluted earnings per share compared with a net loss of $683,000, or
$0.04 basic and diluted loss per share, for 1997. Operating expenses decreased
6% for the year, to $10,390,000 compared with $11,098,000 for
1997. Investment in research and development increased 17% to $4,381,000, as
the company advanced its oral site-specific and systemic bioerodible polymer
technologies for internal drug delivery. Selling, general and administrative
expenses decreased by $1,349,000 to $6,009,000 for 1998 from $7,358,000 for
1997. 
For the fourth quarter of 1998, net profit was $1,120,000, or $0.06 per
share, compared with a net loss of $75,000, or $0.00 per share in the year-ago
period. Operating expenses for the quarter decreased 7% to $2,444,000 from
$2,622,000. Research and development expenses increased 20% to $1,186,000 for
the fourth quarter of 1998, and selling, general and administrative expenses
decreased 23% to $1,258,000. 
Growth of Core Skincare Business Allows for Greater Investment in R & D 
"We have made tremendous progress in our effort to build a first class
drug delivery company," said John J. Meakem, Jr., chairman, president and
chief executive officer of Advanced Polymer Systems. "Advanced Polymer now
combines profitable operations with investment in high-potential future
opportunities. Our skincare business continues to grow as our delivery systems
technologies are used increasingly around the world, allowing investment in
our internal delivery technologies." 
Emerging Technologies Show Significant Potential 
"We are particularly enthusiastic about the commercial potential of our
innovative new drug delivery technologies," Meakem added. "In 1998, human
proof-of-principle studies conducted in the United Kingdom demonstrated that
our colon-specific system has the ability to bypass degradation in both the
stomach and small intestine -- to deliver active ingredients throughout the
length of the colon. In addition, preclinical studies have indicated that our
bioerodible polymers can be implanted for systemic, site-specific or targeted
drug delivery. We expect these new technologies to move Advanced Polymer into
the broader internal drug delivery market." 
Value Added in Ethical Pharmaceuticals 
"U.S. sales of Retin-A(R) Micro(TM), marketed by Johnson & Johnson's Ortho
Dermatological subsidiary, increased to 33% of total Retin-A sales during
1998," Meakem said. "To expand commercialization, Ortho is conducting Phase
III studies of Retin-A Micro for international marketing clearances, and Phase
III studies for product line extensions in the U.S.  Dermik Laboratories,
Inc., our partner for Microsponge(R)-entrapped 5-fluorouracil (5-FU) has
completed its pivotal clinical studies and expects to submit a New Drug
Application in 1999 seeking FDA marketing clearance for the treatment of
actinic keratosis, a common precancerous skin condition. We are also
collaborating with Pharmacia & Upjohn to develop a delivery system for another
topical therapeutic agent." 
Skincare Applications Increase Worldwide 
"Our delivery systems technologies are playing an increasing role in
cosmeceutical and personal care products marketed worldwide," Meakem added.
"During 1998, Avon Products expanded its access to our technology and launched
a second product internationally -- ANEW Retinol Hand Complex -- using our
Microsponge(R)-entrapped retinol combination. Both of Avon's retinol products
are now available not only door-to-door but also over the internet at
www.avon.com. Scott's Liquid Gold launched Alpha Hydrox Retinol Night ResQ PM
with our retinol formulation, supported by a multi-million dollar advertising
campaign. That product is also available over the internet at
www.alphahydrox.com as well as through traditional mass merchandising
channels. 
"Other partners that launched products in 1998 included La Prairie, a
subsidiary of Swiss cosmetics giant Beiersdorf AG, who launched
Microsponge-based products in major markets worldwide," Meakem said.
"Bath & Body Works launched our retinol product. Melanosponge melanin products
are now marketed in South America and Southern Europe and, most recently, we
began partnering with Guthy-Renker Corporation to commercialize multi-product
skincare kits through infomercials featuring a celebrity spokesperson. 
"This is just a sample of the many uses of Advanced Polymer's technologies
throughout the world," Meakem said. "Our substantial and growing client base
enables us to develop and commercialize products very broadly -- through
physicians, mass retailers, high-end department stores, the Avon lady, beauty
salons and spas, TV infomercials, and the internet." 
Advanced Polymer Systems is a leader in polymer-based delivery systems and
related technologies used primarily in ethical and over-the-counter (OTC)
pharmaceuticals and personal care products. The company's Microsponge and
Polytrap(R) systems, which deliver active ingredients to the skin, now play an
integral role in almost 100 personal care products sold worldwide. New
products and technologies under development include site-specific systems for
delivering oral medications to the lower gastrointestinal tract, and
bioerodible microspheres and polymers for oral or implantable drug delivery. 
NOTE:  Except for historical information, this news release contains
certain forward-looking statements that involve risk and uncertainties which
may cause actual results to differ materially from the statements made,
including the success and timing of product development, approvals and
launches, the establishment of new corporate alliances, and other risks listed
from time to time in Advanced Polymer's U.S. Securities and Exchange
Commission (SEC) filings, including those described in the Company's most
recently filed registration statement on Form S-3. These forward-looking
statements represent Advanced Polymer's judgment, as of the date of this
release, and the company disclaims any intent or obligation to update these
forward-looking statements. 


                        ADVANCED POLYMER SYSTEMS, INC.
                        HIGHLIGHTS - INCOME STATEMENT
                      (in thousands, except per share data)
                                    Three Months Ended     Twelve Months Ended
                                    Dec. 31    Dec. 31     Dec. 31      Dec. 31
                                      1998       1997        1998        1997
    Product Revenues                $3,043     $2,841     $13,636    $12,443
    Royalties, License
    Fees & R&D Fees                  2,126      1,808       6,355      4,390
    Milestone Payment                    0          0           0      1,500
      TOTAL REVENUES                 5,169      4,649      19,991     18,333
    Cost of Sales                    1,473      1,963       7,127      7,164
    Operating Expenses:
    Research & Development           1,186        992       4,381      3,740
    Selling, Advertising,
     General & Administrative        1,258      1,630       6,009      7,358
    TOTAL OPERATING EXPENSES         2,444      2,622      10,390     11,098
    OPERATING INCOME                 1,252         64       2,474         71
    Interest Expense, Net            (131)      (141)       (559)      (683)
    Other Expense, Net                 (1)          2        (19)       (71)
    NET INCOME (LOSS)               $1,120      ($75)      $1,896     ($683)
    BASIC EARNINGS (LOSS)
     PER SHARE                       $0.06    ($0.00)       $0.10    ($0.04)
    DILUTED EARNINGS (LOSS)
    PER SHARE                        $0.06    ($0.00)       $0.09    ($0.04)
                            HIGHLIGHTS - BALANCE SHEET
                                  (in thousands)
                                           December 31        December 31
                                               1998               1997
    ASSETS
    Cash and Cash Equivalents                $4,088              $8,672
    Accounts Receivable, Net                  4,829               3,389
    Inventory                                 2,959               2,639
    Other Current Assets                        936                 541
    TOTAL CURRENT ASSETS                     12,812              15,241
    Property, Plant & Equipment,
     Net                                      8,644               6,771
    Other Non-Current Assets                  1,625               2,168
    TOTAL ASSETS                            $23,081             $24,180
    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current Liabilities                      $7,510              $9,140
    Long-Term Liabilities                     1,036               4,799
    Shareholders' Equity                     14,535              10,241
    TOTAL LIABILITIES AND
     SHAREHOLDERS' EQUITY                   $23,081             $24,180



SOURCE  Advanced Polymer Systems, Inc. 
-0-                             03/04/99 
/CONTACT:  Michael O' Connell, Chief Financial Officer, 650-366-2626,
ext. 326, or Gordon Sangster, Controller, 650-366-2626, ext. 327, both of
Advanced Polymer Systems/ 
/Web site:  http://www.advancedpolymer.com/ 
(APOS) 
CO:  Advanced Polymer Systems, Inc.
ST:  California
IN:  MTC
SU:  ERN 
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