CELL PATHWAYS REPORTS DECREASED NET LOSS FOR SECOND QTR.

Cell Pathways, Inc. (Nasdaq:CLPA), Horsham, Pa., has reported financial results for the second quarter and six months ended June 30, 2001.

For the second quarter ended June 30, 2001, the company reported a net loss of $4.9 million, or $2.3 million less than the same period in 2000. Net loss per share was $0.16 on 31.1 million common shares outstanding for the second quarter of 2001, versus a net loss of $0.26 per share on 27.6 million common shares outstanding for the second quarter of 2000. For the six months ended June 30, 2001, the company reported a net loss of $9.6 million, or $4.1 million less than the same period in 2000. Net loss per share was $0.31 on 31.1 million common shares outstanding for the first six months of 2001 versus $0.50 per share on 27.1 million common shares outstanding for the same period in 2000. The company ended the quarter with $38.5 million in cash and investments.

For the three months ended June 30, 2001, research and development ("R&D") expenses were $3.4 million, a decrease of $1.8 million or 34.8% from the same period in 2000. Selling, general and administrative ("SG&A") expenses were $1.9 million, a decrease of $535,000 or 21.8% from the same period in 2000. For the six months ended June 30, 2001, R&D expenses were $7.2 million, a decrease of $3.4 million or 32.2% from the same period in 2000. SG&A expenses were $3.9 million, a decrease of $223,000 or 5.5% from the same period in 2000.

R&D expense for both the second quarter and six months ended June 30, 2001 decreased from the same periods in 2000 primarily due to reductions in purchases of raw materials for Aptosyn(TM) (exisulind) in 2001 and clinical development expenses. SG&A expenses for both the second quarter and six months ended June 30, 2001 decreased from the comparable periods in 2000 primarily due to reduced marketing expenses, offset partially by selling expenses related to the promotion of Nilandron(R) during 2001. The company did not receive revenues from marketing Nilandron(R) in the second quarter of 2001, believed by the company to be due in part to the effects of inventory management on introduction of the 150 mg and discontinuation of the 50 mg dosage form.

Robert Towarnicki, chairman and chief executive officer of Cell Pathways, commented on the second quarter results, "This was a productive quarter for Cell Pathways highlighted by progress in our clinical development program which included:

-- The initiation of a phase I/II study of a combination of Aptosyn(TM) and TAXOL(R) plus Paraplatin(R) as a front-line treatment for non-small cell lung cancer. This trial is being conducted in cooperation with and support from Bristol-Myers Squibb Company.

-- The addition of several prominent scientists and clinical oncologists to the company's scientific advisory board (SAB) and the formation of a clinical advisory subcommittee board.

-- Publication of new research in the Journal of Biological Chemistry that expands the understanding of the mechanism of action of the company's SAANDs technology.

-- Presentation of new clinical data at the American Society of Clinical Oncologists (ASCO) that detailed phase I/II safety and pharmacokinetic results of CP461, the company's second investigational drug, and of the Aptosyn(TM)/Taxotere(R) combination.

-- Presentation of new laboratory research at the annual meeting of the American Gastroenterological Association (AGA) that provides evidence to support that CP461 induced apoptosis or cellular suicide in two human pancreatic cancer cell lines, including cells expressing ras mutations that commonly lead to drug resistance.

Towarnicki continued, "We are encouraged by the ongoing stream of research and clinical data that supports and validates our SAANDs technology and its potential in cancer therapy. We look forward to continuing to advance the clinical development program of our compounds both as single agent and in combination with other leading chemotherapeutics."

Cell Pathways, Inc., headquartered in Horsham, Pa., is a development stage pharmaceutical company focused on the research, development and commercialization of novel and unique medications to prevent and treat cancer.

For more information, visit http://www.cellpathways.com or call 215/706-3800.