Protein Polymer Technologies Reports Second Quarter 1997 Financial Results

    SAN DIEGO, Aug. 5, 1997 -- Protein Polymer Technologies, Inc. (Nasdaq: PPTI), reports today its financial results for the second quarter ended June 30, 1997.  For the quarter, the Company had a net loss applicable to common shareholders of $1,303,000 ($.14 a share), versus a net loss of $825,000 ($.13 a share) for the comparable period a year ago.  Year-to-date PPTI had a net loss applicable to common shareholders of $2,302,000 ($.25 a share), versus a net loss of $1,691,000 ($.27 a share) for the comparable period a year ago.  The net loss and loss per share figures include accumulated dividends related to the Company's preferred stock.  The Company ended the second quarter with $3,295,000 in working capital, compared with $840,000 as of December 31, 1996.
    Contract revenues, interest and product income totaled $170,000 for the second quarter, compared to $127,000 for the same period last year, a 34% increase.  Year-to-date these revenues totaled $389,000, compared to $164,000 for the same period last year, a 138% increase.  Operating expenses for the quarter were $1,351,000, as compared to $830,000 for the same period in 1996, a 63% increase.  Year-to-date the operating expenses totaled $2,447,000, compared to $1,610,000 for the same period last year, a 52% increase.
    For both the second quarter and year to date periods, the Company substantially expanded its research and development in surgical adhesives and sealants, and in ProLastin(TM) hydrogels targeted for use in plastic, reconstructive, and urological soft tissue augmentation procedures.  In addition, the Company increased expenditures in preparing to implement the U.S. Food & Drug Administration's (FDA's) Good Laboratory Practice (GLP) regulations.  Product manufactured under GLP regulations is required for conducting preclinical and clinical studies supporting product safety and efficacy in submissions for FDA marketing approvals.
    "PPTI's increasing investment in R&D and product development results from a number of important technical advances, and from our preparation to meet the rigorous plant and procedural requirements involved in registering products with the FDA," said J. Thomas Parmeter, PPTI's President and Chief Executive Officer.  "Our J&J-sponsored surgical adhesives and sealants program is making excellent progress, and the R&D test results for our internally funded soft tissue augmentation program have been extremely promising.  As a result, we expect ProLastin hydrogels to enter preclinical safety testing before year- end.  These materials are being targeted towards two large market opportunities, bulking agents for use in cosmetic and reconstructive procedures, and for the treatment of urinary incontinence."
    Protein Polymer Technologies, Inc., a San Diego-based biotechnology company, has developed a protein-based technology platform that allows the creation of new biomaterials which target multiple applications in biomedical markets.  The different classes of biocompatible polymers developed by PPTI have been genetically engineered to enable cell growth, promote the regeneration of tissue, bond to synthetic surfaces and resorb into tissue at controlled rates.  Targeted applications include tissue adhesives and sealants, tissue augmentation, wound healing, surgical adhesion barriers and drug delivery vehicles.
    This press release may contain forward-looking statements that are based on management's expectations.  Actual results could differ materially from those expressed here; further, the Company is not obligated to comment specifically on those differences.  Risks associated with the Company's activities include scientific and product development uncertainties, competitive products and approaches, continuing collaborative partnership interest and funding, regulatory testing and approvals, and manufacturing scale-up.  The reader is encouraged to refer to the Company's 1996 Annual Report and filings with the Securities and Exchange Commission, copies of which are available from the Company, to further ascertain the risks associated with the above statements.