Protein Polymer Technologies Reports First Quarter 1998 Financial Results

    SAN DIEGO, May 12, 1998 -- Protein Polymer Technologies, Inc. (Nasdaq: PPTI), reports today its financial results for the first quarter ended March 31, 1998.  For the quarter, the Company had a net loss applicable to common shareholders of $1,347,000 ($.13 a share), versus a net loss of $999,000 ($.11 a share) for the comparable period a year ago.  The net loss and loss per share amounts include accumulated and distributed dividends related to the Company's preferred stock.
    Contract revenues, product and interest income totaled $87,000 for the first quarter ended March 31, 1998, compared to $218,000 for the same period last year.  The decrease was due to reduced contract revenues and interest income.  Operating expenses for the quarter were $1,365,000, as compared to $1,096,000 for the same period in 1997.  The increase was due primarily to increased research and development expenses related to preclinical testing of the Company's soft tissue augmentation products for female stress urinary incontinence and cosmetic and reconstructive applications.
    "Our financial results for the quarter reflect additional development expenditures required for product registration with the U.S. Food and Drug Administration (FDA)," said J. Thomas Parmeter, PPTI's Chief Executive Officer.  "In addition, interest in our programs by potential partners remains strong, and we are currently pursuing a number of opportunities.  In our surgical adhesives and sealants program, we are seeking to create partnering relationships based on specific surgical fields and indications with companies who bring unique competencies in these areas.  This approach, we believe, will result in more, and more effective, commercial opportunities for the Company."
    "Our efforts to raise additional capital met with success.  As previously announced, we received to date slightly more than $4.4 million from the placement of our Series E Preferred Stock and warrants.  These funds will be used to continue operations with the goal of filing Investigational Device Exemptions with the FDA by year-end for both urinary incontinence and cosmetic indications."
    Protein Polymer Technologies, Inc., a San Diego-based biotechnology company, has developed a technology platform that allows the creation of a number of different classes of biocompatible polymers that enable cell growth, promote the regeneration of tissue, bond to synthetic surfaces and are resorbed by tissue at controlled rates.  PPTI's lead programs include surgical adhesives and sealants to replace or augment the use of sutures and staples, and unique hydrogels for a variety of soft tissue augmentation applications.
    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 raising adequate capital to continue operations, 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 1997 Annual Report and 10-KSB, and recent 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.

                        Protein Polymer Technologies, Inc.
                          Condensed Financial Statements
                                   (unaudited)

                                               Three months ended
                                                   March 31,
                                            1998              1997
    SUMMARY OF OPERATIONS
    Contract revenue                       $53,750         $137,250
    Product and other income                25,039           18,604
    Interest income                          8,656           62,445
      Total revenues                        87,445          218,299

    Total expenses                       1,364,682        1,095,655
    Net loss                          $(1,277,237)       $(877,356)

    Undeclared and/or paid
     dividends on Preferred Stock           69,567          121,282

    Net loss applicable to common
     shareholders                     $(1,346,804)       $(998,638)

    Net loss per common share -
     basic and diluted                     $(0.13)          $(0.11)

    Shares used in computing net loss
     per share - basic and diluted      10,429,094        9,035,106

                                          As of             As of
                                      Mar. 31,1998      Dec. 31,1997
    BALANCE SHEET INFORMATION                             (audited)
    Cash, cash equivalents and
     short-term investments               $267,992       $1,299,838
    Working capital                      (524,903)          697,020
    Total assets                         1,200,937        2,347,887
    Total capital invested              25,561,209       25,549,644
    Accumulated deficit               (25,360,748)     (24,083,511)