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Epitope, Inc. Announces Second Quarter Results

    BEAVERTON, Ore., April 27 /PRNewswire/ -- Epitope, Inc. (Nasdaq: EPTO)
today reported its second quarter operating results for fiscal 1999.  Revenues
for the quarter ended March 31, 1999 were $2.1 million, compared to revenues
of $2.1 million for the prior-year period.  Net loss for the second quarter
was $833,000 ($0.06 per share), compared to a net loss of $734,000, ($0.05 per
share), for the same period in fiscal year 1998.  For the six-month period
ended March 31, 1999, the net loss was $1.5 million ($0.11 per share) on
revenues of $4.3 million, compared to a net loss of $1.7 million ($0.13 per
share) on revenues of $3.7 million for the comparable 1998 period.
    Cash and marketable securities increased by $63,000, ending the quarter at
$5.6 million.  The company received $2.0 million from stock option exercises
during the most recent quarter, and used $1.6 million primarily for operations
and an increase in finished goods inventory.  Cash was also used to fund
investment in increased manufacturing capacity for current products and
development of the new OraQuick(R) rapid assay device.  The company expects
that cash usage will be significantly lower for the remaining quarters of
fiscal 1999.
    Gross profit margin for the six-month period increased to 64% for fiscal
year 1999, from 57% for the prior year.  The improvement was primarily
attributable to an increase in the margin on the OraSure(R) oral fluid
collection device because of higher production volumes, and to a shift in the
product mix to this higher-margin product.
    "As the use of Epitope's products in the insurance industry grows, testing
laboratories and insurance companies are becoming more attentive to their own
inventories of OraSure devices," stated John W. Morgan, Epitope's president
and chief executive officer.  "During the second quarter, one major testing
laboratory took advantage of the company's demonstrated ability to reliably
supply product on short notice and reduced its own target inventory level of
OraSure devices.  This action had a short-term effect of reducing Epitope's
sales to that laboratory for the quarter.  Now that the laboratory has
achieved the desired level of inventory, its order commitments for the third
quarter have increased to previous rates.  Several insurance companies have
also taken advantage of the timely product delivery from the testing
laboratories and have adjusted their own supply of OraSure devices downward,
resulting in a temporary slowdown in orders.  These companies have indicated
that they have achieved desired inventory levels and will resume ordering at
higher rates in the third quarter."
    Commenting on the outlook for the remainder of the fiscal year, Morgan
stated, "The rate at which OraSure devices are being used remains robust, so
we are confident sales for the third and fourth quarters will accelerate.
Indications from our customers are that demand for OraSure is increasing.
Based on the rebound we are already seeing in orders for the third quarter, we
anticipate year-to-year revenue growth of 10 to 15 percent."  He explained
that fiscal year results will be significantly affected by receipt and timing
of an expected contract to supply OraSure devices to Argentina for large-scale
testing for HIV, Hepatitis and Chagas.

                           Condensed Financial Data

    In Thousands                      Quarter ended        Six months ended
                                         March 31              March 31
                                     1999        1998      1999        1998
    Operating Results
    Revenues                        $2,072      $2,103     $4,314     $3,706
    Operating costs and expenses     2,940       2,921      5,903      5,574
    Other income, net                   67          84        126        179
    Net loss                          (801)       (734)    (1,463)    (1,689)
    Basic net loss per share         (0.06)      (0.05)     (0.11)     (0.13)
    Diluted net loss per share       (0.06)      (0.05)     (0.11)     (0.13)
    Shares used in per share
     Calculations*                  13,900      13,486     13,850     13,470

    Selected Balance Sheet Data                           3/31/99    9/30/98

    Cash and marketable securities                          5,600      5,619
    Working capital                                         7,510      6,510
    Total assets                                           10,900     10,357
    Shareholders' equity                                    9,040      8,274

    * Basic and diluted per share amounts are the same due to losses.

    Epitope, Inc. is an Oregon-based corporation that develops and markets
medical devices and diagnostic products.  Its focus is on products that use
oral fluid in the detection to HIV infection, with emphasis in the life
insurance and public health markets, and on the use of oral fluid testing for
detection of drugs of abuse and other analytes.
    Statements in this press release about future sales levels or other future
events or performance are forward-looking statements.  The company's actual
results could be significantly different.  Factors that could affect results
include the extent of future use of oral fluid testing and OraSure in the
insurance industry or other key markets; loss or impairment of sources of
capital; ability of the company to develop product distribution channels;
ability of the company to develop new products; development of competing
products; changes in international, federal or state law or regulations;
uncertainties related to customers' and suppliers' ability to achieve year
2000 compliance; and loss of key personnel.  Although forward-looking
statements help to provide complete information about the company, readers
should keep in mind that forward-looking statements are much less reliable
than historical information.

SOURCE Epitope, Inc.


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