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Epitope, Inc. Announces Record Product Revenues, First Quarterly Profit In Company History

            Fourth Quarter Results Reflect Operational Turnaround

    BEAVERTON, Ore., Nov. 17 /PRNewswire/ -- Epitope, Inc. (Nasdaq: EPTO)
today reported record product revenues and a small profit for the fourth
quarter of fiscal year 1998, contributing to a 50% reduction in its fiscal
year net loss from 1997 to 1998.
    Revenues for the quarter ended September 30, 1998 were $3.3 million, up
120% over revenues from continuing operations of $1.5 million for the quarter
ended September 30, 1997.  Net profit for the fourth quarter was $21,000,
compared to a net loss from continuing operations of $1.9 million for the same
period in fiscal year 1997.  For the year ended September 30, 1998, net loss
was $1.9 million ($0.14 per share) on revenues of $9.8 million, compared to a
net loss from continuing operations of $4.0 million ($.30 per share) on
revenues of $9.4 million for the year ended September 30, 1997.
    Results for the 1998 fourth quarter represent the company's first
operating profit in its history and reflect management's successful
revitalization of the company's strategic direction, a significant reduction
in costs, and increased control over cash use. The results also mark the
company's first quarter of positive cash flow from operations.  Cash and cash
equivalent balances ended the fiscal year at $5.6 million, as a result of
positive cash flow for the fourth quarter.  The company ended the year with no
debt on its balance sheet.
    Fiscal 1998 product revenues increased 21% over the prior year, despite
the dampening effect of excess inventory in the insurance market from prior
year product sales.  Particularly strong sales growth in the public health
market, the resolution of inventory problems in the life insurance market, and
sales to several new important international markets, including Argentina and
Japan, each contributed to the increase in revenues.  Grant and contract
revenue decreased by about $1.3 million from fiscal 1997 to fiscal 1998
because of the termination of a development and supply agreement with
SmithKline Beecham plc in July 1997.
    Gross profit margins increased to 62% for fiscal year 1998, from 57% for
fiscal year 1997.  The improvement was primarily attributable to increases in
the margins because of higher production volumes on the OraSure(R) oral fluid
collection device, and a shift in the sales mix to this higher margin product.
    "Fiscal 1998 has marked the transition at Epitope from a research and
development company to a highly focused medical device company with strong
commercial potential," said John W. Morgan, president and chief executive
officer.  "Epitope intends to add to its already strong foundation of products
by moving beyond HIV testing into the larger drugs-of-abuse testing market,
both domestic and internationally.  Our exclusive distribution agreement with
STC Technologies for a drugs-of-abuse testing panel will serve as our exciting
entree into this $350 million market. "
    Morgan continued, "We are very pleased to have succeeded in having
increased product sales, achieved control over our operating costs and
produced our first quarter ever of positive cash-flow. Expanding the scope of
our oral fluid testing base into new markets will provide the platform for
future growth while smoothing out the seasonal variations in our revenues that
have occurred in past years. Looking forward to the first quarter, which is
seasonally our weakest, we expect to continue on our path of year-over-year
revenue growth."
    Discontinued operations, which had no effect on operating results for
fiscal year 1998, lost $18.4 million in fiscal 1997, for a total 1997 loss of
$22.4 million.  Discontinued operations consisted primarily of Agritope, a
former agricultural biotechnology subsidiary that was spun off to shareholders
in December 1997, and Andrew & Williamson Sales, Co., the acquisition of which
was rescinded in fiscal year 1997.  Discontinued operations used approximately
$2.1 million in cash in fiscal 1998.

    Condensed Financial Data

    In Thousands                      Quarter ended           Year ended
                                       September 30          September 30
                                     1998       1997       1998        1997

    Operating Results
    Revenues                        $3,303     $1,500      $9,792     $9,360
    Operating costs and expenses     3,360      3,494      12,042     14,324
    Other income, net                   78        116         322        882
    Profit (loss) from
     continuing operations              21    (1,878)     (1,928)    (4,081)
    Discontinued operations             --    (3,698)          --   (18,359)
    Net Profit (loss)                   21    (5,576)     (1,928)   (22,440)
    Profit (loss) per share
     from continuing Operations       0.00     (0.14)      (0.14)     (0.30)
    Net Profit (loss) per share       0.00     (0.42)      (0.14)     (1.67)
    Shares used in per share
     Calculations*                  13,629     13,239      13,529     13,404

    Balance Sheet Data
    Working capital                                         6,510      9,538
    Total assets                                           10,357     17,012
    Accumulated deficit                                 (103,046)   (95,426)
    Shareholders' equity                                    8,274     15,014

    * Basic and diluted per share amounts are the same due to losses.  The
number of shares used to determine diluted per share amounts in the fourth
quarter 1998 was 14,004.

    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 of 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 testing and OraSure in the insurance
industry or other key markets; ability of the company to develop product
distribution channels; development of competing products; changes in
international, federal or state law or regulations; 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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