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Epitope Announces First Quarter Operating Results

    BEAVERTON, Ore., Feb. 6 /PRNewswire/ -- Epitope, Inc. (Nasdaq: EPTO) today
reported its first quarter operating results for fiscal 1998.  Revenues from
continuing operations for the quarter ending December 31, 1997 were
$1.6 million, as compared to revenues from continuing operations of
$2.6 million for the comparable period in 1997.  The Company reported a net
loss from continuing operations of $955,000 for the quarter, or $0.07 a share,
compared with a net loss from continuing operations of $291,000, or $0.02 a
share, in the first quarter of fiscal year 1997.
    Operating results for the first quarter of fiscal 1998 were not affected
by discontinued operations of Agritope, Inc., which was spun off to
shareholders in December 1997.  The costs of the spin-off and Agritope's
operating losses in fiscal 1998 were accounted for in fiscal year 1997.  The
loss from discontinued operations in the comparable quarter in 1997, including
the former subsidiary Andrew & Williamson Sales Co., was $4.1 million.
    Sales of Epitope's OraSure(R) device for the quarter totaled $1.1 million
compared to $1.9 million in the first quarter of fiscal 1997.  OraSure sales
for the 1997 quarter reflected initial inventory build-up by major testing
laboratories as insurance companies made initial decisions about adoption of
OraSure and expansion of use beyond pilot programs.  As previously reported,
major insurance testing laboratories have reduced their inventories of OraSure
devices.  These inventory levels are expected to be in line with current
customer requirements by the third quarter of 1998.
    "The insurance testing labs have recently reported a strong increase in
the number of OraSure samples being tested on a daily basis, and they expect
this upward trend to continue," said John W. Morgan, President and Chief
Executive Officer of Epitope.  Mr. Morgan also stated, "Epitope is pleased
with the progress of the transition of sales responsibility for the public
health market from SmithKline Beecham plc to Epitope, which began in
October 1997 and has resulted in sales slightly ahead of plan in the first
quarter of fiscal 1998."
    Development contract revenue was $11,000 in the first quarter of fiscal
1998, compared to $282,000 in the first quarter of fiscal 1997.  Development
contract revenue for the 1997 quarter consisted of work being performed by
Epitope for SmithKline Beecham plc under an agreement that was discontinued in
July 1997.
    The Company maintained gross profit margins at 59% of sales, the same
level as achieved in the first quarter of fiscal 1997, even though revenues
were lower.
    As of December 31, 1997, Epitope had firm orders for delivery in the
second quarter of fiscal 1998 totaling $460,000 for Western Blot products and
$1.2 million for OraSure devices.
    A tabulation of operating highlights and balance sheet data follows (in
thousands, except per share data):

                                                            Quarter Ended

    OPERATING HIGHLIGHTS                      12/31/97         12/31/96
    Revenues  (Continuing Operations)           $1,603          $2,641
    Net loss  (Continuing Operations)             (955)           (291)
    Net loss                                      (955)         (4,384)
    Net loss per share (Continuing Operations)   (0.07)          (0.02)
    Net loss per share                           (0.07)          (0.34)

    SELECTED BALANCE SHEET DATA                 12/31/97        12/31/96

    Cash and marketable securities               $6,102          $9,076
    Working capital                               6,756           9,538
    Total assets                                 11,161          17,012
    Shareholders' equity                          8,504          15,014

    Epitope, Inc. is an Oregon corporation which develops and markets medical
diagnostic products.  Its principal products, including the OraSure oral
specimen collection device, focus on the use of oral fluid to detect HIV
infection and other conditions, and are marketed primarily in the life
insurance and public health sectors.
    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 quite different.  Factors that could affect results include
the extent of future use of oral testing and OraSure in the insurance
industry; ability of the company to develop product distribution channels;
development of competing products; changes in 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

Source: EPITOPE Inc.

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