Business Editors/Health & Medical Writers

BLUE BELL, Pa.--(BUSINESS WIRE)--July 22, 2002

InKine Pharmaceutical Company, Inc. (Nasdaq: INKP)

- Second Quarter Highlights -

- Research and development costs were reduced by 46% and 17% compared to the first quarter of 2002 and the second quarter of 2001, respectively. The decreases were the result of less development costs associated with the new Visicol formulation and the internalized management of previously outsourced functions related to the ongoing Colirest(TM) clinical trial.

- Sales and marketing costs increased by 31% compared to the first quarter of 2002. The increase is attributable to initiatives related to the launch of the "new and improved" Visicol formulation and the launch of IBStat, for the treatment of Irritable Bowel Syndrome (IBS). During the second quarter 2002, the Company began the process of hiring a sales force to complement the Visicol sales efforts of Procter and Gamble Pharmaceuticals and detail IBStat to the gastroenterology community. Additionally, the Company initiated renewed marketing campaigns that include targeted direct to consumer advertising. Second quarter 2002 sales and marketing costs were 42% lower than those of the same period a year ago due to the fourth quarter 2001 termination of the Company's arrangement with a contract sales organization.

- General and administrative costs decreased by 3% and 40% compared to the first quarter of 2002 and the second quarter of 2001, respectively. Such cost reductions are the result of stiff cost control measures put into place during the fourth quarter of 2001 and reduced stock-based compensation costs.

InKine Pharmaceutical Company, Inc. (Nasdaq: INKP) today announced second quarter financial results reporting a net loss of $0.04 per share, a 50% reduction in loss per share compared to both the first quarter of 2002 and the second quarter of 2001.

The reduced loss per share was driven by the combination of increased product sales and ongoing cost control measures. This reported per share loss of $0.04 is better than the revised estimated range of $0.05 to $0.07 per share announced earlier this month. Original loss estimates were in the range of $0.07 to $0.09 per share.

"The second quarter of 2002 was a successful one for InKine. Along with the introduction of the new formulation of Visicol and the launch of IBStat, we have successfully extended our commercial infrastructure to include an internal sales force and a newly opened distribution center," said Leonard S. Jacob, M.D., Ph.D, Chairman and CEO of InKine. "With two commercial products being prescribed in the marketplace, continued aggressive sales and marketing efforts, and ongoing cost containment, we expect to bring InKine to profitability in 2003," added Dr. Jacob.

For the three-months ended June 30, 2002:

Product Sales and Gross Profit:

- Research and development costs were reduced by 46% and 17% compared to the first quarter of 2002 and the second quarter of 2001, respectively. The decreases were the result of less development costs associated with the new Visicol formulation and the internalized management of previously outsourced functions related to the ongoing Colirest(TM) clinical trial.

- Sales and marketing costs increased by 31% compared to the first quarter of 2002. The increase is attributable to initiatives related to the launch of the "new and improved" Visicol formulation and the launch of IBStat, for the treatment of Irritable Bowel Syndrome (IBS). During the second quarter 2002, the Company began the process of hiring a sales force to complement the Visicol sales efforts of Procter and Gamble Pharmaceuticals and detail IBStat to the gastroenterology community. Additionally, the Company initiated renewed marketing campaigns that include targeted direct to consumer advertising. Second quarter 2002 sales and marketing costs were 42% lower than those of the same period a year ago due to the fourth quarter 2001 termination of the Company's arrangement with a contract sales organization.

- General and administrative costs decreased by 3% and 40% compared to the first quarter of 2002 and the second quarter of 2001, respectively. Such cost reductions are the result of stiff cost control measures put into place during the fourth quarter of 2001 and reduced stock-based compensation costs.

Costs and Expenses:

- Research and development costs were reduced by 46% and 17% compared to the first quarter of 2002 and the second quarter of 2001, respectively. The decreases were the result of less development costs associated with the new Visicol formulation and the internalized management of previously outsourced functions related to the ongoing Colirest(TM) clinical trial.

- Sales and marketing costs increased by 31% compared to the first quarter of 2002. The increase is attributable to initiatives related to the launch of the "new and improved" Visicol formulation and the launch of IBStat, for the treatment of Irritable Bowel Syndrome (IBS). During the second quarter 2002, the Company began the process of hiring a sales force to complement the Visicol sales efforts of Procter and Gamble Pharmaceuticals and detail IBStat to the gastroenterology community. Additionally, the Company initiated renewed marketing campaigns that include targeted direct to consumer advertising. Second quarter 2002 sales and marketing costs were 42% lower than those of the same period a year ago due to the fourth quarter 2001 termination of the Company's arrangement with a contract sales organization.

- General and administrative costs decreased by 3% and 40% compared to the first quarter of 2002 and the second quarter of 2001, respectively. Such cost reductions are the result of stiff cost control measures put into place during the fourth quarter of 2001 and reduced stock-based compensation costs.

Cash and cash equivalents:

- The Company's cash balance at June 30, 2002 was $7.7 million.

The Company expects its cash burn rate to continue to decrease

as product sales increase and further cost reduction efforts

are realized.

"Cash flow continues to improve as we fill customers orders for both Visicol and IBStat. We expect that our careful management of distribution channels during the Visicol formulation change will bring the new formulation to pharmacy shelves quicker and minimize customer returns," said Robert F. Apple, Executive Vice President and CFO of InKine. "We previously announced that we could incur a charge of up to $750,000 related to product returns for the old Visicol formulation. While at this time we do not have enough data to calculate what our total returns for the old formulation will be, prescription trends and actual product returns to date suggest that our current reserves may be adequate and the Company does not expect to incur the previously estimated $750,000 charge," added Mr. Apple.

The Company will be hosting a conference call today at 11:00 AM EDT to further discuss the first quarter 2002 financial results. To participate please dial (800) 847-8131 about five to ten minutes prior to the initiation of the teleconference. The conference call will also be available on replay starting at 1:00 pm EDT on July 22, 2002, and ending at 1:00 pm EDT on July 23, 2002. For the replay, please dial (800) 633-8284 (confirmation #20766027). The access number for the replay for international callers is (402) 977-9140 (confirmation #20766027).

About InKine Pharmaceutical

InKine Pharmaceutical Company, Inc. is a publicly traded biopharmaceutical company focused on the diagnosis and treatment of cancer and autoimmune diseases. The Company's development strategy is to acquire late-stage drug candidates with short time lines to commercialization. The Company's first product, Visicol(TM) is the first and only tablet purgative preparation indicated for bowel cleansing prior to colonoscopy. InKine's second product, IBStat(TM), is a novel oral hysocyamine spray for the treatment of Irritable Bowel Syndrome (IBS) and spasm of the colon. Additionally, the Company is developing other clinical compounds such as Colirest(TM), which is in pivotal clinical trials for the treatment of Crohn's disease and completed Phase II trials for the treatment of ulcerative colitis. For further information, please visit InKine on their web site http://www.inkine.com.

In addition to historical facts or statement of current condition, this press release may contain forward-looking statements. Forward-looking statements provide InKine's current expectations or forecasts of future events. These may include statements regarding anticipated scientific progress on its research programs, development of potential pharmaceutical products, interpretation of clinical results, prospects for regulatory approval, manufacturing development and capabilities, market prospects for its products, sales and earnings projections, and other statements regarding matters that are not historical facts. You may identify some of these forward-looking statements by the use of words in the statements such as "anticipate," "estimate," "expect," "project," "intend," "plan," "believe" or other words and terms of similar meaning. InKine's performance and financial results could differ materially from those reflected in these forward-looking statements due to general financial, economic, regulatory and political conditions affecting the biotechnology and pharmaceutical industries as well as more specific risks and uncertainties such as those set forth in its reports on Form 10-Q and 10-K filed with the U.S. Securities and Exchange Commission. Given these risks and uncertainties, any or all of these forward-looking statements may prove to be incorrect. Therefore, you should not rely on any such factors or forward-looking statements. Furthermore, InKine does not intend (and it is not obligated) to update publicly any forward-looking statements. This discussion is permitted by the Private Securities Litigation Reform Act of 1995.

                     InKine Pharmaceutical Company, Inc.
                     CONDENSED STATEMENTS OF OPERATIONS
                               (unaudited)
                 (amounts in thousands, except per share amounts)

                         Quarter Ended               Six-Months Ended
                   -------------------------------  ------------------
                   June 30,   March 31,  June 30,  June 30,   June 30,
                      2002        2002      2001      2002       2001
                      ----        ----      ----      ----       ----

Product revenue   $  1,963    $    958   $ 1,754  $  2,921   $  3,355

Other revenue           44          19       ---        63        ---
                        --          --       ---        --        ---
     Revenue         2,007         977     1,754     2,984      3,355
Cost of goods sold    (504)       (285)     (657)     (789)    (1,424)
                     -----       -----     -----     -----    -------
     Gross profit    1,503         692     1,097     2,195      1,931

Research and
 development           870       1,602     1,045     2,472      1,939
Sales and marketing  1,350       1,030     2,310     2,380      4,227
General and
 administrative        577         593       969     1,170      1,984
                       ---         ---       ---     -----      -----
 Operating expenses  2,797       3,225     4,324     6,022      8,150
                   -------       -----     -----     -----      -----
 Loss from
  operations        (1,294)     (2,533)   (3,227)   (3,827)    (6,219)

Other income
 and expenses         (261)       (244)       26      (505)       139
                     -----       -----        --     -----        ---

       Net loss  $  (1,555)  $  (2,777) $ (3,201) $ (4,332)  $ (6,080)
                   =======     =======   =======   =======    =======
Net loss per share -
 basic and diluted $ (0.04)  $   (0.08) $  (0.09) $  (0.12)  $  (0.18)
                    ======      ======    ======    ======     ======
Weighted average
 shares outstanding -
 basic and diluted  34,899      34,835    34,206    34,867     34,044

                               CONDENSED BALANCE SHEETS
                              (amounts in thousands)
                      June 30,      March 31,     December 31,
                        2002          2002            2001
                       ------         ----            ----
                    (unaudited)   (unaudited)

ASSETS
Cash and investments $ 7,690         $ 9,675       $ 12,166
Accounts receivable      851             640            400
Inventory                914             411            204
Prepaid expenses and
 other assets            640             727            696
Fixed assets             346             358            399
                    ========         =======       ========
  Total assets    $   10,441      $   11,811     $   13,865


LIABILITIES AND
 SHAREHOLDERS' EQUITY

Accounts payable
 and accrued
 expenses         $    3,866      $    4,003     $    3,550
Line of credit         2,402           2,417          2,401
Convertible
 subordinated notes    9,869           9,835          9,801
Shareholders'
 deficit              (5,696)         (4,444)        (1,887)
                    ---------       ---------        -------
Total liabilities
 and shareholders'
 equity           $   10,441       $   11,811    $   13,865
                  ===========      ==========    ==========