PRNewswire - November 13, 2001

Total operating expenses were $4.6 million for the third quarter of 2001, compared with $4.7 million for the third quarter of 2000. On a year-to-date basis, operating expenses were $14.7 million in 2001, compared with $14.8 million for the first nine months of 2000.

At September 30, 2001, the company had cash and short-term investments of $23.5 million compared with $34.7 million at December 31, 2000.

During the third quarter, Genelabs Diagnostics Pte. Ltd. (GLD), a wholly owned subsidiary that is accounted for as a discontinued operation, received a license covering certain HIV diagnostic products as part of a global settlement of alleged patent infringement claims made by Institut Pasteur and Bio-Rad Laboratories, Inc. and its French subsidiary. The settlement included payments from GLD to Institut Pasteur and Bio-Rad, which were within estimates previously provided by Genelabs and, therefore, no further income or expenses related to the diagnostics operation are included in the company's third quarter results. Genelabs is continuing to pursue the sale of its diagnostics subsidiary.

Research and Development Activities

Genelabs remains focused on discovering and developing pharmaceutical products based on our research and on the continued development of Aslera(TM) for the treatment of systemic lupus erythematosus (SLE). We have made recent progress in several areas, which we will review here.

In August, the company announced it would make presentations describing Genelabs' new class of antifungal and antibacterial compounds at the 41st Interscience Conference on Antimicrobial Agents and Chemotherapy (ICAAC). The meeting, originally scheduled to be held in September, has been rescheduled for December 16-19 in Chicago. ICAAC is organized by the American Society for Microbiology and is the largest annual meeting on infectious diseases and antimicrobial agents, with more than 12,000 scientists and health care professionals expected to attend from around the world. We plan to release additional information regarding the posters and discussion of the research during the course of the meeting.

In early September, two reports were published in the New England Journal of Medicine that show patients infected with both the human immunodeficiency virus (HIV) and GB virus C (GBV-C, also known as hepatitis G virus or HGV) had a reduced mortality rate compared to those only infected with HIV. These two studies, published by Xiang, et. al. (Iowa City) and Tillman, et. al. (Hannover, Germany), confirm previous reports suggesting delayed progression of HIV in patients coinfected with GBV-C. Genelabs scientists first discovered HGV, which is transmitted by blood and other bodily fluids, while seeking to identify what was then an unknown hepatitis virus. Patents covering the HGV genome, peptides and their uses have issued to Genelabs and companies such as Boehringer Mannheim (now Roche Diagnostics), Chiron Corporation and Ortho Diagnostics have licensed diagnostic applications. Genelabs retains all other commercial rights to its discovery of HGV.

Also in September we announced the initiation of a Phase II clinical trial of an investigational new vaccine for prevention of disease caused by hepatitis E virus (HEV). The trial is being conducted by the Walter Reed Army Institute of Research in collaboration with the Medical Department of the Royal Nepal Army, the U.S. National Institutes of Health and Genelabs' licensee GlaxoSmithKline Biologicals. The trial has enrolled approximately 2,000 adult volunteers who are to receive three doses of either HEV vaccine or placebo over six months. The study is being conducted in Nepal, where HEV causes annual epidemic outbreaks and has an historical attack rate that is among the highest in the world. HEV was first isolated and cloned by Genelabs scientists working in conjunction with researchers from the U.S. Centers for Disease Control and Prevention. Genelabs granted an exclusive worldwide license to GlaxoSmithKline Biologicals for vaccine applications under Genelabs' HEV patent portfolio. GlaxoSmithKline has one of the world's leading vaccine programs and markets vaccines against hepatitis A and hepatitis B.

Genelabs is committed to seeking approval of Aslera(TM), our investigational treatment for SLE, in the United States and abroad. Discussions with the FDA regarding our New Drug Application (NDA) are on-going as the company seeks approval of the NDA for Aslera(TM).

Rheumatologists from around the world are in San Francisco this week for the 2001 American College of Rheumatology Annual Scientific Meeting. Genelabs, along with our North American licensee Watson Pharmaceuticals, Inc., is sponsoring a post-meeting symposium entitled "Systemic Lupus Erythematosus - Hormones: From Basic Science to the Bedside."

Outlook for Fourth Quarter and Full Year 2001

Genelabs also issued guidance on its financial results for the fourth quarter of 2001. For the fourth quarter of 2001, the net loss is estimated to be $3.5 to $3.8 million, or $0.07 to $0.08 per share. Contract revenues are expected to be approximately $1.0 million. Research and development expenses are expected to be $3.1 to $3.4 million. General and administrative expenses are expected to be $1.5 to $1.7 million. Interest income is expected to be approximately $0.2 million. For the full year 2001, the net loss is estimated to be $13.2 to $13.5 million, or $0.27 per share. Cash as of December 31, 2001 is expected to be approximately $18 million. If Aslera(TM) is approved by the FDA, under the collaboration and license agreement with Watson Pharmaceuticals, Inc., Genelabs would receive a milestone payment of up to $45 million, which has not been factored into these estimates.

Genelabs Technologies, Inc. is a biopharmaceutical company engaged in the discovery and development of a new class of pharmaceutical products that target DNA. The company is focusing initially on anti-microbial drug discovery, developing compounds that target DNA in bacteria, fungi, viruses and other infectious pathogens. A large number of these compounds have been screened for their activity in cell-based assays and many lead compounds with potent activity in vitro against fungi and bacteria have been identified. In addition to its drug discovery research, Genelabs has discovered, and holds several patents covering, the hepatitis E virus and the hepatitis G virus (also referred to as GB virus C). Apart from its research, Genelabs is developing Aslera(TM) for systemic lupus erythematosus under a license from Stanford University.

NOTE: This press release contains forward-looking statements, including without limitation the matters discussed in the Outlook for Fourth Quarter and Full Year 2001 section. These forward-looking statements are based on Genelabs' current expectations and the forward-looking statements are subject to uncertainties and risks that could cause actual results to differ materially from the statements made. Uncertainties and risks include without limitation whether the results of the company's clinical trials of Aslera(TM) and other supporting information will be sufficient to support the approval of Aslera(TM) by FDA; delays regarding the regulatory approval process including the timing and scope of approval received, if any; uncertainties and risks regarding market acceptance of Aslera(TM) as a treatment for systemic lupus erythematosus (SLE); the early stage of Genelabs' research programs and the company's ability to produce products from its research; the validity, scope and enforceability of patents related to the company's technologies; the company's capital requirements and history of operating losses; and uncertainties and risks regarding the company's ability to consummate strategic or corporate partner transactions on favorable terms or at all. The active ingredient in Aslera(TM) is prasterone, the synthetic equivalent of the androgenic hormone dehydroepiandrosterone (DHEA). Products containing DHEA are currently being marketed by others as dietary supplements. The company has not submitted applications for regulatory review outside the U.S. In addition, neither U.S. nor foreign regulatory authorities have made a determination as to the safety or efficacy of Aslera(TM) for SLE. Please see the information appearing in the company's filings with the Securities and Exchange Commission for more discussion regarding these uncertainties and risks and others associated with the company's research programs, early stage of development and other risks which may affect the company. The company does not undertake any obligation to update these forward-looking statements to reflect events or circumstances after the date of this release.

This and past press releases are available at Genelabs' web site at http://www.genelabs.com and at PR Newswire's Company News on Call at http://www.PRNewswire.com.

CONTACT: Matthew M. Loar, Chief Financial Officer of Genelabs Technologies, Inc., +1-650-562-1424

GENELABS TECHNOLOGIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands)

September 30, December 31, 2001 2000 (Unaudited) ASSETS Current assets: Cash, cash equivalents and short-term investments: $23,465 $34,671 Other current assets 202 478 Total current assets 23,667 35,149 Property and equipment, net 1,318 1,459 Long-term investments 960 986 $25,945 $37,594

LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities $3,134 $2,974 Unearned contract revenue 3,000 3,417 Total current liabilities 6,134 6,391 Accrued compensation 307 578 Unearned contract revenue 4,375 6,625 Total liabilities 10,816 13,594

Shareholders' equity 15,129 24,000 $25,945 $37,594

GENELABS TECHNOLOGIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) (Unaudited)

For the three months For the nine months ended September 30 ended September 30

2001 2000 2001 2000

Contract revenue $1,127 $1,588 $3,707 $5,205

Operating expenses: Research and development 3,019 3,496 9,919 10,970 General and administrative 1,537 1,158 4,804 3,789

Total operating expenses 4,556 4,654 14,723 14,759

Operating loss (3,429) (3,066) (11,016) (9,554)

Interest income, net 385 88 1,424 206 Gain on sale of long-term investments -- 282 -- 282

Net loss $(3,044) $(2,696) $(9,592) $(9,066)

Net loss per share $(0.06) $(0.06) $(0.19) $(0.21)

Weighted average shares outstanding 49,698 44,965 49,546 42,254

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