Carrington Reports Second Quarter 2004 Results

IRVING, Texas, Aug 12, 2004 /PRNewswire-FirstCall via COMTEX/ -- Carrington Laboratories, Inc., (Nasdaq: CARN) reported record revenue of $7.99 million for the quarter ended June 30, 2004, with a profit of $808,000 before funding of DelSite Biotechnologies, Inc., the company's research and development subsidiary dedicated to development of proprietary drug delivery technology.

This marks the ninth consecutive quarter in which revenue increased over the same quarter the previous year. After DelSite expenses of $1.0 million, which were partially offset by grant revenue of $158,000, the quarter's net loss was $36,000, or ($.00) per basic and diluted share. In the year-ago second quarter, the company reported revenue of $7.96 million with a profit of $968,000 before DelSite funding of $629,000, which brought final net to $339,000, or $.03 per basic/diluted share.

For the first six months of 2004, Carrington's revenue totaled $15.3 million compared to $14.9 million in the year-ago period, an increase of 3.1 percent. Before DelSite funding of $1.6 million, Carrington recorded profits of $1.3 million for the six months just ended, compared to profits of $1.4 million before $1.3 million of DelSite funding in the year-ago period. DelSite funding brought the final net loss to $281,000, or ($.03) per basic/diluted share, for the six months ended June 30, 2004 compared to a profit of $40,000, or $.00 per basic/diluted share, for the comparable six months in 2003.

The DelSite drug delivery technology is now under confidentiality agreements and in various stages of evaluation by more than 20 companies desiring to improve nasal or injectable delivery of their vaccines or therapeutic products.

Sales of the company's Medical Service Division were $2.5 million in the second quarter 2004 compared to $2.4 million in the year-earlier period, an increase of 2.5%. For the six months ended June 30, Medical Services sales were up 1.7% to $5.4 million in 2004 from $5.3 million in 2003. The Consumer Services Division, formerly Caraloe, Inc., recorded revenues for the second quarter of 2004 totaling $5.3 million versus $5.5 million in 2003. For the first six months, Consumer Services posted total sales of $9.7 million in 2004, up 1.9% from $9.6 million the year earlier.

Carlton Turner, PhD, Carrington's president and CEO, stated, "A record sales quarter is always gratifying. Although revenues rose only modestly from the second quarter a year ago, they were up almost nine percent from the first quarter of this year and our net loss narrowed to almost break-even. This was achieved after substantial funding for our DelSite subsidiary which is strengthening both its intellectual manpower and its research capacities in anticipation of human clinical trials and new commercial developments early next year."

He continued, "Results of our preclinical trials and the interest from the commercial marketplace continues to confirm our belief in the potential of DelSite's drug delivery technologies and their prospects in making an important contribution to Carrington's success."

In July the company announced the doubling of its DelSite research facilities. The increased capacity at Texas A&M University will augment the company's plans to commercialize novel ways to deliver vaccines through nasal membranes to effect both nasal and systemic protection against dangerous airborne pathogens.

In May at the 1st International Conference on Influenza Vaccines for the World in Lisbon, Portugal and in June at the 31st Annual Meeting Of the Controlled Release Society in Honolulu, DelSite researchers presented preclinical data evidencing the potential utility of the company's technologies for nasal delivery of vaccines and injectable delivery of peptides and proteins.

"The presentation of these data is an important step in creating awareness of how our technologies have the potential to solve important drug delivery issues confronting the pharmaceutical and biopharmaceutical industries," said Dr. Turner. "The GelSite(TM) polymer system is continuing to draw interest from drug manufacturers seeking new ways to manage product life cycles or enhance the therapeutic quality of new peptide or proteins. To date, we have confidentiality agreements with more than 20 companies with interest in our technology."

About DelSite

DelSite Biotechnologies, Inc., a wholly owned subsidiary of Carrington, is an early stage biotechnology company established to commercialize its novel polymer drug delivery technology. Currently, DelSite is focusing its resources on developing GelSite(TM) as an injectable delivery system for the controlled release of new or existing therapeutic proteins and peptides, and GelVac(TM) as an intranasal platform for the delivery of vaccines. In March 2004, DelSite was awarded a Small Business Innovation Research biodefense grant by the National Institute of Allergy and Infectious Diseases to further its work. DelSite's technology is protected by composition of matter, process and use patents that are issued, pending or under review. For more information, visit .

About Carrington

Carrington Laboratories, Inc., is an ISO 9001-certified, research-based biopharmaceutical and consumer products company currently utilizing naturally- occurring complex carbohydrates to manufacture and market products for mucositis, radiation dermatitis, wound and oral care as well as to manufacture and market the nutraceutical raw material Manapol(R) and cosmetic raw material Hydrapol(TM). Carrington also manufactures and markets consumer products under the AloeCeuticals(R) brand and manufactures quality products for other companies. Manufacturing operations comply with cGMP standards. The Company's DelSite Biotechnologies subsidiary is developing its propriety GelSite(TM) technology designed to provide controlled release of peptide and protein-based drugs. Carrington's technology is protected by more than 120 patents in 26 countries. Select products are honored with the internationally coveted CE mark, recognized by more than 20 countries around the world. For more information, visit .

Certain statements in this release concerning Carrington may be forward- looking. Actual events will be dependent upon a number of factors and risks including, but not limited to: subsequent changes in plans by the Company's management; delays or problems in formulation, manufacturing, distribution, production and/or launch of new finished products; changes in the regulatory process; changes in market trends; and a number of other factors and risks described from time to time in the Company's filings with the Securities & Exchange Commission, including the Form 10Q filed May 13, 2004.

Carrington, Manapol, AloeCeuticals, Hydrapol, GelSite, GelVac and Acemannan Hydrogel are trademarks, registered trademarks or service marks of Carrington Laboratories, Inc., in the United States and other countries. All other trademarks or service marks contained herein are the properties of their respective owners.

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