SAN DIEGO, Nov. 12 /PRNewswire/ -- Trega Biosciences, Inc. (Nasdaq: TRGA)
today reported financial results for the third quarter and the nine-month
period ended September 30, 1997.  Revenues for the third quarter were $1.4
million, compared with revenues of $4.6 million in the same period for 1996.
The net loss for the third quarter of 1997 was $3.5 million, or $0.25 per
share, compared with a net loss of $1.1 million, or $0.08 per share, in the
comparable period in 1996.  Excluding a one time payment of $3.4 million in
Magainin Pharmaceutical, Inc. stock received as a royalty buyout and $0.6
million derived from sales from Trega's former subsidiary Multiple Peptide
Systems, Inc., third quarter 1996 revenues would have been $0.6 million,
resulting in a net loss of $5.0 million, or $0.38 per share.  Trega ended the
quarter with $22.5 million in cash, cash equivalents and short-term
investments.
    Revenues in the third quarter 1997 resulted exclusively from collaborative
agreements related to the company's combinatorial libraries, which are used by
pharmaceutical and biotechnology companies as a source of potential new drug
leads.
    "During the quarter, Trega improved and expanded its chemical diversity
platform by progressing its small molecule combinatorial chemistry program
from mixture-based libraries to libraries formatted as single compounds
synthesized through our proprietary robotics system," stated Robert S.
Whitehead, Trega's president and chief executive officer.  "This provides our
partners with a more efficient route to discovering lead compounds to move
forward into the clinic.  Further, we enhanced our scientific organization
through the appointment of Lawrence D. Muschek, Ph.D. as president of research
and development.  Dr. Muschek, previously vice president of world-wide
research and development at Solvay, Inc., has a wealth of scientific
experience and has already proven himself as a valuable addition to our
growing organization.  These steps will allow Trega to better address the
increasing demands placed on drug discovery companies by large pharmaceutical
companies and Trega's continued expansion into an integrated discovery
organization."
    Research and development expenses increased to $3.9 million in the third
quarter of 1997, compared with $3.2 million in the same quarter last year.
The increase in expenses was due principally to increased funding for the
company's combinatorial chemistry program.  Selling, general and
administrative expenses increased to $1.3 million in the third quarter of 1997
from $1.0 million in the comparable period last year, due primarily to higher
legal costs incurred for patents, litigation and corporate development
activities.
    For the nine months ended September 30, 1997, total revenues were $5.4
million, compared with $7.0 million for same the period last year.  The net
loss for the nine months was $7.0 million, or $0.52 per share, compared with
$5.9 million, or $0.49 per share, for the nine months ended September 30,
1996.
    Trega Biosciences is a drug discovery company, utilizing combinatorial
chemistry and other technologies to pursue the discovery of novel, small-
molecule drug therapies.  The company leverages its technology platform by
entering into pharmaceutical alliances, enabling partners to access Trega's
technologies in exchange for licensing fees and potential milestone payments
and royalties, or by establishing joint-discovery alliances with biotechnology
companies.  Trega also uses its drug discovery technologies in its internal
development programs.  HP 228, the company's lead compound, is in Phase II
trials for the treatment of inflammatory conditions.
    Except for the historical information contained herein, the matters
discussed in this news release are forward-looking statements that involve
risks and uncertainties, including whether any proposed product can be
successfully formulated, scaled-up, developed and commercialized, whether
regulatory approvals can be obtained, the impact of competitive products and
pricing, whether any corporate collaborations or alliances will be successful,
and other risks detailed from time to time in Trega's Securities and Exchange
Commission (SEC) filings.  These forward-looking statements represent Trega's
judgment as of the date of this release.  Actual results may differ materially
from those projected.  Trega disclaims, however, any intent or obligation to
update these forward-looking statements.


                           TREGA BIOSCIENCES, INC.
                    Condensed Consolidated Balance Sheets
                    (in thousands, except per share data)

                                      September 30,          December 31,
                                               1997                  1996
     ASSETS                             (unaudited)
     Current assets:
     Cash, cash equivalents
      and short-term investments            $22,474               $27,443
     Accounts receivable                         --                   481
     Notes receivable                           528                    --
     Other current assets                       717                   282
     Total current assets                    23,719                28,206
     Property and equipment, net              2,595                 1,745
     Notes receivable (long-term)               561                    --
     Other assets                             1,869                   562
     Total assets                           $28,744               $30,513

     LIABILITIES AND STOCKHOLDERS' EQUITY
     Current liabilities:
     Accounts payable                          $581                  $810
     Accrued liabilities                      1,877                 2,720
     Current portion of debt obligations        690                   433
     Deferred revenue                         4,384                 1,761
     Total current liabilities                7,532                 5,724
     Obligations under capital leases           385                   633
     Long-term equipment notes payable          979
     Long-term notes payable                  1,523                    --
     Total liabilities                       10,419                 6,357
     Stockholders' equity:
     Common stock                                14                    13
     Additional paid-in capital              72,918                71,050
     Common stock issuable                      107                 1,281
     Deferred compensation, net             (1,436)               (1,931)
     Accumulated deficit                   (53,278)              (46,257)
     Total stockholders' equity              18,325                24,156
     Total liabilities
      and stockholders' equity              $28,744               $30,513


                           TREGA BIOSCIENCES, INC.
               Condensed Consolidated Statements of Operations
                                 (Unaudited)
                    (in thousands, except per share data)
                              Three Months Ended          Nine Months Ended
                                September 30,               September 30,
                              1997          1996         1997          1996

    Revenues:
    Net sales                 $ --          $609         $430        $1,723
    Contract research
     and license fees        1,437         3,960        4,951         5,301

    Total revenues           1,437         4,569        5,381         7,024

    Operating expenses:
    Cost of revenues            --           479          341         1,429
    Research and
     development             3,860         3,241       10,088         8,410
    In process research
     and development            --         1,303            4         1,303
    Selling, general
     and administrative      1,341           994        4,253         2,654

    Total operating expenses 5,201         6,017       14,686        13,796

    Loss from operations   (3,764)      $(1,448)     $(9,305)      $(6,772)

    Interest and other
     income/(expense), net     312           382        2,284           848

    Net loss              $(3,452)      $(1,066)     $(7,021)      $(5,924)

    Net loss per share     $(0.25)       $(0.08)      $(0.52)       $(0.49)

    Weighted average
     common and
    common equivalent shares13,685        13,274       13,522        11,996

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