NeoPharm Announces First Quarter 2006 Financial Results

-- Net Loss Reduced To $0.30 Per Share

-- Cash Used In Operations $9.3 Million

-- PRECISE Update

-- NeoLipid(R) Platform Update

NeoPharm, Inc. (Nasdaq: NEOL) today announced financial resultsfor the first quarter ended March 31, 2006.

First Quarter 2006 Results

The Company reported a first quarter 2006 net loss ofapproximately $8.1 million, or $0.30 per basic and diluted share. Thefirst quarter loss represents a $2.8 million, or 26%, improvementcompared to the $10.9 million loss, or $0.46 per basic and dilutedshare, in the first quarter of 2005. Additionally, the first quarter2006 results represent a $1.6 million, or 16% improvement to the $9.7million, or $0.41 loss per basic and diluted share, when compared tothe fourth quarter of 2005.

Net cash used in operations in the first quarter of $9.3 millionwas $0.1 million, or 1% lower than the $9.4 million used in the firstquarter of 2005, and $0.1 million, or 1% lower than the $9.4 millionused in the fourth quarter of 2005.

As of March 31, 2006, the Company had cash, cash equivalents, andshort-term investments on hand of $59.8 million, compared to cash,cash equivalents and short-term investments on hand of $30.3 millionas of December 31, 2005. The increase in cash is directly attributableto the $38.7 million in net proceeds received from the sale of4,025,000 shares of common stock at a public offering price of $10.20per share on January 10, 2006.

"We have made positive progress on the implementation of ourpreviously announced strategy during my first six months at NeoPharm,"said Guillermo A. Herrera, President and Chief Executive Officer ofNeoPharm. "We continue to make preparations to move ahead in the eventthat positive results are achieved in the PRECISE Trial. Additionally,we continue to maintain our commitment to our NeoLipid(R) liposomeplatform, and have taken steps to further focus our efforts onincreasing the probability of success and commercial opportunity ofour two lead liposomal drug product candidates, LEP-ETU and LE-SN38.Furthermore, our financial results for the first quarter, as well asthe actions taken last week, reflect our continued commitment tomaintain fiscal discipline."

PRECISE Update

Enrollment in the PRECISE Trial for cintredekin besudotox wascompleted in December 2005. Also, in December 2005, the independentData Monitoring Committee (DMC) recommended that the PRECISE Trialcontinue as planned under the approved protocol. The DMC observed notreatment related adverse or serious adverse events that differed fromthose seen in the Phase I/II trials, and observed that optimalcatheter placement (greater than or equal to 2 catheters adequatelypositioned) had been achieved in more than 80% of patients. A plannedinterim efficacy analysis (triggered at 160 deaths) is currentlyexpected to occur in the late-second or early-third quarter of 2006,and the final efficacy analysis (triggered at 215 deaths), if needed,is currently expected to occur late in the fourth quarter of 2006 orfirst quarter of 2007. The PRECISE protocol does not requirecintredekin besudotox to show a predetermined improvement in mediansurvival over Gliadel Wafer(R). Rather, the endpoint of the trial isto provide evidence of a statistically significant improvement inoverall survival for cintredekin besudotox versus Gliadel Wafer.

NeoLipid(R) Platform Update

In April 2006, the Company announced a reprioritization of theNeoLipid(R) platform. As the Company continues its transition fromresearch to development and commercialization of its products, it hasstreamlined its operations to focus development on its two mostpromising NeoLipid(R) drug product candidates, LEP-ETU and LE-SN38.The Company is now prepared to initiate a Phase II clinical trial forLE-SN38. Further, recognizing that the market landscape has changedfor taxane based oncology products, the Company has selected a505(b)(2) regulatory path for LEP-ETU which will be designed todemonstrate non-inferiority with superiority advantage over Taxol.Pre-clinical work continues on earlier stage liposomal formulations ofthe anti-cancer agents docetaxel and gemcitabine, while the LErafAONprogram is on hold pending analysis of the data gathered in Phase I.

Financial Projections

The Company currently projects a net loss range for 2006 ofapproximately $36 million to $38 million, or approximately $1.32 to$1.39 per share. These projections assume stock option expense ofapproximately $2 million in 2006. The Company also currently estimatesthat the 2006 projected net loss will result in cash used inoperations of less than $34 million. NeoPharm believes that the cash,cash equivalents, and short-term investments on hand as of March 31,2006 can support the Company's activities through the fourth quarterof 2007 at current and projected levels of development and generalcorporate activity.
Conference Call

NeoPharm will host a conference call to discuss these financial
results on:

Friday, May 5, 2006 at 11:00 a.m. Eastern/8:00 a.m. Pacific

Domestic: 800-688-0836, passcode 45361215
International: 617-614-4072, passcode 45361215

Audio replays will be available through May 12, 2006.
Domestic: 888-286-8010, passcode 61152573
International: 617-801-6888, passcode 61152573

The live call and replay will also be available via webcast atwww.neopharm.com.

About Glioblastoma Multiforme

Glioblastoma multiforme (GBM) is the most common type of malignantprimary brain tumor in adults. According to the Central Brain TumorRegistry of the United States ("CBTRUS") (www.cbtrus.org), GBM tumorsaccount for approximately 22 percent of all adult primary brain tumorsand usually affect men more commonly than women, particularly menbetween the ages of 60 and 85 years. GBM is rare in children,comprising approximately three percent of all childhood tumors.According to the CBTRUS, approximately 18,500 people are diagnosedannually with primary malignant brain tumors and approximately 13,000people die from this disease annually. Survival time for patientsranges from six months for recurrent disease to 12 months with newlydiagnosed disease despite aggressive treatments including surgery,radiation therapy and chemotherapy.

GBM tumors mainly arise in the cerebral hemispheres (the mainportions of the brain), but they can also occur in the brain stem,cerebellum, or spinal cord. Symptoms of a GBM can include headachesthat are caused by increased intracranial pressure, memory loss,seizures, personality changes, and coordination difficulties.

About Cintredekin Besudotox (IL13-PE38QQR)

Cintredekin besudotox is a recombinant protein consisting of asingle molecule composed of two parts: a tumor-targeting molecule(Interleukin-13, or IL13) and a cytotoxic agent (Pseudomonas Exotoxin,or PE). The drug is delivered via Convection Enhanced Delivery (CED),a novel drug delivery system using catheters placed following tumorresection (removal), in areas with microscopic tumor spread or at riskof tumor spread around the tumor resection cavity. IL13 receptors arepresent in appreciable numbers on malignant glioma cells, but only toa minimal amount if at all on healthy brain cells. The IL13 portion isdesigned to bind to receptors on tumor cells like a key fits into alock. The cancer cell appears to latch onto and absorb the IL13 andthe attached PE, causing destruction of the cancer cell. Healthy braincells appear to be unharmed because they do not internalize the PE.

Cintredekin besudotox has received Orphan Drug designation andFast Track designation from the U.S. Food and Drug Administration(FDA). Cintredekin besudotox was also accepted into FDA's Pilot 2Program for continuous marketing applications. Cintredekin besudotoxhas also received Orphan Drug designation in Europe.

Promising data for this potential therapeutic advance in thetreatment of GBM has been observed in Phase I/II trials. In addition,the importance of adequate catheter positioning in order to achieveoptimal distribution of cintredekin besudotox in brain tissue wasassessed, leading to the specific guidelines for catheter positioningand deferred catheter placement used in the Company's ongoing PhaseIII PRECISE Trial. Improved catheter placement translated into abetter patient outcome for the 45 (complete Phase I/II patient set)recurrent GBM patients treated post-tumor resection in the Phase I/IItrials, with an overall median survival of 44.0 weeks (95% ConfidenceInterval (CI): 36.1-55.6) including 42 percent of patients withgreater than 2 adequately positioned catheters, while patients withgreater than or equal to 2 catheters adequately positioned survivingwith a median of 53.6 weeks (95% CI: 36.1-70.3). Separately, one-yearand two-year survival rates for recurrent GBM patients were 40 percentand 13 percent respectively.

Pivotal Phase III Trial - PRECISE

PRECISE, an acronym for Phase III Randomized Evaluation ofConvection Enhanced Delivery of IL13-PE38QQR with Survival Endpoint,www.precisetrial.com, is a randomized, controlled Phase III clinicaltrial. It was designed to enroll up to 300 patients in order to obtain270 patients with confirmed GBM at first recurrence at study entrysurgical resection for the intent-to-treat patient population, andcompare overall survival, drug safety and quality of life of patientsreceiving cintredekin besudotox with patients receiving Gliadel(R)Wafer in the treatment of first recurrent GBM following surgical tumorresection.

PRECISE achieved the 270 patient intent-to-treat milestone (276intent-to-treat) in early December after enrolling 294 patients.Patients were randomized so that 2 patients received cintredekinbesudotox via CED for every 1 patient that received Gliadel Waferplaced in the resection cavity at the time of resection. The primaryefficacy analysis of the trial will be based on the comparison of theoverall patient survival curves of the two treatment groups.

NeoPharm's Commitment to Oncology

NeoPharm employees share a common goal: bringing hope to cancerpatients and their families through the research and development ofnew cancer drugs and therapies. The Company's oncology portfolio isbuilt on two novel, proprietary platforms: a tumor-targeting platform,and the NeoLipid(R) Liposomal Drug Delivery platform. Through itsresearch and clinical studies, as well as its work with physicians,scientists, and advocacy groups, NeoPharm is helping to enhance thelives of cancer patients.

About NeoPharm, Inc.

NeoPharm, Inc., based in Waukegan, Illinois, is a publicly tradedbiopharmaceutical company dedicated to the research, development andcommercialization of new and innovative cancer drugs for therapeuticapplications. Additional information, including ongoing clinicaltrials, can be obtained by visiting NeoPharm's Web site atwww.neopharm.com.

Forward Looking Statements - This press release contains"forward-looking statements" within the meaning of Section 27A of theSecurities Act of 1933 and Section 21E of the Securities Exchange Actof 1934. The Company has tried to identify such forward-lookingstatements by use of such words as "expects," "intends," "hopes,""anticipates," "believes," "could," "may," "evidences" and"estimates," and other similar expressions, but these words are notthe exclusive means of identifying such statements. Such statementsinclude, but are not limited to, any statements relating to theCompany's drug development program, including, to the Company'sability to make a BLA submission, the initiation, progress andoutcomes of clinical trials of the Company's drug product candidates,including, but not limited to, the PRECISE trial and NeoLipid drugproduct candidates, projections regarding cash used in operations,financial projections, and any other statements that are nothistorical facts. Such statements involve risks and uncertainties,including, but not limited to, those risks and uncertainties relatingto difficulties or delays in financing, development, testing,regulatory approval, production, and marketing of the Company's drugand non-drug compounds including, but not limited to the Company'sability to develop a program for commercializing cintredekin besudotoxand the liposomal technology drug product candidates, uncertaintyregarding the outcomes of ongoing or proposed FDA studies, uncertaintyregarding the availability of third party production capacity,uncertainty regarding the outcome of damage claims made by or againstthe Company, the Company's financial guidance and projections, theCompany's ability to cut back on its funding of certain of itsdevelopment projects in order to conserve its cash resources, theability of the Company to procure additional future sources offinancing, unexpected adverse side effects or inadequate therapeuticefficacy of the Company's drug and non-drug compounds, including, butnot limited to, cintredekin besudotox and the liposomal technologydrug product candidates, that could slow or prevent products coming tomarket, uncertainty regarding the Company's ability to market its drugand non-drug products, including, but not limited to, cintredekinbesudotox and the liposomal technology drug product candidates,directly or through independent distributors, the uncertainty ofpatent protection for the Company's intellectual property or tradesecrets, and other risks detailed from time to time in filings theCompany makes with the Securities and Exchange Commission includingits annual reports on Form 10-K and quarterly reports on Forms 10-Q.Such statements are based on management's current expectations, butactual results may differ materially due to various factors, includingthose risks and uncertainties mentioned or referred to in this pressrelease. Accordingly, you should not rely on these forward-lookingstatements as a prediction of actual future results.
NeoPharm, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)

Three-Months Ended
March 31
--------------------------------

2006 2005
--------------- ---------------

Revenues $1,610 $71,300

Expenses:
Cost of revenues 70 290
Research and development 5,843,761 8,073,761
Selling, general, and
administrative 2,937,929 3,233,309
--------------- ---------------
Total expenses 8,781,760 11,307,360

Loss from operations (8,780,150) (11,236,060)

Interest income 665,687 371,787
--------------- ---------------

Net loss $(8,114,463) $(10,864,273)
=============== ===============

Net loss per share-basic and
diluted $(0.30) $(0.46)
=============== ===============

Shares used in computation of
net loss per share:
Basic and diluted 27,317,829 23,469,462
=============== ===============


Balance Sheet Data:
(Unaudited)

March 31, December 31,
2006 2005
--------------- ---------------
Cash and cash equivalents $6,283,879 $1,486,172
Short-term investments $53,473,297 $28,776,020
Total assets $62,614,960 $33,369,985
Current liabilities $7,582,205 $9,388,474
Accumulated deficit $(236,139,178) $(228,024,715)
Total stockholders equity $51,840,442 $21,945,324