Akorn, Inc. Reports Third Quarter 2006 Revenues of $14.5 million and 41% Gross Margin.

BUFFALO GROVE, Ill. -- Akorn, Inc. (AMEX:AKN) today reported net sales of $14.5 million for the third quarter 2006, an increase of 32% vs. third quarter 2005 net sales of $11.0 million. Gross profit of $6.0 million or 41% of third quarter 2006 net sales, represents an increase of 62% vs. gross profit of $3.7 million or 33% of net sales for the third quarter 2005. Net loss available to common stockholders for the third quarter 2006 was $(1.2) million, or $(0.02) per diluted share vs. a $(3.6) million net loss available to common stockholders for the third quarter 2005, or $(0.14) per diluted share. During the third quarter of 2006, net loss available to common stockholders was adversely impacted by stock option expense of $0.3 million as compared to zero in the third quarter of 2005, and product development milestone expenses of $371,000 for the Akten (AK-1015) clinical trial and the Sofgen Pharmaceuticals development and supply agreement.

For the nine months ended September 30, 2006 as compared to the nine months ended September 30, 2005, net sales were $56.7 million vs. $33.7 million, an increase of 68%. Gross profit was $22.6 million or 40% of net sales, vs. $11.9 million or 35% of net sales. Net loss available to common shareholders was $(0.6) million vs. a net loss of $(8.0) million. For the first nine months of 2006, net income was adversely impacted by stock option expense of $1.0 million as compared to zero in the first nine months of 2005, product development milestone expenses of $613,000, and one-time non-recurring interest expense of $1.1 million recorded upon the early retirement of convertible debt.

Highlights for the Third Quarter 2006 include:

* One new business development agreement was signed, with Sofgen Pharmaceuticals, which adds one new generic drug to Akorn's product development pipeline. Combined with Fidia, Natco (2), and Cipla, this brings our total to five new business development agreements signed in 2006.

* Two new contract manufacturing supply agreements were signed, one with GeneraMedix, Inc. and one with Advanced Vision Research, Inc. As previously announced, we believe that these two supply agreements will increase Contract Manufacturing sales by approximately 50% on an annualized basis beginning in 2007. Both supply agreements are expected to contribute revenue in the fourth quarter of 2006.

* Two product approvals were received from the FDA: Bal-in-Oil injection and BSS Ophthalmic Solution, and three products were launched: Bal-in-Oil, Sufenta, and Sublimaze. To date, Akorn has received 10 ANDA product approvals in 2006.

* Clinical trials began for Akten (AK-1015), Akorn's internally developed new drug indicated for use in ocular anesthesia. Of the 200 patients that are necessary to complete the clinical trial, 104 patients have been enrolled. We expect to file the 505(b)(2) NDA in the first half of 2007.

* Eight ANDA's were submitted to the FDA. For the year, Akorn has submitted 19 ANDA's and has a total of 27 ANDA's under review with the FDA.

* A $3.5 million purchase order for the procurement of Ca-DTPA and Zn-DTPA was received from the Department of Health and Human Services (HHS). This was the first purchase order that accessed the one million unit purchase option provided for in our 2005 contract award with HHS. Akorn expects to ship this order in the fourth quarter of 2006.

* A $3.56 million equity investment was received from the Serum Institute of India, Ltd, one of Akorn's long term strategic partners. Akorn expects to use these proceeds to begin the development of its biologics product pipeline.

Arthur S. Przybyl, President and Chief Executive Officer stated, "Our third quarter results continue to reflect our commitment to achieve our 2006 stated objectives: 50% year-over-year revenue increase, 40% gross margin, positive net income, 20 ANDA regulatory filings, 10 product approvals, and the completion of our lyophilization validation efforts.

"Late last week, our new liquid fill injectable/lyophilization product fill line was granted clearance by the FDA to manufacture and commercialize liquid injectable products. This action will allow us to further upgrade and automate our Decatur manufacturing facility. We expect to complete validation efforts on our lyophilizers prior to year end. Commercialization of the new lyophilizers will require a successful prior approval inspection (PAI) to be conducted by the FDA. Also in the third quarter, we retired our operating lease and purchased our two lyophilizers for $1.5 million, resulting in cash savings of approximately $613,000.

"We continue to develop four important products for anticipated product launches in 2008. Two proprietary products are being developed internally. AK-1015, now named Akten, is indicated for ocular anesthesia, continues to undergo clinical trials, and we expect to file our 505(b)(2) NDA in the first half of 2007. Formulation work continues on Minolok, our licensed patent from the University of Texas M.D. Anderson Cancer Center, and we expect to file a 510(k) in the first half of 2007. Two undisclosed generic products are being developed externally through Cipla and Sofgen, respectively, and we remain confident and on track for anticipated product launches in 2008. For these two products, the recent FDA announcement that specific generic drugs could be eligible for priority review is an additional benefit, potentially reducing the regulatory approval time for these two products. Akorn applauds this effort by the FDA to continue to help lower U.S. healthcare costs.

"Finally, although not immediately apparent, Serum Institute of India's equity investment in Akorn is expected to be the beginning of a long term strategic partnership to expand our portfolio of products to eventually include biologics and vaccines."

Conference Call

Akorn will host a conference call on Monday October 30, 2006, beginning at 5:00 p.m. Eastern Time to discuss third quarter 2006 operating results. The dial-in numbers are [phone] for domestic callers and [phone] for international callers. Alternatively, analysts, investors and other interested parties are invited to participate by visiting the Company's website, www.akorn.com, and clicking on the live webcast icon located on the home page, or http://www.videonewswire.com/event.asp?id=35878. Please plan to log on at least ten minutes prior to the designated start time so management may begin promptly.

About Akorn, Inc.

Akorn, Inc. manufactures and markets sterile specialty pharmaceuticals. Akorn has manufacturing facilities located in Decatur, Illinois and Somerset, New Jersey and markets and distributes an extensive line of hospital and ophthalmic pharmaceuticals. Additional information is available at the Company's website at www.akorn.com .

Materials in this press release may contain information that includes or is based upon forward-looking statements within the meaning of the Securities Litigation Reform Act of 1995. Forward-looking statements give our expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. They use words such as "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," and other words and terms of similar meaning in connection with a discussion of future operating or financial performance. In particular, these include statements relating to future steps we may take, prospective products, future performance or results of current and anticipated products, sales efforts, expenses, the outcome of contingencies such as legal proceedings, and financial results.

Any or all of our forward-looking statements here or in other publications may turn out to be wrong. They can be affected by inaccurate assumptions or by known or unknown risks and uncertainties. Many such factors will be important in determining our actual future results. Consequently, no forward-looking statement can be guaranteed. Our actual results may vary materially, and there are not guarantees about the performance of our stock.

Any forward-looking statements represent our expectations or forecasts only as of the date they were made and should not be relied upon as representing our expectations or forecasts as of any subsequent date. We undertake no obligation to correct or update any forward-looking statements, whether as a result of new information, future events or otherwise, even if our expectations or forecasts change. You are advised, however, to consult any further disclosures we make on related subjects in our reports filed with the SEC. In particular, you should read the discussion in the section entitled "Cautionary Statement Regarding Forward-Looking Statements" in our most recent Annual Report on Form 10-K, as it may be updated in subsequent reports filed with the SEC. That discussion covers certain risks, uncertainties and possibly inaccurate assumptions that could cause our actual results to differ materially from expected and historical results. Other factors besides those listed there could also adversely affect our results.

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