Albany Molecular Research, Inc. Enters Into Agreement to Acquire Seattle-Based, Chemistry-Focused Drug Discovery, Natural Products, Chemoinformatics and Genomics Company.

Business Editors

ALBANY, N.Y.--(BUSINESS WIRE)--Dec. 19, 2000

AMRI through acquisition strengthens discovery chemistry

services, acquires extensive natural product-based

libraries, expands into chemoinformatics and genomics

Albany Molecular Research, Inc. (NASDAQ: AMRI) today announced the signing of a definitive agreement to acquire New Chemical Entities, Inc. (NCE), a privately held, chemistry-focused drug discovery company in Bothell, WA.

"NCE brings added strength in drug discovery platform technologies, expands us into the world of genomics, and singularly positions AMRI to take full advantage of the explosion of opportunity for new drug leads created by breakthroughs in genomics, combinatorial chemistry and high throughput screening," said Albany Molecular Research, Inc. Chairman and Chief Executive Officer Thomas E. D'Ambra, Ph.D.

The acquisition creates an expandable AMRI presence on the West Coast -- home to many leading and emerging biotechnology and biopharmaceutical companies, and makes AMRI more readily accessible to customers in Japan and the Pacific Rim.

Under the terms of the agreement, AMRI will acquire NCE for $22.4 million and assume approximately $600,000 in outstanding debt. Subject to customary closing conditions, the transaction is expected to be completed at the end of January 2001. AMRI intends to account for the NCE acquisition as a purchase. NCE is expected to generate approximately $2.0 million in revenue but incur a $2.5 million loss in 2000. However, the purchase is expected to be neutral to AMRI's earnings per share in 2001, according to AMRI Chief Financial Officer David P. Waldek.

Mr. Waldek also updated AMRI's earnings per share guidance range for 2001, from $0.85 to $0.90 per share to $0.87 to $0.91 per share, including the acquisition of NCE. The new guidance represents earnings per share growth of 23 percent to 28 percent in 2001, and is in response to continued strength in AMRI's core contract services business and Allegra(R) royalty income. Said Mr. Waldek, "The growth and demand for our contract chemistry services remains strong, resulting in continued contract revenue growth in 2001." AMRI also receives royalty payments from Aventis, S.A. on sales of the antihistamine Allegra(R).

NCE has built a comprehensive group of integrated and information rich technologies in lead discovery and lead optimization. The company provides a range of drug discovery services, as well as platform technologies for proprietary lead discovery. The company's core technologies include: isolation, purification, structure elucidation and the supply of natural products libraries from microbial and botanical sources; computational and combinatorial chemistry, including chemoinformatics, proprietary databases and proprietary data mining capabilities; chemical synthesis; and pharmaco- and toxicogenomics.

"We share the same vision and purpose, and adding the strengths of Albany Molecular Research to our core technologies will produce a powerful drug discovery engine," said Barry A. Berkowitz, Ph.D., CEO of NCE. "Together with AMRI, we have a unique blend of chemistries and technologies to meet today's demands of high throughput screening and the increasing number of drug targets rapidly becoming available."

Dr. Berkowitz previously was CEO of Magainin Pharmaceuticals (NASDAQ: MAGN) and was a founder of ChemGenics, which was acquired by Millennium Pharmaceuticals (NASDAQ: MLNM) in 1997. NCE also has a number of research directors with experience in computer-aided drug discovery, lead identification and bioengineering, synthetic chemistry, separation technologies and analytical chemistry.

NCE possesses an extensive collection of over 100,000 diverse compounds and natural products extracts, which are integrated into NCE's drug discovery efforts. These samples are complemented by a chemofocus library composed of pure single compound samples of both natural products and natural product-based compounds augmented by combinatorial chemistry and computational drug design. NCE sells or licenses these libraries, or subsets, to customers for high throughput screening and novel drug lead discovery. The company also sells or licenses subscriptions to its proprietary databases and data mining technology.

NCE currently has 12 customers and strategic alliances in the biotechnology and pharmaceutical industries. The company offers its contract chemistry, genomics and informatics services on a full-time equivalent (FTE) basis, similar to AMRI's business model. NCE employs 30 scientists and support staff, and leases a 24,500 square foot facility with five laboratories in Bothell, WA.

NCE brings highly complementary strengths in the following areas:

-- microbiology and natural products isolation, purification and structure
elucidation from microbial, fungal and plant sources;

-- combinatorial chemistry, particularly with regard to large scale, and the
application to natural products scaffolds and core structures;

-- computational chemistry, particularly in terms of data handling, data mining
and chemoinformatics;

-- experienced, seasoned and strong scientific managers in each of these core
areas;

-- natural products libraries, which represent the results of years of
collection and isolation, and which are immediately available to AMRI and its
customers;

-- a West Coast presence and facility, which can be expanded from 30 to 70
employees without significant time or capital investment, putting AMRI's full
service offerings closer to customers on the West Coast and in Asia; and

-- strong leadership and an exceptional scientific advisory team.

"This acquisition gives us an extensive library of natural product-based compounds for our customers and our own research and development, which could eventually lead to potential milestone and royalty payments for Albany Molecular Research, Inc.," continued Dr. D'Ambra. "We see immediate and strong synergies to our enzyme and microbial research at AMRI's Biocatalysis Division. NCE's efforts in chemo- and toxicogenomics are also cutting-edge technologies likely important for further growth."

"Significant advances in the technologies around purification and structure elucidation in the last several years have made working with natural products easier and faster," said Dr. D'Ambra. "We think that adapting these advances to the classic science of natural products will provide an important source of new drug leads for many important disease targets. We are very excited about coupling NCE's strengths and capabilities with our core competencies at AMRI, particularly with our strength in lead optimization and medicinal chemistry."

With the advent of genomics, NCE is developing targeted libraries of potential pharmaceutical compounds, geared toward specific protein interactions. The company also conducts focused gene profiling, gene sequencing and automated genetic polymorphism assays.

The NCE purchase marks the fifth acquisition or investment for Albany Molecular Research, Inc. since its public offering in February 1999. In October 1999, AMRI acquired EnzyMed, recently renamed as the AMRI Biocatalysis Division, located in Iowa City, IA. In December 1999, AMRI announced a $15 million investment in Organichem Corporation, giving AMRI a 37.5 percent ownership interest in the Rensselaer, NY-based pilot plant and large-scale chemical manufacturer. In February 2000, the company acquired American Advanced Organics, recently renamed as the AMRI Syracuse Research Center, which specializes in the rapid development of active pharmaceutical ingredients and intermediates. And in July 2000, AMRI announced a $650,000 seed investment in Fluorous Technologies, a new company formed near the University of Pittsburgh to develop and commercialize Professor Dennis Curran's revolutionary fluorous chemistry.

AMRI will be hosting a conference call for stock analysts regarding the NCE purchase on Wednesday morning, December 20th. Replays of this call will be available for seven days following the call beginning at 11:30 a.m. on December 20, 2000. To access the replay by telephone, please call 800-475-6701 (for domestic calls) or 320-365-3844 (for international calls) and use access code # 559088.

Albany Molecular Research is a leading chemistry research and drug discovery and development company focusing on applications for the pharmaceutical, biotechnology and life sciences industries. The company performs comprehensive chemistry research for many of the leading pharmaceutical and biotechnology companies and for its own internal research and development.

Statements in this press release that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties, including statements regarding the anticipated results of NCE for 2001, earnings guidance for AMRI for 2001, and the strategic effects of the addition of NCE's business. The company's actual results may differ materially from such forward-looking statements. Factors that could cause such differences include, but are not limited to, the company's ability to attract and retain experienced scientists, trends in pharmaceutical and biotechnology companies outsourcing chemical research and development, sales of Allegra(R) (including any deviations in estimates provided by Aventis) and the Company's receipt of significant royalties from the Allegra(R) license agreement, the Company's ability to enforce its intellectual property and technology, the Company's ability to take advantage of proprietary technology and expand the scientific tools available to it, the Company's ability to efficiently utilize NCE's libraries and integrate NCE's business, the ability of the Company's strategic investments to perform as expected, the Company's ability to successfully complete its ongoing expansion projects on schedule, and the Company's ability to effectively manage its growth, as well as those discussed in the Company's final prospectus as filed with the Securities and Exchange Commission on October 5, 2000 and in the Company's other SEC filings.