Albany Molecular Research, Inc. Reports 42% Increase in Revenue, 46% Increase in Net Income During Third Quarter.

Business/Health & Medical Editors

ALBANY, N.Y.--(BUSINESS WIRE)--Nov. 8, 2001

Albany Molecular Research, Inc. (Nasdaq: AMRI) today reported financial results for the quarter and nine-month period ending September 30, 2001.

Third Quarter 2001 Earnings

Total revenue for the third quarter of 2001 increased by $7.2 million, or 42%, to $24.6 million, compared to $17.4 million during the same period last year. The growth in total revenue resulted from increases in both net contract revenue and recurring royalties. Net contract revenue for the third quarter of 2001 increased by 48% to $14.7 million, compared to net contract revenue of $9.9 million during the third quarter of 2000. The quarter ended September 30, 2001 is the 19th consecutive quarter in which the company's contract revenue has increased.

Recurring royalties for the third quarter of 2001 were $9.9 million, a 33% increase over recurring royalties of $7.5 million in the third quarter of 2000. AMRI earns royalties from worldwide sales of the non-sedating antihistamine Allegra(R) (Telfast(R) outside the United States) for patents relating to the active ingredient in Allegra.

Net income for the third quarter of 2001 increased by $2.7 million, or 46%, to $8.5 million, or $0.25 per share on a diluted basis, compared to net income for the third quarter in 2000 of $5.8 million.

Year-to-Date

Total revenue for the nine-month period ending September 30, 2001 increased by $22.5 million, or 47% to $70.0 million, compared to total revenue during the same period in 2000 of $47.5 million. Net contract revenue for the first nine months of 2001 increased 53% to $40.7 million, compared to net contract revenue of $26.6 million for the comparable period in 2000. Recurring royalty revenue for the first nine months of 2001 increased by 40% to $29.3 million, compared to recurring royalty revenue of $20.9 million during the same period in 2000.

Net income for the nine-month period ending September 30, 2001 was $25.1 million, or $0.74 per share on a diluted basis, representing a 56% increase compared to net income during the first nine months in 2000 of $16.1 million.

Total revenue at Organichem Corporation, an unconsolidated affiliate of AMRI, was $18.7 million in the third quarter of 2001 and $53.5 million for the nine month period ending September 30, 2001. As a minority shareholder, AMRI does not include these revenues in its total revenues stated above.

During the third quarter of 2001, AMRI added 12 new customers, renewed or expanded an additional 10 contracts, and added a net of 39 scientists. AMRI also added 36 scientists as part of its acquisition of the Great Lakes Chemical Corporation research facility in Mount Prospect, Illinois. At the end of September 2001, 20 additional scientists had accepted positions and were scheduled to begin employment during the next six months. At the end of the third quarter, the total number of AMRI employees, including those located in the recently acquired Mount Prospect, Illinois facility, was 514, including 350 scientists.

"We are pleased to report another strong quarter," said AMRI Chairman and Chief Executive Officer Thomas E. D'Ambra, Ph.D., "particularly given the major weakening in the economy during this period. Although to our knowledge the economic downturn hasn't directly impacted the pharmaceutical companies with which we work, R&D spending at many of our customers has been hurt by expiring patents and loss of drug exclusivity, FDA-mandated drug product recalls, and merger-related aggressive cost cutting initiatives. In spite of these challenges, we remain confident of meeting our earnings growth targets for the remainder of 2001, with continued earnings growth throughout 2002. We continue to make forward progress in many of our research programs, in developing and integrating new technologies, as well as in senior level discussions for additional collaborations. I am very enthusiastic about AMRI's future."

Earnings Guidance and Impact of Bristol-Myers Squibb Purchase of DuPont Pharmaceuticals

AMRI Chief Financial Officer David P. Waldek provided guidance and EPS estimates for the full year 2001 and 2002. Mr. Waldek stated, "We remain comfortable with the analyst consensus estimate of $0.25 per diluted share for the fourth quarter of 2001, which would place our full-year diluted earnings per share at $0.99. This EPS analysis includes lower projected interest income from our investment portfolio due to the decline in interest rates over the past several months. For the third quarter of 2001, the lower interest rate environment resulted in a reduction in anticipated interest income amounting to approximately $.01 per diluted share."

Mr. Waldek continued, "In early October, Bristol-Myers Squibb (BMS) completed its purchase of DuPont Pharmaceuticals, a significant AMRI customer. Recently, BMS announced significant cost-cutting initiatives from DuPont personnel and research budgets, and we are in discussions with BMS regarding our relationship. For the nine months ended September 30, 2001, this contract accounted for 19.1% of net contract revenue. Although one scenario of our discussions is a continuation of the DuPont contract by BMS, we expect that it would only be continued at a significantly reduced level in 2002, relative to 2001. There are protections in the DuPont contract that cover a termination, and mitigate any dramatic impact a termination would have on AMRI. Furthermore, we believe a gradual downsizing of this contract relationship could be mitigated through placement of scientists into new contracts as they become available. Based on current discussions, we are providing EPS guidance for the full year 2002 as a range of $1.14 to $1.17 per diluted share, based on contract revenues ranging from $66 to $70 million, and royalties from Allegra ranging from $43 to $45 million. Should a different termination option be negotiated, beyond what is described in the contract, this guidance could be adjusted."

Additional Information

At September 30, 2001, AMRI had cash, cash equivalents and investments of $139.3 million, compared to $152.0 million at December 31, 2000. The net decrease of $12.7 million in cash, cash equivalents and investments in the first nine months of 2001 was due primarily to the $23.0 million purchase of Seattle-based New Chemical Entities, Inc., the $10.0 million purchase of Great Lakes Chemical Corporation's Mount Prospect facility, and $13.6 million in purchases of property, plant and equipment, offset by $27.8 in cash generated from operations and $5.7 million in low-interest Industrial Development Agency financing. Net interest income was $1.6 million for the three-month period ending September 30, 2001, compared to $0.7 million during the comparable period in 2000. The increase was due primarily to higher cash balances resulting from the company's follow-on offering in October 2000. Total shares outstanding at September 30, 2001 were 33,120,333.

Third Quarter Highlights

A number of significant company events took place during the third quarter of 2001. Early in the quarter, AMRI announced the election of prominent physicist and Rensselaer Polytechnic Institute (RPI) President Shirley Ann Jackson, Ph.D. to its Board of Directors. Dr. Jackson brings a strong scientific background as a physicist and university administrator, along with extensive experience in industry, academia and government. Before assuming the presidency at RPI, she was chairman of the U.S. Nuclear Regulatory Commission (NRC) from 1995-1999 under former President Clinton, and a professor of physics at Rutgers University from 1991 to 1995. Dr. Jackson worked as a theoretical physicist at the former AT&T Bell Laboratories during the period 1976 to 1991.

In September, AMRI purchased from Great Lakes Chemical Corporation (NYSE: GLK) its Mount Prospect, Illinois laboratory facilities and operations for $10 million in cash and hired most of the employees at this location. The site includes fully equipped scientific workstations, a chemical pilot plant and research fermentation facilities. The purchase agreement also includes a royalty-free research license allowing AMRI to use patent-protected technology developed at the site, as well as a $3 million research contract for chemistry services over a 15-month period. In October, AMRI announced plans to consolidate its Midwestern operations in 2002 by relocating its Biocatalysis Division from Iowa City to the Mount Prospect facility. The consolidation should result in enhanced collaboration among scientists, smoother technology transfer and important operating efficiencies.

During the third quarter, AMRI announced a drug discovery collaboration at its Biocatalysis Division with Cubist Pharmaceuticals, Inc. (Nasdaq: CBST) through which the companies hope to identify novel anti-infective drug candidates. If Cubist determines that initial feasibility experiments show promise, the research program could be expanded, allowing AMRI the opportunity to receive success fees from Cubist for the achievement of specific clinical and regulatory milestones, as well as royalties on net sales of any commercial products that result from the collaboration.

AMRI has been awarded two Small Business Innovation Research (SBIR) grants from the National Institute on Drug Abuse (NIDA). During the third quarter, AMRI received a Phase I grant award of $98,466. Recently, AMRI was notified of a second Phase I SBIR award of $192,199. Both grant awards fund work focused on the development of novel compounds to treat cocaine and other stimulant abuse. This work will be conducted using AMRI's proprietary combinatorial biocatalysis technology. If the results are promising, these studies could lead to additional Phase II funding and potential commercial development opportunities.

AMRI opened its two newest facilities during the quarter. In Cicero, New York, AMRI opened a new 25,000 square foot, $7.0 million chemical development facility, which will be used for the expansion of its Syracuse-based operations. The facility contains 40 scientific workstations and provides additional preparative scale facilities. In Albany, AMRI completed the first phase of construction and began operations at its new 30 Corporate Circle facilities. Phase one construction at the facility provided an additional 29 scientific workstations. The second phase of construction, which will add another 35 scientific workstations, is underway. To date, the company has spent $3.5 million out of an anticipated total cost of $6.5 million on this project.

And recently, Albany Molecular Research, Inc. placed twelfth on the Forbes magazine list of the 200 Best Small Companies. The ranking marks the second consecutive year that AMRI has appeared in the top ten percent of companies on the list, and is the highest ranking of any biotech or health care related company on the listing. AMRI also placed number 406 on the 2001 Deloitte & Touche Technology Fast 500 listing, which recognizes the fastest growing technology companies in the United States and Canada. The Technology Fast 500 is based on a five-year percentage increase in revenues.

Third Quarter Conference Call

The company will hold a conference call at 4:30 p.m. Eastern Time on November 8, 2001 to discuss its quarterly results and business highlights. Individuals interested in listening to the conference call should dial 888-273-9885 (for domestic calls) or 612-332-0636 (for international calls) at 4:15 p.m. and reference the AMRI Third Quarter 2001 Earnings Release conference call. Replays of the call will be available for seven days following the call beginning at 9:45 p.m. on November 8, 2001. 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 #609198.

Albany Molecular Research, Inc. is a chemistry-based drug discovery and development company, focusing on applications for new small molecule prescription drugs. The company conducts R&D projects and collaborates with many leading pharmaceutical, biotechnology and genomics companies, and is developing new chemistry technology for potential prescription drug applications.

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. These statements include, but are not limited to, statements regarding (i) the company's earnings guidance for the fourth quarter and full year 2001 and the full year 2002, (ii) the effect of potential reduction or elimination of the DuPont contract, (iii) the development of new technology and receipt of future success fees and royalty payments, (iv) the enforceability of patents relating to Allegra(R), (v) demand for the company's services, and (vi) the company's views with respect to the strength of its underlying core operations. These statements may also be identified by forward-looking words such as "may," "could," "should," "would," "will," "intend," "expect," "anticipate," "believe" and "continue" or similar words. Readers should not place undue reliance on our forward-looking statements. The company's actual results may differ materially from such forward-looking statements as a result of numerous factors, some of which the company may not be able to predict and may not be within the company's control. Factors that could cause such differences include, but are not limited to (a) the company's ability to attract and retain experienced scientists, (b) trends in pharmaceutical and biotechnology companies outsourcing chemical research and development, (c) sales of Allegra (including any deviations in estimates provided by Aventis) and the company's receipt of significant royalties from the Allegra license agreement, (d) the possibility that Allegra will be approved by the FDA for over-the-counter sales and the potential adverse effects to the company's licensing revenues as a result of such determination, (e) the outcome of the DuPont/BMS negotiations, (f) the company's failure to develop new technologies or commercial products internally or through collaborations, (g) the company's and Aventis' ability to successfully enforce their intellectual property, patent rights and technology, including with respect to the recent Barr ANDA filings, (h) the company's ability to take advantage of proprietary technology and expand the scientific tools available to it, (i) the ability of the company's strategic investments and acquisitions to perform as expected, (j) the company's ability to successfully complete its ongoing expansion projects on schedule and on budget and to integrate acquired companies, and (k) the company's ability to effectively manage its growth, as well as those factors discussed in the company's Annual Report on Form 10-K for the year ended December 31, 2000 as filed with the Securities and Exchange Commission on April 2, 2001 and the company's other SEC filings. The company does not undertake any duty to and does not intend to update any forward-looking statements contained in this press release after the date of this press release.

                    Albany Molecular Research, Inc.
              Condensed Consolidated Statements of Income
                              (unaudited)

(Dollars in thousands, except per share data)

                           Three Months Ended      Nine Months Ended

                          Sept. 30,    Sept. 30,  Sept. 30,  Sept. 30,
                              2001         2000      2001        2000
                            ------        -----    ------      -------



Net contract revenue       $14,653       $9,890    $40,652     $26,557
Recurring royalties          9,918        7,469     29,326      20,894
                           ----------  ---------- ---------   --------
   Total revenue            24,571       17,359     69,978      47,451

Cost of contract
 revenue                     8,088        5,506     22,451      14,847
Technology incentive
 award                         990          747      2,930       2,089
Research and
 development                 1,099          513      3,023       1,499
Selling, general and
 administrative              2,988        1,943      8,467       5,695
                           ----------  ---------- ----------- --------
   Total costs and
    expenses                13,164        8,709     36,871      24,130
                           ----------  ---------- ----------- --------

Income from operations      11,407        8,650     33,107      23,321

 Equity in income of
  unconsolidated
     affiliates                341           28      1,242         378
 Other income, net           1,551          702      5,396       2,047
                           ----------  ---------- ----------- --------

Income before income
 tax expense                13,299        9,380     39,745      25,746

Income tax expense           4,819        3,554     14,605       9,640
                           ----------  ---------- ----------- --------

Net income                  $8,480       $5,826    $25,140     $16,106
                           ==========  ========== =========== ========


Basic earnings per share     $0.26        $0.20      $0.76       $0.54
                           ==========  ========== =========== ========

Diluted earnings per
 share                       $0.25        $0.19      $0.74       $0.51
                           ==========  ========== =========== ========




                    Albany Molecular Research, Inc.
         Selected Consolidated Balance Sheet Data - Unaudited

                   In thousands
                                       Sept. 30,              Dec. 31,
                                           2001                  2000
                                      ---------             ---------

   Cash, Cash Equivalents
    and Investments           $         139,348   $           152,024
   Accounts receivable, net              11,724                 7,952
   Royalty receivable                     9,898                 7,827
   Total current assets                 169,492               171,162
   Net property, plant and
    equipment                            53,136                30,914
   Total assets                         280,607               238,566

   Current liabilities                   19,380                 9,913
   Long term debt                         6,117                   120
   Stockholders' equity                 255,110               228,533
   Total liabilities and
     stockholders' equity               280,607               238,566