Catalytica Pharmaceuticals Announces Development and Manufacturing Agreement With Eli Lilly.

MOUNTAIN VIEW, Calif.--(BW HealthWire)--April 13, 1999--

Catalytica Pharmaceuticals, Inc., a subsidiary of Catalytica, Inc. (Nasdaq:CTAL), announced today that it has signed a five-year agreement with Eli Lilly and Company (NYSE:LLY) for development and formulation, filling, and finishing of a Lilly biological investigational drug candidate at Catalytica's state-of-the-art sterile facility in Greenville, North Carolina. Under the terms of the agreement, Catalytica will receive guaranteed revenues for its development work and, assuming FDA approval, anticipates potential revenues for manufacturing will be approximately $30 million over the five-year contract period.

"We are pleased that Eli Lilly, one of the world's leading pharmaceutical firms, has chosen Catalytica as the manufacturing source for its important new investigational drug candidate," stated Dr. Gabriel Cipau, President and CEO of Catalytica Pharmaceuticals. "Lilly's choice underscores Catalytica's uncompromising commitment to quality and regulatory expertise, competitive advantages which have enabled us to attract a growing number of leading firms and strategically important products. Combining world class facilities, excellent reliability from pre-approval through production, and on-time delivery, we intend to satisfy the requirements of pharmaceutical firms as the preferred source for product development and manufacturing."

Catalytica Pharmaceuticals, Inc., a subsidiary of Catalytica, Inc., provides the pharmaceutical and biotech industries with comprehensive skills and demonstrated commercial experience in a broad spectrum of areas extending from process development through drug development, formulation, manufacturing and packaging. Since the acquisition of the Greenville Facility from Glaxo Wellcome in 1997, Catalytica has entered into over 20 new agreements and announced 9 new contracts for the manufacture of products for various pharmaceutical and biotech companies. Catalytica has over 20 chemical and formulation development projects underway. In anticipation of additional business, it has expanded its chemical manufacturing facility and is currently expanding its sterile facility. It is the largest, independent, fully integrated drug development and manufacturing supplier in the world.

Catalytica, Inc. builds business in high growth industries where the Company's technologies optimize manufacturing and solve environmental problems. Catalytica Pharmaceuticals, Inc. provides drug development and product manufacturing to the pharmaceutical industry; Catalytica Combustion Systems, Inc. produces XONON, a catalytic system that permits essentially pollution free combustion for the energy market; and Catalytica Advanced Technologies, Inc. serves as an incubator for new catalytic technologies for industrial applications. Find Catalytica on the World Wide Web at www.catalytica-inc.com.

This news release contains forward-looking statements regarding Catalytica's future development and manufacture of products at the Greenville Facility, the timing and amount of revenue received under the contract with Eli Lilly, new business developments, the ability to develop solutions rapidly and provide related regulatory expertise, the ability to market the Company's manufacturing and other services to current and prospective clients, the ability to transition new customers and business into the Greenville Facility, and Catalytica's competitive position in its markets. These statements involve risks and uncertainties, including without limitation, the ability to operate the manufacturing and development facilities efficiently, the ability to perform cost effectively and in a timely manner, the ability to satisfy the requirements of pharmaceutical firms as a preferred source for product development and manufacturing, the extent to which additional business will fill excess manufacturing capacity, product development delays, changes in the company's competitive position, the ability to attract new customers, and the impact of FDA and other regulations on pharmaceutical and biotech manufacturing. Investors are encouraged to review Catalytica's Form 10K for the year ending December 31, 1998, for a more complete discussion of risk factors that could affect Catalytica's future performance.