2Forward-Looking Statements This presentation may contain projections, estimates and other forward-looking statements that involve a number of risks and uncertainties, including those discussed in the Company’s filings with the Securities and Exchange Commission. While this presentation represents management’s current judgment on the future direction of the Company’s business, such risks and uncertainties could cause actual results to differ materially from any future performance suggested herein. The Company undertakes no obligation to release publicly the results of any revisions to these forward-looking statements to reflect events or circumstances arising after the date hereof.
3Global Services Provider A leading contract research and manufacturing organization. One of the only companies providing a fully integrated service offering from discovery, through early development to commercial manufacturing.Global capabilities with facilities in U.S., Europe and AsiaProprietary portfolio of early stage drug candidates provides free call option1,300 employees including the highest ratio of Ph.D. to B.S. scientists compared to competitorsUnited StatesEuropeAsia
4Service Platform Discovery Services Early Development Contract ManufacturingTarget ValidationMedicinal ChemistryHTSIn Vitro BiologyLibrary SynthesisBiocatalysisCustom SynthesisNatural ProductsStructure IDEarly ADMEChemical Process DevelopmentAnalytical DevelopmentKilo Lab Scale-UpPhase I GMPFermentation DevelopmentSalt & Polymorph InvestigationsImpurity IdentificationFormulation DevelopmentPhase II/III APICommercial APIHigh Value IntermediatesHigh PotencyDEA Regulated APISterile Fill & Finish Drug ProductNiche GenericsFormulation Manufacturing4
6Value PropositionStrong intellectual input for creative customer solutionsHigher ratio of Ph.D. to B.S. scientists compared to competitors- 45% Ph.D. density, 10 years average experienceProven ability to bring discovery candidates to IND and clinical candidatesto commercialization- Delivered over 75 preclinical and clinical leads leading to over 50 IND’s in last ten years- 90 patents filed and 300 peer review publicationsIntegrated global chemistry and biology servicesFlexible, customized solutions for our customers toimprove speed, cost and qualitySeamless technology transfer from earlydevelopment to commercial production- 53 Phase I & II customer compounds- 25 Phase III customer compounds- 35 Commercial customer productsPartnering and out-licensing opportunities for proprietary early-stage portfolio
72012 Strategic Initiatives Enhance revenue growth and mixIncrease multi-year strategic relationshipsStrengthen aseptic fill/finish businessDrive SMARTSOURCING™ - a cross functional approach that maximizes the strengths of both insourcing and outsourcingEnhance international footprint- key appointments in Europe and ASIAStreamline operations to improve margins~$16M reductions vs. 2011Hungary operations closed Q1’12; select services moved to AsiaOngoing assessment of global operating structureMaximize licensing/partnering of proprietary compounds to enhance cash flowDeliver Profitable Operating Performance in 2012.
8Enhancing Revenue Profile Build multi-year collaboration agreements:Lilly insourced chemistryNIH award to develop pre-clinical drug candidatesMerck for discovery services at Singapore facilityDrive Aseptic Fill/Finish businessCardium agreement for aseptic fill for commercial launch of Excellagen™Two compounds with NDAs expected. Working on commercial manufacturing contractsExpand material commercial manufacturing agreementsSigned extensions on two large API supply agreementsNew generic compound approved by FDA in Quarter 2 with both API and royalty revenue35 commercial products already in placeMaximize strong customer clinical pipeline53 Phase I & II; 25 Phase IIISeven high potential compounds with two anticipated PDUFA dates and five with potential NDA filings during the next 12 months. Some NDA filings may be fast tracked resulting in PDUFA dates during the same time period.2012 Contract Revenue Guidance** - Mid-point of GuidanceDevelopmentLarge ScaleDiscovery
9Diversifying The Customer Portfolio (2012) TOTAL AMRIDiscoveryDevelopment/Small ScaleLarge ScaleLarge Pharma/Biotech Biotech Spec Pharma Other9
10Improving Cost Structure Ended development activities related to internal R&D programs~$7M reduction vs. 2011Right sized US operations~$3M reduction vs. 2011Announced closure of Bothell, WA (March, 2013)Global cost-reduction initiatives to streamline businessClosed Hungary facility$6M reduction vs. 2011Ongoing operating reviewSourcing initiativesLean initiativesProcess improvement investments to increase future margins for generic/commercial productsPositioning business for improvement in marginswhile aligning capabilities to emerging customer needs.10
11Positive Long-term Industry Drivers Large pharma R&D restructuringReduction in internal R&D resources, generic competition, healthcare reform driving increased strategic outsourcingMore stringent regulatory environmentRequires the use of service providers with strong intellectual capacity and high quality standardsGlobalization of R&D activitiesCustomers are seeking lower cost alternatives with the same quality standards they receive in the USBiotech funding environmentAvailability of capital has stabilizedAcademic institutional roleLarge pharma turning to academics as source of innovation. Academics need support to “Industrialize” conceptsWe believe market pressures will exert increasing trend toward outsourcing.
12Market Opportunity Contract Services Predict long-term growth due to increased outsourcing by Big Pharma and entrance of more virtual Biotech, non-profit, academic organizationsHistorically fragmented market subject to significant consolidationDiscovery ServicesEarly DevelopmentContract ManufacturingEstimated Outsource MarketEstimated Outsource MarketEstimated Outsource MarketAMRI ShareAMRI ShareAMRI Share$12 – $14 billion$2 billion$36 – $38 million$1 billion$33 –$35 million$111 – $113 millionData Sources: William Blair & Co, Jefferies & Co., Merrill Lynch, Kalorama Research, Sterne Agee
13Market Opportunity Sales & Marketing Strategic Direction AMRI “SMARTSOURCING™”Transitioning from a scientific to a customer relationship focusStrategic Account Plan launched to increase penetration and market share in the large pharma segmentGeographically expanded team throughout US, Europe and Asia to capture larger customer baseGlobal Pharma/Biotech Industry*AMRI presently provides services to 300+ Companies. Large Opportunity to Expand Customer Base.* Data Source: Ernst & Young
14AMRI Royalties Allegra® AMRI licensed technology to Sanofi in 1995 Earn royalties through 2015At risk launch of generic version by Teva/Barr in September 2005Amended license agreement in 2008 to allow sublicense to Teva/BarrReceived $10M upfront payment for sublicenseReceived increased royalties from Sanofi; royalties on Teva/Barr salesSanofi launched OTC in March 2011 in USOtherNew royalty for a generic from previous agreementFive-year royalty stream commencing June 2012Rolling five-year window with any new drug launch($ Millions)$36$35$35$35$280809101112
19Discovery Biology Biology Marketplace Forecast as the fastest growing sector within the Discovery outsourcing market, (estimated to be as high as 20% compound annual growth over the next 5 years)Increasing trend towards sourcing end-to-end integrated drug discovery servicesCustomers increasingly seeking co-location with chemistryHTS market relatively mature; demand is mainly for niche specialty technologiesAMRI Biology Services:As standalone and as key component of Integrated Drug Discovery programsBothell site provides “High end” custom biology, HTS and Natural ProductsSingapore much smaller scale, mainly program-support biology, some HTSWell-received by clients (NPS = 45); highly related on all customer feedback metrics (except pricing)About 20% AMRI Discovery business is dependent upon our biology capabilitiesBiology increasingly an entry-point for wider range of services
20Discovery Biology Challenges Bothell site is running ~10% capacity => substantial lossesUS biology carries high costs inherent in HTS and natural products capabilitiesSingapore biology lacks certain important capabilities (molecular biology, microbiology)Small scale of Singapore biology raises credibility questionsVery little market-appetite for US pricing in biologyUS biology is not co-located with chemistry services
21Bothell Exit and Transition Decision made to exit Bothell by end Q and consolidatebiology operations at Singapore Integrated Discovery locationBothell staff notified Thursday November 29, 2012Of 24 staff, approximately 25% will leave Dec 31st, remainder end-Q1, 2013Several projects will continue through March 2013Ongoing (and new) biology projects will be executed in SingaporeWork commenced on Singapore biology lab expansion to accommodate broader-scope of work (including HTS, molecular biology and microbiology)Structural analysis operation will be relocated to Albany, as part of PQS
22Discovery Biology Summary Biology consolidation in single location provides:A biology operation of credible scalePresents a clear integrated discovery offering to our clientsSupports vision of “Asia Discovery” (Singapore hybridized with India)Eliminates duplication of existing and future cost-structureRelocation of Structural Analysis business:Plays to overlap of impurity ID service with chemical development and gmp servicesPresents logically to clients as associated with existing analytical and separation servicesLeverages overlaps in equipment resource with PQS operations
23Strategic Priorities for 2012 Return to profitabilityRight size operating structureIncrease global market shareContinue to enhance quality profileExpand long-term strategic partnerships (insourcing, not-for-profit/government collaborations, venture capital relationships, etc.)Out-license/partner remaining proprietary compoundsAdjusting business strategy to address changing market.
25AMRI Contract Services Discovery A broad spectrum of lead discovery services backed by decades of experienceAMRI U.S. discovery chemists average 10 years plus of industrial experience, 50% PhD densityAMRI has delivered over 75 pre-clinical and clinical leads to customers resulting in over 50 customer IND’s over the past 10 yearsAMRI’s expertise demonstrated by over 90 patents filed and 300 peer review publicationsTightly integrated services can be accessed individually or as a full discovery programExtensive depth across multiple therapeutic areas and target classes.Helping customers discover/advance clinical leads.
26AMRI Contract Services Early Development A suite of drug development services to bring a clinical candidate from laboratory scale to commercializationExceptional track record and strong compliance historyClients benefit from individual components of a development/ manufacturing program, while harnessing synergies in discoveryHighly integrated with Large Scale business to effect technology transfer and accelerate customer timelines for both API and drug product53 customer compounds in Phase I-II pipeline feeding large scale business.26
27AMRI Contract Services Contract Manufacturing Assets in US, Europe and India allow AMRI to assist customers in product life cycle managementExcellent FDA compliance historyThirteen consecutive FDA inspections across global API facilities with no 483s. Approved by MHRA in UKFormulation manufacturing added in solid dosage and sterile fill/finish drug product to decrease clinical trial timelines and costsSpecialized capabilities in high potency and controlled substancesPortfolio of niche generic APIs provides a base level of cost absorptionMultiple successes in supporting customers progressing to NDA and Commercialization35 commercial products in place25 customer compounds in Phase III pipeline.
28Strategic Partnerships AMRI & BMS Licensing Agreement Development of biogenic amine reuptake inhibitors for depression and other CNS disorders. Preclinical lead compounds licensed in October 2005.Received over $33 million in upfront fees, research funding and milestonesMilestones up to $66 million per compound for first two compounds and up to $22 million per compound on subsequent compoundsOpportunity for multiple drug candidatesRoyalties on worldwide sales of commercialized compoundsOne compound in Phase II, milestones received for one compound that entered Phase II and two compounds that entered preclinical developmentBMS viewed by BMS as one of its most promising development programs for treatment resistant depression.
29Condensed Balance Sheet ($ millions)September2012JuneMarchDecember2011AssetsCash and Investments - Unrestricted$15.7$13.4$8.2$20.2Restricted Cash5.04.5--Accounts Receivable35.235.333.430.4Royalty Receivable9.37.010.76.8Inventory33.235.929.326.0Net PP&E141.5142.2145.0149.8Total Assets$266.4$267.4$263.4$263.1Liabilities and EquityAccounts Payable & Accrued Expenses$27.9$25.0$20.4Deferred Revenue184.108.40.206Debt8.05.45.8Stockholders’ Equity204.6205.0205.3206.4Total Liabilities and Equity
30Development/Small Scale Major CompetitorsDiscoveryDevelopment/Small ScaleLarge ScaleUSAsh StevensCambridge MajorIrixNoracRegisRicercaCambrexJohnson MattheySAFCEuropeAptuitChem DivEvotecGalapagosAlmacCarbogenHovioneOnyx ScientificSolviasDSMEvonikLonzaFabbrica Italiana SynteticiSaltigoAsiaGVK BioShanghai Chem PartnerWuXiSyngeneChembiotekJubilantAurigeneDishmanDr. Reddy’s LabsShasunArch PharmalabsAMRI only company which competes across all segments
31About AMRIAlbany Molecular Research, Inc. (AMRI) is a global contract research and manufacturing organization offering customers fully integrated drug discovery, development, and manufacturing services. For over 21 years AMRI has demonstrated its adaptability as the pharmaceutical and biotechnology industries have undergone tremendous change in response to multiple challenges. This experience, a track record of success and locations in the United States, Europe and Asia now provides our customers with SMARTSOURCING™, a full range of value-added opportunities providing customers informed decision-making, enhanced efficiency and more successful outcomes at all stages of the pipeline. AMRI has also successfully partnered R&D programs and is actively seeking to out-license its remaining programs for further development.Contacts: Investor Relations: Michael Nolan, Chief Financial Officer,Media: Gina Monari, AMRI Communications,