AlphaRx

Analyst: Lisa Springer, CFA Initial Report July 21th, 2009

7/17/09

ALRK daily

0.12 0.11 0.10 0.09 0.08 0.07 0.06 0.05 Š BigCharts.com

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Jul

MARKET DATA

Company Overview Symbol Exchanges Current Price Rating Outstanding Shares Market Cap. Average 3M Volume

ALRX OTCOB $0.12 Speculative Buy 92.4 Million $10.4 Million NA

Source: Yahoo Finance, Analyst Estimates

AlphaRx Inc. (ALRX) is a specialty pharmaceutical company

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AlphaRx in 2000.

ALRX is applying its novel drug delivery technology to therapeutic

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advantages for these manufacturers by enabling them to extend patent protection with reformulated versions of existing compounds and by broadening their potential applications.

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AlphaRx Inc. (OTCOB: ALRX)

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Analyst: Lisa Springer, CFA Initial Report July 21th, 2009

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and anticipates completing the clinical development program through phase IIb within 24 months. ALRX is also

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AlphaRx Inc. (OTCOB: ALRX)

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Analyst: Lisa Springer, CFA Initial Report July 21th, 2009

Robust drug pipeline

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Exhibit: Product pipeline

Product

Streptomycin NDS ARX606T

Initial Indication

Status

Osteoarthritis Pneumonia (Gram +ve) Pneumonia (Gram -ve) Bio-defense Bio-defense Tuberculosis Wound Healing Cardio-protection Neuro-protection Cancers

Phase II Pre clinical Pre clinical Pre clinical Pre clinical Pre clinical Pre clinical Pre clinical Pre clinical R&D

Source: Company website * Licensed to Cypress Bioscience, ** Collaborated with US Army, *** Licensed to Gaia BioPharma

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royalty payments ALRX plans to deploy its drug delivery technology by forming partnerships with pharmaceutical companies and

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AlphaRx Inc. (OTCOB: ALRX)

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Analyst: Lisa Springer, CFA Initial Report July 21th, 2009

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Exhibit: Drug deliveries platforms

Source: Company website

Robust Product Pipeline

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AlphaRx Inc. (OTCOB: ALRX)

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Analyst: Lisa Springer, CFA Initial Report July 21th, 2009

Exhibit: ALRX Product pipeline

Product

Streptomycin NDS ARX606T

Initial Indication

Status

Osteoarthritis Pneumonia (Gram +ve) Pneumonia (Gram -ve) Bio-defense Bio-defense Tuberculosis Wound Healing Cardio-protection Neuro-protection Cancers

Phase II Pre clinical Pre clinical Pre clinical Pre clinical Pre clinical Pre clinical Pre clinical Pre clinical R&D

Source: Company website * Licensed to Cypress Bioscience, ** Collaborated with US Army, *** Licensed to Gaia BioPharma

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AlphaRx Inc. (OTCOB: ALRX)

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Analyst: Lisa Springer, CFA Initial Report July 21th, 2009

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AlphaRx Inc. (OTCOB: ALRX)

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Analyst: Lisa Springer, CFA Initial Report July 21th, 2009

Exhibit: Drug Delivery System Demand Trends

Source: Fredonia Report, 2008

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AlphaRx Inc. (OTCOB: ALRX)

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Analyst: Lisa Springer, CFA Initial Report July 21th, 2009

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AlphaRx Inc. (OTCOB: ALRX)

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Analyst: Lisa Springer, CFA Initial Report July 21th, 2009

Exhibit: Drug Delivery System Demand, 2007 (Total value =$80.2 billion)

Source: Fredonia 2008 report

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Source: Fredonia Report, 2008

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Analyst: Lisa Springer, CFA Initial Report July 21th, 2009

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Exhibit: Key Indicators for Drug Delivery Systems (billion dollars) % Annual Growth Item Gross Domestic Product Resident Population (million) Population 65 Years & Older (million) ! " # $

Pharmaceutical Demand Acute Conditions (million) Chronic Conditions (million)

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2007

2012

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10470 287.9 35.6 1603.3 200.6 425 935

13850 301.6 37.9 2250 287.6 437 1012

17550 315 42.6 3165 410 450 1100

5.8 0.9 1.3 7 7.5 0.6 1.6

12/07 4.8 0.9 2.4 7.1 7.3 0.6 1.7

Source: Fredonia 2008 report

ALRX Business Strategy ALRX is using partnerships with pharmaceutical companies and research institutions to leverage its own # ,_' *

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AlphaRx Inc. (OTCOB: ALRX)

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Analyst: Lisa Springer, CFA Initial Report July 21th, 2009

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AlphaRx Inc. (OTCOB: ALRX)

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Analyst: Lisa Springer, CFA Initial Report July 21th, 2009

Financial Analysis , }

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Exhibit: Financial Performance Quarter Particulars ($)

31-Mar-09 31-Mar-08

Net Sales % ' * #

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Net Income (Loss) Total Current Assets Long term assets (including plant, property and equipment) " " < #=$ > ?; @

164,109 72,495 44,262 20,951 170,263 110,370 (529,403)

17,243 211,846 190,402 (397,255) 33,052 149,498 (537,421)

Annual 30-Sep-08 97,499 753,118 583,195 (1,335,457) 33,052 149,498 (639,045)

30-Sep-07 170,441 1,023,684 727,046 (1,750,236) 146,714 217,626 (458,798)

Source: Company10-K and 10-Q filings

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Analyst: Lisa Springer, CFA Initial Report July 21th, 2009

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# $ Q< +,- Peer P/E and P/S Multiples Company Name Novartis AG Nektar Therapeutics Paladin Labs Inc. Gilead Sciences Inc. Average for the Peer group " : ;E

Ticker Price Market Symbol $ Cap. $ Mn NVS NKTR PLB GILD

$39.75 $ 5.95 $19.17 $44.91

1,052 56 29 4,105

ALRX

$0.12

11.1

2007

P/E 2008

2009

2007

P/S 2008

2009

10.00 NM 68.46 26.73 35.06

10.92 NM 29.05 21.39 20.45

11.19 NM 26.70 18.07 18.65

2.75 2.05 4.57 9.70 4.77

2.52 6.20 3.48 7.69 4.97

2.54 7.81 2.67 6.33 4.84

Source: Reuters

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AlphaRx Inc. (OTCOB: ALRX)

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Analyst: Lisa Springer, CFA Initial Report July 21th, 2009

Risk Factors History of operating losses < N G O/ T@@0 +,- >/1 ? #

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AlphaRx Inc. (OTCOB: ALRX)

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Analyst: Lisa Springer, CFA Initial Report July 21th, 2009

Management Team

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AlphaRx Inc. (OTCOB: ALRX)

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Analyst: Lisa Springer, CFA Initial Report July 21th, 2009

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AlphaRx Inc. (OTCOB: ALRX)

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