June 24, 2003

News Release: Applied Molecular Evolution Enters Into Third Collaboration With Lilly for Optimization of Protein Therapeutics

Applied Molecular Evolution, Inc. (AME) (Nasdaq: AMEV) today announced that it has agreed to optimize two protein therapeutic candidates for Eli Lilly and Company (NYSE: LLY). The goal of the collaboration is to apply AME's proprietary AMEsystem(TM) directed molecular evolution technology to create optimized versions of both a growth factor and an antibody candidate for clinical development. Under the terms of the agreement, AME will receive an upfront fee and has the potential to receive milestone payments and royalties on any products resulting from the collaboration. 'Our third agreement with Lilly is a testament to AME's track record of delivering successfully optimized protein therapeutic candidates as well as the power of the AMEsystem to potentially improve the function of both growth factor and antibody therapeutic candidates,'commented William D. Huse, M.D., Ph.D., President, CEO and Chairman of AME. 'The continued adoption of AME's technology by Lilly and other world-leaders in protein therapeutic development emphasizes the importance for biotherapeutic candidates to undergo optimization prior to clinical evaluation and provides continued support for the collaborative component of AME's business model.'

Applied Molecular Evolution, Inc., (AME) is a leader in applying directed molecular evolution to improve healthcare by optimizing and developing human biotherapeutics. Directed molecular evolution is a process for optimizing genes and proteins for specific commercial purposes. Since its inception, AME's principal focus has been on applying its proprietary AMEsystem(TM) technology platform to human biotherapeutics, the largest market for directed molecular evolution. Biotherapeutics, or biopharmaceuticals, are protein pharmaceuticals such as antibodies, cytokines, hormones and enzymes. AME uses its proprietary technology to develop improved versions of currently marketed, FDA-approved biopharmaceuticals as well as novel human biotherapeutics. For more information, please visit www.AME.biz .

This press release contains forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in the forward-looking statements, including uncertainties related to product development, uncertainties related to the need for regulatory or other government approvals, dependence on proprietary technology, uncertainty of market acceptance of the Company's products, uncertainties related to business opportunities, the receipt of future payments, including royalties, the continuation of customer relationships and other risks cited in the Company's Annual Report on Form 10-K for the year ended December 31, 2002, and other SEC Filings. These forward-looking statements speak only as of the date hereof. The Company disclaims any intent or obligation to update these forward-looking statements.

For further information, please contact Chris Erdman, Director of Corporate Communications of Applied Molecular Evolution, Inc., +1-858-638-8635, This email address is being protected from spambots. You need JavaScript enabled to view it.

SOURCE Applied Molecular Evolution, Inc.

Chris Erdman, Director of Corporate Communications of Applied Molecular Evolution, Inc., +1-858-638-8635, This email address is being protected from spambots. You need JavaScript enabled to view it.

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