First quarter 2005 pro forma net income was $4.3 million, or $0.13 per share, compared with $3.4 million, or $0.12 per share, in the first quarter of 2004. Pro forma net income and pro forma earnings per share increased by 26.7% and 8.3%, respectively. Reconciliations between GAAP results and pro forma results are presented in the attached tables and on the Company's web site (www.serologicals.com) under the Investor Relations tab.

President & CEO Perspectives

"Our revenues for the first quarter of 2005 were consistent with the guidance we provided in January 2005 when we estimated that first quarter revenue would be approximately 18-20% of the annual total. Revenue for the first quarter has historically declined from the fourth quarter due to customer ordering patterns, and this year was no exception. However, we saw significant increases in order activity and shipping in both February and March, continuing into April, following an expected slow January. We continue to be very pleased with the ongoing successful development of our business and the outlook for 2005." said David A. Dodd, President and CEO.

"Our first quarter gross profit was negatively impacted by product mix and revenue shortfalls. EX-CYTE(R) first quarter revenues were lower than expected due to timing of customer delivery requirements; however, we expect the shortfall will be made up later in the year. Research revenue was below our expectations because of shipment delays, lower bulk and pharmaceutical sales and the issuance of our Research product catalogues later than originally anticipated.

The Upstate business unit continues to perform very well with a year over year revenue increase of 20% in the first quarter. In addition, margins continue to exceed our expectations as we continue to significantly expand our drug screening and target validation services. We are committed to maintaining our leadership position in this growing market segment. Several new drug screening contracts were concluded and work initiated during the first quarter, with the majority of those revenues scheduled to occur beginning in the second quarter.

The outlook for the balance of 2005 remains very positive. As a result of new contracts achieved during the first quarter and existing plans for the year, we are confirming our earlier guidance for 2005 for annual revenues of $275.0-$285.0 million with pro forma earnings of $0.95-$1.00 per share. We are confident about achieving our earlier guidance because:

-- Customer projections for purchases of our key products, including EX-CYTE(R), reflect a significant pickup in the second half of the year and on target for our expectations

-- We continue to obtain new contracts and contract extensions to provide drug screening services

-- Our daily order flow for research reagents was below expectations for January, but increased sequentially 32% in February and another 25% in March, with continued strength in April

-- We continue to identify and implement cost reduction initiatives in all parts of our business to improve gross margins and reduce overhead costs

We also expect that as in previous years, the second half of 2005 will be significantly stronger both in terms of revenue and earnings performance because of customer ordering patterns, the delayed impact of new product introductions during the year and the delivery of our new research reagents catalogues in March and April," Mr. Dodd added.

Significant accomplishments during the first quarter included:

-- We continue to see positive results in our EX-CYTE(R) evaluations that were begun in 2004 as well as pursuing new evaluation opportunities in 2005. The 2005 Evaluation Program consists of two parts. First, targeting programs that are in pre-clinical trials with recombinant proteins or antibodies and second, continuing the placement of EX-CYTE(R) into research and development programs using mammalian cell lines for production. We placed EX-CYTE(R) into 21 different evaluation opportunities during the first quarter.

-- Our Celliance business unit recently introduced Hybri-CYTE(TM), a serum-free cell culture supplement designed for use in hybridoma cell lines. Hybri-CYTE(TM) is the first in a new line of supplements that are designed specifically to eliminate the use of fetal bovine serum while incorporating a number of Celliance's proprietary cell culture products including EX-CYTE(R), Probumin(TM) BSA and Incelligent(TM) animal free insulin. A patent has been filed for Hybri-CYTE(TM). The new product has been introduced in both Europe and North America and more than 20 product samples are currently being provided to customers. Further product extensions are expected later this year.

-- During the quarter, Celliance successfully completed the construction and internal phases of initial product manufacturing and testing at its EX-CYTE(R) plant in Lawrence, Kansas. The facility has commenced the final phases of production validation which includes customer audits and extensive testing requirements. This phase of validation is expected to take approximately six to nine months to complete based on scheduling commitments and testing requirements. Full manufacturing operations are expected to commence in early 2006. Updated customer projections received during first quarter re-confirmed the need to initiate production at the Lawrence site in support of projected growing product demand beginning in early 2006.

-- Our research business units, Chemicon and Upstate, introduced 384 new products during the first quarter, including new Chemicon assays and reagents focused in the areas of neuroscience and stem cell research and a range of new Upstate kinases and multiplex Beadlyte(R) assays. Upstate is expanding its industry leading position by providing over 220 kinases in their selectivity panel with an aggressive plan to substantially increase its kinase panel by the end of 2005. Recently, Upstate also announced the launch of a new immunoprecipitation product (IP) called Catch and Release(R) which is a faster, simpler and more reproducible method of completing traditional IP.

-- Both Chemicon and Upstate recently introduced new product catalogues. The combined catalogues provide over 10,000 products and will reach over 250,000 customers throughout North America, Europe and Asia. Over 1,000 individual products are being dual marketed by Chemicon and Upstate to their respective customers.

-- Chemicon expanded its exclusive worldwide agreement with Amrad Corporation Ltd. and The Walter and Eliza Hall Institute of Medical Research (WEHI) providing Chemicon with additional rights to further develop its proprietary embryonic stem cell products, Leukemia Inhibitory Factor (LIF) and ESGRO, into additional kits and combination products. The new agreement provides an important expansion of the initial license agreement covering patent rights signed by Chemicon, Amrad and WEHI in 1999.

-- Our Upstate business unit continues to successfully expand its drug screening services. These services are provided out of the recently expanded Dundee, Scotland facility. In addition to contracting to provide kinase profiling services to several new customers, Upstate recently introduced PathwayProfiler(TM), a new service which measures cell-based signaling cascades (cell communication pathways) and provides drug development companies with a unique insight into their therapy and its efficacy within a cell.

First Quarter Results Summary

In the fourth quarter of 2004, the Company restructured its organization to improve management control and oversight of its operations. Consistent with this organizational change, the Company will now report its operating results in two business segments. The Research segment, which is focused on the research products and services business, will consist primarily of products and services offered under the brand names of Chemicon(R) and Upstate(R). The Bioprocessing segment, Celliance, will include cell-culture-supplement products along with diagnostic related products and contract research services offered through Celliance BioServices.

Revenues for the first quarter of 2005 totaled $56.6 million, compared to $36.5 million in the first quarter of 2004, an increase of 55.1%. The increase in revenues in the first quarter of 2004 over the same period in the prior year was due primarily to the sales increase in the Research segment. The primary reason for the increase in sales in the Research segment is the inclusion of Upstate results for the first quarter. Upstate sales for the first quarter were $16.2 million.

Operating income for the first quarter of 2005 was $4.3 million, or 7.6% of revenue, compared to $5.2 million, or 14.1% of revenue, in the first quarter of 2004. Pro forma operating income before acquisition related amortization and other similar acquisition related costs was $7.7 million, or 13.6% of revenue in 2005 compared to $5.8 million or 15.9% of revenue in 2004.

Cash flows from operating activities were $0.4 million in the first quarter of 2005. This compares to cash flows from operating activities of $12.5 million in the first quarter of 2004. This significant decline is the result of a decrease in non-cash items and working capital in the first quarter of 2005 compared to a significant increase in non-cash items and working capital in the first quarter of 2004.

Performance Highlights: Research Products and Services

Research revenue in the first quarter of 2005 increased approximately $16.9 million, or 111%, over the prior year quarter. In addition to the increased revenue recorded as the result of the Upstate acquisition, Chemicon achieved revenue growth of 5.9% which was driven by contributions in the areas of neuroscience, molecular biology, bulk reagents and custom services. Upstate revenue, while not included in the 2004 operating results for the Company, grew 20% compared to the first quarter of 2004. Upstate growth was driven primarily by a 112% increase in revenue from Kinase Profiling services. Geographically, Research revenues increased 16% in Asia, 14% in Europe and 11% in North America.

Performance Highlights: Bioprocessing Products and Services

Bioprocessing revenue increased by 15% or $3.2 million to $24.5 million over the first quarter of 2004. EX-CYTE(R) sales in the quarter were $2.8 million, compared to $3.6 million in the first quarter of 2004. Sales of Celliance's proprietary bovine serum albumin (Probumin(TM) BSA) in the first quarter of 2005 were $4.4 million, compared to $4.3 million in the first quarter of 2004. Sales of recombinant human insulin (Incelligent(TM)) were $6.8 million for the quarter compared with $5.2 million in the first quarter of 2004. Sales of monoclonal antibodies from our Livingston, Scotland facility increased 20% from $5.4 million in Q1 2004 to $6.5 million in Q1 2005. The quarterly revenue growth in Bioprocessing came from North America where revenue was up 16% over 2004 and from Europe, where revenue was up 15% over 2004. Sales to the rest of the world were flat compared with the first quarter of 2004.

Other Q1 2005 Financial Information

-- Available cash and short-term investments at the end of the quarter were $53.7 million, compared with $62 million at the end of 2004. The primary reason for this decline was the purchase of Specialty Media for $6.5 million plus acquired debt of $0.2 million. Specialty Media develops and supplies a variety of specialty stem cell culture media formulations and supplements, cells and research reagent tools to the life science industry.

-- Accounts receivable totaled approximately $34.0 million at the end of the first quarter, compared with $46.9 million at the end of 2004.

-- Capital expenditures for the first quarter of 2005 were $2.9 million compared to $5.5 million for the first quarter of 2004.

-- Recognized losses on foreign exchange transactions were $0.1 in the first quarter of 2005, compared to a loss of $0.2 in the first quarter of 2004. Gross margins in the Research segment were unaffected by currency rates in the first quarter of 2005 compared to a 1% reduction in margins in the first quarter of 2004. Gross margins in the Bioprocessing segment were adversely affected by 1% due to currency rates in the first quarter of 2005 compared to an adverse affect of 2% in the first quarter of 2004.

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