Market Opportunity

Chronic pain, defined as lasting six months or longer, is usually the result of an ongoing condition or significant problem associated with chronic diseases, including cancer, various neurological and skeletal disorders and other ailments such as severe arthritis or a debilitating back injury. As the condition gets worse, the pain often gets worse. Also, long-lasting pain can affect the nervous system to the point where pain persists even if the condition that originally caused the pain is stabilized or improved. This is one reason patients often need stronger pain medication even if their underlying condition has been treated. Chronic pain affects as many as 50 million Americans annually.

Product Concept

Our transdermal sufentanil patch (TRANSDUR-Sufentanil) under development is based on our proprietary TRANSDUR transdermal technology and is intended to provide continuous delivery of sufentanil for up to seven days from a single application, as compared to the three days of relief provided by currently available opioid patches. Sufentanil is a highly potent opioid that is currently used in hospitals as an analgesic for which the patent covering the chemical entity has expired. We anticipate that the small size of our sufentanil patch (potentially as small as 1/5th the size of currently marketed transdermal fentanyl patches for a therapeutically equivalent dose) and longer duration of delivery may offer improved convenience and compliance for patients. Worldwide sales for Duragesic^®, a leading transdermal fentanyl product, along with generic fentanyl patches exceeded $1.2 billion in 2006.

In March 2005, we entered into an agreement with Endo Pharmaceuticals granting Endo exclusive rights to develop, market and commercialize TRANSDUR-Sufentanil in the U.S. and Canada. We have received an initial payment of $10 million, and we will receive up to $35 million in additional milestone payments if specified development and commercialization milestones are achieved. If commercialized, we will also receive royalties based on the sale of TRANSDUR-Sufentanil in the U.S. and Canada. We have retained limited co-promotion rights to TRANSDUR-Sufentanil in the U.S. and Canada and full commercialization rights in the rest of the world.

Clinical Program

In 2005, we successfully completed the first clinical trial of the Phase II program for TRANSDUR-Sufentanil using patches manufactured by us to evaluate the transition of chronic pain patients from the Duragesic^® fentanyl patch to TRANSDUR-Sufentanil. The clinical study also evaluated the pharmacokinetics and safety of repetitive applications of TRANSDUR-Sufentanil in patients for a period of up to four weeks. The clinical trial was conducted at two clinical sites (one in the United States and the other in Europe) and enrolled 13 adult patients in the primary study with malignant or non-malignant chronic pain. In December 2005, we announced positive preliminary results from this trial as follows:

Preliminary data indicate that all primary endpoints for the clinical trial were achieved, which include:

	Pharmacokinetic—Evaluation of plasma level data indicate that TRANSDUR-Sufentanil performed as designed by achieving its target delivery profile of providing a rapid onset of drug and a delivery duration of over seven days. Targeted plasma levels over the consecutive four-week period (repetitive applications of TRANSDUR-Sufentanil) were achieved as intended.
	Safety—The product was tolerated well with no apparent safety issues over the four-week treatment period.

Preliminary Efficacy Observations:

As this was an open label study, conclusions on efficacy cannot be drawn; on average, pain levels remained stable after the transition to TRANSDUR-Sufentanil.

Endo is conducting Phase II studies designed to evaluate the conversion of chronic pain patients treated with oral opioid products to TRANSDUR-Sufentanil.