Impede™ Technology

We have developed a pseudoephedrine hydrochloride (PSE) tablet product candidate utilizing our Impede™ Technology. Impede™ Technology utilizes a proprietary mixture of functional inactive ingredients intended to limit or impede extraction of PSE from the tablets for use as a starting material in producing the illicit drug methamphetamine. The unique mixture of inactive ingredients in the Impede™ PSE product candidate are generally recognized as safe.

We sponsored an independent pharmaceutical laboratory test of our Impede™ PSE tablets compared to Sudafed®* brand PSE tablets in an attempt to extract PSE from 100 x 30 mg tablets for conversion to methamphetamine using what we believe to be the three most commonly used conversion processes. The results of these tests demonstrated that while PSE was readily extracted from Sudafed® tablets, Impede™ PSE effectively impeded the extraction of the PSE for conversion into methamphetamine. We are currently optimizing our tablet formulation and evaluating potential commercialization and regulatory strategies for Impede™ PSE Tablets.

*Sudafed® is a registered trademark of McNeil PPC, Inc.

Acurox® (oxycodone HCl) Tablets

After our April 22, 2010 FDA Advisory Committee meeting for Acurox® with Niacin (oxycodone HCl/niacin) Tablets, we and King jointly announced our intentions to develop product candidates utilizing our Aversion® Technology without niacin including Acurox® (oxycodone HCl) Tablets, Vycavert® (hydrocodone bitartrate/acetaminophen) Tablets and Acuracet® (oxycodone HCl/acetaminophen) Tablets. In a Phase 1 pharmacokinetic (PK) study, Acurox® Tablets demonstrated fasted bioequivalence to the anticipated reference listed drug. We expect this PK study will serve as the basis for establishing safety and analgesic efficacy of Acurox® Tablets. King and Acura have scheduled a pre-NDA meeting for Acurox® Tablets for late in the 3 rd quarter of 2010 to confirm the contents of an Acurox® Tablets NDA submission acceptable to FDA for filing. Although we do not expect a Phase 3 safety and efficacy study will be required for an NDA filing, we expect that additional PK and abuse liability studies may be required. Subject to the outcome of our pre-NDA meeting, we expect to submit an NDA for Acurox® Tablets to the FDA in the first quarter of 2011.

A primary market research survey of 401 opioid prescribing physicians suggests that regardless of whether Acurox® Tablets contain niacin or do not contain niacin, Acurox® has the potential for garnering a substantial share of immediate release opioid analgesics prescriptions. This finding was confirmed in a separate primary market research study of 435 physicians which concluded the particular combination of ingredients [i.e. with or without niacin] does not appear to have a substantial effect on the estimated brand market share potential.