Tuesday, Dec 21, 1999

Genentech and Inspire to Collaborate on Respiratory Therapeutics

South San Francisco, Calif. and Durham N.C. -- December 21, 1999 --

Genentech, Inc. and Inspire Pharmaceuticals, Inc. today announced the signing of a collaboration to develop treatments for respiratory disorders with significant unmet medical needs including cystic fibrosis and chronic bronchitis. The alliance brings together Inspire's novel inhaled P2Y2 agonists and expertise in pulmonary hydration and clearance mechanisms with Genentech's presence and expertise in respiratory product development and commercialization.

Under the terms of the agreement, if all milestones are met, Inspire could receive total payments of $78 million including an upfront payment of $5 million in cash and $5 million in equity, and milestone payments. In addition, the deal calls for royalties on net sales. In the U.S., Inspire will lead the early development of a small-molecule for the treatment of cystic fibrosis and retains the option to continue to co-develop and co-promote the product in exchange for a sharing of U.S. operating profits. The collaboration also includes development work on a small-molecule for chronic bronchitis for which Inspire has completed a Phase I study. The companies will begin Phase II development plans in Q1 2000.

"We at Inspire are delighted to be working closely with Genentech to develop our products in this respiratory area," said Gregory Mossinghoff, Inspire's chief business officer. "They have the substantial experience and resources of a large company as well as the flexibility and drive of a small one. Our cultures and desire to advance products rapidly and efficiently match up well."

"Inspire has a strong scientific rationale to support its development plans in the area of respiratory disease," said Nicholas J. Simon, vice president, Business and Corporate Development, Genentech. "This collaboration complements and strengthens our position in this therapeutic area."

Chronic bronchitis is a lung disease caused primarily by smoking and pollution. There are more than 13 million patients diagnosed with chronic bronchitis in the U.S. alone and it is the fourth leading cause of death. It involves excessive retention of mucus as well as inflamed airways leading to impaired mucociliary clearance causing patients to experience frequent respiratory infections.

Cystic fibrosis is the most common fatal inherited disease in Caucasians. Life expectancy of cystic fibrosis patients averages 30 years, though this has increased in recent years due to treatments such as Genentech's Pulmozyme?. There are more than 30,000 patients in the U.S. with cystic fibrosis, a disorder in which a genetic mutation in airway cells causes dehydrated secretions and production of thickened mucus and impaired mucociliary clearance. This leads to frequent pulmonary infections and severely impaired quality of life.

Genentech, Inc. is a leading biotechnology company that discovers, develops, manufactures and markets human pharmaceuticals for significant unmet medical needs. Twelve of the approved products of biotechnology stem from Genentech science. Genentech markets seven products directly in the United States. The company has headquarters in South San Francisco, California and is traded on the New York Stock Exchange under the symbol DNA.

Inspire Pharmaceuticals is focused on the discovery and development of novel therapeutics based on mucosal hydration and epithelial cell biology. The Company's products target members of the P2Y receptor family. Inspire has two respiratory products, INS365 for therapeutic uses and INS316 for diagnostic applications, and one ophthalmic product, INS365 for Dry Eye Disorder, in clinical trials. Kissei Pharmaceutical Co., Ltd., Inspire's Japanese respiratory partner, recently filed an IND for INS365 in Japan. Inspire's Asian ophthalmic partner is Santen Pharmaceutical Co., Ltd. In addition, Inspire is advancing a number of preclinical programs for various therapeutic indications. The members of Inspire's scientific and management team have proven track records in drug discovery and development in the pharmaceutical industry. Inspire was established on the basis of inventions developed at the University of North Carolina at Chapel Hill School of Medicine. A venture capital syndicate, including Burr, Egan, Deleage & Co., Domain Associates, Medical Science Partners, Benefit Capital Management Corporation, InterWest Partners, New Medical Technologies and JAFCO Co., Ltd. funds the Company.

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