(Inhalable Insulin)

Providing a Needle-Free Alternative to Diabetes Management

AERx iDMS is being developed to control blood glucose levels in patients with diabetes. This product is currently in Phase 3 clinical trials, and our licensee, Novo Nordisk, is responsible for all remaining development, manufacturing and commercialization. The expected approval of the product is in 2010.

According to 2005 statistics from the American Diabetes Association, approximately 20.8 million Americans suffer from either Type 1 or Type 2 diabetes. Over 90% of these Americans have Type 2 diabetes, the prevalence of which is increasing dramatically due to lifestyle factors such as inappropriate diet and lack of physical activity. Patients with Type 1 diabetes do not have the ability to produce their own insulin and must administer insulin injections to survive. Patients with Type 2 diabetes are insulin resistant and unable to efficiently use the insulin that their bodies produce. While many Type 2 patients can initially maintain adequate control over blood glucose through diet, exercise and oral medications, most Type 2 patients progress within three years to where they cannot maintain adequate control over their glucose levels and insulin therapy is needed. However, given the less acute nature of Type 2 diabetes, many of these patients are reluctant to take insulin by injection despite the risks. Inadequate regulation of glucose levels in diabetes patients is associated with a variety of short and long-term effects, including blindness, kidney disease, heart disease, amputation resulting from chronic or extended periods of reduced blood circulation to body tissue and other circulatory disorders. The global market for diabetes therapies in 2005 was in excess of $18 billion, according to Business Insights. The majority of this amount was from sales of oral antidiabetics, while insulin and insulin analogues accounted for $7.3 billion, a 17% increase over the prior year. Sales of insulin and insulin analogues are forecast to grow to $9.8 billion in 2011. Type 2 patients consume the majority of insulin used in the United States.

We believe that AERx iDMS possesses features that will benefit diabetes patients and will provide an advantage over competitive pulmonary insulin products or can be used as a replacement for or adjunct to currently available therapies. Our patented breath control methods and technologies guide patients into the optimal breathing pattern for effective insulin deposition in and absorption from the lung. An optimal breathing pattern for insulin delivery depends on several elements: actuation of drug delivery at the early part of inspiration, control of inspiratory flow rate, and the state of inflation of the lung after the insulin is deposited, with the fully inflated lung providing the most desirable absorption profile. We believe a patient’s ability to breathe reproducibly will be required to assure adequate safety and efficacy of inhaled insulin for the treatment of Type 1 and Type 2 diabetes. Our system also allows patients to adjust dosage in single unit increments, which is key to proper glucose control in diabetes. AERx iDMS offers the ability for patients and physicians to monitor and review a patient’s dosing regimen.

While Novo Nordisk is responsible for all further development of the diabetes product, we and Novo Nordisk continue to cooperate and share in general technology development, as well as intellectual property development and defense. We will receive royalty payments on any commercial sales. Novo Nordisk is a shareholder of our common stock.

* As with any clinical program, there are many factors that could delay the launch or result in AERx iDMS not receiving or maintaining regulatory approval.

Scientific Publications
There is extensive literature on the AERx inhalation products and technologies. Following are citations relating to insulin delivery using AERx iDMS:

Brunner, G.A. et al.: “Dose-Response Relation of Liquid Aerosol Inhaled Insulin in Type I Diabetic Patients” Diabetologia 1991; 44:305-308.

Cramer, J, Okikawa, J, and Cramer, J.: “Compliance with Inhaled Insulin Treatment Using AERx® insulin Diabetes Management System [Abstract]” Abstracts of Papers 63rd Annual Meeting of American Diabetes Association New Orleans, LA., 2003; Abstract #442.

Thippawong, J. et al.: “Pulmonary Insulin Administration Using the AERx® Insulin Diabetes System” Diabetes Technology & Therapeutics 2002; 4(4): 499-504.

Educational Links
For more information on diabetes, access the following resources:
American Diabetes Association
CDC Diabetes Public Health Resource
National Diabetes Information Clearinghouse
MedlinePlus