Novartis Pharma AG

Oral Salmon Calcitonin

Novartis Pharma AG and its development partner Nordic Bioscience are currently taking Emisphere's Eligen^® Technology into Phase III development with an oral salmon calcitonin product to treat osteoarthritis and osteoporosis. Enrollment in the first trial of Phase III clinical studies for osteoarthritis is expected to be completed by the third quarter of 2008, and enrollment for the second Phase III trial should be complete mid-2009. Osteoporosis Phase III trials are also ongoing, with enrollment completion expected in the first half of 2008. When these Phase III studies are completely enrolled under their current protocols, over 5,000 clinical study patients will be using the Eligen^® Technology.

Osteoporosis represents a large market, including 10 million managed patients and 34 million additional individuals at risk. An ideal treatment with an optimal efficacy/ safety/convenience profile is not available, representing a clear need that could be addressed by Emisphere's oral calcitonin product. Oral calcitonin could provide a safe, effective, and convenient alternative to existing therapies, which currently include injectable or intranasal options.

The market for treatment of osteoarthritis is also substantial, represented by 21 million managed patients. Earlier research indicates that oral calcitonin could become the first global disease-modifying drug for osteoarthritis.

Oral Human Growth Hormone

Human Growth Hormone (hGH) is a protein hormone secreted from the anterior pituitary gland that stimulates tissue growth and is responsible for linear, skeletal, organ, and cell growth. In addition, hGH has salutary effects on metabolism of proteins, lipids, carbohydrates, and minerals and stimulates the synthesis of chondroitin sulfate and collagen.

From 1998 through August 2003, Emisphere developed oral recominant hGH (rhGH) in collaboration with Eli Lilly & Company. As of August 2003, Lilly returned to Emisphere all rights to the oral rhGH program pursuant to the terms of its license agreement. On September 23, 2004, Emisphere announced a new partnership with Novartis to develop its oral rhGH program. Under this collaboration, Emisphere is working with Novartis to initiate clinical trials of a convenient oral human growth hormone produce using the Eligen^® Technology.

On May 1, 2006, Emisphere announced that Novartis would initiate the development of an oral rhGH product using the Company's Eligen^® delivery technology. Under this agreement, Novartis has an exclusive worldwide license to develop, make, have made, use, and sell products developed under this program.

Oral Recombinant Parathyroid Hormone 1-34

Recombinant PTH, currently approved for the treatment of osteoporosis, is available only by injection. On December 1, 2004, Emisphere entered into a Research Option and License Agreement with Novartis whereby Novartis obtained an option to license Emisphere's existing technology to develop oral forms of PTH 1-34. On March 7, 2006, Novartis exercised its option to the license. Parathyroid hormone continues to be on a progressive clinical development path in collaboration with Novartis Pharma AG.