Salmon Calcitonin for Osteoarthritis and Osteoporosis

Novartis is using our Eligen® drug delivery technology in combination with salmon calicitonin and human growth hormone. Their most advanced program utilizing the Company's Eligen® Technology is testing an oral formulation of calcitonin to treat osteoarthritis and osteoporosis. For osteoarthritis, Novartis completed one Phase III trial and a second Phase III clinical study is continuing. Novartis is also conducting a Phase III clinical study for osteoporosis. In its Media Release for the second quarter 2011, Novartis reported that its planned submission for oral calcitonin for the treatment of osteoporosis is scheduled to be filed with the regulatory authorities during 2012.

Osteoarthritis ("OA") is a clinical syndrome caused by a wearing-away of cartilage that cushions the joints and a decrease in the important joint lubricant, synovial fluid, thereby resulting in low grade inflammation and pain. As OA progresses, joint pain can result when the patient bears weight in the course of walking or standing. It is the most common form of arthritis and affects nearly 21 million people in the United States.

On December 14, 2011, Novartis informed Emisphere that it will not pursue further clinical development of the investigational drug SMC021 (oral calcitonin) being studied by Nordic Bioscience (the exclusive license partner of Novartis) as a treatment option in two indications, osteoarthritis (OA) and for post-menopausal osteoporosis (OP) and that it will not seek regulatory submission for SMC021 in OA or OP indications.

Novartis advised Emisphere that its decision to stop the clinical program of SMC021 in both indications was based on analysis and evaluation of data from three Phase III clinical trials (two in OA and one in OP) that showed that while SMC021 displayed a favorable safety profile, it failed to meet key efficacy endpoints in all three trials.