Endo Pharmaceuticals Holdings Inc, a market leader in pain management, entered into a license and development agreement with Alexza Pharmaceuticals, Inc. for the exclusive clinical development and commercialisation rights in North America for Alexza's AZ-003 (Staccato fentanyl).

Currently in phase I clinical development, AZ-003 is a hand-held drug device system that uses Alexza's proprietary Staccato system inhalation technology to deliver fentanyl for the treatment of breakthrough pain in cancer and non-cancer patients.

"We are delighted to partner with a leading-edge company such as Alexza to further expand our penetration in the pain market and bring us another step closer to our stated goal of becoming the leading pain company," said Peter A. Lankau, president and chief executive officer, Endo. "Clearly, AZ-003 meets our criteria for clinically differentiated, innovative products that fill an unmet medical need. Early clinical data suggest that AZ-003 could potentially have a rapid onset of action comparable to intravenous administration, and we believe that the formulation will be tamper-resistant. We have evaluated many technologies and product opportunities in the pain field and believe that the Alexza Staccato technology is 'best in class' for an inhalation approach to pain management. AZ-003 is patent protected until 2022."

Under the terms of the agreement, Endo will pay Alexza an upfront fee of $10 million, with additional payments of approximately $40 million upon achievement of predetermined regulatory milestones. Endo will also pay undisclosed royalties to Alexza on net sales of AZ-003. Effective immediately, Endo will assume responsibility for, and funding of, all remaining clinical trial development and regulatory filings. Alexza will manufacture the product for Endo and will be responsible for completing development of the device.

AZ-003 is the combination of Alexza's proprietary Staccato system with fentanyl, a drug belonging to the class of compounds known as opioid analgesics. AZ-003 is a hand-held, electrically heated, multiple-dose inhaler designed to generate and deliver excipient-free fentanyl aerosol for deep lung delivery. The current product candidate consists of a disposable dose cartridge containing 25 doses each of 25 mcg fentanyl, which is inserted into a reusable controller. Development of additional dosage strengths and quantities is anticipated. The controller consists of software and hardware designed to allow safe, patient-controlled delivery of the drug. Since the Staccato system can be designed to incorporate a variety of lockout and dosing features, Alexza believes that AZ-003 may reduce the potential for abuse and diversion, and facilitate patient-dose titration to the minimum effective drug dose in a simple, convenient and easy-to-use delivery system.

In October 2007, results from the AZ-003 phase I clinical trial were presented at the 2007 American Society of Anesthesiologists Annual Meeting, in San Francisco. The clinical trial was conducted in 50 opioid-naive healthy volunteers in two stages. In Stage 1, the arterial pharmacokinetics (PK) of 25 mcg of AZ-003 was compared to a 25 mcg dose of fentanyl administered intravenously (IV). The AZ-003 PK was equivalent to the IV fentanyl PK, with similar peak plasma concentration (Cmax), time to maximum.-2- plasma concentration (Tmax), and area under the curve concentration (AUC). These data suggest complete bioavailability of the inhaled dose. Mean peak arterial plasma concentrations were observed within 30 seconds for both administration routes. In Stage 2 of the clinical trial, ascending doses of AZ-003, controlled by the Staccato system, exhibited dose proportionality of fentanyl throughout the dosing range from 50 mcg to 300 mcg, following an AUC analysis. No serious adverse events were attributable to AZ-003, and the results from the clinical study showed that AZ-003 was generally safe and well tolerated at all doses.

Endo Pharmaceuticals Holdings Inc. is a fully integrated specialty pharmaceutical company with market leadership in pain management products. Through its wholly owned Endo Pharmaceuticals Inc. subsidiary, the company researches, develops, produces and markets a broad product offering of both branded and generic pharmaceuticals, meeting the needs of healthcare professionals and consumers alike.