Inspire Pharmaceuticals, Inc. announced that it has entered into an
amended and restated license, development and marketing agreement with
Allergan, Inc., which revises terms related to the Prolacria
(diquafosol tetrasodium ophthalmic solution) 2% development programme
and Inspire's right to receive revenues from Allergan based on net
sales of Restasis (cyclosporine ophthalmic emulsion) 0.05% and any
other human ophthalmic formulations of cyclosporine owned or controlled
by Allergan.

"This agreement provides clarity on the revenue
stream and respective responsibilities of the parties in our ophthalmic
collaboration," said Adrian Adams, president and CEO of Inspire. "We
have solidified the term for potential Restasis and follow-on product
revenues and have eliminated any financial commitment for both the
continued development of Prolacria and the co-promotion of Restasis. We
are pleased to have now gained sole control over any future Prolacria
development while retaining the right to leverage the asset as
appropriate. At this time, we are not planning to proceed with clinical
development of Prolacria. Our strategy is to create shareholder value
by focusing resources on our Azasite franchise and our potentially
transformational denufosol tetrasodium for cystic fibrosis programme."

Under
the amended agreement, which now runs through December 31, 2020,
Inspire is entitled to receive revenues at one global rate based on net
sales of Restasis and any other human ophthalmic formulation of
cyclosporine owned or controlled by Allergan, with no requirement to
co-promote Restasis. The royalty rate for Restasis in the United States
remains unchanged for the remainder of 2010. The annual global rate
steps down from the 2010 US rate by three percentage points in 2011, a
further 0.25 percentage point in 2013, and a final 0.50 percentage
point in 2014, remaining at this level through the end of the term in
2020.

Under the amended agreement, Inspire now has unilateral
control over any future Prolacria development and commercialization. In
the event Inspire resumes the Prolacria clinical development program
and receives regulatory approval for a Prolacria product in a
particular country, it will have the option to offer Prolacria
commercialization rights to Allergan for such country. If Inspire
chooses not to offer Allergan Prolacria commercialization rights with
respect to a country, Inspire will receive all the commercialization
revenues related to Prolacria in such country and Inspire's rights to
receive revenues from Allergan based on net sales of Restasis products
in such country will terminate.

Under the prior agreement,
Restasis royalties would have been reduced by thirty percent if the
joint development committee elected to terminate the Prolacria
development programme and Inspire elected not to co-promote Restasis.
Under the prior agreement, Inspire was entitled to receive revenues
based on net sales of Restasis and on any other human ophthalmic
formulation of cyclosporine owned by Allergan on a country-by-country
basis for a term equal to the later of (i) the applicable patent term
covering such product in such country, and (ii) 10 years from
commercial launch of such product.

Inspire is a
biopharmaceutical company focused on researching, developing and
commercializing prescription pharmaceutical products for ophthalmic and
pulmonary diseases.