Analyst Conference Summary

conference date: November 1, 2007 @ 1:30 PM Pacific Time
for quarter ending: September 30, 2007 (3rd quarter)

Forward-looking statements

Overview: With Zingo approved by the FDA this quarter, first revenues are expected some time in 2008. No new news except exactly how much was spent in Q3.

Basic data:

No revenues.

Net loss $16.1 million, or $0.58 per share.

Cash and equivalents ended at $54.5 million, down $8.3 million sequentially.

Guidance:

2007 loss reduced by $5 million to range of $59 to $64 million, including $9.00 million of non-cash stock compensation expense.

End of 2007 cash expected between $35 and $40 million.

Conference Highlights:

Research and Development expense was $9.5 million. General and Administrative expense was $6.4 million, for a total operating expense of $16.0 million. $2.1 million of this was non-cash, stock-based compensation.

Reiterated earlier news: Zingo approved for children, trial for adults concluded with good results, sales will begin in 2008 when the product line is up to speed. Sales team is ready, including teaming with Sagent, and a nurse advocate group has been formed. Sagent has a lot of experience developing hospital sales.

Adlea for surgical pain is now in a Phase 2 trial with 2 Phase 3 trials slated for the first half of 2008.

Q4 will be busy with Zingo pre-launch activity, expansion of Zingo label, and Adlea trials.

Q&A:

Marketing Zingo to adults? Adult market is quite large. After pediatric hospital launching will look to adult launching.

Adlea trials? One will be bunyonectomy surgery. The other will be knee replacement surgery. We are aiming to show long-term pain reduction. Because of the long-term pain, if successful Adlea will be extremely attractive to care providers by reducing pain and the need for opioids.

Capital expenditures? We are mostly done with that.

Investor reluctance because of previous failure of needle-stick analgesic introductions? We see a genuine desire in hospitals to reduce needle-stick pain, especially in children. The existing products act too slow. With a fast-acting product, we expect acceptance.

Other companies with capsaicin based products competing with Adlea? Our patents are on how to apply it. The competitor is addressing neuropathic pain, so we are not really competing and in fact are encouraged by their good results.

Other Adlea competition? Lilly and Glenn-Mark deal. They are in early Phase II trials, so they are behind in time. Adlea is an agonist, their drug is an antagonist. The finances of the deal were attractive and we see our product as quite valuable. We are having some potential partners who are doing due diligence. We are looking for cost sharing and hefty upfront payments.

Zingo international? In partnership discussions, can't be more specific at this point.

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