The spinal cord and brain together comprise the central nervous system, or CNS. The billions of nerve cells that make up the CNS, in conjunction with the nerve bundles that run through all parts of the body, which is called the peripheral nervous system, transmit the electrical impulses necessary to sustain, regulate and monitor every aspect of human life. Spasticity refers to the often painful involuntary tensing, stiffening or contracting of muscles. Spasticity is not a disease but a symptom of other conditions, such as MS, SCI, stroke, traumatic brain injury and cerebral palsy, where portions of the nervous system that control voluntary movement have been damaged. Up to 75% of people with chronic SCI, and the majority of people with MS, experience some form of spasticity. We Moved, a non-profit organization dedicated to movement disorders, estimates that spasticity affects approximately 500,000 people in the United States and over 12 million worldwide.

The National Multiple Sclerosis Society, or NMSS, currently estimates that 400,000 people in the United States have multiple sclerosis. The NMSS estimates that the medical costs associated with treating MS in the United States were approximately $6.2 billion in 2004. Medications accounted for approximately $3.5 billion of these costs. MS is more prevalent in Caucasians and women and is generally diagnosed between the ages of 20 and 50. MS is a degenerative CNS disorder in which the immune system attacks and damages the insulating myelin sheath.

According to the National Spinal Cord Injury Statistical Center, approximately 250,000 people in the United States live with the long-term consequences of SCI and approximately 11,000 new spinal cord injuries occur each year, typically in young men. The majority of people with SCI are injured under the age of 30 and live with permanent disability and multiple related medical conditions for more than 40 years after their injury. The National Spinal Cord Injury Database at the University of Alabama estimates that the average lifetime costs directly attributable to SCI for an individual injured at age 25 varies from approximately $600,000 to $2.8 million depending on the severity of the injury.

There are currently 11 generic versions of tizanidine tablets on the market. However, substantial brand loyalty remains in the prescriber community for the Zanaflex brand.

Clinical trials conducted by Elan demonstrated that Zanaflex Capsules, when taken with food, produce average peak levels of tizanidine in a person\'s blood that are lower and rise more gradually compared to the peak levels following a similar dose of the tablet form. The FDA recognizes these differences and has determined that Zanaflex tablets and generic tizanidine tablets are not therapeutically equivalent and are not AB-rated to Zanaflex Capsules.

Fampridine-SR, the Company’s lead products candidate, is currently in a Phase 3 clinical trial for the improvement of walking ability in people with MS pursuant to an SPA issued by the FDA. The FDA has agreed that this trial, if successful, could qualify as one of the pivotal efficacy studies required for drug approval. Fampridine-SR is a small molecule drug contained in a sustained-release tablet form. Laboratory studies have shown that fampridine, the active ingredient in Fampridine-SR, improves impulse conduction in nerve fibers in which the myelin sheath has been damaged. Fampridine is not currently FDA-approved for use in MS or any other indications.

The Company has a worldwide, exclusive licenses from Elan for all of its rights to, among other things, develop, promote, distribute, use and sells Fampridine-SR in all human clinical indications, and to develop, promote, distribute, use and sells other patented sustained-release formulations of the drug.

The Company has conducted a series of clinical trials to establish the safety, pharmacokinetics and optimal dosing of Fampridine-SR in MS and SCI, as well as to assess its efficacy. More than 800 people have been treated with Fampridine-SR in over 25 clinical trials, including nine clinical trials in MS and 11 clinical trials in SCI.

Cost of sales of $1.4 million for the six months ended June 30, 2005 as compared to $0 for the six months ended June 30, 2004.

Research and development expenses for the six months ended June 30, 2005, were $7.1million as compared to $13.5 million for the six months ended June 30, 2004, a decrease of approximately $6.4 million , or 47.4%.

Sales and marketing expenses for the six months ended June 30, 2005, were $5.5 million compared to $1.7 million for the six months ended June 30, 2004, an increase of approximately $3.8 million or 223.5%.

General and administrative expenses for the six months ended June 30, 2005, were $3.9 million compared to $8.1million for the six months ended June 30, 2004, a decrease of approximately $4.2 million, or 51.9%.