The pharmaceutical industry is highly competitive and characterized by a number of established, large pharmaceutical companies, as well as smaller emerging companies.

The marketing of pharmaceutical products is increasingly affected by the growing role of managed care organizations and pharmaceutical benefit management companies in the provision of health services. Such organizations negotiate with pharmaceutical companies for highly competitive prices for pharmaceutical products in equivalent therapeutic categories. Failure to be included or to have a preferred position in a managed care organization’s drug formulary could result in decreased prescriptions of some products.

In 2004, total U.S. sales of calcium channel blockers were approximately $4.5 billion, consistent with 2003 sales levels. The market leaders are Pfizer’s Norvasc (amlodipine) and AstraZeneca’s Plendil (felodipine). Total U.S. sales of Norvasc and Plendil in 2004 were approximately $2.4 billion and $216 million, respectively. In 2004, total U.S. sales of anti-arrhythmics were approximately $366 million, down 14% from 2003. The anti-arrhythmic market consists primarily of lower-priced generic drugs. Total prescriptions for anti-arrhythmic drugs grew 1% in 2004 compared to 2003. In 2004, total U.S. sales of fibrates were approximately $972 million, a 31% increase over 2003 sales. The market leader is Abbott’s Tricor (fenofibrate). According to IMS, total U.S. sales of Tricor in 2004 were approximately $854 million, up 37% from 2003. The remaining market for fibrates consists primarily of the branded and generic forms of gemfibrozil, which had U.S. sales of approximately $111 million in 2004. In 2004, total U.S. sales of beta blockers were approximately $1.9 billion, a 20% increase over 2003 sales. The market leader is AstraZeneca’s Toprol XL (metoprolol). Total U.S. sales of Toprol XL in 2004 were approximately $1.2 billion.

The Company’s DynaCirc and DynaCirc CR (a controlled release, once daily formulation) contain isradipine, a dihydropyridine calcium channel blocker approved for the treatment of high blood pressure. DynaCirc CR has a number of favorable characteristics when compared to the market leading calcium channel blockers, Norvasc and Plendil. DynaCirc CR was also observed to result in a reduced incidence of edema or swelling of the ankles and legs.

The Company’s Rythmol and Rythmol SR (a sustained release, twice daily formulation) contain propafenone, an anti-arrhythmic approved for the treatment of an irregular heart rhythm known as atrial fibrillation in patients without structural heart disease. According to the prescribing information for Rythmol SR, no liver function monitoring is required.

The Company’s InnoPran XL is an extended release once daily formulation of propranolol, a beta blocker approved for the treatment of high blood pressure. Beta blockers reduce heart rate and blood pressure by blocking the effects of adrenaline. InnoPran XL is the first and only beta blocker designed to provide 24-hour control of blood pressure and heart rate with additional protection in the early morning hours.

The Company’s Antara is a once daily formulation of fenofibrate approved for use in combination with a diet restricted in saturated fat and cholesterol to reduce elevated low-density lipoprotein cholesterol (LDL or “bad” cholesterol), triglyceride and Apolipoprotein B (free floating fats in the blood) levels, and to increase high-density lipoprotein cholesterol (HDL or “good” cholesterol) in adult patients with high cholesterol or an abnormal concentration of lipids in the blood. Antara is the lowest therapeutic dose fenofibrate currently available with equivalent blood levels of the drug and efficacy equal to the market leader, Tricor.

The Company’s Omacor is a highly purified and distilled formulation of the ethyl esters of a range of omega-3 acids, predominantly EPA and DHA, and approved by the FDA for the treatment of very high triglycerides (500 mg/dL and greater).

The Company’s Lescol and Lescol XL, which contain fluvastatin, are members of the statin class of drugs approved for the treatment of high cholesterol.

Net product sales for the three months ended March 31, 2005 decreased $3.5 million, or 10%, to $30.5 million compared to $34.0 million for the three months ended March 31, 2004.

Sales and marketing expenses for the three months ended March 31, 2005 were $34.2 million and $25.8 million for the three months ended March 31, 2004, representing an increase of $8.4 million, or 33%.

Interest expense for the three months ended March 31, 2005 was $3.3 million, compared to zero interest expense for the three months ended March 31, 2004.

Interest income for the three months ended March 31, 2005 was $0.3 million, compared to $0.2 million for the three months ended March 31, 2004.

Net loss was $47.9 million for the three months ended March 31, 2005 and $24.2 million for the three months ended March 31, 2004.