Inhale's Technology Used in Recently-Approved Hepatitis C Treatment.

Business Editors/High-Tech Writers

FDA Approves Pegasys(R) (peginterferon alfa-2a) in combination with

Copegus(TM) (ribavirin) for the treatment of Hepatitis C

SAN CARLOS, Calif.--(BUSINESS WIRE)--Dec. 16, 2002

Inhale Therapeutic Systems, Inc. (Nasdaq:INHL) today reported the approval by the U.S. Food and Drug Administration (FDA) of an additional drug product using the company's technology. Roche announced on December 4, 2002, that the FDA has approved combination therapy with Pegasys(R) (peginterferon alfa-2a), which uses Inhale's technology to create a PEGylated interferon, and Copegus(TM) (ribavirin) for the treatment of adults with chronic hepatitis C who have compensated liver disease and have not previously been treated with interferon alpha. Patients in whom efficacy was demonstrated included patients with compensated liver disease and histological evidence of cirrhosis (Child-Pugh class A).

Pegasys and Copegus combination therapy was granted priority review designation by the FDA. Pegasys was approved as monotherapy for the treatment of adults with chronic hepatitis C on October 16, 2002. Currently, 2.7 million Americans are chronically infected with hepatitis C.

"We are pleased that our PEGylation technology enables this breakthrough therapy," said Ajit Gill, president and CEO, Inhale. "PEGylation continues to grow as an industry standard method for enabling improved performance of protein drug products."

In a separate release, Inhale reported today that Pharmacia Corporation initiated a large Phase III clinical development program with CDP 870, a product targeted at rheumatoid arthritis, that uses Inhale's PEGylation technology.

Other products using Inhale's PEGylation technology approved this year in the U.S. include Amgen's Neulasta(TM) (pegfilgrasatim) and Roche's Pegasys (peginterferon alfa-2a) as a monotherapy. Further, Pharmacia's SOMAVERT(R) has been approved for marketing in Europe for the treatment of certain patients with acromegaly.

The process of PEGylation is used to increase drug circulation time in the bloodstream, to improve drug solubility and stability, and to reduce immunogenicity. These advantages can translate into decreased dosing frequency, improved drug efficacy and safety, improved stability, and a simplified drug formulation.

Pegasys is made when interferon alfa-2a undergoes the process of PEGylation in which one or more chains of polyethylene glycol, also known as PEG, are attached to another molecule. In Pegasys, a large, branched, mobile PEG is bound to the interferon alfa-2a molecule and provides a selectively protective barrier. Pharmacokinetic behavior of the end product depends on the length of the PEG and the nature of the link between the PEG and the protein. The high molecular weight (40 kilodalton) branched PEG in Pegasys has been shown to provide sustained PEGylated interferon alfa-2a exposure at clinically effective levels over the one-week dosing period. The PEG used in Pegasys is licensed by Roche from Inhale.

Pivotal Studies

According to Roche, Pegasys and Copegus combination therapy was granted approval based on the results of two pivotal Phase III clinical trials that demonstrate it is an effective treatment for patients with chronic hepatitis C.

The pivotal study completed most recently evaluated the effects of the duration (24 weeks compared to 48 weeks) of Pegasys 180mcg as a subcutaneous injection once weekly and Copegus treatment (24 weeks compared to 48 weeks) and the daily dose of Copegus (800mg compared to 1000 for patients weighing less than 75 kg and 1200 for patients equal to or more than 75 kg) in patients with chronic hepatitis C. The number of patients who received medication in the study was 1284.

The study showed that patients with strains of the hepatitis C virus known as genotype non-1 (predominantly 2 and 3) achieved similar sustained virological response rates when treated with a 24 week regimen of Pegasys and 800mg Copegus compared to a 48 week regimen of Pegasys and 1000-1200 Copegus. Genotype non-1 (predominantly 2 and 3) patients who were treated with the 24 week lower Copegus dose regimen experienced fewer side effects compared to patients treated for 48 weeks. Sustained virological response refers to a patient's continued undetectable serum hepatitis C RNA levels 24 weeks after finishing a course of treatment.

Genotype 1 patients who were treated with the 48 week regimen of Pegasys and 1000-1200 Copegus had higher sustained virological response rates compared to those treated with the 24 week lower Copegus dose regimen.

Sustained virological response rates for these groups treated with Pegasys and Copegus therapy were:

-- Genotype 1: 48 week duration with 1000-1200mg Copegus: 51 percent

-- Genotype 2-3: 24 week duration with 800mg Copegus: 82 percent

The other pivotal study was published in the September 26, 2002 New England Journal of Medicine and showed that Pegasys 180mcg and Copegus 1000-1200mg combination therapy is a more effective treatment for chronic hepatitis C than interferon alfa-2b 3 MIU as a subcutaneous injection three times a week and 1000-1200mg ribavirin. The sustained virological response rate in the Pegasys and Copegus treated patients was 53 percent compared to 44 percent in the interferon alfa-2b and ribavirin group. The number of patients who received medication in the study was 1121.

In both studies, virus genotype was clearly the strongest predictor of whether or not a patient achieved a sustained virological response.

Pegasys, a premixed solution, is dosed at 180mcg as a subcutaneous injection once a week. Copegus, available as a 200mg tablet, is administered at 800 to 1200mg taken twice daily as a split dose. Pegasys is currently available at pharmacies. Copegus will be available in early 2003. The two products will be sold separately.

Pegasys and Copegus Adverse Events

Alpha interferons, including Pegasys, may cause or aggravate fatal or life-threatening neuropsychiatric, autoimmune, ischemic, and infectious disorders. Patients should be monitored closely with periodic clinical and laboratory evaluations. Patients with persistently severe or worsening signs or symptoms of these conditions should be withdrawn from therapy. In many, but not all cases, these disorders resolve after stopping Pegasys therapy.

Copegus may cause birth defects. Extreme care must be taken to avoid pregnancy in female patients and in female partners of male patients taking Pegasys and Copegus combination therapy. Ribavirin causes hemolytic anemia. The anemia associated with ribavirin therapy may result in worsening of cardiac disease. Ribavirin is genotoxic, mutagenic, and should be considered a potential carcinogen.

Pegasys is contraindicated in patients with hypersensitivity to Pegasys or any of its components, autoimmune hepatitis, and decompensated hepatic disease prior to or during treatment with Pegasys. Pegasys is also contraindicated in neonates and infants because it contains benzyl alcohol. Benzyl alcohol has been reported to be associated with an increased incidence of neurological and other complications in neonates and infants, which are sometimes fatal. Pegasys and Copegus therapy is additionally contraindicated in women who are pregnant, men whose female partners are pregnant, and patients with hemoglobinopathies (eg, thalassemia major, sickle-cell anemia).

The most common adverse events reported for Pegasys and Copegus combination therapy, observed in clinical studies to date (n=451), were fatigue/asthenia (65%), headache (43%), pyrexia (41%), myalgia (40%), irritability/anxiety/nervousness (33%), insomnia (30%), alopecia (28%), neutropenia (27%), nausea/vomiting (25%), rigors (25%), anorexia (24%), injection site reaction (23%), arthralgia (22%), depression (20%), pruritus (19%), and dermatitis (16%).

Serious adverse events include neuropsychiatric disorders (suicidal ideation and suicide attempt), serious and severe bacterial infections, bone marrow toxicity (cytopenia and rarely, aplastic anemia), cardiovascular disorders (hypertension, arrhythmias and myocardial infarction), hypersensitivity (including anaphylaxis), endocrine disorders (including thyroid disorders and diabetes mellitus), autoimmune disorders (including psoriasis and lupus), pulmonary disorders (dyspnea, pneumonia, brochiolitis obliterans, interstitial pneumonitis and sarcoidosis), colitis (ulcerative and hemorrhagic/ischemiccolitis), pancreatitis, and ophthalmologic disorders (decrease or loss of vision, retinopathy including macular edema and retinal thrombosis/hemorrhages, optic neuritis and papilledema).

About hepatitis C

Hepatitis C, a blood-borne infectious disease of the liver, the leading cause of cirrhosis and liver cancer and the number one reason for liver transplants in the U.S., is transmitted through body fluids, primarily blood or blood products, and by sharing needles. In many patients, the mode of transmission is unknown. Unfortunately, most people infected with hepatitis C are unaware of it because it may take years for symptoms to develop. Hepatitis C chronically infects an estimated 170 million people worldwide (three percent of the world's population), with as many as 180,000 new cases occurring each year. It is estimated that less than 30 percent of all cases are diagnosed. If left untreated, hepatitis C can be fatal for some patients.

About Inhale

Inhale Therapeutic Systems, Inc. provides a portfolio of leading drug delivery technologies and expertise to enable pharmaceutical and biotechnology companies to maximize the performance of their drug products. The company is collaborating with major pharmaceutical and biotechnology companies. Additional information is available on the company's website at www.inhale.com.

This release contains forward-looking statements that reflect the current views of Inhale management as to future products, product development, and other future events and operations. These forward-looking statements involve uncertainties and other risks that are detailed in reports and other filings with the Securities and Exchange Commission, including the Form 10-K for 2001 and Form 10-Q for the third quarter 2002. These documents identify important factors that could cause the company's actual performance to differ from current expectations, including the outcome of clinical trials, regulatory review, manufacturing capabilities and marketing effectiveness.