The Company began exploring formulations to improve the original Pennsaid formulation in late 2004. The Company has completed preliminary testing of a new, improved version of Pennsaid, currently referred to as Pennsaid Plus. While no clinical trials of this product have taken place to date, in vitro and in vivo tests have indicated that Pennsaid Plus may increase the transport of diclofenac, the active therapeutic drug in both original Pennsaid and Pennsaid Plus, through the skin with less frequent dosing than Pennsaid providing Pennsaid Plus with potential advantages over Pennsaid. The development of Pennsaid Plus is an important step in the Company's plan to develop a family of topically applied drugs with applications in a number of therapeutic areas.

Pennsaid Plus is not currently approved for sale or marketing in any jurisdiction. Based on meetings with the FDA in 2008, it was determined that two pivotal phase 3 clinical trials will be required to demonstrate the clinical efficacy of Pennsaid Plus. Licensing partner, Covidien will assume responsibility for all future development activities and expenses for Pennsaid Plus, including the two phase 3 trials. Additional clinical and non-clinical studies may be required to support applications for the regulatory approval of Pennsaid Plus in the U.S. and other jurisdictions where the Company may market the product. There can be no assurance that such trials will be sufficient for regulatory authorities or that studies will yield successful results or that the required regulatory approvals will be obtained.