Avanir Pharmaceuticals and OptiNose Announce Development and Commercialization Agreement for a New Fast-Acting Investigational Product for the Treatment of Acute Migraine

Avanir Pharmaceuticals, Inc.

and OptiNose AS today announced that the companies have entered into an exclusive North American license agreement for the development and commercialization of OptiNose's novel Breath Powered™ intranasal delivery system containing low-dose sumatriptan powder to treat acute migraine. If approved, this product would be the first and only fast-acting, dry-powder nasal delivery form of sumatriptan. Under the terms of the agreement, OptiNose received an upfront cash payment of $20 million and is eligible to receive certain shared development costs and up to an additional $90 million in total linked to the achievement of future clinical, regulatory and commercial milestones. In addition, if approved, Avanir will make tiered royalty payments based on net sales in North America. "The large migraine market is characterized by a high level of dissatisfaction. OptiNose has developed a unique device that has the potential to transform the clinical profile of the leading migraine drug, resulting in a new product candidate that we believe can significantly improve upon the current treatment options," said Greg Flesher, senior vice president of corporate development and chief business officer of Avanir Pharmaceuticals. "In clinical trials, this innovative and easy-to-use device has demonstrated rapid absorption and migraine relief using approximately 80% less drug than the most commonly prescribed oral sumatriptan. This NDA-ready asset fits well with our current commercial infrastructure and is strategically aligned with strengthening our position as a leading CNS specialty company." Under the terms of the agreement, Avanir will assume responsibility for regulatory, manufacturing, supply-chain and commercialization activities for the investigational product, now named AVP-825. Both parties will work together on the remaining activities in support of the NDA submission. Avanir will begin preparing the NDA immediately and expects to file the application with the U.S. Food and Drug Administration by early calendar 2014. "Avanir is an ideal partner given its proven track record of successfully developing and commercializing neuroscience products," said Peter Miller, chief executive officer of OptiNose. "The results from our phase III clinical study were extremely encouraging and we believe we have a potential treatment that provides pain relief quickly and with few adverse events. This new delivery method offers significant benefits and we look forward to working with the Avanir team to bring an important new treatment option to people who continue to suffer from migraines." Migraine represents an area of significant unmet medical need. According to the Centers for Disease Control and Prevention, over 37 million Americans suffer from migraine headaches.1 The triptan class of medications is generally considered the gold standard of care with over 13 million prescriptions written annually. Sumatriptan is the class leader with a market share of over 50% making it the most commonly prescribed migraine drug in the U.S.2 An online survey of over 2,500 frequent migraine sufferers revealed that 66% were dissatisfied with their treatments.3 As a result, many migraine sufferers are seeking fast-acting, well tolerated treatment options. About the Phase III TARGET study In November 2012, Optinose reported results from its pivotal Phase III study in 212 subjects. The TARGET study tested delivery of 16 mg of sumatriptan using OptiNose's Breath Powered delivery technology. The study found that the product provided headache relief for 68% of subjects with moderate to severe migraines after two hours (p<0.01 compared to placebo). The trial found subjects began to experience headache relief as quickly as 15 minutes after administration, with nearly 42% reporting pain relief at 30 minutes post-treatment (p<0.05 vs. placebo at 30 minutes). In this multicenter, double-blind, placebo-controlled study, migraine sufferers were randomized to self-administer either OptiNose sumatriptan (AVP-825) or placebo using the Breath Powered device when they had moderate to severe migraine pain. Pain scores were then assessed at various time points after administration. Pain was evaluated using a four point scale with headache relief defined as a reduction from moderate (grade 2) or severe (grade 3) pain to mild (grade 1) or complete relief (grade 0). The data show pain relief for some subjects began as early as 15 minutes after treatment, and a statistically significant greater number of subjects receiving OptiNose sumatriptan (AVP-825) experienced headache relief compared to placebo at all times from 30 minutes through two hours. At two hours after taking the medication, 70% of subjects taking OptiNose sumatriptan (AVP-825) reported that they were experiencing meaningful relief from their headache pain. There were no serious adverse events associated with OptiNose sumatriptan (AVP-825) in the study. There were also no systemic adverse events reported in more than a single subject, and local adverse events reported in the nose were generally mild and transient. Other Events Additionally, Avanir plans to enter into a debt financing, subject to syndication of the facility and customary closing conditions. The term loan would include a total loan amount of $50 million. Funds from the loan would be used to retire Avanir's current $30 million term loan and the remaining $20 million will be used to fund the upfront payment for the Optinose license agreement. About OptiNose Breath Powered Delivery Technology OptiNose's Breath Powered delivery technology is unique in that it uses the natural function of a user's breath to propel medications beyond the nasal valve into the deep, targeted areas of the nasal cavity more effectively, efficiently and consistently than current treatments. A user exhales into the device, automatically closing the soft palate and sealing off the nasal cavity completely. The exhaled breath carries medication from the device into one side of the nose through a sealing nosepiece. Narrow nasal passages are gently expanded and medication is transported well beyond the nasal valve to targeted sites. After delivering medication to the targeted sites, air painlessly flows around to the opposite side of the nasal cavity and exits through the other side of the nose rather than into the throat or lungs. To view a multimedia overview of the OptiNose technology, please visit this link. Note to Investors: Avanir will hold a conference call to discuss this transaction today, July 2, 2013, beginning at 3:00 p.m. Pacific Time. You can listen to this call by dialing 1- 877 280 4960 for domestic callers or +1- 857 244 7317 for international callers, and entering passcode 96822585. Those interested in listening to the conference call live via the internet may do so by visiting http://ir.avanir.com. About AVP-825 AVP-825 is an investigational drug-device combination product consisting of low-dose sumatriptan powder delivered intranasally utilizing a novel breath powered delivery technology. If approved, AVP-825 would be the first and only fast-acting, dry-powder intranasal form of sumatriptan. About Avanir Pharmaceuticals, Inc. Avanir Pharmaceuticals, Inc. is a biopharmaceutical company focused on bringing innovative medicines to patients with central nervous system disorders of high unmet medical need. As part of our commitment, we have extensively invested in our pipeline and are dedicated to advancing medicines that can substantially improve the lives of patients and their loved ones. For more information about Avanir, please visit www.avanir.com. About OptiNose OptiNose is a drug delivery company developing a breakthrough Breath Powered nasal technology set to transform the static nasal drug delivery market. OptiNose devices are designed to reliably deliver nasal medication to target regions of the nasal cavity, including the sinus and olfactory regions, while preventing lung deposition. The simple devices are intended to unlock the potential for significant new benefits, including better local activity, better systemic bioavailability and pharmacodynamics and for "nose-to-brain" delivery for treating neurologic and psychiatric disorders. OptiNose has created single and multi-use nasal devices for delivering both liquid and powder formulations. The patent-protected technology has been successfully tested in a number of clinical trials evaluating the advantages of the technology compared to traditional nasal sprays. OptiNose is actively developing internal products using the new technology, which is also available to license for delivery of proprietary medicines. Investors in OptiNose include Avista Capital Partners in New York, WFD Ventures LLC located in New York and Entrepreneurs Fund LP based in Jersey, Channel Islands. For more information please visit www.optinose.com.