Inspire Receives Wells Notice from U.S. Securities and Exchange Commission Staff

Business Wire, Oct 23, 2006

DURHAM, N.C. -- Inspire Pharmaceuticals, Inc. (NASDAQ: ISPH) announced today that it received a Wells Notice letter on October 19, 2006 from the staff of the U.S. Securities and Exchange Commission (Commission), issued in connection with a Commission investigation that the Company previously disclosed relating to its Phase 3 clinical trial of the Company's dry eye product candidate, Prolacria([TM]). The Company's Chief Executive Officer and its Executive Vice President, Operations and Communications, also received Wells Notices.

The Wells Notices provide notification of the Commission staff's determination that it intends to recommend to the Commission that it bring a civil action against the Company and the two officers regarding possible violations of Section 17(a) of the Securities Act of 1933, Sections 10(b) and 13(a) of the Securities Exchange Act of 1934 and SEC Rules 10b-5, 12b-20, 13a-1, 13a-11, 13a-13, and 13a-14 thereunder. Under the process established by the Commission, the Company and the two officers have the opportunity to respond in writing to the Wells Notice before the staff makes any formal recommendation to the Commission regarding what action, if any, should be brought by the Commission. The Company and the officers receiving these notices will be preparing submissions in response to the Wells Notices and may seek a further meeting with the Commission staff.

The Company previously disclosed the Commission investigation in a September 7, 2005 press release and subsequent periodic filings.

About Inspire

Inspire is a biopharmaceutical company dedicated to discovering, developing and commercializing prescription pharmaceutical products in disease areas with significant commercial potential and unmet medical needs. The research and development programs of Inspire are driven by extensive scientific experience in the therapeutic areas of ophthalmology and respiratory/allergy, and supported by expertise in the field of P2 receptors. Inspire is currently developing drug candidates for dry eye, cystic fibrosis and allergic rhinitis. Inspire's U.S. specialty sales force promotes Elestat([R]) (epinastine HCI ophthalmic solution) 0.05% for allergic conjunctivitis and Restasis([R]) (cyclosporine ophthalmic emulsion) 0.05% for dry eye, ophthalmology products developed by Allergan, Inc. Elestat and Restasis are trademarks owned by Allergan. For more information, visit www.inspirepharm.com.

Forward-Looking Statements

The forward-looking statements in this news release relating to management's expectations and beliefs are based on preliminary information and management assumptions. Such forward-looking statements are subject to a wide range of risks and uncertainties that could cause results to differ in material respects, including adverse litigation developments and adverse developments in the U.S. Securities and Exchange Commission investigation. Further information regarding factors that could affect Inspire's results is included in Inspire's filings with the Commission. Inspire undertakes no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof.