Healthcare Industry News:   Emisphere Technologies 

Biopharmaceuticals Drug Delivery Litigation

 News Release - February 7, 2006

Emisphere Technologies Responds to Eli Lilly Motion

TARRYTOWN, N.Y., Feb. 7 (HSMN NewsFeed) -- Emisphere Technologies, Inc. (Nasdaq: EMIS ) announced today the Company filed papers in response to a recent motion by Eli Lilly & Co. (NYSE: LLY ; Lilly), seeking to modify the U.S. Federal District Court of the Southern District of Indiana's January 6th ruling in favor of Emisphere. Lilly's motion does not dispute the Court's ultimate conclusion that Lilly had breached its agreements with Emisphere. Lilly is seeking a specific, limited change in the language used by the Court to describe the claims that were addressed in the decision. Emisphere opposes Lilly's motion because Emisphere believes that the Court's description was accurate.

About the Emisphere/Eli Lilly Lawsuit

On January 6, 2006, U.S. Federal District Court Judge David F. Hamilton of the Southern District of Indiana, determined that Lilly breached its contractual obligations and that the Lilly license and collaboration agreements with Emisphere for oral PTH were properly terminated as of August 23, 2004.

The litigation addressed whether Emisphere was entitled to terminate its license and collaboration agreements with Lilly in August 2004. Emisphere contended that it had three independent reasons to terminate its relationship with Lilly: (1) Lilly's admitted use of Emisphere's patented technology and confidential know-how outside of the licensed field of PTH (including use of Emisphere's technology with insulins, human growth hormone, interferon follicle stimulating hormone and other compounds addressing obesity, atherosclerosis and inflammation); (2) Lilly's refusal to assign to Emisphere a patent application filed by Lilly for GLP 1, which related to the use of Emisphere's technology outside of the PTH field and arose out of the collaboration between the companies; and (3) Lilly's disclosure to Lilly personnel not involved in the PTH collaboration of confidential information provided by Emisphere and/or developed by the collaboration that related to the use of Emisphere's technology. Judge Hamilton agreed with all three contentions, finding that "Lilly did not act in good faith and did not deal fairly with Emisphere. The breach of trust went to the root of the parties' agreement, and it is serious enough to support termination of the contracts."

About Emisphere Technologies, Inc.

Emisphere Technologies, Inc. is a biopharmaceutical company pioneering the oral delivery of otherwise injectable drugs. Emisphere's business strategy is to develop oral forms of injectable drugs, either alone or with corporate partners, by applying its proprietary eligen® technology to those drugs or licensing its eligen® technology to partners who typically apply it directly to their marketed drugs. Emisphere's eligen® technology has enabled the oral delivery of proteins, peptides, macromolecules and charged organics. Emisphere and its partners have advanced oral formulations or prototypes of salmon calcitonin, heparin, insulin, parathyroid hormone, human growth hormone and cromolyn sodium into clinical trials. Emisphere has strategic alliances with world-leading pharmaceutical companies. For further information, please visit

Safe Harbor Statement Regarding Forward-looking Statements

The statements in this release and oral statements made by representatives of Emisphere relating to matters that are not historical facts (including without limitation those regarding the timing or potential outcomes of research collaborations or clinical trials, any market that might develop for any of Emisphere's product candidates and the sufficiency of Emisphere's cash and other capital resources) are forward-looking statements that involve risks and uncertainties, including, but not limited to, the likelihood that future research will prove successful, the likelihood that any product in the research pipeline will receive regulatory approval in the United States or abroad, the ability of Emisphere and/or its partners to develop, manufacture and commercialize products using Emisphere's drug delivery technology, Emisphere's ability to fund such efforts with or without partners, and other risks and uncertainties detailed in Emisphere's filings with the Securities and Exchange Commission (the "SEC"), including those factors discussed under the caption "Risk Factors" in Emisphere's Annual Report on Form 10-K (file no. 1-10615) filed on March 11, 2005, as amended by Form 10-K/A filed on March 29, 2005.

Source: Emisphere Technologies

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