Silenor® (doxepin) is highly differentiated from currently available insomnia treatments and will have competitive advantages in a large and growing market, if it is approved by the FDA. According to IMS Health, in 2008 the prescription market for the treatment of insomnia grew approximately 6% to more than 63 million prescriptions compared the prior year. In 2008, the insomnia market accounted for more than $2.0 billion in sales despite the introduction in April 2007 of generic versions of Ambien, which was the leading prescription product at the time.

Sleep is essential for human performance, general health and well-being. Insomnia, the most common sleep complaint across all stages of adulthood, is a condition characterized by difficulty falling asleep, waking frequently during the night or too early, or waking up feeling unrefreshed. According to the American Psychiatric Association, approximately one-third of adult Americans (approximately 70 million people) are affected by insomnia. Of this number, approximately 70% report sleep maintenance insomnia, defined as either waking frequently during the night or waking too early and being unable to return to sleep, as their primary complaint.

While there are a number of products currently available for the treatment of insomnia, the market remains underserved due in part to the limitations of current therapies. It is estimated that only about 20 percent of those who suffer from insomnia are on prescription therapy. Somaxon-sponsored market research indicates that less than one third of patients being treated for insomnia with prescription medications claimed they were very satisfied with their current treatment, and only 12% of patients claimed that their insomnia was well controlled. The primary reason cited by insomniacs was that they did not achieve the desired 7-8 hours of sleep. Safety and tolerability concerns relating to the available prescription alternatives have also led to an under-treatment and dissatisfaction with these products and were frequently cited.

In addition, the insomnia market is driven primarily by the clinical experience of patients. Patient trial is seen as the most useful tool by physicians to determine the clinical utility of any insomnia agent. Importantly, because Silenor will not be designated as a Schedule IV controlled substance (unlike GABA-ergic products), it can be freely sampled in all jurisdictions. This will facilitate critical initial physician and patient trial and usage and provide Silenor with an important competitive advantage.

Based on our clinical results and our market research, we believe that initial trial will lead to prescription usage. In our market research 9 out of 10 physicians indicated a willingness to try Silenor. In fact, when presented with the Silenor product profile as part of our market research, the surveyed physicians indicated that Silenor could become a leading product for treating insomnia in their practice. Similarly, in our primary market research of insomnia sufferers, respondents indicated a highly favorable response to the Silenor product profile. The introduction of a new prescription treatment with an advantageous clinical profile that is highly differentiated from currently marketed products, coupled with increased awareness of the ill effects of chronic, untreated insomnia, will translate into continued growth in the prescription treatment of insomnia. Based upon extensive market research it is expected that physicians and patients will gravitate to new product options that deliver the desired efficacy they are seeking (7-8 hours of sleep) without the side effect consequences that are typically associated with currently prescribed medications. The Silenor clinical trial program demonstrated that patients slept 7 to 8 hours with no evidence of dependence, tolerance, withdrawal, memory impairment, hallucinations or complex sleep behaviors (e.g., sleep driving, sleep eating).