Market Opportunity

Somaxon believes that Silenor is highly differentiated from currently available insomnia treatments and will have competitive advantages in a large and growing market. According to IMS Health, in 2009 the prescription market for the treatment of insomnia grew to approximately 67 million prescriptions.

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. It is estimated that approximately one-third of adult Americans (approximately 70 million people) are affected by insomnia. According to one study, 70% of respondants report sleep maintenance insomnia, defined as either 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% of those who suffer from insomnia are on prescription therapy. Somaxon-sponsored market research indicates that only 25% of patients being treated for insomnia with prescription medications claimed they were very satisfied with their current treatment. The primary reason cited by insomniacs was that they did not achieve the desired 7-8 hours of sleep. Safety and tolerability concerns have also led to an under-treatment and dissatisfaction 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 is not designated as a Schedule IV controlled substance, it can be freely sampled in all states. This will facilitate critical initial physician and patient trial and usage, and provide Silenor with an important competitive advantage.

Based on Somaxon's market research, Somaxon believes that initial trial will lead to prescription usage. In Somaxon's market research, a majority of physicians indicated a willingness to try Silenor. In fact, when presented with the Silenor product profile, the surveyed physicians indicated that Silenor could become a leading product for treating insomnia in their practice. Similarly, in Somaxon's primary market research of insomnia sufferers, respondents indicated a highly favorable response to the Silenor product profile.

Somaxon believes that the introduction of a new prescription treatment with an advantageous and differentiated clinical profile, 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 unfavorable side effect consequences. 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), and with no clinically meaningful evidence of next day residual effects.