Inspire Pharmaceuticals (ISPH) 10-Q 2005 Q3 Quarterly report

Exhibit 99.1

For Immediate Release

Contacts: Inspire Pharmaceuticals, Inc. Jenny Kobin Senior Director, Investor Relations (919) 941-9777, Extension 219 Thomas R. Staab, II Chief Financial Officer and Treasurer (919) 941-9777, Extension 267

INSPIRE REPORTS THIRD QUARTER 2005 FINANCIAL RESULTS

- Third Quarter 2005 Revenue Up 73%, Company Raises 2005 Revenue Guidance -

DURHAM, NC – November 8, 2005 – Inspire Pharmaceuticals, Inc. (NASDAQ: ISPH) today reported financial results for the third quarter ended September 30, 2005.

Total revenue for the third quarter of 2005 was $6.6 million compared to $3.8 million for the third quarter of 2004, reflecting a 73% increase in total co-promotion revenue. This increase is attributed to the continued market penetration of Elestat^®(epinastine HCl ophthalmic solution) 0.05% and Restasis^® (cyclosporine ophthalmic emulsion) 0.05% in the United States, accompanied by an increase in the Company’s entitled percentage of net sales ofRestasis.

Co-promotion revenue from net sales ofElestat for the third quarter of 2005 was $4.5 million, as compared to $3.3 million of co-promotion revenue fromElestat recognized in the third quarter of 2004. Co-promotion revenue on net sales ofRestasis for the third quarter of 2005 was $2.1 million, as compared to $0.5 million recognized in the third quarter of 2004. Total co-promotion revenue for the nine months ending September 30, 2005 was $18.0 million, as compared to $7.3 million for the same period in 2004.

For the quarter ended September 30, 2005, the Company reported a net loss of $6.8 million, or ($0.16) per share, as compared to a net loss of $10.2 million, or ($0.28) per share, for the same period in 2004. The net loss for the nine months ended September 30, 2005 was $24.8 million, or ($0.59) per share, as compared to a net loss of $32.3 million, or ($0.96) per share for the same period in 2004. Operating expenses for the third quarter of 2005 totaled $14.4 million, as compared to $14.3 million for the same period in 2004. Operating expenses for the nine months ended September 30, 2005 were $45.8 million, as compared to $40.4 million for the same period in 2004. Cash, cash equivalents and investments totaled $125.9 million at September 30, 2005, reflecting a $6.1 million utilization of cash, cash equivalents and investments during the third quarter of 2005.

Based upon results and revenue trends for bothElestat andRestasis, the Company is increasing its previously issued 2005 operating guidance for co-promotion revenue to a new range of $22-26 million from the previous range of $19-23 million and is reaffirming its operating expenses guidance for 2005 to be in the $59-65 million range.

4222 Emperor Boulevard, Suite 200· Durham, North Carolina 27703

Telephone 919.941.977· Fax 919.941.9797

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Christy L. Shaffer, Ph.D., President and CEO of Inspire, stated, “Our commercial organization continues to drive excellent revenue growth forElestatand provide co-promotion support for Restasis. Elestat is now the second most prescribed allergic conjunctivitis product in the United States, based on recent market data. In research and development, we made progress in our cystic fibrosis program, as previously announced, by completing two long-term animal toxicology studies and an additional Phase 2 safety clinical trial in cystic fibrosis patients. Based on the cumulative pre-clinical and clinical data in our CF program, we have requested and been granted an End-of-Phase 2 meeting with the FDA in late January 2006 to discuss next steps.”

Recent Updates Include (July 1, 2005 through November 8, 2005):

Research & Development

• Completed two six-month animal toxicology studies in denufosol tetrasodium for the treatment of cystic fibrosis;

• Announced top-line results of a Phase 2 safety clinical trial of denufosol for the treatment of cystic fibrosis;

• Submitted an application to the European Medicines Evaluation Agency (EMEA) to receive orphan drug status for denufosol in cystic fibrosis in Europe;

• Presented scientific data at two poster sessions and one Early Bird Short Course at the 2005 North American Cystic Fibrosis Conference; and

• Discontinued enrollment in a pilot Phase 2 clinical trial of diquafosol for corneal epithelial wound healing since the single clinical trial site, located in New Orleans, was seriously impacted by Hurricane Katrina.

Sales and Marketing

• Succeeded in makingElestat the second most prescribed allergic conjunctivitis product in the United States, achieving over 9% in total weekly prescription volume, and achieving approximately 8% of total year-to-date 2005 prescription volume based upon National Prescription data from IMS Health, as measured for the week ending October 14, 2005; and

• In collaboration with Allergan, increased prescription volume ofRestasis, which is the only approved prescription treatment for dry eye in the United States; Allergan reported aggregate third quarter 2005 net sales ofRestasisof $54 million, representing a 124% increase over the third quarter of 2004.

Inspire will host a conference call and live webcast to discuss its third quarter 2005 financial results on Tuesday, November 8^th at 10:00 a.m. ET. To access the conference call, U.S. participants may call (877) 780-2276 and international participants may call (973) 582-2757. A live web cast and replay of the call will be available on Inspire’s website at www.inspirepharm.com. A telephone replay of the conference call will be available until November 22, 2005. To access this replay, U.S. participants may call (877) 519-4471 and international participants may call (973) 341-3080. The conference pass code is 6584278.

4222 Emperor Boulevard, Suite 200· Durham, North Carolina 27703

Telephone 919.941.977· Fax 919.941.9797

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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. Inspire has significant technical and scientific expertise in the therapy areas of ophthalmology and respiratory and is a leader in the field of P2 receptors which are important drug targets in various therapeutic areas, including ophthalmology, respiratory disease and cardiovascular disease. Inspire’s U.S. specialty sales force promotesElestat^® (epinastine HCl ophthalmic solution) 0.05% andRestasis^® (cyclosporine ophthalmic emulsion) 0.05%, ophthalmology products developed by Inspire’s partner, Allergan, Inc.ElestatandRestasis are trademarks owned by Allergan, Inc.

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 those relating to product development, revenue, expense and earnings expectations, the seasonality ofElestat, intellectual property rights, adverse litigation developments, adverse developments in the U.S. Securities and Exchange Commission (SEC) investigation, competitive products, results and timing of clinical trials, success of marketing efforts, the need for additional research and testing, delays in manufacturing, funding, and the timing and content of decisions made by regulatory authorities, including the U.S. Food and Drug Administration. Inspire’s revenues, and the rate of revenue growth, for the three and nine month periods ended September 30, 2005 are not necessarily indicative of future revenue or the rate of growth, if any, of revenues during the year ending December 31, 2005. Inspire cannot assure the continued growth of revenue from the sale ofElestat orRestasis for any future periods. Further information regarding factors that could affect Inspire’s results is included in Inspire’s filings with the SEC. 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.

— Financial tables follow —

4222 Emperor Boulevard, Suite 200· Durham, North Carolina 27703

Telephone 919.941.977· Fax 919.941.9797

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INSPIRE PHARMACEUTICALS, INC.

Condensed Statements of Operations

(in thousands, except per share amounts)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2005			2004			2005			2004
Revenues:
Revenue from product co-promotion	$	6,562		$	3,791		$	18,020		$	7,348
Total revenue		6,562			3,791			18,020			7,348
Operating expenses:
Research and development		6,672			6,762			19,463			17,318
Selling and marketing		5,063			5,529			18,160			16,665
General and administrative		2,672			2,035			8,163			6,369
Total operating expenses		14,407			14,326			45,786			40,352
Loss from operations		(7,845	)		(10,535	)		(27,766	)		(33,004	)
Other income (expense):
Interest income		1,129			422			3,130			1,010
Interest expense		(36	)		(37	)		(114	)		(78	)
Loss on investments		—			—			—			(198	)
Other income, net		1,093			385			3,016			734
Net loss	$	(6,752	)	$	(10,150	)	$	(24,750	)	$	(32,270	)
Basic and diluted net loss per common share	$	(0.16	)	$	(0.28	)	$	(0.59	)	$	(0.96	)
Weighted average common shares used in computing basic and diluted net loss per common share		42,188			36,767			42,066			33,566

4222 Emperor Boulevard, Suite 200· Durham, North Carolina 27703

Telephone 919.941.977· Fax 919.941.9797

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INSPIRE PHARMACEUTICALS, INC.

Selected Balance Sheet Information

(in thousands)

	September 30, 2005		December 31, 2004
Cash, cash equivalents and investments	$	125,885	$	156,796
Receivable from Allergan		6,497		3,501
Working capital		101,925		134,559
Total assets		137,428		165,696
Total stockholders’ equity		125,328		149,598
Shares of common stock outstanding		42,203		41,845

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4222 Emperor Boulevard, Suite 200· Durham, North Carolina 27703

Telephone 919.941.977· Fax 919.941.9797