Argatroban (FDA approved) Argatroban is a shining example of the strength of our research and development capabilities, as well as our FDA experience. The drug was developed to treat heparin-induced thrombocytopenia (HIT), a serious immune reaction to heparin that causes abnormal clotting and often leads to limb amputation and even death.

As with any pharmaceutical compound, its success is never truly realized until it makes it through clinical trials and is approved by the FDA. Argatroban was such a success. The data generated during clinical trials was strong and after navigating the requisite series of FDA hurdles, Argatroban received FDA approval in June 2000. Our clinical development team gained valuable, real world experience from this endeavor that will continue to pay dividends.

Now being marketed by our partner GlaxoSmithKline (GSK), Argatroban has generated a growing stream of revenue for Encysive over the last two years. During 2002, GSK conducted medical education programs to raise physician awareness of this potentially fatal syndrome. In part due to these efforts, Argatroban exceeded its quarterly and yearly sales goals, bringing in over $3 million to Encysive that we used to offset our development expenses for sitaxsentan.

Sitaxsentan (Phase 3) Sitaxsentan is a small molecule that antagonizes the action of endothelin, a potent mediator of blood vessel constriction and growth of smooth muscle in vascular walls. Endothelin receptor antagonists may prove to be effective in the treatment of a variety of diseases where the regulation of vascular constriction is important. Sitaxsentan is a highly selective endothelin A receptor antagonist and is 6000 times more selective for endothelin A than endothelin B receptors.

Sitaxsentan being developed to treat pulmonary arterial hypertension, a condition that involves high blood pressure and structural changes in the walls of the pulmonary arteries, which are the blood vessels that connect the right side of the heart to the lungs. PAH causes shortness of breath, limits activity, and shortens life-expectancy. Primary and secondary pulmonary arterial hypertension are estimated to afflict over 100,000 people worldwide, many of whom are young adults.

BIMOSIAMOSE (Phase 2) While our own development efforts are focused on sitaxsentan, our corporate partners are taking two of Encysive s most promising compounds through the clinical development process. And we have a next generation endothelin A receptor antagonist waiting in the wings.

Revotar Biopharmaceuticals AG, a majority owned affiliate of Encysive, is taking Bimosiamose through clinical trials for the treatment of asthma and psoriasis. This small molecule is a selectin antagonist. There are three selectins that are known to support the inflammatory process. Our scientists believe that bimosiamose inhibits all three selectins, blocking the inflammatory process at an early stage.

Phase 2 trials are now underway with Bimosiamose as an inhaled therapy for asthma. Phase 2 trials are also ongoing with Bimosiamose for treating psoriasis and atopic dermatitis and should be completed by the end of 2003. Revotar is conducting the clinical trials for both indications in Europe. We licensed Bimosiamose to Revotar in 2000, but retained North American territorial rights to topical uses of the compound. All costs to develop the product for asthma and psoriasis are being borne by Revotar, based in Berlin, Germany.

TBC3711 (Phase 1) Waiting in the wings for sitaxsentan to complete its Phase 3 trial, is TBC3711, an endothelin A antagonist that showed excellent kinetics in Phase 1 studies. Based on the positive data we ve received for sitaxsentan, our first endothelin A antagonist, we believe TBC3711 holds promise as a next generation compound.

VLA-4 ANTAGONISTS (Pre-Clinical) With a complex biological process such as the one that triggers asthma, there is often more than one way to attack the problem. A case in point is our collaboration with Schering Plough Corporation to discover and optimize VLA-4 antagonist compounds to treat asthma. In June 2002, Schering chose to take one of our VLA-4 antagonists into the final stages of testing prior to beginning clinical development. Unlike other VLA-4 antagonists that are in development, our candidate is a small molecule compound and is therefore orally available. We believe our VLA-4 compound may block the action of certain cell adhesion molecules and thereby prevent inflammation in a highly specific manner.