RADFORD, Va., Aug. 8 /PRNewswire-FirstCall/ -- New River Pharmaceuticals Inc. (Nasdaq: NRPH) today announced its financial results for the three months ended July 2, 2006. New River recognized a net loss of $4.3 million, or $(0.12) per share, basic and diluted for the three months ended July 2, 2006 compared to a net loss of $6.4 million, or $(0.18) per share, for the three months ended July 3, 2005. Cash and short-term investment balances were $91.7 million at July 2, 2006.

For the three months ended July 2, 2006, New River recognized $5.5 million of revenue related to its collaboration agreement with Shire Pharmaceuticals Group plc (Shire) (LSE: SHP; Nasdaq: SHPGY; TSX: SHQ) with respect to NRP104, New River's lead product candidate under development. New River is recognizing milestone revenue from the collaboration that is not subject to refund over the estimated product development period for each of three indications for NRP104: pediatric, adult and adolescent, based on the estimated proportional effort associated with each indication. To date, New River has received $100 million under the terms of its collaboration with Shire, a portion of which is refundable under certain circumstances.

General and administrative expenses were $5.3 million for the three months ended July 2, 2006 compared to $1.8 million for the three months ended July 3, 2005. The increase in these expenses is due primarily to increases in shared marketing expenses with Shire under the terms of the collaboration agreement and stock-based compensation due to the adoption of Statement of Financial Accounting Standards No. 123(R), "Share-Based Payment," (SFAS 123(R)) effective January 2, 2006. SFAS 123(R) requires companies to expense the grant-date fair value of employee equity awards over the vesting period.

Research and development expenses were $5.6 million for the three months ended July 2, 2006 compared to $5.0 million for the three months ended July 3, 2005. This increase was primarily the result of increases in compensation- related costs, including stock-based compensation expense as a result of adopting the provisions of SFAS 123(R).

"We continue to make solid progress on all fronts," said Krish Krishnan, New River's Chief Financial Officer and Chief Operating Officer. "We intend to use part of the proceeds from our recent financing transactions to raise a sales force to co-promote NRP104, which we believes positions us to achieve our strategic objective of becoming a fully integrated pharmaceutical company. We look forward to an End-of-Phase II meeting with the FDA regarding NRP290 which is scheduled to occur in the fourth quarter of 2006. Finally, we are pleased with the progress we have made with respect to NRP409, for which we filed an IND in the second quarter of 2006."

New River Pharmaceuticals Inc. is a specialty pharmaceutical company focused on developing novel pharmaceuticals that are generational improvements of widely prescribed drugs in large and growing markets.

For further information on New River, please visit the company's website at www.nrpharma.com.

"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This press release contains certain forward-looking information that is intended to be covered by the safe harbor for "forward-looking statements" provided by the Private Securities Litigation Reform Act of 1995. Forward- looking statements are statements that are not historical facts. Words such as "expect(s)," "feel(s)," "believe(s)," "will," "may," "anticipate(s)" and similar expressions are intended to identify forward-looking statements. These statements include, but are not limited to, financial projections and estimates and their underlying assumptions; statements regarding plans, objectives and expectations with respect to future operations, products and services; and statements regarding future performance. Such statements are subject to certain risks and uncertainties, many of which are difficult to predict and generally beyond the control of New River Pharmaceuticals, that could cause actual results to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. These risks and uncertainties include: those discussed and identified in the New River Pharmaceuticals Inc. annual report on Form 10-K, filed with the SEC on March 15, 2006; the timing, progress and likelihood of success of our product research and development programs; the timing and status of our preclinical and clinical development of potential drugs; the likelihood of success of our drug products in clinical trials and the regulatory approval process; our drug products' efficacy, abuse and tamper resistance, resistance to intravenous abuse, onset and duration of drug action, ability to provide protection from overdose, ability to improve patients' symptoms, incidence of adverse events, ability to reduce opioid tolerance, ability to reduce therapeutic variability, and ability to reduce the risks associated with certain therapies; the ability to develop, manufacture, launch and market our drug products; our projections for future revenues, profitability and ability to achieve certain sales targets; our estimates regarding our capital requirements and our needs for additional financing; the likelihood of obtaining favorable scheduling and labeling of our drug products; the likelihood of regulatory approval under the Federal Food, Drug, and Cosmetic Act without having to conduct long and costly trials to generate all of the data which are often required in connection with a traditional new chemical entity; our ability to develop safer and improved versions of widely prescribed drugs using our Carrierwave (TM) technology; our success in developing our own sales and marketing capabilities for our lead product candidate, NRP104; and our ability to obtain favorable patent claims. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof. New River Pharmaceuticals does not undertake any obligation to republish revised forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Readers are also urged to carefully review and consider the various disclosures in New River Pharmaceuticals' annual report on Form 10-K, filed with the SEC on March 15, 2006, as well as other public filings with the SEC.

Contacts:

The Ruth Group
John Quirk (investors)
646-536-7029
jquirk@theruthgroup.com

Zack Kubow (media)
646-536-7020
zkubow@theruthgroup.com


                NEW RIVER PHARMACEUTICALS INC. AND SUBSIDIARY
                         CONSOLIDATED BALANCE SHEETS
                                 (Unaudited)

                       Assets                  July 2, 2006   January 1, 2006
    Current assets:
        Cash and cash equivalents                $19,221,558     $3,515,572
        Short-term investments                    72,475,000     49,250,000
        Other receivables                            198,795        135,755
        Due from affiliates                            5,188              -
        Prepaid expenses                             491,930        798,090
           Total current assets                   92,392,471     53,699,417

    Property and equipment:
        Leasehold improvements                        94,609         94,609
        Machinery and equipment                      854,325        819,472
                                                     948,934        914,081

        Less accumulated depreciation and
         amortization                                734,129        653,427
           Property and equipment, net               214,805        260,654
           Total assets                          $92,607,276    $53,960,071

        Liabilities and Shareholders' Equity (Deficit)

    Current liabilities:
        Capital lease obligation - current           $23,582        $22,298
        Accounts payable                           5,605,846      1,548,473
        Unpaid and accrued research and
         development expenses                      4,211,331      3,201,732
        Accrued compensation                       1,358,828      2,203,898
        Due to affiliates                             70,162         34,138
        Deferred revenue - current                13,274,708              -
        Accrued stock based compensation -
         current                                     226,758              -
           Total current liabilities              24,771,215      7,010,539

    Capital lease obligation - noncurrent             15,027         27,148
    Accrued stock-based compensation               7,919,291      3,404,435
    Deferred revenue                              59,900,215     50,000,000
           Total liabilities                      92,605,748     60,442,122

    Shareholders' Equity (Deficit):
        Preferred stock, par value $0.001 per
         share.
            Authorized 25,000,000 shares; none
             issued and outstanding                        -              -

        Common stock, par value $0.001 per share.
            Authorized 150,000,000 shares; issued and
             outstanding 36,707,064  shares at July 2,
             2006 and 36,367,064 shares at
             January 1, 2006                          36,707         36,367
        Additional paid-in capital                66,349,374     63,326,824
        Accumulated deficit                      (66,384,553)   (69,845,242)
           Total shareholders' equity (deficit)        1,528     (6,482,051)
        Commitments and contingencies
           Total liabilities and shareholders'
            equity (deficit)                     $92,607,276    $53,960,071


                NEW RIVER PHARMACEUTICALS INC. AND SUBSIDIARY

                    CONSOLIDATED STATEMENTS OF OPERATIONS

                                   Three months ended       Six months ended
                                   July 2,    July 3,     July 2,      July 3,
                                    2006       2005        2006          2005
                                      (Unaudited)              (Unaudited)

    Collaboration revenues  $5,497,701           $-  $26,825,077           $-
    Operating costs and
     expenses:
        Selling, general,
         and administrative  5,278,256    1,770,242   13,495,760    4,945,523
        Research and
         development         5,581,996    5,040,996   11,097,909    8,825,211
        Depreciation and
         amortization of
         property and
         equipment              39,702       39,636       80,702       74,816
        Total operating
         expenses           10,899,954    6,850,874   24,674,371   13,845,550
        Operating income
         (loss)             (5,402,253)  (6,850,874)   2,150,706  (13,845,550)
    Other income (expense):
       Interest expense         (1,189)      (1,854)      (2,531)      (1,854)
       Interest income       1,150,095      498,294    2,023,411      820,738
         Total other income,
          net                1,148,906      496,440    2,020,880      818,884
           Income (loss)
            before
            cumulative effect
            of change in
            accounting
            principle       (4,253,347)  (6,354,434)   4,171,586  (13,026,666)
    Cumulative effect of a
     change in accounting
     principle                       -            -     (710,897)           -
        Net income (loss)  $(4,253,347) $(6,354,434)  $3,460,689 $(13,026,666)
    Net income (loss) per
     share:
        Basic                   $(0.12)      $(0.18)       $0.09       $(0.37)
        Diluted                 $(0.12)      $(0.18)       $0.09       $(0.37)

SOURCE New River Pharmaceuticals Inc.

CONTACT:
Investors - John Quirk
+1-646-536-7029, jquirk@theruthgroup.com
Zack Kubow
+1-646-536-7020, zkubow@theruthgroup.com
both of The Ruth Group

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding New River Pharmaceuticals Inc.'s business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year.