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Pain Therapeutics Announces Third Quarter 2006 Financial Results

SOUTH SAN FRANCISCO, Calif., Oct 25, 2006 -- Pain Therapeutics, Inc. (Nasdaq: PTIE), a biopharmaceutical company, today reported financial results for the three and nine months ended September 30, 2006. Net income for the quarter ended September 30, 2006 was $9.7 million, or $0.22 per share, compared to a net loss of $8.8 million, or $0.20 per share, in the third quarter of 2005. Net income for the nine months ended September 30, 2006 was $11.9 million, or $0.27 per share, compared to a net loss of $27.5 million, or $0.63 per share, for the same period in 2005.

Cash, cash equivalents and marketable securities were $213.9 million at September 30, 2006. Previously, the Company believed its cash requirements for calendar year 2006 would be approximately $15 million. The Company now believes its cash requirements for calendar year 2006 will be under $3 million.

"Our clinical and corporate momentum grew this quarter," said Remi Barbier, Pain Therapeutics' president and chief executive officer. "We are also pleased to announce significantly lower cash requirements for 2006. This is due to on-going fiscal discipline, a milestone payment from our corporate partner, reimbursement of certain clinical development expenses and favorable interest rates."

Pain Therapeutics plans to announce the initiation of a Phase III study with Oxytrex(TM) by year-end 2006. The Company also believes it remains on- track to announce results of a Phase III trial with Remoxy(TM) in the first half of 2007, followed by an NDA filing for this drug candidate three quarters after data release. Finally, the Company is committed to announcing in Q4 2006 a new clinical development opportunity, developed by top academic labs, in a therapeutic area outside of pain management.

About Pain Therapeutics, Inc.

Pain Therapeutics is a biopharmaceutical company that develops novel drugs. We have three investigational drug candidates in clinical programs. Remoxy and PTI-202 are proprietary, abuse-resistant forms of opioid drugs. Oxytrex is a novel, next-generation painkiller that potentially offers less physical dependence than currently marketed opioid painkillers. These three drugs target different segments of the multi-billion dollar market to treat severe chronic pain, such as persistent low-back pain or pain due to advanced stages of osteoarthritis. The FDA has not yet evaluated the merits, safety or efficacy of our drug candidates. For more information, please consult our website:

Our Strategic Alliance with King Pharmaceuticals, Inc.

We have a strategic alliance with King to develop Remoxy, PTI-202 and two other abuse-resistant opioid painkillers. In December 2005, King paid us $150 million in cash as an up-front payment. King is also obligated to pay us up to $150 million in cash based upon the successful achievement of additional clinical or regulatory milestones for Remoxy, PTI-202 and two other abuse- resistant opioid painkillers. King funds all development expenses pursuant to the strategic alliance and is obligated to pay us a 20% royalty on net sales of drugs, except as to the first $1 billion in cumulative net sales, for which the royalty is set at 15%. In exchange, King received worldwide commercial rights to Remoxy, PTI-202 and two other abuse-resistant drugs developed under the strategic alliance.

Note Regarding Forward-Looking Statements: This press release contains forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995 (the "Act"). Pain Therapeutics disclaims any intent or obligation to update these forward-looking statements, and claims the protection of the Safe Harbor for forward-looking statements contained in the Act. Examples of such statements include, but are not limited to, any statements relating to the timing, scope or expected outcome of the Company's clinical development of its drug candidates or related regulatory filings, the potential benefits of the Company's drug candidates, the Company's plan to announce a new clinical development opportunity in Q4 2006, the Company's expected cash requirements and fluctuations in income tax expenses in 2006, and the size of the potential market for the Company's products. Such statements are based on management's current expectations, but actual results may differ materially due to various factors. Such statements involve risks and uncertainties, including, but not limited to, those risks and uncertainties relating to difficulties or delays in development and testing of the Company's drug candidates, unexpected adverse side effects or inadequate therapeutic efficacy of the Company's drug candidates (including the risk that current and past results of clinical trials are not necessarily indicative of future results of clinical trials), the uncertainty of patent protection for the Company's intellectual property or trade secrets and unanticipated research and development and other costs. For further information regarding these and other risks related to the Company's business, investors should consult the Company's filings with the Securities and Exchange Commission.

                             PAIN THERAPEUTICS, INC.
                     (in thousands, except per share amounts)

                              Three Months Ended         Nine Months Ended
                                 September 30,             September 30,
                              2006         2005        2006          2005
      Program fee revenue    $6,550           $-      $19,651           $-

      Collaboration revenue   6,960            -       22,931            -

      Milestone revenue       5,000                     5,000
      Total revenue          18,510            -       47,582            -

    Operating expenses (1):
      Research and
       development           10,471        8,144       33,513       25,783
      General and
       administrative         1,686        1,105        5,706        3,282
        Total operating
         expenses            12,157        9,249       39,219       29,065
    Operating income (loss)   6,353       (9,249)       8,363      (29,065)
    Interest and other
     income                   2,559          482        7,115        1,528
    Income (loss) before
     provision (credit)
     for income tax           8,912       (8,767)      15,478      (27,537)
    Provision (credit) for
     income tax                (744)           -        3,579            -

    Net income (loss)        $9,656      $(8,767)     $11,899     $(27,537)
    Earnings per share
      Basic                   $0.22       $(0.20)       $0.27       $(0.63)
      Diluted                 $0.21       $(0.20)       $0.26       $(0.63)
    Weighted-average shares
     used to compute
     earnings per share
      Basic                  44,184       43,853       44,106       43,754
      Diluted                45,221       43,853       45,323       43,754

    (1) Included in research and development and general and administrative
    expenses are non-cash stock-based compensation expenses of $1,013 thousand
    and $657 thousand, respectively, totaling $1,670 thousand for the three
    months ended September 30, 2006 and $2,763 thousand in research and
    development and $2,027 thousand in general and administrative, totaling
    $4,790 thousand for the nine months ended September 30, 2006. The non-cash
    stock-based compensation expense was $68 thousand and $159 thousand for
    the three and nine months ended September 30, 2005.

                             PAIN THERAPEUTICS, INC.
                             CONDENSED BALANCE SHEETS
                                  (in thousands)

                                                  September 30, December 31,
                                                      2006         2005(2)
    Current assets:
      Cash, cash equivalents and marketable
       securities                                   $213,918       $212,652
      Collaboration revenue receivable                 2,596            889
      Prepaid expenses                                   345            623
        Total current assets                         216,859        214,164
    Property and equipment, net                        1,352          1,556
    Other assets                                          75             75
        Total assets                                $218,286       $215,795

    Liabilities and stockholders' equity
    Current liabilities:
      Accounts payable                                  $438           $998
      Accrued development expense                      5,774          4,461
      Deferred program fee revenue -
       current portion                                26,200         26,200
      Accrued compensation and benefits                  409            501
      Income tax payable                               3,579              -

      Other accrued liabilities                          112            187
        Total current liabilities                     36,512         32,347
    Non-current liabilities:
      Deferred program fee revenue -
       non-current portion                           100,438        120,088
        Total liabilities                            136,950        152,435
    Stockholders' equity:
      Common stock                                        44             44
      Additional paid-in-capital                     212,378        206,489
      Accumulated other comprehensive loss              (291)          (479)
      Accumulated deficit                           (130,795)      (142,694)
        Total stockholders' equity                    81,336         63,360
        Total liabilities and stockholders'
         equity                                     $218,286       $215,795

    (2) Derived from audited financial statements.

SOURCE Pain Therapeutics, Inc.

Christi Waarich, Senior Manager of Investor Relations of Pain Therapeutics, Inc.,
+1-650-825-3324, or; or media, Carney Noensie of Burns
McClellan, +1-212-213-0006

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