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Executives

Carol DeGuzman - Senior Director, Investor Relations

Michael L. Kranda - President and CEO

Nancy E. Donahue - Senior Vice President, Sales and Marketing

Jean-Frederic Viret, Ph.D. - Vice President and Chief Financial Officer

Analysts

Allen Carr - Needham & Company, Inc.

Kyle Pickens - Cattigan [ph]

Anesiva, Inc. (ANSV) Business Update Call September 3, 2008 11:30 AM ET

Operator

Welcome everyone to the Anesiva corporate update conference call. (Operator Instructions)

Carol DeGuzman

Joining me on our call today are Michael Kranda, Anesiva’s president and CEO, Nancy Donahue, senior vice president for sales and marketing and Jean Viret, our vice president and chief financial officer.

This conference call includes forward looking statements within the meaning of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Words such as expect, estimate, project, budget, forecast, anticipate, intend, plan, may, seek, will, could, should, believe, predict, potential, continue and similar expressions are intended to identify such forward-looking statements.

Forward-looking statements on this conference call may include without limitation matters that involve known and unknown risks, uncertainties, and other factors that may cause actual results, levels of activity, performance, or achievement to differ materially from results expressed or implied in this conference call. Such risk factors include among others, whether Zingo gains FDA approval in the adult indication, Anesiva’s ability to estimate and address customer demand for Zingo, the degree to which Zingo gains market acceptance, potential delays in the commencement and enrollment of Adlea clinical trials, and whether the Adlea clinical development program will purport FDA approval for the management of acute pain following orthopedic surgeries.

Additional information concerning these and other risk factors are contained in Anesiva’s annual report on Form 10-K for the year ended December 31, 2007 and subsequent 10-Q filings. Actual results may differ materially from those contained in the forward-looking statements in this presentation.

I will now turn the call over to Michael Kranda.

Michael Kranda

The goal of today’s call is really to refresh and reframe the Anesiva value proposition. I was hired by the board in mid-June with a simple mandate, to lead and accede the successful transition to a commercial stage paying management company. I work with various constituencies, including our employees, investors, and advisors over the last few weeks and all of my hopes and expectations for the Anesiva opportunity have been confirmed. This is a company with remarkable talent, proven capabilities and a valuable pipeline. Most importantly Anesiva has already achieved a stage few companies in our industry reach, the commercial stage with a unique combination of assets, which I believe are tailor made for today’s capital market appetite. These include a commercial product in Zingo. This provides us with a valuable entrée into the pain management spec market.

We have a large opportunity in Adlea with key clinical milestones approaching by year-end and we have an organization with the talent and capacity to develop and commercialize multiple pain management products on our way to becoming a leading specialty pharma company. We have all the pieces, we simply have to improve our execution, focus our efforts, and build our outreach to shareholders, new investors, and collaborators.

Today I want to focus on three issues the company is addressing. Number one is the strategic business plan and model, and by that I mean the road map by which we plan to achieve our long-term vision for Anesiva to become a leading specialty pharma company. This obviously has to start with Zingo and Adlea.

Today we will focus on Zingo’s value, meaning its contribution that this unique drug device will make to our economic and strategic plans. We will also talk about the registration strategy and timeline for Adlea. Adlea is one of these rare blockbuster opportunities. It is a new, non-opioid approach to the management of acute pain. So let’s look at a business model.

As stated our goal is to become a leading specialty pharma company focused on pain management. We believe we can achieve this goal by maintaining and growing our core competencies in sales and marketing, clinical development and manufacturing. These are essential elements of the model.

We are pleased to announce yesterday the appointment of Bill Houghton, our senior VP and chief medical officer as a key member of our senior management team, Bill brings to Anesiva an extensive commercial and product development expertise with pain management products and a strong medical background in his field. He will also add important depth to our clinical and regulatory groups.

I am working with Bill and the team to evaluate strategies that will maximize the clinical and commercial value of Zingo and Adlea. In addition we will be looking for opportunities to expand Anesiva’s portfolio pain management products through end licensing of late stage or commercial products. Through the foundation created by Zingo and Adlea their growth and the additional products to expand our franchise, we believe we can evolve into a solid, profitable, specialty pharma company.

A strategic business review also gave us the opportunity to take a hard look at our organizational structure and burn rate. This morning we announced we are reducing our workforce by approximately 20% by eliminating pre-clinical development and other non-core functions. The restructured company is focused primarily on Zingo sales and marketing, the Adlea clinical development plan, manufacturing, and business administration.

We expect to report a one-time charge of approximately $700,000.00 in the current quarter related to this restructuring. These restructuring and other cost reductions are expected to result in annual cost savings of approximately $20 million per year as compared to current levels.

On the financing front we are evaluating alternatives to bring in the additional financial resources we need to support the objectives and timelines we are laying out today. I believe the individual parts of the story, Zingo sales, Adlea data, the business models, each have attraction to investors, and combined, I believe, we will take the story out of the road in the next few months and achieve our financing goals.

To sum [ph] up the business plan to refinement of our goals, the alignment of our organization behind those goals, I am confident that we have the opportunity to build a successful company.

Moving onto Zingo, this is an important part of the Anesiva opportunity both strategically and financially and to begin with I would like to introduce our head of sales and marketing Nancy Donahue to tell you about the initial market reaction which confirms that in Zingo we have an attractive solution to a real unmet medical need with significant upside opportunity ahead.

Nancy Donahue

In late June we began shipping orders so now we are just over two months into the launch and I am excited to share with you some important qualitative feedback and insight.

As a reminder, Zingo is a drug device product that delivers anesthetic powder lidocaine into the skin. It is used one to three minutes prior to a peripheral IV insertion and blood draws to reduce pain associated with these procedures in children ages 3 to 18. Peripheral IV insertions and blood draws are among the most frequently reported painful events in hospitalized children. Pediatric nurses have reported that almost ¾ of the time restraints are required to successfully complete these procedures and as most parents know, it is never easy to have to bring a child to the hospital, especially when the child perceives that needle sticks may be part of the experience.

Other available pre-needle stick anesthetics are primarily creams or patches that can take 20 to 30 minutes or even longer to work. This time frame is usually impractical in this fast-paced hospital environment. In fact nurses have reported that they use these methods infrequently, citing the delays as the cause of the primary impediment.

Zingo was developed to address this unmet need for a fast acting, easy to administer analgesic. In two large pediatric clinical trials, Zingo was shown to significantly reduce the pain associated with peripheral IV insertions and blood draws when administered just one to three minutes prior to the procedure; so within this framework I am pleased to report on our initial commercial successes.

Supporting the launch of Zingo is an exceptional marketing and sales organization we have built here at Anesiva. Our sales force, along with our co-promotion partner’s, Sagent, represent a combined 35% hospital based team, with on average over 16 years of sales experience focused on the hospital marketplace. The team is initially targeting leading children’s hospitals and academic medical centers with large pediatric units. We intend to gain a strong foothold in these institutions, which as the innovators in pediatric care, represent approximately 75% of the overall pediatric hospital opportunity for Zingo.

The sales force was employed in the first quarter of this year. Their early efforts were devoted to building Zingo advocacy in targeted pediatric hospitals. I believe these efforts are really paying off now, as we enter the selling phase. We have a number of early success achieving formulary acceptances and/or approval to begin small experience trials at these targeted hospitals.

The experience trials are going extremely well and we have received numerous anecdotal reports from health care providers who have used Zingo and are very pleased with its ease of use and the benefits it provides to their pediatric patients.

Among some children whose conditions require frequent IV insertions or blood draws, we have heard comments to the effect that “it doesn’t hurt, it doesn’t hurt” or “is it in yet?” coming from children who have previously experienced the pain of needle stick insertion, this is pretty compelling feedback.

Some hospitals are beginning to use Zingo in the emergency department and we have reports of when those patients are subsequently admitted and need another needle stick on the floors, they and their parents are insisting on the use of Zingo. In fact these requests have led some hospitals to roll out Zingo hospital wide.

Overall we are excited with the field reports on initial experiences. I believe there are a couple of really important learning’s in these early days that give us confidence in Zingo’s long-term potential.

We certainly knew pre-launch that there was a significant unmet need and now we are seeing that Zingo has been able to fill this need. Nurses are finding Zingo is easy to explain and easy to use. Importantly children are not finding the popping sounds scary, rather they trust that when they hear the sounds that means the medicine has been delivered.

Although summer is traditionally a slow time for new product uptakes and hospitals, we are very pleased with the progress we are making. Our goals over the next few months are to continue to have nurses and patients experience Zingo’s fast action and ease of use and pain reduction benefits; to generate positive word of mouth based on real life experience, which we are beginning to see; and also to continue to secure additional formulary approvals. By doing these things we will be well positioned to accelerate Zingo’s sales.

On the marketing front this fall we will be launching a new media campaign to call attention to the unmet need for peripheral venous access pain management in children and to the benefit new approaches such as Zingo can provide.

The campaign will have national as well as regional local components. We are also continuing to conduct training sessions for health care providers to advocate for better venous access pain management for their pediatric patients and to continue to grow memberships in our invoice [ph] and hits on manageivpain.com.

Finally we are expecting an FDA decision regarding the expanded use of Zingo in adults by January 2009; nonetheless, for the first half of ’09 the marketing and sales efforts will continue to focus on penetrating the pediatric hospital market.

Overall we are very pleased with the early stages of the Zingo launch. In addition to tracking sales, other metrics we are following closely include new hospitals ordering as well as reordering, experience trials initiated and those successfully completed, formulary wins, and hospitals with Zingo broad access.

Although I won’t be in a position to provide details on these metrics today, I look forward to sharing Zingo’s successes in more definitive terms in the future.

Michael Kranda

Commercializing the drug devices such as Zingo historically result in substantial start-up costs. Ours have been magnified by the manufacturing issues we have discussed in the past. If we continue to bring online the automation steps which include filling the drug to sampling and packaging of the devices, we anticipate these components will continue to come online this year and into 2009. Ultimately we expect to achieve optimal costs of good sold through the assembly of Zingo components in China at the facility run through our joint venture with Wanbang.

Last month I traveled to China to see first hand the progress on this important project and I am pleased to report the construction of the facility is complete and we are on a trajectory for this facility to be online in late 2010.

For 2008, as Nancy described, we continue to focus our marketing and sales effort on the pediatric market and we will synchronize expansion into the adult market as cost of goods come down with automation. While we now estimate 2008 Zingo sales will be in the range of $2 to $3 million, the market feedback gives us confidence in the long-term potential of Zingo and we continue to believe the pediatric market represents a large financial opportunity to be followed potentially by a new additive opportunity pending the outcome of the adult indication.

Moving onto Adlea, as you know, Adlea is a highly purified form of capsaicin. It is a major opportunity for Anesiva, since it is among the vanishingly few non-opioid agents in late stage clinical development to treat severe to moderate pain. And as you may know, the B-1 receptor story is gaining a tremendous amount of attention and Anesiva’s agonistic approach has a unique profile in this setting.

We have a strong clinical foundation today that demonstrates the potential of Adlea with completed Phase 2 trials in approximately 400 patients in acute and chronic indications. We also have ongoing support of Phase 2 trials in total hip replacement and shoulder surgery and anticipate having data from these trials in mid-’09.

Today we are pleased to announce that we have completed enrollment in the two Phase 3 trials at Adlea, one in bunionectomy, one in knee replacement. Going forward we will refer to these trials as Active-1 for bunionectomy and Active-2 for total knee. The completion of enrollment in the Active trials puts us on track, as promised, for releasing top line data by year-end.

As part of the overall reassessment we have just completed, we have carefully evaluated the Adlea program to ensure we are assembling an NDA package that will lead to the earliest possible market introduction. Through these evaluations we determine that the data that we currently have and expect to have from ongoing trials will need to be supplemented to further validate the Adlea dose and accrue the number of patient exposures needed for an adequate safety database. As a result, we will initiate an additional trial in total knee replacement scheduled to start next quarter. This trial will enroll 240 patients to receive one of three doses of Adlea or placebo. We anticipate the full trial will accrue within a year, although an interim analysis is built in.

With regard to the number of patient exposures needed to support the safety database, our new plan will bring us to approximately 1,000 patients. Our advisors have told us this should be adequate for acute post op indication. You may recall our previous plan contemplated both acute post op and chronic OA applications. For this scenario the guidance we received was for 1,500 patient total exposures.

Our plan is to present the Phase 3 data from the FDA with convincing arguments that the 1,000 patient safety database is sufficient for the acute indication. Having said this, should the agency insist on more patient exposures, we have contingency plans in place focused on the fast accruing bunionectomy setting and possible other open label studies that we can run in parallel. With this planned ad lib program we are driving toward an NDA filing in miod-2010. We believe this timeline is realistic and achievable and hope for the best prospects for Adlea approval and timely commercialization.

Wile the current focus of the Adlea program is on post-surgical indication, we remain enthusiastic about Adlea’s potential to reduce pain associated with moderate to severe OA and see this as a huge unmet medical need. I am working with the team and Bill Houghton to lead a strategic reassessment of this opportunity and will look forward to providing you with further updates on the road.

Before leaving Adlea I want to point out the clinical and preclinical presentations we made last month at the world congress on pain meeting in Scotland. They were extremely well received with overflow interest from both clinicians and basic researchers, many of whom are world recognized opinion leaders in pain drug development. The interest generated by our data reflects the very significant need for truly new approaches to the management of moderate to severe pain with non-opioid agents. The number of attendees we met commented that Adlea represents the only new approach and I have to say our group came back with a greatly heightened enthusiasm for the program and its prospects. If you are interested in more information on these studies, our studies presented at the World Pain Congress, the posters are available on our web site.

In closing our prepared remarks I want to emphasize my enthusiasm in this company, its employees, and the business plan I have laid out for you today. I am looking forward to getting onto the road starting this week to introduce the new Anesiva story to investors and potential collaborators and meeting many of you in person.

I want to reiterate that Anesiva has experience, pipeline, and resources to truly become a leading specialty pharma pain company.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from Allen Carr with Needham & Company, Inc.

Allen Carr - Needham & Company, Inc.

I wanted to start off with Zingo. Can you better characterize how this launch is going in terms of penetration at the hospitals? Can you give us a sense of how many hospitals you are on the formulary, that sort of data?

Nancy Donahue

Those are metrics that we are taking a look at, but being so early into the launch we are not prepared today to be able to provide those updates, but we plan to do so in the future as soon as we have more detail.

Allen Carr - Needham & Company, Inc.

Can you give a gross generalization at this point, or no?

Nancy Donahue

Not really. I mean I can say that we are very comfortable and enthusiastic about where we’re going, especially given the fact that we launched in July when a lot of these committees don’t meet. Despite that we are well on our way, but again beyond that we can’t share any additional details at this point.

Allen Carr - Needham & Company, Inc.

Given the review of the company’s operation do you feel you have the right sized sales force and also what are the plans, if it is approved for adult indications can you tell us about how you would expand into that next year?

Nancy Donahue

As you may recall, about 75% of the pediatric opportunity is in about 175 hospitals, so the size of the existing sales force, of our sales force of 15 combined with the Sagent sales I mentioned on the call was really critical as we have highly experienced, talented, hospital based sales organization and a lot of experience specifically in the hospital market, so that sized sales force we feel very comfortable will allow us to capture the pediatric opportunity.

In addition, our partnership with Sagent allows access to a broader group of institutions and that they call on a large number of hospitals and many of them, which would be targets for the adult indication. So, we feel really strongly that we’ve got the right sized sales force in place for pediatrics and we will take a look at the adult opportunity and what type of additional resources we may need to more fully capitalize on that opportunity.

At this point we are evaluating the pediatric launch, the workload required to continue to grow that and whether or not we would need to expand to take advantage of more of the adult indication.

Michael Kranda

Then one other difference in the adult indication is that it does have two components, both the hospital piece of it as well as the outpatient piece. The outpatient piece in adult post-automation coming online really does give us some additional opportunities with respect to sampling, trials, some other typical marketing tools that we haven’t applied both because of our cost issues A, and B, the fact that pediatric hospitals generally don’t want sampling, I know it’s very complicated and so in a sense we are delivering what they want and as Nancy said, continuing to focus on the key 175 hospitals. We are dealing with the timing issue of a summer launch and the formulary and trialing process that she described, all of which are proceeding on schedule.

Allen Carr - Needham & Company, Inc.

Can you comment a bit more on the need for another Phase 3 trial? Is this based on a reinterpretation of the FDA’s comments in previous meetings or is this because of, you may have hinted that the osteoarthritis trial, by not doing that you wouldn’t have enough patient exposure. Can you elaborate on that?

Michael Kranda

First off it’s a Phase 2 and it is mainly focused on the patient exposure issue. It is clear that we need more patients and it will provide that. It does also allow us to further evaluate our dose and we believe it essentially validates the dose that has been shown and used in prior trials, so it is supportive, both in terms of patients and it is designed to, it increases patient exposure, the database, and helps validate and guide us to the optimal dose.

Operator

Your last question comes from Kyle Pickens with Cattigan [ph] .

Kyle Pickens - Cattigan [ph]

What is your current capacity of the automated line in the US? What are you guys currently running at? I know before I think it was 5 million units per annum, I think and are you guys running at that level now or are there still production problems that you are working through?

Michael Kranda

Well as we indicated in the June launch, the call launch, we are continuing to manufacture with the approved process which does have certain manual steps in it; it has components of automation. The migration of manufacturing involves really three key automation steps. I think we also mentioned the packaging issue that had popped up late, that is also currently being manual.

The 5 million per shift number, I suppose was out there and that would reflect the implementation of automated filling of the set A, B, automated assembly of the device, and C automated packaging. Those are the three steps we are working through right now. When they are all there, you are at the 15 and that is per shift. You have flex, upside on that if you add additional shifts and then of course you have China coming online.

Kyle Pickens - Cattigan [ph]

We’re at 15 or we’re at 5?

Michael Kranda

We’re not at either.

Kyle Pickens - Cattigan [ph]

I know but you said 15, I thought it was 5, so was it 5 per shift?

Michael Kranda

Yes.

Kyle Pickens - Cattigan [ph]

That gives you 15 if you run 24 hours?

Michael Kranda

Yes and then China is on top of that. [Inaudible] of those numbers in the US, as I think I have laid out , the overall cost structure of China is superior and so we want that to sites, for obvious reasons, and we will balance the supply from those based on optimal overall cost.

Kyle Pickens - Cattigan [ph]

So where are you guys now, can you say? In terms of what you can produce now? And have you guys built inventory of Zingo that you just haven’t sold yet or, you know because the $3 million number for the rest of ’08 is much lower than at least what analysts on the street were predicting.

Michael Kranda

Right and what was pointed out in June is that these lingering costs of good sold issues really have us in a desire not to overly build inventory at high prices, so clearly we’re not doing that. We’re building to the demand and preparing and expecting that we can bring automation online, ramp up and address the demand that we believe is building and so we’ll synch these up. I have used the word a couple of times, synchronize manufacturing and inventory build with the demand and right now they are working well together in terms of synchronization.

But, no we are not overbuilding inventory at these prices, but we are capable of building to the market as we see it.

Kyle Pickens - Cattigan [ph]

How much CapEx are you planning on doing to get to this full automation? Is that a big commitment for you guys or you have most of the stuff pretty much done, it’s just finishing it off?

Michael Kranda

You’re right, the investments have been made, the machines are there, it’s aligning, attuning, and implementing these additional changes in the process, but the CapEx is largely done, it’s really a matter of fine-tuning it.

Carol DeGuzman

I would like to thank you all for joining us today. As [inaudible] mentioned we will be presenting tomorrow at the Bio Century Newsmakers Conference in New York and later this month we will also be presenting at the UBS Healthcare conference and look forward to seeing all of you at one or both of those meetings.

That concludes our prepared remarks for today.

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