Kos Reports 2005 Fourth Quarter and Full Year Results, Forecasts Continued Double-Digit Revenue Growth for 2006

Fourth Quarter 2005 Highlights*

-- Revenue increased 42% to $213.9 million

-- Net income was $26.2 million or $0.53 per share; excluding one time events, net income was $35.1 million, or $0.71 per share

-- Generated approximately $96 million in cash from operations

Full Year 2005 Highlights*

-- Revenue increased 51% to a record $751.7 million

-- Net income of $118.1 million or $2.46 per share; excluding one-time events, net income grew 44% to $131.2 million and EPS grew 36% to $2.73 from 2004 (as adjusted for a full tax rate)

-- Generated approximately $238 million in cash from operations; year-end net cash balance of $412.7 million

-- Company remains debt free
* Fourth quarter and full year net income amounts include a $5.5
million accrual adjustment ($0.11 per share) relating to the expected
ability of the Company to realize certain tax benefits. Attached is a
reconciliation of GAAP to Non-GAAP calculations.

Kos Pharmaceuticals, Inc. (Nasdaq:KOSP) today announced financialresults for the fourth quarter and full year ended December 31, 2005.

For the fourth quarter of 2005, revenue increased 42% to a record$213.9 million, up from $150.7 million for the fourth quarter of 2004.This significant increase is in large part a result of continuedstrong growth of the Company's highly differentiated cholesterolproducts and contributions from its new hypertension portfoliofollowing the successful transaction with Biovail, which was completedin May 2005. Revenue for the full year ended December 31, 2005,increased 51% to $751.7 million, from $497.1 million in 2004.

Excluding one-time events, net income for the fourth quarter of2005 was $35.1 million, or $0.71 per share, versus $33.0 million, or$0.72 per share, during the comparable 2004 quarter (as adjusted toreflect a 38% effective tax rate in the 2004 period). Including theone-time events, net income and earnings per share during the fourthquarter of 2005 were $26.2 million and $0.53 per share, respectively.Reported net income and earnings per share during the fourth quarterof 2004, which did not reflect a full effective tax rate, were $53.0million and $1.15 per share, respectively.

Excluding one-time events, net income for the full year 2005increased 44% to $131.2 million, or $2.73 per share, from $90.9million, or $2.01 per share, during 2004 (inclusive of a 38% effectivetax rate in the 2004 period). Including the one-time events, netincome and earnings per share for 2005, were $118.1 million and $2.46per share, respectively. Reported net income and earnings per sharefor 2004, which did not reflect a full effective tax rate, were $142.3million and $3.13 per share, respectively.

During the fourth quarter and twelve-month period ended December31, 2005, the Company generated approximately $96 million and $238million, respectively, in cash from operations. At year-end, Kos hadcash and marketable securities of $412.7 million, the highest amountin the Company's history. Kos also continues to remain debt-free.

Revenue from Kos' cholesterol franchise grew 21% to $149.5 millionfor the fourth quarter of 2005, up from $123.2 million recorded duringthe fourth quarter of 2004. For the twelve-month period ended December31, 2005, Kos' cholesterol franchise grew 30% to $556.6 million versus$428.8 million in 2004.

Azmacort(R) achieved revenue of $30.6 million for the fourthquarter of 2005, compared to $27.5 million for the comparable 2004quarter. Since acquiring Azmacort in 2004, the Company has slowed theprevious four-year prescription decline and has begun, through itsSMART targeted marketing, to generate growth among its targetedphysicians. The brand's revenue grew to $103.2 million for thetwelve-month period in 2005.

The Company's hypertension portfolio has contributed significantlyto revenue growth. Since acquiring these products in May 2005, Kos'hypertension portfolio recorded sales of $91.8 million. Totalprescriptions for Cardizem(R)LA increased 19% in 2005 versus growth inthe calcium channel blocker market of only 1%, and the Teveten(R)franchise demonstrated total prescription growth of 12% for 2005.

"We have just concluded our third consecutive year ofprofitability," said Adrian Adams, President and Chief ExecutiveOfficer. "We are proud of our major accomplishments in 2005, a year inwhich we continued to deliver revenue and earnings growth ahead ofmost of our peers, above market prescription growth, favorableclinical trends and results and the continuation of our highlydifferentiated position within our core markets." He continued, "2005was also a very active and successful year from a corporatedevelopment and licensing perspective, highlighted by the completedtransactions with Arisaph Pharmaceuticals, Barr, Biovail and Jerini.These achievements, together with our progress in research anddevelopment, position us well for transitioning to the next excitingphase of evolution for Kos."

The Company continued to drive enhanced research and developmentand product life-cycle management productivity in 2005. Kos enteredinto an exclusive North American collaboration and license agreementwith Jerini US, Inc. for the development, marketing and distributionof Icatibant, a product in late-stage, Phase III development forhereditary angiodema, projected to be launched during the first halfof 2007. The Company also announced, in conjunction with its sponsoredresearch partner, Arisaph Pharmaceuticals, promising data on a newchemical entity, reverse-D4F, which showed a reduction in theatherosclerotic lesion area in Apo E-null mice. At the 2005 ScientificSessions of the American Heart Association Meeting, Kos also announcedthe results of the ARBITER 3 clinical study, which demonstrated thatadding Niaspan(R) to a statin reverses atherosclerosis with a 105%reduction in the rate of progression as measured by a change incarotid IMT. In addition, during 2005 Kos announced the commencementof the AIM-HIGH morbidity/mortality study with Niaspan/simvastatin,jointly sponsored with National Heart, Lung, and Blood Institute ofthe National Institutes of Health. Finally, the Company announcedtoday, in a separate press release, excellent top line efficacyresults from the COMPELL study and the flush study conducted on itsoptimized Niaspan modified formulation.

With respect to its financial outlook, the Company forecastsstrong prescription and revenue growth in 2006 with anticipated newproduct introductions driving further growth in 2007. In order tooptimally position Kos to take full advantage of its new productopportunities and to maximize the profit contribution of new andexisting products, the Company has made the strategic decision toexpand the size of its sales force ahead of its anticipated 2007 and2008 new product launches. The cost of expanding the sales force,together with an increase in royalty expenses, will lead to reducedoperating margins in 2006. Operating margins are expected to improvesignificantly in 2007 as a result of a substantial reduction inroyalty expenses. Revenue and earnings for 2006 will also be impactedby the recent signing of inventory management agreements (IMAs) witheach of the three leading pharmaceutical wholesalers.

"2006 will be a transitional year for Kos," said Mr. Adams. "Wewill continue to make investments in new products and commercialinfrastructure to strategically position the Company for the nextphase of our growth. Based on the clinical success of our optimizedNiaspan modified formulation, we plan to develop a complete range ofnew Niaspan products and expect the first phase of this new line to belaunched in the first quarter of 2007. We also plan to launchIcatibant for the treatment of hereditary angiodema in the first halfof 2007, and Niaspan/simvastatin, in the first half of 2008, all ofwhich should give us very favorable revenue evolution over the nextseveral years. While we are assessing the benefits to Kos of apotential extension of the co-promotion agreement with TakedaPharmaceuticals, we have made the strategic decision to build anexpanded Kos sales force to fully maximize on the considerablecommercial opportunities ahead of us."

For the full year 2006, revenues are expected to be in a range of$880 - $900 million, a growth rate of 17% to 20% over 2005. Thisrevenue level includes the impact of an estimated $45 millionreduction of wholesaler inventory levels as a result of the executionof IMAs. Adjusted for the one-time impact of IMAs, underlyingprojected revenue growth would have been in the range of 23% - 26% for2006 as compared to the preceding year.

Earnings per share for the full year 2006 are expected to be inthe range of $2.25 - $2.35, before accounting for share-basedcompensation expense. As a result of the adoption of FAS 123R, theCompany projects reported earnings per share to be in the $1.70 -$1.80 range. Projected 2006 earnings include factoring in theanticipated one-time impact of IMAs (approximately $0.33 per share)and the cost of hiring and training 250 new sales representatives(approximately $0.23 per share). Absent these one-time andtransitional items, 2006 earnings per share are expected to be in therange of $2.80 - $2.90 versus $2.73 in 2005 before one-time events.Most of the impact of the IMAs will be realized in the first quarterof 2006. Expenses related to the expansion of the sales force will berealized primarily in the third and fourth quarters.

Revenues for the first quarter of 2006 are expected to be in therange of $170 - $175 million. Earnings (loss) per share for thequarter are expected to be in the range of $0.05 - $0.10, prior toaccounting for share-based compensation expense, and $(0.05) - $(0.10)on a GAAP reported basis. As noted above, the majority of the impacton revenue and earnings from IMAs is expected to be realized duringthe first quarter.

While not providing formal guidance at this time, Kos expectsrenewed profit growth in 2007. Continued strong revenue growth drivenby the anticipated launch of the first phase of a new range of Niaspanproducts in early 2007, and Icatibant, coupled with a significantreduction in royalty expenses, should result in earnings growth perfully diluted share in the range of 30% - 40% over 2006 guidance.

Kos' senior management will host a conference call today at 8:30a.m. ET to discuss the Company's quarterly results. The conferencecall will be available live via the Internet by accessing Kos' websiteat www.kospharm.com. Please go to the website at least fifteen minutesprior to the call to register, download and install any necessaryaudio software. Those who cannot access the webcast, can participatevia telephone by calling 913-981-5542, confirmation code 9534014. Areplay will also be available on the website at www.kospharm.com or bycalling 888-203-1112 domestic or international, and entering 9534014from 3:00 PM ET today until 12:00 AM ET on Monday, February 27, 2006.Financial information to be discussed during the conference call islocated on Kos' website in the Investor Relations section.

Kos Pharmaceuticals, Inc. is a fully integrated specialtypharmaceutical company engaged in developing, commercializing,manufacturing and marketing proprietary prescription products for thetreatment of chronic diseases with a particular focus on thecardiovascular, metabolic and respiratory disease areas. The Company'sprincipal product development strategy is to reformulate existingpharmaceutical products with large market potential to improve safety,efficacy, and patient compliance. Kos' strategy also includes makingmeasured investments in new chemical entity research through in-houseand sponsored research, scientific in-licensing and general corporatedevelopment activities. The Company currently markets Niaspan andAdvicor(R) for the treatment of cholesterol disorders, Azmacort forthe treatment of asthma, Cardizem LA for the treatment of hypertensionand angina, and Teveten and Teveten(R)HCT for the treatment ofhypertension. Kos has a strong and growing research and developmentpipeline including proprietary drug delivery technologies insolid-dose, inhalation and aerosol metered-dose device administrationto help fuel sustained, organic sales growth into the future.

Certain statements in this press release, including statementsregarding the Company's ability to generate enhanced revenue andearnings, achieve its financial projections for 2006 and 2007,continue to grow sales of Niaspan, Advicor, Azmacort, Cardizem LA, andTeveten/ Teveten HCT, the Company's ability to develop or acquireadditional products, the Company's ability to successfullycommercialize and develop the products acquired through its strategicalliances, the Company's ability to successfully develop and launchnewly formulated Niaspan products, the Company's increasedexpectations regarding revenue, profit growth, operating margins andearnings per share in future periods, the Company's ability to makecontinued investments in research and development, to aggressivelypursue corporate development activities, to continue excellent growthmomentum in the short, medium and long-term, the Company'sexpectations regarding the continuing increases in prescriptionswritten for its products, the Company's expectations regarding theimpact of certain non-recurring and transitional items, including thesigning of inventory management agreements, the Company's expectationsregarding the launch dates for an Icatibant based product,Niaspan/simvastatin and a modified formulation of Niaspan, theCompany's anticipated hiring of approximately 250 additional salesrepresentatives and the cost associated therewith, the Company'santicipated reduction in wholesale inventory levels and impact of suchreduction on earnings, the Company's reduction of royalty expenses infuture periods, and the Company's ability to continue to generate cashfrom operations are forward-looking and are subject to risks anduncertainties which may cause actual results to differ materially fromthose projected in a forward-looking statement. These risks anduncertainties include, the Company's ability to grow revenue andcontrol expenses, the protection afforded by the Company's patents andthose related to the acquired and licensed products, the ability tobuild awareness for Niaspan, Advicor, Azmacort, Cardizem LA, Tevetenand Teveten HCT within the medical community, the continued success ofthe alliances with Takeda, Merck KGaA, Oryx, Arisaph, Barr, Biovailand Jerini, the continuing growth of the cardiovascular andrespiratory markets, the Company's ability to maintain its compliancewith FDA regulations and standards without adversely affecting theCompany's manufacturing capability or ability to meet its productionrequirements or profit margins, the Company's ability to increase thesize of its sales force and to attract and retain sales professionals,and, ensure compliance with prescription drug sales and marketing lawsand regulations, changes in the regulatory environment governing theCompany's compliance with the FDA, PTO, tax and competition issues,the impact of a possible generic version of the Cardizem LA product orother products sold by the Company, the ability of third partysuppliers to the Company continuing to be able to perform their supplyobligations, the Company's ability to achieve regulatory approvals forits products under development in a timely manner, such as themodified formulation of Niaspan, Niaspan/simvastatin and others, theCompany's ability to establish a footprint and generate sales in thehypertension and angina markets, the Company's ability to successfullynegotiate additional important strategic business developmentopportunities, the progress of the Company's research and developmentpipeline, fluctuating buying patterns by the Company's wholesalers anddistributors, the adequacy of the Company's reserves for income taxes,the Company's ability to maintain coverage of its products bygovernment agencies and the effects of the loss of such coverage withsuch agencies, such as the Centers for Medicare and Medicaid Services,the effect of conditions in the pharmaceutical industry and theeconomy in general, as well as certain other risks. A more detaileddiscussion of risks attendant to the forward-looking statementsincluded in this press release are set forth in the "Forward-LookingInformation: Certain Cautionary Statements" section of the Company'sAnnual Report on Form 10-K for the year ended December 31, 2004, filedwith the Securities and Exchange Commission, and in other reportsfiled with the SEC. All information in this press release is as ofFebruary 23, 2006 and the Company undertakes no duty to update thisinformation.
Kos Pharmaceuticals, Inc. and Subsidiaries

SELECTED FINANCIAL INFORMATION

Three Months Ended Year Ended
December 31, December 31,
------------------- -------------------
2005 2004 2005 2004
--------- --------- --------- ---------
(unaudited)(unaudited)
Condensed Consolidated
Statement of Operations
(in thousands, except
per share data)

Revenues $213,916 $150,710 $751,700 $497,104
Cost of Sales 25,409 10,424 81,295 36,926
-------- -------- -------- ---------

188,507 140,286 670,405 460,178
-------- -------- -------- ---------
Operating Expenses:
Research and
development 40,651 20,476 123,234 111,064(II)
Selling, general
and administrative 100,987 66,295 366,137 235,718(III)
-------- -------- -------- ---------

Total operating
expenses 141,638 86,771 489,371 346,782
-------- -------- -------- ---------

Income from Operations 46,869 53,515 181,034 113,396

Interest and Other
(Income)/Expense (3,208) (352) (7,580) (4,747)(III)

Provision for/(Benefit
from) Income Taxes 23,854 843 70,511 (24,176)(IV)
-------- -------- -------- ---------

Net Income $26,223 $53,024 $118,103 $142,319
======== ======== ======== =========

Net Income per Share:
Basic $0.56 $1.34 $2.71 $3.76
Diluted 0.53 1.15(I) 2.46(I) 3.13(I),(V)

Shares Used in
Computing Net Income
per Share:
Basic 46,561 39,701 43,528 37,898
Diluted 49,577 46,154 48,293 45,836



Three Months Ended December 31,
-------------------------------------
2005 2004
------------------ -----------------
Diluted Diluted
Amount Per Share Amount Per Share
-------- -------- -------- --------
(unaudited) (unaudited)
Reconciliation of Net
Income Before One-Time
Events to Reported Net
Income
(in thousands, except
per share data)

Net Income Before One-
Time Events $35,085 $0.71 $33,041 $0.72
Impact of One-Time
Events:
Benefit from removal
of valuation
allowance
associated with
NOLs - - 19,983 0.43
Jerini licensing
fees (8,862) (0.18) - -
-------- -------- -------- --------
Net Income and EPS, as
reported $26,223 $0.53 $53,024 $1.15
======== ======== ======== ========


Year Ended December 31,
-------------------------------------
2005 2004
------------------ -----------------
Diluted Diluted
Amount Per Share Amount Per Share
-------- -------- -------- --------
(unaudited) (unaudited)

Reconciliation of Net
Income Before One-Time
Events to Reported Net
Income
(in thousands, except
per share data)

Net Income Before One-
Time Events $131,215 $2.73 $90,911 $2.01
Impact of One-Time
Events:
Investment in
Arisaph
Pharmaceuticals, Inc. (2,500) (0.05) - -
Settlement with Andrx
Laboratories - - 3,720 0.08
Azmacort HFA
acquisition - - (23,560) (0.51)
Biovail transaction (1,750) (0.04) - -
Benefit from removal
of valuation
allowance associated
with NOL's - - 71,248 1.55
Jerini licensing fees (8,862) (0.18) - -
-------- -------- -------- --------
Net Income and EPS, as
reported $118,103 $2.46 $142,319 $3.13
======== ======== ======== ========


December December
31, 2005 31, 2004
-------- --------
Condensed Consolidated
Balance Sheet
(in thousands)

Cash and Cash
Equivalents $412,736 $258,703(VI)
Accounts Receivable,
net 111,652 74,568
Deferred Tax Asset,
current 36,775 35,516
Other Current Assets 41,303 22,221
Fixed Assets, net of
depreciation 28,745 23,341
Deferred Tax Asset,
non-current 29,490 19,016
Intangible Assets 228,530 150,079
Other Assets 20,523 3,482
-------- --------

Total assets $909,754 $586,926
======== ========

Current Liabilities $210,273 $136,788
Other Liabilities 21,122 14,996
Shareholders' Equity 678,359 435,142
-------- --------

Total liabilities
and shareholders'
equity $909,754 $586,926
======== ========

-----

Notes:

(I) Calculation of fully diluted EPS reflects net income excluding
$264,000 in interest expense for the quarter ended December
31, 2004, and $520,000 and $1,209,000 for the twelve months
ended December 31, 2005 and 2004, respectively, associated
with the Company's convertible credit facilities.

(II) Includes the effect of a one-time, $38.0 million in-process
R&D write-off associated with the acquisition of the Azmacort
product.

(III) Includes the effect of a $6.0 million settlement received
from Andrx, of which $2.0 million was recorded as
reimbursement of operating expenses and $4.0 million as other
income.

(IV) Includes a tax benefit of $71.2 million associated with the
reversal of the Company's deferred tax asset valuation
allowance.

(V) Includes a (i) tax benefit of $71.2 million, which had a
positive income statement impact of $1.50 per share,
associated with the reversal of the Company's deferred tax
asset valuation allowance during 2004, (ii) $38 million charge
associated with the Azmacort HFA acquisition, which had a
negative income statement impact of $0.51 per share, and (iii)
the impact of the Andrx settlement, of $ 6 million, which had
a positive income statement impact of $0.08 per share.

(VI) Includes $17.1 million of cash pledged as collateral under
the Company's letters of credit facility as of December 31,
2004.