AzaSite^® is designed to be the first once daily dosed ophthalmic antibiotic.

KAR: What is InSite Vision's core business?
Dr. Chandrasekaran: InSite Vision's mission is to be the leader in the diagnosis and treatment of ophthalmic diseases through the introduction of diagnostic, prognostic and therapeutic products utilizing novel agents, genomic services and drug delivery systems. We focus on ocular infections, glaucoma and retinal diseases through three technology platforms that include our patented time-release ophthalmic drug delivery system DuraSite®; genomic research; and retinal drug delivery devices. We have a portfolio of patented ocular infection and glaucoma products that are primarily in late-stage development and, in some cases, have reached or are nearing commercialization.

KAR: Could you discuss your product portfolio and market opportunities?
Dr. Chandrasekaran: Our lead product, AzaSite, formerly known as ISV-401, combines azithromycin, the world's best selling antibiotic, with DuraSite, our proprietary drug delivery system. DuraSite increases the time azithromycin resides in the eye to a range of four to six hours. Most currently marketed ophthalmic antibiotics remain in the eye for a period of minutes. As a consequence, AzaSite is designed to be the first once daily dosed ophthalmic antibiotic. Our goal is to mimic in the ophthalmic space what Pfizer was able to accomplish with azithromycin in Zithromax® for respiratory infection. That is to provide a loading dose followed by once daily delivery and thereby change the paradigm for the treatment of ocular infection.

AzaSite is presently in pivotal Phase 3 clinical trials and is being evaluated under the protocol set forth by the U.S. Food and Drug Administration for product registration and marketing approval. The Phase 3 trials are being conducted in more than 100 clinical sites across the United States, all of which are now open. Enrollment of roughly 1,350 patients is currently underway. We anticipate completing Phase 3 AzaSite trials in the second quarter of 2005 and commercializing this product in the second half of 2006. The first indication we are pursuing with AzaSite is bacterial conjunctivitis. In this space, AzaSite will be competing against quinolones and a number of generic ophthalmic antibiotics. The retail cost of branded competitive products ranges from $70 to $80 and non-branded products range from $20 to $45.

The current global market for ocular infection, ocular antibiotics and combination products exceeds $1 billion. Within a few years after AzaSite reaches market, we anticipate this product to capture at least 20% of the $1 billion dollar global anti infective market.

We also envision AzaSite has the potential to be built into a franchise and we are currently examining product extensions and additional product options. Among the opportunities we plan to pursue include combining this antibiotic with an anti-inflammatory steroid. This combination is already in various phases of preclinical development and depending upon financial resources we expect to bring this product into the marketplace 24 months following the AzaSite market launch. Additionally, we intend to broaden the use of AzaSite to include ocular infections such as blepharitis, one of the most common eye problems in older adults, and trachoma, which is among the leading causes of preventable blindness.

KAR: Tell us about the other products in your pipeline.
Dr. Chandrasekaran: We also focus on glaucoma and are applying the principles of genomics in this area. We currently have two products addressing glaucoma. The first, our genetic test for glaucoma management OcuGene®, is designed as a tool for eye care practitioners to identify and more effectively manage those patients at risk for a particularly aggressive form of glaucoma. OcuGene is currently being extensively studied in universities and the scientific community and we expect to further commercialize this product in the next 12 months. The second opportunity in glaucoma is ISV-205, our therapeutic product that combines diclofenac with our DuraSite delivery system. This drug has completed two Phase 2 trials, one in ocular hypertension and the other in steroid raised glaucoma. We plan to move forward with a pivotal Phase 3 clinical trial program based on cash availability and/or corporate partner opportunities.

KAR: What is your strategy to grow InSite Vision's business?
Dr. Chandrasekaran: We have a three-pronged strategy. First, we are working diligently to ensure the timely execution of the AzaSite pivotal trials and commercialization of this product. Second, we are focused on finding a suitable partner for AzaSite, as well as other products in our portfolio. The market for AzaSite extends beyond the field of eye care to include pediatricians and general practitioners, who currently write the bulk of ocular prescriptions. We are pursuing a corporate partner with distribution to these multiple medical professions already in place and will provide revenue sharing or very attractive royalties to InSite Vision. We expect the profit margin from AzaSite to be extremely attractive, falling well within the pharmaceutical norms. Our goal is to announce a corporate partnership in the third quarter of next year. Third, we are actively conducting outreach within the investment community to increase the awareness of InSite Vision as an exciting investment opportunity.

KAR: What separates InSite Vision from its competitors?
Dr. Chandrasekaran: AzaSite provides a good example of how we intend to compete in the ocular infection market. Ocular infections such as bacterial conjunctivitis are currently treated with third and fourth generation quinolones as well as a number of generic ophthalmic drugs. These products suffer from two major deficiencies. First, they are not patient friendly from a dosing standpoint. They require multiple administration, sometimes up to six to eight times during the first two-day period, followed by four times daily for the next five days. This aggressive dosing regimen can lead to non-compliance. Second, high dosing of antibiotics can also facilitate the formation of bacterial resistance profiles, whereby the drug becomes less effective and bacterial mutations can occur. AzaSite's low-dosing formulation is significantly more user friendly.

Therefore, AzaSite could be the first marketed once daily dosing ocular antibiotic, potentially providing for improved patient compliance, lowered resistance profiles and considerably minimized bacterial mutations. Based on these beneficial attributes, we expect to capture 20% of the ocular antibiotic market within a few years following product introduction.

KAR: Tell us about your patent position.
Dr. Chandrasekaran: Our intellectual property position is among our strong suits. InSite Vision currently has 70 issued and pending U.S. patents that cover our drug delivery technology, genomics work in glaucoma and retinal drug delivery devices. Additionally of particular note, our AzaSite product is covered by two issued patents and one pending patent application that extends through the year 2019. KAR: Give us a brief overview of InSite Vision's financial position. Dr. Chandrasekaran: At the end of the third quarter, we reported cash of approximately $8 million, which we anticipate will take us approximately through the second quarter of 2005. We expect to raise additional capital either through the exercise of warrants, new corporate relationships or from other sources in the investment community. Our goal is to raise sufficient funds to take InSite Vision through market approval for AzaSite. Assuming that we meet our timelines, we anticipate the generation of additional capital from the investor community or from corporate relationships to fund InSite Vision through internal revenue generation by AzaSite, thereby providing our Company with the opportunity to become self sufficient in the 2007 time period.

KAR: What are your near-term plans to maximize shareholder value?
Dr. Chandrasekaran: InSiteVision is a totally refocused and revamped company. We are actively moving toward the 2006 commercialization of a novel ophthalmic drug that addresses a large market. We have the potential to generate longer-term value based on additional applications for AzaSite, as well as the other exciting products in our clinical development portfolio. We believe we are offering an exciting opportunity for investors new to our Company and we ask those who have considered us in the past to take another look at the reenergized InSite Vision.