CIPHER PHARMACEUTICALS AND VERTICAL PHARMACEUTICALS COMPLETE U.S. DISTRIBUTION AND SUPPLY AGREEMENT FOR EXTENDED-RELEASE TRAMADOL

Toronto Stock Exchange Symbol: DND

MISSISSAUGA, ON, June 29, 2011 /PRNewswire/ - Cipher Pharmaceuticals Inc. (TSX: DND) ("Cipher" or "the Company") today announced that it has entered into a definitive distribution and supply agreement with Vertical Pharmaceuticals, Inc. ("Vertical"), a U.S.-based specialty pharmaceutical company, under which Cipher has granted Vertical the exclusive right to market, sell and distribute CIP-TRAMADOL ER in the United States.

CIP-TRAMADOL ER is a patent-protected, extended-release formulation of tramadol, which is used for the treatment of moderate to moderately severe chronic pain in adults. The product received approval from the U.S. Food and Drug Administration in 2010.

"Completing a commercial supply agreement for our extended-release tramadol represents another important achievement for our organization and provides an additional revenue stream to support our continued growth," said Larry Andrews, President and Chief Executive Officer of Cipher Pharmaceuticals. "With its experienced, entrepreneurial leadership team and strong promotional commitment behind this product, we believe Vertical is well positioned to penetrate the U.S. tramadol market."

Under the terms of the agreement with Vertical, Cipher received an initial upfront payment of US$0.5 million with additional payments totaling US$1.0 million due upon the first commercial sale of the product. Cipher is also eligible to receive future payments of approximately US$4.0 million contingent upon the achievement of certain sales milestones. In addition, Cipher will receive a royalty on net sales in the mid-teens. Cipher is responsible for product supply and manufacturing, which will be fulfilled by its partner, Galephar Pharmaceutical Research.

Vertical plans to launch the product in Q3 2011 under the trade name ConZip™. Vertical's dedicated sales force will comprise 60 representatives at the time of product launch, with plans for further expansion in the first half of 2012.

Steve Squashic, President of Vertical, said, "We are excited about the opportunity in the large and growing U.S. tramadol market, where there were more than 36 million tramadol prescriptions written last year. ConZip's unique capsule formulation comprising an immediate-release tablet and sustained-release beads, combined with having no food effect, will make it an attractive alternative for clinicians and chronic pain sufferers. It will immediately become our flagship product."

VelocityHealth Securities, Inc. acted as the exclusive financial advisor to Vertical on this transaction.

About Vertical Pharmaceuticals, Inc.
Vertical Pharmaceuticals, Inc was founded in 2003 with a clear focus in mind. Vertical develops, markets and acquires products with therapeutic options for patients and caregivers. Vertical is a privately owned pharmaceutical company that supplies niche prescription pharmaceutical preparations. The company specializes in Pain Management, Primary Care, Internal Medicine and Women's Health. Our prescription medications are marketed by our dedicated sales force throughout the United States. With prescription drug costs rising, Vertical supplies effective and safe medications that are affordable. We value our patient and physician feedback to bring a better prescription medication to our patient population.

About Cipher Pharmaceuticals Inc.
Cipher Pharmaceuticals is a commercial-stage drug development company focused on commercializing novel formulations of successful, currently marketed molecules using advanced drug delivery technologies. Cipher's strategy is to in-license products that incorporate proven drug delivery technologies and advance them through the clinical development and regulatory approval stages, after which the products are out-licensed to international partners. Because Cipher's products are based on proven technology platforms applied to currently marketed drugs, they are expected to have lower approval risk, shorter development timelines and significantly lower development costs. The Company's lead compound is being marketed in the United States by Kowa Pharmaceuticals America under the label Lipofen®. Cipher's second product, an extended-release version of the pain reliever tramadol, has received FDA final approval and will be marketed in the United States by Vertical Pharmaceuticals Inc. The Company's third product, a novel formulation of the acne treatment isotretinoin, recently completed its final Phase III safety study.

Cipher is listed on the Toronto Stock Exchange under the symbol 'DND' and has approximately 24 million shares outstanding.  For more information, please visit www.cipherpharma.com.

Forward-Looking Statements

Statements made in this news release, other than those concerning historical financial information, may be forward-looking and therefore subject to various risks and uncertainties. The words "may", "will", "could", "should", "would", "suspect", "outlook", "believe", "plan", "anticipate", "estimate", "expect", "intend", "forecast", "objective", "hope" and "continue" (or the negative thereof), and words and expressions of similar import, are intended to identify forward-looking statements. Certain material factors or assumptions are applied in making forward-looking statements and actual results may differ materially from those expressed or implied in such statements.  Factors that could cause results to vary include those identified in the Company's Annual Information Form and other filings with Canadian securities regulatory authorities, such as the applicability of patents and proprietary technology; possible patent litigation; regulatory approval of products in the Company's pipeline; changes in government regulation or regulatory approval processes; government and third-party payer reimbursement; dependence on strategic partnerships for product candidates and technologies, marketing and R&D services; meeting projected drug development timelines and goals; intensifying competition; rapid technological change in the pharmaceutical industry; anticipated future losses; the ability to access capital to fund R&D; and the ability to attract and retain key personnel. All forward-looking statements presented herein should be considered in conjunction with such filings. Except as required by Canadian securities laws, the Company does not undertake to update any forward-looking statements; such statements speak only as of the date made.

SOURCE Cipher Pharmaceuticals Inc.