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Filed by Algos Pharmaceutical Corporation pursuant to Rule 425 under the
Securities Act of 1933, and deemed filed pursuant to Rule 14a-12 of the
Securities Exchange Act of 1934. Commission File No. 000-28844
Subject Company: Algos Pharmaceutical Corporation
ALGOS PHARMACEUTICAL CORPORATION MADE THE FOLLOWING PRESENTATION TO INVESTORS ON
MARCH 1, 2000 AT AN INVESTOR CONFERENCE SPONSORED BY BB BIOTECH.
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Algos Pharmaceutical Corporation Endo Pharmaceuticals Inc.
March 2000
2
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Risk Factors
This overview of Algos contains "forward-looking" statements, within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934, as amended, that are based on Algos
management's beliefs and assumptions, current expectations, estimates and
projections. Statements that are not historical facts, including statements
which are preceded by, followed by, or that include the words "believes;"
"anticipates;" "plans;" "expects;" "estimates;" or similar expressions and
statements about Algos are forward-looking statements. Many of the factors that
will determine Algos' future results are beyond the ability of Algos to control
or predict. These statements are subject to risks and uncertainties and,
therefore, actual results may differ materially. The reader should not rely on
any forward-looking statement. Algos undertakes no obligation to update any
forward-looking statements whether as a result of new information, future events
or otherwise.
The FDA review process is an uncertain one whose outcome cannot be
guaranteed. There is no guarantee the FDA will accept or approve any New Drug
Application. In particular, there is no guarantee that the FDA will approve the
Algos MorphiDex(R) New Drug Application. Under the Prescription Drug User Fee
Act, the FDA has 12 months to review an accepted application and issue an Action
Letter, which could be a deficiency or an approval. A resubmission in response
to a deficiency letter must be reviewed by the FDA within two or six months
depending on whether or not "substantial review work" is required. There is no
guarantee the FDA will grant an approval in response to a resubmission. There
is no guarantee the foregoing standards and timelines will not be changed.
Important factors that may affect Algos' future results include, but are
not limited to, uncertainty associated with pre-clinical studies and clinical
trials and regulatory approval, the effect of economic conditions, impact of
competitive products and pricing, product development, changes in laws and
regulations, customer demand, possible future litigation, availability of future
financing, uncertainty of market acceptance of new products and private party
and governmental reimbursement policies. Readers should evaluate any statements
in light of these important factors. See "Risk Factors" in Algos' Annual Report
on Form 10-K, preliminary proxy statement filed on Schedule 14A and Algos press
releases.
3
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Algos Summary
On November 29, 1999, Algos entered into a definitive merger agreement with Endo
Pharmaceuticals Holdings Inc., pursuant to which Algos will merge with a
subsidiary of Endo and the Algos stockholders will receive shares of Endo common
stock and warrants to purchase Endo common stock that become exercisable upon
the FDA approval of Algos' MorphiDex(R) New Drug Application. This merger,
including the direct and indirect interests of the Algos board and management in
the merger, and Algos and Endo generally, are described the preliminary proxy
statement of Algos filed with the SEC on Schedule 14A and the amendments
thereto. Algos stockholders should read the proxy statement because it contains
important information. Copies of the proxy statement and other relevant
documents are available to the public from commercial document retrieval
services and at the Internet world wide web site maintained by the Securities
and Exchange Commission at www.sec.gov and may also be obtained from Algos by
calling Gary Anthony at (732) 938-5959 or from Endo by calling Osagie Imasogie
at (610) 558-9800.
4
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Algos Summary
. Focus on fast-growing, billion dollar Pain Management markets
Patented NMDA technology provides superior pain relief
. Eight analgesic, anesthetic and addiction treatment products in late-stage
development
. Solid Phase II and Phase III clinical data
. Definitive merger agreement signed with Endo in November 1999
5
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Recent Developments
. FDA meeting held December 1999 to resolve MorphiDex(R) NDA deficiencies
. Two additional large MorphiDex(R) post-operative pain studies underway
. MorphiDex(R) refiling preparation underway
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NMDA-Enhanced Analgesia
. Opioid analgesics activate Mu receptors, triggering an intracellular response
from NMDA (N-methyl-D-aspartate) receptors in the brain and spinal cord.
. NMDA receptors activate the enzyme PKC, which desensitizes Mu receptors,
resulting in reduced analgesia.
. Dextromethorphan, an NMDA-receptor antagonist, prevents the activation of
PKC.
. Combining dextromethorphan with an opioid analgesic prevents the
desensitization of the Mu receptor, increasing analgesia.
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Single Opioid Pain Management Market
Graph describing the growth of the Single Opioid Pain Management Market between
1997 and 1999. The graph shows approximate sales figures in the following
amounts for the following years: 1997 between $400 and $600 million; 1998
between $600 and $800 million; 1999 between $1 Billion and $1.2 Billion.
8
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Results of MorphiDex(R)
Chronic Use Study 013
Treatment
Variable Period N MS:DM MS Difference P-Value
- -------------------------------------------------------------------------------
__
Average Morphine 1 89 76.2 163.7 87.6 less than 0.001
Daily Dose (mg)
2 77 84.0 160.3 76.3 less than 0.001
Combined 77 80.3 161.5 81.2 less than 0.0001
- -------------------------------------------------------------------------------
__
Number of 1 8 4
Drop-outs
2 1 6
Combined 9 10
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Average Daily Dose of Morphine as MorphiDex(R) Over Time - Study 018
Graph describing a ten month study, indicating that during the study the
approximate Mean Morphine Dosage did not exceed 150 milligrams.
10 Month Patients (N=116)
Mean Morphine Dose (mg/day)
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Merger Summary
. Algos will merge with and into a subsidiary of Endo
. Algos shareholders will receive one share of Endo common stock and one Endo
warrant exercisable on MorphiDex(R) approval
. Endo common stock received will be publicly traded
. Endo warrants will be, if elected, publicly traded
. Carol A. Ammon named President and CEO and John W. Lyle named Chairman of the
Board
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Merger Summary
Endo Endo
Achieves Does Not Achieve
Cash Gross Cash Gross
MorphiDex(R) Approved by: Profit Target Profit Target
- --------------------------------------------------------------------------------
12/01 35% 40%
1/02 to 6/02 30% 35%
7/02 to 12/02 25% 30%
MorphiDex(R) not 15% 20%
approved by 12/02
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Endo Pharmaceuticals Inc.
Formed in August 1997:
An innovative, therapeutically-focused pharmaceuticals company with a strong
brand presence and market share in acute and chronic pain management
13
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Endo's Marketing Strategy for Existing Brands
. Capitalize on strong brand equity inherent in each product
. Revitalize existing brands through increased marketing directly to
prescription writers
. Focus on promotionally sensitive products which have not been marketed in
many years preparing market for future products
. Build Franchise - line extensions, novel new technology and new chemical
entities
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Leading Brand Names
. Endo(R) name has been in existence since 1935 and has a reputation for
quality and customer focus.
. Percocet(R) and Percodan(R) are considered "gold standards" in the pain
management products segment.
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Pain Management:
Key Drivers of Market Growth
. Demographics
. Increase in number of surgical procedures
. Changing attitudes towards pain management
. Introduction of new forms of pain medications
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Overview of Endo
. Manufacturing: All manufacturing is contracted with third parties including:
. DuPont Pharmaceuticals, Merck, Teikoku Seiyaku Co. Ltd.
. Sales Force: Contract force of 300 individuals solely dedicated to Endo.
Partnership with Ventiv Health, Inc. (formerly Snyder Healthcare Sales).
17
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Overview of Endo
. Sales and marketing driven culture
. Focused, effective research and development
. Flexible cost structure
. Management expertise
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Growth Through New Products
. Percocet(R) Franchise:
. Percocet(R) 10.0/650
. Percocet(R) 7.5/500
. Percocet(R) 5.0/325
. Percocet(R) 2.5/325
. "Gold Standard"
. Supported by prescribing patterns of physicians
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Growth Through New Products
. Zydone(R)
. Competes in $1 Billion (branded) Hydrocodone/Acetaminophen Market
. No generic competition
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Growth Through New Products
. Lidoderm(R)
. 200,000 Post-Herpetic Neuralgia Patients
. Orphan Status granted by FDA through March 2006
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Net Sales
(in millions)
1998 $108.4 million
1999 $138.5 million
2000 $220.6 million (f)
(f) = Forecast
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Gross Profit*
(in millions)
1998 $53.6 million
1999 $80.3 million
2000 $154.3 million (f)
(f) = Forecast
* as determined by generally accepted accounting principles
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Cash Gross Profit*
(in millions)
1998 $72.2 million
1999 $99.5 million
2000 $174.8 million (f)
(f) = Forecast
*as defined in the merger agreement
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Consolidated EBITDA*
(in millions)
1998 $40.7 million
1999 $47.2 million
2000 $100.3 million (f)
(f) = Forecast
*as defined by Credit Facility
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Strategic Rationale
. Combined company becomes a US leader in Pain Management with brand equity and
novel proprietary technology
. Marriage of established specialty pharmaceutical Company with a broad
technology development Company
. Significant growth potential through:
. Existing marketed products
. Newly launched branded products
. Pipeline of late stage development products
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Strategic Rationale
. Focus on large, fast-growing Pain Management markets
. Accelerated market penetration of Algos' patented technology through existing
Endo sales force
. Potential to maximize OxycoDex(TM) sales through Percocet(R) brand
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Strategic Rationale
. Complementary Strengths:
. Management Team
. Product Formulation and Manufacturing
. Existing Sales Force
. Distribution Network
. Clinical Development
. Regulatory
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Broad and Deep Portfolio
Moderate Moderately Severe Severe
<TABLE>
<CAPTION>
Existing Brands: Nubain(R) Percocet(R) 5.0, Percodan(R), Percolone(R) Numorphan(R)
<S> <C> <C> <C> <C> <C>
New Brands: Lidoderm(R) Percocet(R) 2.5 Percocet(R) 7.5, Percocet(R) 10
Zydone(R) 5, Zydone(R) 7.5, Zydone(R) 10
Pipeline Brands: EN3222 EN3212 Numorphan(R) IR and CR
Patent Protected HydrocoDex(TM) OxycoDex(TM) MorphiDex(R)
Brands
EN3215 LidoDex(TM) NS NeuroDex(TM) EN3216
</TABLE>
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<PAGE>
These communications include "forward-looking" statements, within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, as amended, that are based on Algos management's beliefs
and assumptions, current expectations, estimates and projections. Statements
that arc not historical facts, including statements which are preceded by,
followed by, or that include the words "believes;" "anticipates;" "plans;"
"expects;" "estimates;" or similar expressions and statements about Algos are
forward-looking statements. Many of the factors that will determine Algos'
future results are beyond the ability of Algos to control or predict. These
statements arc subject to risks and uncertainties and, therefore, actual results
may differ materially. The reader should not rely on any forward-looking
statement. Algos undertakes no obligation to update any forward-looking
statements whether as a result of new information, future events or otherwise,
In addition, the FDA review process is an uncertain one whose outcome cannot be
guaranteed. There is no guarantee the FDA will accept or approve any New Drug
Application. In particular, there is no guarantee that the FDA will approve the
Algos MurphiDex(R) New Drug Application. Under the Prescription Drug User Fee
Act, the FDA has 12 months to review an accepted application and issue at)
Action Letter, which could be a deficiency or an approval. A resubmission in
response to a deficiency letter must be reviewed by the FDA within two or six
months depending on whether or not "substantial review work" is required. There
is no guarantee the FDA will grant an approval in response to a resubmission.
There is no guarantee the foregoing standards and timelines will not be changed.
Important factors that may affect Algos' future results include, but are not
limited to uncertainty associated with pre-clinical studies and clinical trials
and regulatory approval, the effect of economic conditions, impact of
competitive products and pricing, product development, changes in laws and
regulations, customer demand, possible future litigation, availability of future
financing, uncertainty of market acceptance of new products and private party
and governmental reimbursement policies. Readers should evaluate any statements
in light of these important factors. See "Risk Factors" in Algos' Annual Report
on Form 10-K, preliminary proxy statement riled on Schedule 14A and Algos press
releases.
30
<PAGE>
On November 29, 1999, Algos entered into a definitive merger agreement with Endo
Pharmaceuticals Holdings Inc., pursuant to which Algos will merge with a
subsidiary of Endo and the Algos stockholders will receive shares ur Endo common
stock and warrants to purchase Endo common stock that become exercisable upon
the FDA approval of Algos' MorphiDex(R) New Drug Application. This merger,
including the direct and indirect interests of the Algos board and management in
the merger, and Algos and Endo generally, are described the preliminary proxy
statement of Algos filed with the SEC on Schedule 14A and the amendments
thereto. Algos stockholders should read the proxy statement because it contains
important information. Copies of the pmxy statement and other relevant documents
are available to the public from cornmercial document rctrieval services and at
the biternet world wide web site maintained by the Securities and Exchange
Commission at www.sec.gov and may also be obtained from Algos by calling Gary
Anthony at (732) 938-5959 or from Endo by calling Osagie Imasogie at (610)
558-9800.
31
