8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)            January 8, 2008

INSPIRE PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)

Delaware                          000-31135                                   04-3209022
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)

4222 Emperor Boulevard, Suite 200, Durham, North Carolina 27703-8466
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code          (919) 941-9777

____________________________________________
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.02 Termination of a Material Definitive Agreement.

On January 8, 2008, Inspire Pharmaceuticals, Inc. ("Inspire") provided written notice to FAES Farma, S.A. ("FAES") of the termination of the License Agreement, dated October 31, 2006, as amended June 19, 2007, between Inspire and FAES (the "Agreement") pertaining to bilastine, an antihistamine compound. Termination of the Agreement is effective 30 days from the date of the notice. Following review of its development and commercialization program relating to bilastine, Inspire made a strategic business decision to terminate the Agreement and focus its resources and capital investments on its other late stage development programs and commercial activities. A copy of the termination notice is attached as Exhibit 99.1 to this report and is made a part hereof.

Under the terms of the Agreement, Inspire was granted an exclusive, royalty-bearing license for the U.S. and Canadian development and commercialization of oral formulations of bilastine and rights to develop ocular formulations worldwide, except various Spanish speaking countries. In consideration of the license grants, Inspire paid FAES an upfront license fee of $7 million and agreed to make additional milestone payments, contingent upon achievement of the milestones, and royalty payments, based on net sales.

As a result of the termination of the Agreement, Inspire is no longer responsible for the further development and commercialization of the oral or ocular formulations of bilastine and has no further obligation to make any milestone or royalty payments under the Agreement. All of the rights in the intellectual property licensed by Inspire from FAES under the Agreement will revert to FAES and the regulatory dossier pertaining to the candidates, including the U.S. Investigational New Drug application (IND) for the oral bilastine compound, will be transferred back to FAES.

Item 8.01     Other Events.

On January 14, 2008, Inspire issued a press release, attached to this report as Exhibit 99.2 and made part hereof, announcing the termination of the Agreement.

Item 9.01      Financial Statements and Exhibits.

(c)     Exhibits.

No.                  Description

99.1                 Notice of Termination under License Agreement, dated January 8, 2008

99.2                 Press Release, dated January 14, 2008

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

                                                                         Inspire Pharmaceuticals, Inc.

                                                                         By: /s/ Christy L. Shaffer                         
                                                                               Christy L. Shaffer,
                                                                               President and Chief Executive Officer

Dated: January 14, 2008

EXHIBIT INDEX

EXHIBIT INDEX

No.                  Description

99.1                 Notice of Termination under License Agreement, dated January 8, 2008

99.2                 Press Release, dated January 14, 2008

EX-99.1

Faes Farma, S.A.
Maximo Aguirre, 14
48940 Leioa, Vizcaya, Spain
Attention: General Manager

January 8, 2008

Re: Notice of Termination under License Agreement

Dear Paco:

Reference is made to the License Agreement dated as of October 31, 2006 between Inspire Pharmaceuticals, Inc. and Faes Farma, S.A., as amended June 19, 2007 (the "Agreement").

Inspire hereby gives to notice to Faes pursuant to Section 9.2 (ii) of the Agreement that Inspire hereby terminates the Agreement in its entirety effective thirty days from the date of this letter.

Inspire is grateful for the relationship that it has had with Faes and hopes that the parties will have opportunities to work together in the future.

Very truly yours,

/s/ Christy L. Shaffer

Christy L. Shaffer, Ph.D.

President and Chief Executive Officer

cc: Joseph M. Spagnardi

Benjamin R. Yerxa

EX-99.2

For Immediate Release

Investor Contact:
Inspire Pharmaceuticals, Inc.
Jenny Kobin
VP, Investor Relations and Corporate Communications
(919) 941-9777, Extension 219

Media Contact:
BMC Communications
Dan Budwick
(212) 477-9007, Extension 14

INSPIRE ANNOUNCES ITS TERMINATION OF
BILASTINE LICENSING AGREEMENT

DURHAM, NC - January 14, 2008 - Inspire Pharmaceuticals, Inc. (NASDAQ: ISPH) announced today that it has exercised its option to terminate the licensing agreement with FAES Farma, S.A. for the U.S. and Canadian development and commercialization of oral bilastine for the treatment of allergic rhinitis. Inspire is terminating the agreement in its entirety, and as a result, Inspire is no longer responsible for the development and commercialization of the oral or ocular formulations of bilastine. Inspire has no further financial obligation to FAES.

"We have made a strategic business decision to terminate the bilastine agreement and focus our resources and capital investments on our other late stage development programs and commercial activities," stated Christy L. Shaffer, Ph.D., President and CEO of Inspire.

About the Licensing Agreement

In October 2006, Inspire completed the initial bilastine licensing agreement with FAES and in June 2007, the companies amended the agreement based on a meeting with the Pulmonary Division of the U.S. Food and Drug Administration. FAES agreed to conduct additional clinical work on oral bilastine, during which time Inspire would have no financial obligation to FAES. Each company had the option to terminate the agreement beginning in December 2007.

About Inspire

Inspire is a biopharmaceutical company dedicated to discovering, developing and commercializing prescription pharmaceutical products in disease areas with significant commercial potential and unmet medical needs. Inspire employs a U.S. sales force for the promotion of AzaSite^™ (azithromycin ophthalmic solution) 1% for bacterial conjunctivitis, Elestat^® (epinastine HCl ophthalmic solution) 0.05% for allergic conjunctivitis and Restasis^® (cyclosporine ophthalmic emulsion) 0.05% for dry eye. Inspire is focused on the therapeutic areas of ophthalmology and respiratory/allergy, and is developing products for dry eye, cystic fibrosis, allergic rhinitis and glaucoma. Elestat and Restasis are registered trademarks owned by Allergan, Inc. AzaSite is a trademark owned by InSite Vision Incorporated. For more information, visit www.inspirepharm.com.

Forward-Looking Statements

The forward-looking statements in this news release relating to management's expectations and beliefs are based on preliminary information and management assumptions. Specifically, no assurances can be made on Inspire's ability to focus its resources and capital investments on its remaining late stage development programs and commercial activities or the timing or outcome associated with any such programs or activities. Such forward-looking statements are subject to a wide range of risks and uncertainties that could cause results to differ in material respects, including those relating to product development, revenue, expense and earnings expectations, the seasonality of Elestat, intellectual property rights, adverse litigation developments, adverse developments in the U.S. Securities and Exchange Commission (SEC) investigation, competitive products, results and timing of clinical trials, success of marketing efforts, the need for additional research and testing, delays i n manufacturing, funding, and the timing and content of decisions made by regulatory authorities, including the U.S. Food and Drug Administration. Further information regarding factors that could affect Inspire's results is included in Inspire's filings with the SEC. Inspire undertakes no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof.

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