Napo Pharmaceuticals, Inc. Obtains Special Protocol Assessment Agreement From FDA for Crofelemer in HIV/AIDS Diarrhea Assessment

SOUTH SAN FRANCISCO, July 3 /PRNewswire-FirstCall/ -- Napo Pharmaceuticals, Inc., , which focuses on the development and commercialization of proprietary pharmaceuticals for the global marketplace in collaboration with local partners, today announced that under the Special Protocol Assessment (SPA) process it has obtained agreement with the United States Food and Drug Administration (FDA) for the design of its pivotal study protocol for crofelemer for the treatment of chronic diarrhea in people with HIV/AIDS (CRO-HIV).

The study, also referred to as the ADVENT trial, will be carried out under an FDA Fast Track designation. On Jan. 16, 2007, Napo met with the FDA under the Special Protocol Assessment Process on this adaptive design of its ADVENT trial. On March 14, 2007, Napo announced it had received approval from the principal independent review board (IRB) overseeing the ADVENT trial.

The ADVENT trial -- (Anti-Diarrhea therapy in HIV disease-Emerging treatmeNT concepts) is a randomized, double-blind, parallel-group, placebo- controlled, two-stage, adaptive design study to assess the efficacy and safety of crofelemer at 125mg, 250 mg and 500 mg oral doses twice daily (p.o.b.i.d) for the treatment of HIV-Associated Diarrhea.

The 'adaptive design' of the ADVENT trial -- Adaptive trial design has been advocated by the FDA to improve efficiency of clinical trials*. The ADVENT trial will be executed in two stages. Stage I represents a dose selection stage and Stage II, a dose assessment stage. Four dose groups (placebo, 125 mg, 250 mg, and 500 mg) will be assessed in Stage I. When 50 subjects per group complete the initial efficacy dosing period (28 days), an interim analysis will be conducted to select an optimal single dose of crofelemer for Stage II. Stage II will continue until an additional 75 subjects are randomized both to this dose of crofelemer and the placebo, providing for 125 patients on placebo and 125 patients the selected crofelemer dose. The primary study analysis is planned after all subjects complete the 28-day efficacy period. A full study analysis and final study report will be prepared at that time that will form the basis of a subsequent New Drug Application (NDA) filing to FDA. Subjects who complete the efficacy part of the study will be allowed to continue into an open-label, five-month extension. The purpose of the extension is to provide additional safety and tolerability information about crofelemer in longer tem use.

Commenting on this announcement, Lisa Conte, Chief Executive Officer of Napo Pharmaceuticals, said: "The SPA agreement is an important milestone for Napo, allowing us to address and mitigate regulatory uncertainty prior to the completion of our final Phase 3 trial in support of the Company's first NDA filing, targeted for early 2008."

Dr. Scott Harris, Vice President, Clinical Affairs, and Chief Medical Officer, said: "Napo has taken every effort to design and execute a Phase 3 program with the highest possible probability of success, incorporating experience from approximately 1,500 patients studied in clinical trials involving crofelemer. Already, 55 patients have enrolled in a previously conducted Feasibility Study of CRO-HIV. We expect these patients to be immediately eligible for enrolment for the ADVENT study."

About Special Protocol Assessment

The FDA's SPA process was implemented under the Prescription Drug User Fee Act (PDUFA) in November 1997. The SPA process provides for review and agreement on the design of protocols for Phase 3 trials whose data will form the primary basis for an efficacy claim. To use this process, companies planning clinical trials submit a study protocol with related questions. The FDA may then review and agree to the protocol design, execution and analyses and issue a special protocol letter to that effect. Once the FDA agrees in writing to a protocol reviewed under this process, the assessment should be considered binding on the review division of the FDA as long as the protocol is followed, unless substantial scientific issues essential to determining the safety or efficacy of the drug are being identified after the testing has begun.

References *Scott Gottlieb, MD, 2006 Conference on Adaptive Trial Design, July 10, 2006, http://www.fda.gov/oc/speeches/2006/trialdesign0710.html. For more information please contact: Napo Pharmaceuticals, Inc Lisa Conte, Chief Executive Officer 001 + 650 616 1902 Charles Thompson, Chief Financial Officer 001 + 650 616 1903 Buchanan Communications + 44 (0)20 7466 5000 Mary-Jane Johnson, Catherine Breen Russo Partners 001 + 858 717 2310 David Schull Nomura Code Securities Limited +44 (0)20 7776 1205 Clare Terlouw

About Napo

Napo Pharmaceuticals Inc., focuses on the development and commercialization of proprietary pharmaceuticals for the global marketplace in collaboration with local partners. Napo was founded in November 2001, and is based in California, USA with subsidiaries in Mumbai, India and London, UK.

Napo's late-stage proprietary gastro-intestinal compound, crofelemer, is in various stages of clinical development for four distinct product indications, including a late-stage Phase 3 program:

-- CRO-HIV for AIDS diarrhea, Phase 3 -- CRO-IBS for diarrhea irritable bowel syndrome ("D-IBS"), Phase 2 -- CRO-ID for acute infectious diarrhea (including cholera), Phase 2 -- CRO-PED for paediatric diarrhea, Phase 1

The FDA has granted fast-track status to CRO-IBS and CRO-HIV.

Crofelemer, a proprietary patented agent, is extracted from Croton lechleri, a medicinal plant which can be sustainably harvested from several countries in South America. Experimental studies have shown that crofelemer normalises chloride secretion across the CFTR transporter in various animal models of diarrhea, including cholera toxin treatment. Napo also plans to develop a clinical stage product, NP-500, for the treatment of insulin resistant diseases such as Type II diabetes and metabolic syndrome. Napo also has a plant library of approximately 2,300 medicinal plants from tropical regions and Napo has entered into screening relationships associated with this collection. Currently, products are based on the chemical and biological diversity derived from plants with medicinal properties, but future products may be in-licensed from other sources.

Napo has partnerships with Trine Pharmaceuticals, Inc. of the United States of America; Glenmark Pharmaceuticals Limited of India; and AsiaPharm Group Ltd. of China. For more information please visit www.napopharma.com

About Crofelemer

Crofelemer, a proprietary patented agent, is extracted from Croton lechleri, a medicinal plant which can be sustainably harvested from several countries in South America. Crofelemer is in various stages of clinical development for four distinct product indications, one in Phase 3, two in Phase 2 and one in Phase 1.

Crofelemer has been tested in trials involving approximately 1500 patients in double-blind placebo-controlled, published trials of AIDS diarrhea, diarrhea-predominant IBS, and acute infectious diarrhea. It is generally well tolerated and has shown significant anti-diarrheal activities and improvement in gastrointestinal symptoms. Crofelemer produces several effects when administered orally providing for activity in several disease indications. Crofelemer's anti-secretory mechanism reduces excess fluid secreted into the gastro-intestinal tract, while its anti-inflammatory and analgesic activity may provide the rationale for its significant benefit in abdominal pain. Crofelemer acts locally in the intestines, with limited systemic exposure.

CRO-HIV is being developed to address chronic diarrhea in people living with HIV/AIDS. Based on epidemiological data(1), access to medication(2) and evidence on the incidence of chronic diarrhea in patients with HIV/AIDS(3), the Directors of Napo estimate that peak sales of crofelemer for HIV/AIDS- related chronic diarrhea could exceed US$300 million in the US.

At the end of 2003, there were approximately 1,000,000 HIV/AIDS patients under care in the US(4). The post-HAART highly active ARVs HIV AIDS population shows incidence of diarrhea ranging from 6-19 percent with 15 percent managing diarrhea chronically, and 50 percent refractory to currently available alternatives. At the end of 2005, there were approximately 720,000 HIV/AIDS patients in Europe.

The cause of diarrhea is often unknown, as causative infectious agents are rarely discovered: in as many as 50 percent of HIV-infected patients with diarrhea, no pathogen can be identified and HIV itself may be the cause(5). However, in 2003, there were 37,000 ARV drug switches in US HIV/AIDS patients due to diarrhea, the second most common reason for switching ARV drugs(6). In some cases, there can be a negative reaction in connection with some medications used to manage diarrhea and this is thought to be caused by certain ARV regimes

AIDS patients on ARV therapy with unmanaged diarrhea have been shown to be non-compliant with HIV medications. Non-compliance is a major cause of the emergence of resistant HIV viral strains, providing a strong medical rationale for treatment on a global basis.

References: 1. UNAIDS/WHO - World Health Organisation. Progress on global access to HIV antiretroviral therapy (2005) 2. Screening for HIV for the US Preventative Services Task Force, An Intern Med 2005: 14 3:55-73 3. S. A. Call et al American Journal of Gastroentoology, Vol. 95 Page 3142 4. Glynn M. Rhodes P. Estimate HIV prevalence in the United States at the end of 2003. National HIV prevention conference; June 2005; Atlanta. Abstract 595, abs CDC basic facts 5. Chronic Diarrhea and Malabsorption Associated with Enteropathogenic Bacterial Infection in a Patient with AIDS, Annals of Internal Medicine 15 July 1993, Volume 119 Issue 2, Pages 127-128 6. Verispan's HIV Therapy Audit completed in 2004 for 2003 data collection; and drug switch data for 2003.

Disclaimer The Shares referenced in this announcement are not for distribution, directly or indirectly, in or into the United States or to any US person as defined in Regulation S under the US Securities Act of 1933, as amended ("Regulation S"). This announcement is not an offer of securities for sale into the United States or elsewhere. The Shares described above have not been registered under the US Securities Act of 1933, as amended (the "Securities Act") and may not be offered or sold in the United States or to, or for the account or benefit of, US persons (as such term is defined in Regulation S) unless they are registered under the Securities Act or they are exempt from registration under the Securities Act. No offer or sale of Regulation S securities has been made or will be made in the United States. Hedging transactions involving these securities may not be conducted unless in compliance with the Securities Act.

Napo Pharmaceuticals, Inc.

CONTACT: Lisa Conte, Chief Executive Officer, +650-616-1902, or CharlesThompson, Chief Financial Officer +650-616-1903, both of NapoPharmaceuticals, Inc.; or Mary-Jane Johnson or Catherine Breen, both ofBuchanan Communications, + 44-(0)20-7466-5000; or David Schull of RussoPartners, +858-717-2310; or Clare Terlouw of Nomura Code Securities Limited+44-(0)20-7776-1205, all for Napo Pharmaceuticals, Inc.

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