Napo Pharmaceuticals

market

Diarrhea-predominant IBS market (product: CRO-IBS)

Irritable Bowel Syndrome (“IBS”) is characterized by a constellation of gastrointestinal symptoms including diarrhea, constipation (or alternation of the two), urgency, and abdominal pain. IBS afflicts up to 20% of the population in the US (estimates range from 9-25%; of whom 75% are women). About 75% of the affected patients are managing diarrhea-predominant IBS (“D-IBS”).

IBS ranks second only to the common cold as a cause of lost work time in the US. In addition, the disease accounts for approximately 3 million physician visits in the United States each year, costing the US healthcare system more than US$30 billion annually. The market in the United States alone could be over US$4 billion for a safe and effective D-IBS product.

C-IBS is a smaller market than D-IBS and non-competitive to the potential indication of crofelemer for D-IBS.

The company believes that the market for D-IBS is currently largely unserved. Due to the severe toxicities associated with treatment, and observed with other drugs of the same class, the entire class of 5-HT3 receptor antagonists (which have a different mechanism of action from that of crofelemer) has fallen out of favor in the pharmaceutical industry. Solvay, the sponsor of Cilansetron®, which is one such drug, recently announced it was discontinuing its efforts to obtain FDA marketing approval.

The first 5-HT3 antagonist approved for the treatment of IBS in women, GlaxoSmithKline's Lotronex®, was removed from the US market due to serious toxicities and subsequently returned to the market under rigid black-box restrictions. The significant toxicities observed with Lotronex® are believed to be mechanism-related. As a 5-HT3 antagonist, alosetron (Lotronex®) is felt to provide benefit to patients by inhibiting intestinal motility, secretion, and sensation. The most common side effect of Lotronex® is constipation. The constipation and ischemic colitis associated with Lotronex® can be severe and have resulted in hospitalization, surgery, and death.

This has cleared the pathway for a novel anti-secretory drug approach with a late-stage product opportunity, such as CRO-IBS, which does not have the same mechanism of action nor the same side effect liabilities as Lotronex®.

In February, 2006, the results of a proof-of-concept study of CRO-IBS for D-IBS indicated a significant effect for the treatment of abdominal pain, the important endpoint from a regulatory, patient satisfaction, and large corporate partner interest perspective.

Additionally, on July 10, 2008; Napo results from a recently completed intent-to-treat analysis of the existing data from the two Phase 2 trials conducted by Napo's former licensee, Trine Pharmaceuticals, Inc (previously referred to as Phase 2a and Phase 2b) evaluating the effects of crofelemer in the treatment of diarrhoea predominant irritable bowel syndrome ("D-IBS").

The analysis of the data of the dose-ranging Phase 2 study in D-IBS patients indicates that crofelemer at a dose of 500 mg twice daily, produced statistically and clinically meaningful improvement in pain-discomfort free days in female D-IBS patients. This improvement represents an important observation with respect to a key regulatory endpoint for D-IBS. Crofelemer did not affect any other bowel function parameters. This statistical analysis of the data was conducted by an independent third party and has not been previously disclosed.

As previously announced, Trine Pharmaceuticals, Inc. had conducted a single-dose evaluation of crofelemer in a Phase 2 study in female D-IBS patients following a dose-ranging Phase 2 study in male and female D-IBS patients. The results from an outlier analysis of the dose-ranging Phase 2 study were presented at Digestive Disease Week in May 2007. In the later single dose Phase 2 study with crofelemer, Trine evaluated a 125 mg twice daily dose of a different formulation of crofelemer from the one used in the dose-ranging Phase 2 study. There were no serious drug related adverse events associated with crofelemer in either of the Phase 2 studies in D-IBS patients.

Napo received the full datasets of the Phase 2 studies in March, 2008, shortly after the termination of the license agreement with Trine Pharmaceuticals. Napo announced its intention to conduct a full analysis in its announcement of 11 February 2008. The results announced today as part of Napo's analysis of the full dataset have not been previously disclosed or noted publicly in Trine's announced results.