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. Zelnorm® (a 5-HT receptor agonist), which is marketed by Novartis, is an approved drug for constipation-predominant IBS (C-IBS) in women.

SG Cowen has projected that the product will achieve annual revenues of over US$1.1 billion. 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.