Napo Pharmaceuticals

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Napo Enters Finder's Agreement for Development of Crofelemer in China

Agreement to Tap Key Growth Market and Address Dire Pediatric Need

SAN FRANCISCO, Calif., April 20, 2010 - Napo Pharmaceuticals, Inc., which focuses on the development and commercialization of proprietary pharmaceuticals for the treatment of diarrheal diseases in the global marketplace in collaboration with local partners, is pleased to announce the formation of a Finder's Agreement with its licensee for crofelemer in China, Luye Pharma Group Ltd. (formerly Asiapharm).

Drug sales in China are expected to outpace those in France and Germany next year, and by 2013 China will contribute an estimated $40 billion, or 44 percent, of the $90 billion in anticipated sales to be generated by emerging pharmaceutical markets (which will account for 48 percent of overall industry growth). This according to a report by IMS Health recently cited in The New York Times (1), in which IMS divided into three tiers 17 markets poised for significant growth. China was alone in the top tier.

Almost three million children die of dehydration due to diarrhea each year, with measurable morbidity in hundreds of millions more. Napo and Luye seek to combat this in a key market by allying with pharmaceutical companies that have a presence in China as well as expertise in the manufacture and commercialization of gastrointestinal products-particularly those that can address pediatric populations.

Luye will contribute its licensed rights to crofelemer in China (including Macao and Hong Kong) for the indications of chronic diarrhea in people living with HIV/AIDS, adult acute infectious diarrhea, and pediatric diarrhea, and Napo will seek a sub-licensee with resources and experience in the gastro-intestinal and/or pediatric markets to achieve development, regulatory approval, and distribution of crofelemer in China., Napo will have access to Chinese translations of regulatory and clinical data from previous research on crofelemer, encompassing studies of more than 2,000 patients, as well as all data generated in the future.

"We see a great opportunity for crofelemer in the rapidly expanding Chinese market, and in particular applaud the vision of Luye to seek expertise to most rapidly address the important pediatric need," said Napo CEO Lisa Conte. "We are looking forward to the end of the Phase 3 trial for CRO-HIV in the United States, and believe the data from this trial and that of previously conducted CRO-ID trials provides a very attractive regulatory and clinical data package."

About Crofelemer
Napo's proprietary patented gastrointestinal compound, crofelemer, is a first-in-class anti-secretory agent extracted from Croton lechleri, a medicinal plant sustainably harvested from several South American countries. Crofelemer is in Stage 2 of a two-phase adaptive design final Phase 3 pivotal trial for chronic diarrhea associated with HIV/AIDS in the United States. Additionally, Glenmark Pharmaceuticals Ltd., which holds the license for crofelemer in 140 countries, is completing a dosing trial for crofelemer for adult acute infectious diarrhea. Napo is working on accelerating the development of crofelemer for pediatric populations.

Crofelemer is in various stages of clinical development for four distinct programs, including a late-stage Phase III program:

• CRO-HIV for HIV-related diarrhea, Phase 3 (under Special Protocol Assessment)
• CRO-IBS for diarrhea irritable bowel syndrome (D-IBS), Phase 2
• CRO-ID for acute adult infectious diarrhea (including cholera), Phase 2
• CRO-PED for pediatric diarrhea, Phase 1

The FDA has granted fast-track status to crofelemer development for IBS- and HIV-related indications (CRO-IBS and CRO-HIV).

Napo's licensees expect to launch crofelemer in 2011, with targeted commercialization on five continents within a year thereafter.

About Napo Pharmaceuticals, Inc.
Napo Pharmaceuticals, Inc., focuses on the development and commercialization of proprietary pharmaceuticals for the global marketplace in collaboration with local partners. The company seeks partners in both traditional high-value markets and in the higher volume business models of emerging and developing economies. Founded in November 2001, Napo is based in San Francisco, Calif., with a subsidiary in Mumbai, India.

Napo holds the exclusive worldwide rights to novel small-molecule potential second-generation anti-secretory agents, which have been licensed to Napo from the Regents of the University of California and are the subject of NIAID funding. Napo is developing an early clinical stage/ready-for-Phase 2 product, NP-500, for the treatment of insulin-resistant diseases of Type II diabetes and metabolic syndrome (Syndrome X; pre-diabetic syndrome). Napo has a library of approximately 2,300 medicinal plants.

For more information please contact:
Lisa Conte, CEO, Napo Pharmaceuticals, Inc.
1 415 371 8302
www.napopharma.com

About Luye Pharma Group Ltd.
Luye is a leading specialty pharmaceutical group in China, focusing on the research, development, production and sale of natural drugs, drugs with new delivery systems, and new drugs with other specific features. Luye is dedicated to the provision of quality medicinal products and professional services to its clients. The company's R&D team is recognized for its expertise and ability to conduct all-stage research activities for new drug discovery and is constantly working to enhance its capabilities and product portfolio. Luye's products have an established presence in China; they are distributed to more than 3,000 hospitals and are widely used in the fields of oncology, orthopedics, neurology, gastroenterology, cardiology and hepatology. The company is entering new markets including Singapore, Malaysia, Pakistan, Vietnam, Croatia, Norway, and South Korea.

1. "Drug Giants Lag Where Sales Boom, Study Says", The New York Times, by Natasha Singer, March 16, 2010

Please note that the materials provided herein contain projections and other forward-looking statements regarding future events. Such statements are just predictions and are subject to risks and uncertainties that could cause the actual events or results to differ materially. These risks and uncertainties include, among others: the cost and unpredictability of the duration and results of clinical trials and FDA approval; the possible impairment of, or inability to obtain, intellectual property rights and the costs of obtaining such rights from third parties; market acceptance for approved products; ability to secure the product; and generic and other competition and the need to acquire new products.