Napo Pharmaceuticals

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Termination of Trine Agreement Napo now in active discussions for commercial partner for crofelemer

South San Francisco, California, 11 February 2008 Napo Pharmaceuticals, Inc., (LSE: NAPL) announces that Trine Pharmaceuticals, Inc ("Trine") and Napo have mutually agreed to terminate their license agreement for Napo's gastro-intestinal product, crofelemer. The termination follows Trine's disclosure to Napo of Trine's review of preliminary data of the Phase 2b study conducted by Trine for the treatment of diarrhea-predominant irritable bowel syndrome ("D-IBS") with crofelemer ("CRO-IBS"). Napo has been informed by Trine that, based on the data currently available to it (full patient data sets not yet available, at least 25% of patients with incomplete data sets), they have determined that the primary clinical endpoint of pain was not achieved; that there were no drug related adverse events; and that Trine intends to commence the wind down of the company over the next month.. Napo expects Trine to receive the full data from the trial and then forward it to Napo within the next several weeks. Napo will then fully analyse this data and make a complete announcement with respect to the findings in due course.

Trine conducted a single-dose evaluation of crofelemer in a Phase 2b confirmatory study of the previous successful Phase 2a result, the results of which were presented at Digestive Disease Week in May 2007. In the confirmatory Phase 2b study, Trine evaluated a single active dose against placebo and dramatically modified the formulation of the drug used in the original Phase 2a study.

As part of the mutual termination, full commercial rights of crofelemer previously licensed to Trine have reverted to Napo, and Napo will receive 100% of the profits from each of these indications. These include worldwide rights to CRO-IBS (previously a 65:35 Trine:Napo profit share); co-commercial rights to CRO-HIV in the US (previously a 50:50 profit share); acute infectious diarrhea ("CRO-ID") rights in western territories; as well as any future potential clinical indications, such as cancer or transplant patient related diarrheas, among others (which were also all subject to the 65:35 Trine:Napo profit share).

As part of the termination, Napo has agreed to pay US$500,000 and US$750,000 CRO-HIV success milestone payments to Trine based on future NDA filing, approval, and/or commercial alliances. There are no other future obligations to Trine.

Napo is now in an unencumbered position to continue its ongoing discussions with potential commercial licensees in western territories for all indications of crofelemer, with near-term focus on securing a commercial partner with specialty pharma capability in the HIV marketplace in the US, and gastro-intestinal development and commercial capability, including for the paediatric indication.

Crofelemer is the subject of three on-going clinical trials for various diarrhea indications:

• CRO-HIV for chronic diarrhea in people living with HIV/AIDS. This final Phase 3 study is being conducted in the US, sponsored by Napo. Napo anticipates an NDA filing in late 2008. CRO-HIV is fast-tracked by the FDA.
• CRO-ID for adult acute infectious diarrhea in India, for which Glenmark is the trial sponsor and for which results are expected in Q2, 2008.
• CRO-ID for cholera in Bangladesh for which Napo is the trial sponsor (with support from NIH) and for which results are expected in Q2, 2008.

Napo's Chief Executive Officer, Lisa Conte, commented: "At this point, Napo finds the results of the Phase 2b trial inconclusive as to the value of crofelemer for D-IBS. We believe the primary clinical endpoint will not achieve significance, yet the dramatic change in the formulation of the product and the use of a single dose may have confounded the results and powering of this trial. As Trine had substantially downsized and had limited resources, we understand their need to make a rapid commercial decision as to whether to proceed with CRO-IBS. Napo will make a complete announcement as to our findings once we obtain the full data set from this trial. We believe the proof of concept for D-IBS from the Phase 2a plus the safety database from the Phase 2b will serve as the basis of evaluation for a potential commercial partner with the appropriate resources and endpoint/indication expertise to pursue IBS. Napo's focus is on the completion of our final Phase 3 study for CRO-HIV, which is expected to be the company's first NDA filing in 2008. The endpoint of the CRO-HIV trial, as well as the diarrhea endpoints of our current cholera and acute infectious diarrhea trials with CRO-ID, are matched to the clinical implications of the anti-secretory mechanism of action of crofelemer. With the reversion of our commercial rights, we are actively in discussions with potential commercial partners for crofelemer."

Dr. Pravin Chaturvedi, Napo's Chief Scientific Officer, commented: "We continue to be optimistic about our other clinical programmes and the addition of approximately 120 crofelemer treated patients with no adverse events to our safety database. The diarrhea endpoint in the ongoing clinical trials is distinct from the primary endpoint of pain targeted in the D-IBS Phase 2b study. As regards the CRO-HIV trial, Napo spent over 6 months designing an appropriate adaptive clinical trial and ran approximately 800,000 simulations to determine the sample size in the crofelemer ADVENT trial, and these simulations and sample size calculations were shared with the FDA in designing the final Phase 3 CRO-HIV study to support the clinical trial design. Napo's diarrhea trials mentioned above are testing multiple doses and all are using similar formulations to ensure continuity of crofelemer release in the intestine."

For more information please contact:

Napo Pharmaceuticals, Inc.
Lisa Conte, Chief Executive Officer
+001 (650) 616-1902

Charles Thompson, Chief Financial Officer
+001 (650) 616-1902

Buchanan Communications
+ 44 (0)20 7466 5000
Tim Anderson, Mary-Jane Johnson

Nomura Code Securities Limited
+44 (0)20 7776 1205
Clare Terlouw

About Napo Pharmaceuticals, Inc.

Napo Pharmaceuticals, Inc. focuses on the development and commericalization 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 a subsidiary in Mumbai, India.

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 pediatric 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. Napo also plans to develop an early clinical stage product, NP-500, for the treatment of insulin resistant diseases of Type II diabetes and metabolic syndrome (Syndrome X; pre-diabetic syndrome). Napo also has a plant library of approximately 2,300 medicinal plants from tropical regions, and Napo has entered two screening relationship 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.