Napo Pharmaceuticals

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Transaction in Own Shares

South San Francisco, California, July 20, 2007 -

Napo Pharmaceuticals, Inc ("Napo" or the "Company") announces that it has purchased 100,000 of its common shares (the "Shares") at a price of the par value of $0.0001 per share (the "Repurchase"), being an aggregate consideration of $10. The Shares will be held as treasury shares.

The right to and terms of the Repurchase were disclosed in paragraph 5(c) of page 141 and paragraph 9(b) of page 142 of the Company's IPO prospectus published on 26 July 2006.

Following the Repurchase, the Company holds 125,614 common shares in treasury, and has 47,042,278 common shares in issue.

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
020 7466 5000
Tim Anderson, Mary-Jane Johnson

Nomura Code Securities Limited
020 7776 1205
Clare Terlouw

About Napo Pharmaceuticals, Inc.

Napo Pharmaceuticals, Inc. focuses on the development and commercialisation 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.

Napos 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. 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.

About Crofelemer

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.