Napo Pharmaceuticals

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Napo Acquires Rights to Additional CFTR Technology

Indications Include Gastrointestinal and Polycystic Kidney Disease

SOUTH SAN FRANCISCO, Calif., Oct. 26, 2009 - Napo Pharmaceuticals, Inc. has in-licensed from the University of California Regents additional small-molecule cystic fibrosis transmembrane conductance regulator (CFTR) inhibitor technology including gastrointestinal (GI) and polycystic kidney disease (PKD) indications. PKD, a leading cause of end-stage renal disease and kidney transplants, affects approximately 600,000 people in the United States, and 12.5 million worldwide, according to the PKD Foundation.

Napo's collaborator, Alan Verkman, M.D., Ph.D., of the University of California San Francisco (UCSF) Department of Medicine, was recently awarded a National Institutes of Health (NIH) challenge grant to further evaluate CFTR inhibitor technology targeting PKD. The goal of the NIH funded study is to evaluate a select group of CFTR inhibitors that, when orally administered, are effective in preventing renal cyst growth and renal function deterioration in mice.

NPpo has exclusive rights to several classes of novel, proprietary, small-molecule CFTR inhibitors, which it is developing for a variety of indications, including PKD and secretory diarrheas, which may include diarrheas of infectious or other origins. To advance candidate molecules for both indications, Napo intends to leverage the knowledge of secretory biology and clinical development it has gained from its work with crofelemer, the company's lead molecule and first-in-class CFTR inhibitor. Crofelemer, which is extracted and purified from a rain forest plant and cannot be synthesized, is too large to be significantly absorbed, making it a locally acting anti-diarrheal agent.

Napo's licensee, Salix Pharmaceuticals, Inc., is evaluating crofelemer as a treatment for chronic diarrhea in people living with HIV/AIDS on anti-retroviral therapy in a final Phase 3 study called the ADVENT trial. Another Napo licensee, Glenmark Pharmaceuticals, Ltd., is testing crofelemer for use in late-stage adult acute infectious diarrhea (AAID) in India, and plans to expand its studies to severe diarrheal infection (including cholera) and pediatric diarrhea.

Earlier this year, Napo announced that SRI International had begun an early-stage discovery/pre-clinical drug development program using small molecules from Napo's portfolio of CFTR inhibitor candidates. Special funding for this program was provided by the National Institute of Allergy and Infectious Diseases' Division of Microbiology and Infectious Diseases (DMID) at the NIH in response to the dire need for novel drugs for additional treatment options for secretory diarrhea and GI disorders. SRI's activities are focused on refining leads for further pre-clinical studies supporting the filing of an Investigational New Drug (IND) application for a small-molecule CFTR inhibitor. "This is the second time this year that the CFTR technology has been recognized through NIH funding as an important mechanism in treatment of diarrheal diseases and PKD," said Napo CEO Lisa Conte. "Two to three million children die each year from secretory diarrhea, and there are no therapeutic options for PKD, leading to dialysis and transplant options only for the patients."

About CFTR
The cystic fibrosis transmembrane conductance regulator (CFTR) is a cAMP-activated chloride ion (Cl-) channel expressed in various epithelial cells throughout the body, and is a pharmacological target for both activators and inhibitors. Activators are useful in the pharmacotherapy of cystic fibrosis. CFTR inhibitors, such as Napo's compounds, play a role in modulating and reducing water flow across gut epithelium and kidney cysts through the regulation of the CFTR channel. The collaboration between Napo and UCSF identified a variety of potent inhibitors of CFTR activity.

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 in several South American countries. Crofelemer is in various stages of clinical development for four distinct programs, including a late-stage Phase 3 program. The FDA has granted fast-track status to crofelemer development for IBS and HIV-related indications (CRO-IBS and CRO-HIV):

- 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 infectious diarrhea (including cholera), Phase 2
- CRO-PED for pediatric diarrhea, Phase 1

Napo's licensee, Salix Pharmaceuticals, Inc. has exclusive rights to crofelemer for all indications in North America, Europe (excluding Iceland, Liechtenstein, Norway, and Switzerland), and Japan, and, for certain other indications including irritable bowel syndrome, worldwide. Salix estimates that the HIV-associated diarrhea market opportunity alone may be $300 million. The ADVENT trial of crofelemer as a treatment for chronic diarrhea in patients on antiretroviral therapies for HIV or AIDS is being conducted under fast-track status and Special Protocol Assessment agreement with the FDA.

Crofelemer has also been licensed to Glenmark Pharmaceuticals, Ltd. in India and 140 emerging countries for indications related to HIV (CRO-HIV), use in acute adult infectious diarrhea (CRO-ID), and use in pediatric diarrhea (CRO-PED). Glenmark and Salix have entered into a commercial supply agreement for crofelemer active pharmaceutical ingredient (API). AsiaPharm Group, Ltd. has rights to crofelemer in China (including Hong Kong and Macau).

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. Napo was founded in November 2001 and is based in South 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.
1 650 616 1902
www.napopharma.com

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.