ZX002 Development Status

Our licensor for ZX002, Elan Pharma International Ltd., conducted pre-clinical and clinical studies of ZX002 under an Investigative New Drug application initiated in 2002. In both single and multiple dose pharmacokinetic evaluations, ZX002 demonstrated detectable plasma concentrations of hydrocodone within 15 minutes of administration. ZX002 also demonstrated a sustained release effect significantly longer than currently available hydrocodone combination products such as Vicodin^®, as well as dose proportional pharmacokinetics. Consistent, steady-state plasma levels, which are believed to be desirable for chronic pain patients who require around-the-clock opioid therapy, were achieved within one week of the initiation of dosing. In addition, ZX002 has been tested under both fed and fasted conditions and the amount of drug exposure was not affected by food, which we believe provides the basis for a flexible administration regimen in chronic pain. We believe that these prior pharmacokinetic studies demonstrate that ZX002 displays a consistent, controlled release profile, dose-proportional pharmacokinetics and an acceptable safety profile.

ZX002 has also been evaluated in two distinct Phase 2 pain studies. The first study was a randomized, single-dose, parallel group, placebo-controlled, active-comparator study to evaluate the safety, efficacy and pharmacokinetics of ZX002 in opioid-naive adults immediately following bunion removal surgery. This study was designed to evaluate pain prevention rather than pain treatment. In this 241-patient study, patients were treated with either one of four doses of ZX002, an active comparator Vicodin^® consisting of 10 mg hydrocodone plus 325 mg acetaminophen, or placebo. The primary efficacy measurement was the visual analog scale of pain intensity from zero to 12 hours after dosing. Results demonstrated that the highest dose of ZX002 was comparable to Vicodin^® in the primary analgesic efficacy analysis, and both were statistically significant compared to placebo. Although this trial was conducted in a model of acute pain, we believe the preliminary efficacy and safety information is useful in establishing proof of concept for ZX002.

The second Phase 2 study was a four-week, multiple-dose, safety, tolerability, and pharmacokinetic dose-escalation study of ZX002 in opioid-experienced adults with chronic, moderate-to-severe osteoarthritis pain. The primary objective was to assess the safety, tolerability, and pharmacokinetics of ZX002 at steady state over a range of escalating daily doses. Thirty-seven patients in two dosing cohorts received escalating doses of ZX002 over four weeks. This study demonstrated a clinically acceptable safety profile and a reduction in pain intensity for chronic moderate to severe osteoarthritis pain patients across multiple dosage strengths. We believe that the study also demonstrated a steady-state pharmacokinetic profile that is appropriate for the management of chronic pain. In both Phase 2 studies, patients experienced mild to moderate adverse events, such as dizziness, sedation, nausea, vomiting and constipation, which are similar to the reported effects of currently prescribed chronic opioids.

We intend to initiate a pivotal Phase 3 trial in the second half of 2008 that will compare the safety and efficacy of ZX002 to placebo in the treatment of chronic lower back pain. Our trial will be based on a protocol design that has been used to demonstrate the efficacy of other opioid therapies for chronic pain. The study will be a randomized, 12-week double-blind, placebo-controlled trial in at least 300 opioid-experienced adults with moderate to severe chronic low back pain. The primary efficacy endpoint will be the mean change in average daily pain intensity scores between ZX002 and placebo. We plan to seek the FDA’s agreement on our trial design at our End of Phase 2 meeting with the FDA.

To further assess the safety and tolerability of ZX002 in chronic pain therapy, we also plan to perform an open-label Phase 3 trial in opioid-experienced adults with any indication appropriate for chronic opioid treatment. The goal of this study will be to evaluate the safety and tolerability of ZX002 through six and 12 months. Additional Phase 3 safety and efficacy trials in one or more additional chronic pain conditions, such as osteoarthritis, may be required to support our proposed label. Concurrent with the Phase 3 program, we also plan to conduct several pharmacokinetic and clinical pharmacology trials, as well as any remaining pre-clinical studies required to file an NDA and support the approval of this product candidate. Determinations about additional clinical trials and pre-clinical studies will be made based on the outcome of our End of Phase 2 meeting with the FDA.