Zipsor is the lowest prescription-strength diclofenac available. The ProSorb technology allows for rapid delivery and dispersion of the medicine. The low-dose offers minimal systemic drug exposure. Depomed believes these advantages will help them drive Zipsor sales in the coming years.

…Terms…

Depomed paid Xanodyne $25.9 million in cash for worldwide rights to the drug. Xanodyne has the potential to earn two milestone payments from Depomed based on Zipsor sales. These include a $2 million payment if sales eclipse $30 million in a calendar year and $3 million if sales eclipse $60 million in a calendar year. All in, the acquisition price equate to about 1.5x sales – a very attractive price. There are no royalties associated with the transaction. Ongoing phase 4 obligations are minimal at around $0.2 million. Depomed acquired about $0.5 million in inventory. The product has a gross margin at around 95% with the current sales run-rate of around $20 million per year. Depomed plans to start booking sales of Zipsor immediately.

Zipsor is under formulation patent protection (with ProSorb) until 2019. Management noted four additional method of use patents that aim to protect the product to 2029. And, management plans to actively pursue additional exclusivity protection of the product, calling Zipsor’s IP a “live portfolio with prosecution ongoing.” We note there are currently no active paragraph IV challenges to the product. Depomed plans to amortize the cost of the acquisition, which was all cash, through 2019. This will result in approximately $1 million in amortization expense per quarter over the next 28+ quarters.

…The Upside…

Trailing twelve month sales for Zipsor at Xanodyne totaled roughly $19 million. We note that Xanodyne was accomplishing this level of sales with only 70 full-time representatives. Xanodyne has been winding-down its operations over the past year. The company launched Zipsor in June 2009, and at one time had over 200 representatives promoting the product. At its peak, Zipsor was doing roughly $25 million in sales for Xanodyne. Prescriptions over the past several months have been relatively flat. We suspect the remaining 70 representatives promoting the product at Xanodyne were aware of the company’s plans to divest Zipsor.

Depomed plans to insert Zipsor into the No. 2 position behind Gralise with its 164 full-time reps and 75 flex reps. These reps are now actively calling on pain docs, neurologists, and primary care physicians. We see significant synergy here, as most of the Zipsor prescriptions are coming from pain, orthopedics, and primary care. As of May 2012, pain and primary care docs account for 64% of the Gralise prescriptions. Adding in nurse practitioners and physicians assistants and the total jumps to 77%. We suspect that Depomed will look to target high-prescribing orthopedic docs with some of its 75 flex reps. At this time, management is unsure if they will look to acquire any of the Xanodyne sales staff, although the potential certainly exists where there are openings for flex reps.

Depomed plans to re-launch Zipsor with a full promotional effort by late July 2012. The company will focus on promoting the rapid onset of action and lowest available dose. Besides driving volume, management believes there is upside to the current pricing (revenue per Rx is around $140 / per) given that Xanodyne has not taken a price increase in 16+ months. Depomed will also turn its attention on improving managed care positioning for the product. There is a co-pay reduction and e-voucher program active that Depomed plans to maintain for the re-launch in July.

…Impact On Our Model…

As noted above, the acquisition price, including the first $2 million milestone payment for achieving calendar sales of greater-than $30 million, equated to less than 1.5x TTM sales. Depomed expects to spend around $4.5 to $5 million on sales, marketing, clinical, and regulatory expenses for Zipsor. With a 95% gross margin, and around $4 million per year in amortization expense, Zipsor looks to contribute about $9 million in pre-tax earnings to Depomed in the first year ($13 million in cash).

We see this as an impressively structured deal for Depomed. The payback period is about two years on cash, and that assumes little to no growth. We think even with modest growth, Depomed will be in the black on Zipsor in less than two years. After that, it’s all upside. More so, giving the 239 Gralise sales representatives another calling option is a significant positive in our view. We have been calling on the company to acquire a second product to promote alongside of Gralise. Zipsor, while not nearly as sexy in terms of upside, is a near-perfect fit and should be accretive by the fourth quarter 2012.

We have made the following adjustments to our financial model for 2012:

For 2013 and 2014, we’ve made the following changes:

We expect that Depomed will exit 2012 with $75.4 million in cash and investments, in-line with management’s new guidance for cash and investments between $65 and $80 million at year end.

The phase 3 trial, dubbed M12-665, is a randomized, double-blind, placebo-controlled study seeking to enroll 875 women, age 18 to 49, with moderate-to-severe endometriosis-associated pain. It will be conducted at approximately 160 sites in the U.S., Puerto Rico and Canada. The primary endpoint will be a dual-endpoint in reduction in Dysmenorrhea and Non-Menstrual Pelvic Pain (NMPP) for women on two doses of elagolix (150mg and a yet unannounced higher dose) vs. placebo in a 1:1:2 randomization over 3 months.

Efficacy will be assessed by a responder analysis for statistical evaluation. The inclusion of a yet unannounced higher dose of elagolix, perhaps 250mg or 300mg (150mg BID) is intriguing. Responder analysis from the phase 2b trial showed an 85% response rate with 150mg elagolix. We believe Abbott is looking for greater than 90% response rate in the phase 3 program through the inclusion of a higher dose.

Secondary endpoints include Dyspareunia and Patient Global Impression of Change (PGIC), as well as analgesic use. Following the 3 month controlled portion of the trial, patients will be eligible to enroll in a 6 month open-label extension study where Abbott will look for signs of persistent efficacy. For the safety analysis, patients will be followed for an additional 12 months, after which Abbott will conduct a DXA scan to assess changes in bone mineral density.

We expect that this program will take 12 months to enroll. Top-line data from the phase 3 trial should be available in the first half of 2014, with the full analysis in 2015. Abbott plans to conduct a second confirmatory phase 3 program mirroring the M12-665 trial expected to start in 2013. We expect that this program will include sites outside North America, with an emphasis on Western Europe. Full analysis from the second trial is expected in 2016, along with the New Drug Application (NDA) planned for 2016.

…Confident In Design…

We are confident in the design of the phase 3 trials, and the efficacy and safety previously seen with elagolix. In total, Neurocrine has presented data from 12 phase 1 programs and 6 phase 2 programs (2 phase 2a and 4 phase 2b) on roughly 1,000 patients. Results from the phase 2b (n=137) Daisy PETAL (Study-901) program first released in May 2010 provide the best proof-of-concept data for the planned phase 3 trials. Final results, released in November 2010, were statistically significant in all primary and secondary endpoints.

The planned phase 3 program will seek to enroll patients with more severe disease and employ a two-cycle (two-month) run-in period both designed to mitigate the placebo response. We note the 33% placebo response on both primary endpoints in the Daisy PETAL program was rather high, but elagolix at 63% for both was statistically significant at a p-value less than 0.01. All Abbott needs to do is replicated these results in the two phase 3 trials noted above and then show no clinically meaningful changes in bone mineral density and we think approval is likely.

Adjusting Target

While the above is all good news for Neurocrine shareholders, it comes about six months behind what we previously modeled. We remind investors that the end of phase 2 meeting took place in March 2011. The company’s “Update on Elagolix” press release from May 2011 guided to the start of the phase 3 trial in the fourth quarter 2011. However, finalizing the SPA with the U.S. FDA took longer than expected. Ultimately, Abbott believes they have implemented all of the suggestions from the SPA discussions, but did not want any further delay in the start of the trial.

We also expected that both phase 3 trials would start concurrently. Instead, Abbott plans to stagger the second phase 3 trial so it starts one-year later, in 2013. This is so that the second trial can include sites outside North America.

As a result, the planned NDA filing, now expected in 2016, is 18+ months farther out then our model. Therefore, we have adjusted our DCF model to now account for the launch of elagolix at Abbott in 2017. The result is a decrease in our price target from $12 per share to $10 per share.

Our $10 per share target is now the lowest of the five published targets we see listed on Thomson/First Call (previous range was $11.50 to $14.00). However, this should not be misconstrued by investors. We remain quite optimistic on Neurocrine and elagolix, believing the drug – with a full label to include both endometriosis and uterine fibroids - has blockbuster potential. We’ve written previously as to why we see elagolix as one of the more interesting late-stage biotech products. We clarify our position on Neurocrine as “optimistic, yet realistic” with respect to the stock price.

For additional information, please visit: http://scr.zacks.com

Nile is developing cenderitide as a 90-day outpatient treatment for heart failure patients following admission for acutely decompensated heart failure (ADHF) – referred to as the “post-acute” treatment period. The company is searching for a development and commercialization partner willing to fund cenderitide starting with a planned phase 2 trial later this year. Management at Nile is currently preparing to file a protocol to the U.S. FDA in the next month or two. We believe Nile would like to test cenderitide in 300 patients with chronic (post-acute) heart failure, with the primary endpoint of safety and tolerability over the 90-day infusion period. Secondary endpoints will seek to identify improvement in clinical heart failure surrogate markers and a potential trend in the reduction of the hospital re-admission rate.

In preparation for the meeting, management submitted to the FDA a detailed briefing package that includes various types of analysis on the BREEZE data, including parametric and non-parametric analysis, a responder analysis, and a meta-analysis that included the combined data from all three programs together. Included in the analysis was persistent efficacy data at week 24 from both BREEZE-1 and BREEZE-3. We remind investors that top-line data from BREEZE-3 was reported last October 2011.

Below we highlight the top-line data from all three programs for the 1800mg dose – at least what has been disclosed by management to date:

Management has submitted an abstract to the North American Menopause Society (NAMS) annual meeting to take place this October 2012. We expect the full data from BREEZE-3 will be presented at that time. We note that data from BREEZE-1 and BREEZE-2 was previously presented at the NAMS meeting in October 2010.

…Long Shot At Approval…

Looking at the data above, even using a p-value of less than 0.05, in three phase 3 trials we see that Serada hit 10 of the required 12 primary endpoints, including all endpoints for both frequency and severity at week 4, but missed the frequency endpoint at week 12 in two of the three trials and failed to demonstrate signs of persistent efficacy at week 24 in either BREEZE-1 or BREEZE-3. We have admittedly not seen management’s analysis of the data. And on yesterday’s conference call, management noted that the FDA suggested that Depomed file the application so they can, “run their own analyses to decide whether this is an approvable package or not.”

At this point, we think approval is a long-shot; but we do not profess to know how the FDA will rule on data we haven’t seen using an analysis we haven’t been told about. Nevertheless, Depomed will spend approximately $5 million this year getting the NDA filing ready. This includes the filing fee (~$1.5M), a milestone to license partner PharmaNova (~$1M), external consulting expenses, manufacturing test batches, and other launch preparations.

…What We Expect…We expect that Depomed will file the NDA on Serada in the fourth quarter 2012, sometime after the BREEZE-3 data has been presented at the NAMS meeting in October 2012. At that time, we should have a better sense of the entire NDA package on Serada. We have increased our R&D expense for 2012 by $5 million, and now model R&D for the full year to be $17.8 million. We have updated our cash forecast, and now model that Depomed will exit 2012 with approximately $95 million on the books.

We expect that the U.S. FDA will hold an Advisory Committee meeting on Serada. If the NDA is filed in November 2012, the PDUFA would be scheduled for September 2013. That would potentially put an advisory panel meeting on the drug sometime over the summer of 2013.

NAMS recently put out updated guidance on the use of hormone therapy (HT) in women suffering from hot flashes. The position statement notes that a combination of estrogen plus progestin therapy (EPT) remains the most effective treatment available for menopausal symptoms, including hot flashes and night sweats that can interrupt sleep and impair quality of life. NAMS believes that the majority of women can take EPT safely, for periods up to three to five years, with little risk of heart attack, stroke, blood clots, or breast cancer. For women with pre-existing risk, an alternative therapy may be more desirable.

We expect that these updated guidelines from NAMS will have a negative impact on the overall market potential for Serada, if approved. We see Serada relegated to a second-line therapy for women where HT is either not effective or not desirable. We see the peak sales opportunity for Serada in the U.S. at roughly $100 million.

We expect that Depomed would like to be involved in the promotion of Serada to high-prescribing OB/GYN’s in the U.S. Management noted that there are about 18,000 of these high-prescribing OBGs. We suspect that effective promotion can be accomplished by a small field force of 40 to 60 representatives. The opportunity to partner Serada for promotion to the primary care network presents upside to the story. We expect that Depomed will look to partner for this expansion following a focused commercialization effort in 2014.

Our model includes $0 revenues from Serada in the future, and we expect that it will stay that way until the FDA makes a decision. At $100 million in peak sales, we see Serada worth approximately +$2 per share to our current modeled valuation ($9 price target).

Gralise Remains On Track

Gralise total prescriptions remain on track, and in-line with our model.

We model sales in the first quarter 2012 of $2.0 million based on total prescriptions of roughly 17K. Assuming the trend continues in the second quarter 2012, we now see Gralise sales at around $3.0 million in the second quarter and at $16.5 million for the full year 2012. Gralise remains the key value driver for Depomed in our view. Additional information can be found in our full REPORT from March 2012.

…HDE Pathway…

To our surprise, and in our view an enormous positive to InVivo, the FDA plans to regulate the biopolymer scaffolding device under the Humanitarian Use Device / Humanitarian Device Exemption (HUD/HDE) pathway. This dramatically reduces both the cost and time necessary to bring the InVivo’s product to the market. HDE is similar in both form and content to a Pre-Market Approval (PMA) application, but is exempt from the effectiveness requirements of a PMA. An HDE application is not required to contain the results of scientifically valid clinical investigations.

The application, however, must contain sufficient information for FDA to determine that the device does not pose an unreasonable or significant risk of illness or injury, and that the probable benefit to health outweighs the risk of injury or illness from its use.

HUD/HDE allows InVivo to conduct a small – perhaps five to ten patient open-label program – demonstrate probably benefit, and submit the data back to the FDA to potential market approval in a acute or limited population. InVivo can then collect additional data under this limited FDA approval, at a profit, to expand the indication to a wider patient population. Essentially, under the HDE pathway, the PMA trial for a full label in spinal cord injury can be conducted as a post-approval program. HDE also conveys seven years of market exclusivity. So if approved in 2013, InVivo will have a lock on the market until 2020.

Before human clinical studies can begin, the FDA must approved the finalized design of the HDE program. We expect that InVivo and the FDA will be working closely over the next few months to finalize the design of the trial. We believe that the InVivo should be in position to start the HDE trial perhaps in October 2012. Again, we are expecting five to ten patients, open-label, looking at signs of improvement below the level of the spinal cord injury. Data should be available early 2013, which would put InVivo in position to receive HDE approval mid-2013, about 2 years earlier than our previous forecast.

…Hydrogel Up Next…

We are expecting preclinical data from InVivo’s injectable hydrogel in the next few weeks. Following this data, we expect InVivo to meet with the FDA to discuss a path forward for the hydrogel. Ideally, the hydrogel will be regulated as a device by the FDA, allowing InVivo to move into an IDE programs in spinal cord injury and peripheral nerve pain in 2013. This will be followed by larger PMA trials in 2014.

We see an enormous opportunity for the injectable hydrogel. The acute and chronic spinal cord injury market is estimated at $20 to $25 billion in the U.S. alone. For peripheral nerve pain, there are an estimated 3.2 million nerve block injections done in the U.S. each year. It’s an estimated $15 billion market. Existing treatment options are limited and only curb pain for as little as one week. A localized injection using the hydrogel to provide time-released anti-inflammatory therapies like methylprednisolone could provide pain relief for up to twelve months with limited systemic side-effects.

Recommendation

InVivo’s stock is up 5% this morning on announcement. We do not think the market has come to grips with the potential here. Moving the scaffolding forward under HDE is enormous, and the FDA seems clearly supportive of the company’s plans. Hydrogel data is expected soon, and between spinal cord injury and peripheral nerve pain, InVivo is sitting on two potential blockbuster indications.

We reiterate our ‘Outperform‘ rating and $4.50 price target on the shares.

Preclinical Data Shows Intriguing Potential

Over the past six to eight months, Spherix Inc. has been conducting preclinical studies with SPX-106T, the company’s combination of proprietary candidate SPX-106 and D-Tagatose, for the treatment of dyslipidemia and metabolic syndrome.

Recent data presentations show the drug achieved statistically significant reductions in triglycerides and cholesterol when administered in combination with D-Tagatose for 9 weeks to genetically engineered (LDLr -/-) mice prone to dyslipidemia. The data show twice-daily oral dosing significantly reduced triglycerides by 43 mg/dl compared with control animals with a mean triglyceride level of 118 mg/dl (p=0.01). The same therapy significantly reduced total cholesterol by 73 mg/dl from a mean level of 378 mg/dl compared with control animals (p=0.01).

In September 2011, Spherix released additional preclinical data on SPX-106T from the above trial. Results show that SPX-106T achieved statistically significant reductions in VLDL and LDL cholesterol over 9 weeks when administrated to genetically engineered mice prone to dyslipidemia. Treatment of animals using a range of low doses of SPX-106T twice-daily significantly reduced VLDL by 35% (from 127 mg/dl to 82 mg/dl) and LDL by 18% (from 141 to 116 mg/dl) (p=0.05).

In October 2011, Spherix presented a poster at the American Association of Pharmaceutical Scientists (AAPS) National Meeting highlighting key findings where SPX-106T significantly reduced serum cholesterol by 30% (-307 mg/dl; p<0.05), prevented body weight gain (p<0.05), and significantly reduced the amount of subcutaneous, retroperitoneal, and epididymal fat (77%, 90%, 85% reductions, respectively, p<0.01). Safety analysis showed that SPX-106T did not affect the weight of other organs such as the heart and spleen.

In March 2012, management presented data showing that SPX-106T arrested development and reduced atherosclerotic plaque area in mice genetically predisposed to cardiovascular disease. Two groups of apolipoprotein E-deficient mice (control and SPX-106T) were each fed a Western diet (high in fat and carbohydrates) for 8 weeks. In the SPX-106T group, the sucrose portion of the dietary carbohydrates was replaced with D-tagatose and SPX-106 was added at 0.1%. Plaque area was quantified at three locations: the sinus of Valsalva on top of the heart, aortic arch, and thoracic aorta. SPX-106T reduced atherosclerotic plaque areas almost 5-fold in all locations (p<0.05 in thoracic aorta, p≤0.01 in aortic arch and sinus of Valsalva).

…Pre-IND Meeting Requested…

Management has now advanced SPX-106 and SPX-106T to the point where they are ready to being human clinical trials. A pre-IND meeting has been requested with the U.S. FDA. We expect this meeting to take place in the next few months, which should put management in position to file the IND in the third quarter 2012. We expect that the first human testing will begin early 2013. This will most likely be a standard phase 1a pharmacokinetic study of a single-ascending dose. A phase 1b multiple-ascending dose study should follow mid-2013.

If all goes well, Spherix should be in position to start the first phase 2 proof-of-concept program with SPX-106 / SPX-106T in the second half of 2013. We expect management to pursue a niche “orphan” indication first, focusing on genetic subtypes of dyslipidemia and high triglycerides. This provides the quickest and most cost-effective route to market for management.

New Strategy For Growth

The company’s growth strategy revolves around the internal development of pharmaceuticals products. Management has instituted a four-pronged strategy to drive growth:

1. Utilize existing clinical development capabilities to manage and drive drug candidates through development and ultimately approval. This includes a marriage of the development capabilities at Biospherix and the strong science and analysis background at Spherix Consulting.
2. Identify and explore licensing and partnership opportunities for drug candidates.
3. Acquire medically important drug candidates in early to mid-stage clinical development.
4. Commercialize drug candidates, either alone or in partnership, which can maximize stockholder value. This includes the outright sale of a drug candidate.

To help improve the pipeline turnover and efficiency, Spherix is launching a combination drug discovery platform based on dynamic data-driven simulation analysis, or DDDAS. Management is looking at phase 1 and phase 2 assets to roll up in its platform with the goal of treating complex disease where dual or multi-pharmacology may be appropriate. These include cocktail approaches similar to what has been developed for HIV and HCV, or dual-mechanisms of action such as drugs like Vytorin (ezetimibe and simvastatin) for high cholesterol, Janument (metformin and sitagliptin) for diabetes, and Spherix’ own SPX-106T (SPX-106 and D-Tagatose).

The DDDAS program began at the National Science Foundation. DDDAS is now being employed to model complex metabolic disease pathways, testing potential binary therapies in simulations at various combinations, at two points in the pathways, choosing the most effective pair-wise combinations. DDDAS is being used now in animal and human studies planned by Spherix. Management believes that DDDAS yields more accurate analysis and prediction, more precise controls, and more reliable outcomes in drug development. Furthermore, the incorporation of dynamic inputs into an executing simulation helps create application platforms that can more accurately describe real-world complex metabolic diseases.

Recommendation

The registered direct offering includes 200% warrant coverage, a Series-A traunch of 6.517 million shares exercisable in six months (October 2012) for six years at $1.15 per share and a Series-B traunch exercisable in six months (October 2012) with no expiration at $0.85 per share. The offering is expected to close on or about April 13, 2012.

…A Financing Was Necessary…

The above offering was necessary based on the dwindling cash position, which we estimate stood at $3.0 million as of March 31, 2012. This was enough cash to fund operations into July 2012. Adding in the net $5.2 million from the raise above should boost the cash position to approximately $6.0 million at the end of the second quarter. If the stock can get back above $0.85, management may see some exercising of the Series-B warrants later in the year. We suspect that the filing of the Probuphine NDA in the third quarter 2012, especially with designation of priority review, could give the shares a pop and allow the Series-B warrant holders to exercise. In total, this could give Titan another $5+ million in cash.

…Because A Deal Remains Elusive…

On the fourth quarter conference call in March 2012, management noted talks have progressed to the initial term sheet stage with a handful of potential commercialization partners. We remind investors that Titan is working with Woodside Capital Partners and Keelin Reeds Partners in closing a partnership agreement on Probuphine.

These include the acquisition of Oncogenerix, Inc. in January 2012 and the exclusive agreement with Innocutis Holdings, LLC in March 2012. These two deals brought in two commercial ready assets in Soltamox and Bionect, both which we expect to hit the market in the third quarter 2012. We also highlight the company’s relationship with Uman Pharma and Rosemont Pharma, and how we believe this helps DARA build an oncology and oncology-supportive care pipeline for the future. Our report also goes into detail on the company’s legacy product, KRN5500, for chemotherapy induced neuropathic pain. And finally, the key management changes that made it all possible.

In our view, the company’s story is really starting to come together. We see Soltamox as a $25 million peak opportunity for DARA Bio. In our report, we discuss the market opportunity for Soltamox, how the company plans to promote the product oncologists, and how the newly acquired Bionect fits nicely into the model. We also highlight how KRN5500 and generic cytotoxic agents provide meaningful upside in the years to come. In the past six months, DARA has gone from little to no near-term drivers, to a pipeline of products that has the potential to drive cash flow positive operations in 2014.

We have conducted a discounted cash flow analysis on the new DARA, and currently see $3.50 per share as fair value. This value includes a doubling of the current shares outstanding over the next year. Despite our belief that the shares are meaningfully undervalued, our rating is ‘Neutral’ because we see the company raising an estimated $8 million over the next several weeks. We believe DARA needs approximately $10 million to see it’s new strategy to fruition. The company secured $1.7 million in January 2012. Raising an estimated $8 million on a market value of only $10 million is a daunting task.

Therefore, we believe investors should familiarize themselves with the DARA Bio story, wait for the financing to complete, and then look to establish a long-term position. DARA Bio, if successful at it’s transformation, is seeking to become a profitable specialty pharmaceutical company with a focus on oncology and oncology care. The right management is in place to get the job done. Once the cash is secured, the story becomes investable – and could present meaningful upside to shareholders.

Please click here to view the full (12-page) report –> DARA(4/5/12)/Napodano

The design of the study was a multicenter, dose escalating evaluation of the PK and PD responses to various subcutaneous doses of cenderitide boluses and infusion regimens in patients with chronic heart failure. The phase 1 study enrolled a total of 58 patients (45 on cenderitide + 13 placebo) and employed three parts:

Patients were infused using Medtronic’s MiniMed Paradigm pump, currently indicated for continuous infusion of insulin. The pump utilizes MiniMed’s minimally invasive, subcutaneous micro-needle technology. The goal of the phase 1 study was two-fold. From Medtronic’s point of view, they wanted to test the feasibility of using the MiniMed Paradigm for indications outside of continuous insulin therapy. From Nile’s point of view, the company wanted to achieve steady-state target plasma PK levels, reduce weight-based variability in dosing, and demonstrate a dose-dependent reduction in mean maximum systolic blood pressure (SBP).

…The Results…The data show the trial was a success, from both Medtronic’s and Nile’s standpoint. We see nothing that prohibits movement into a phase 2 program.

Figure-1 shows the achieved steady-state plasma levels with 18 ug/hr, 24 ug/hr, and weight-based doses. Based on preclinical and previous phase 2 data in acute heart failure patients, management at Nile targeted a cenderitide plasma concentration of 600 pg/ml. We believe the 24 ug/hr or the weight-based dose will be what Nile moves into the next proof-of-concept program.

Figure-2 shows the dose-dependent reduction in systolic blood pressure (SBP). Nile was targeting a reduction in blood pressure between 5 and 10 points beyond the placebo. Based on the results depicted in Figure-2, 18 ug/hr, 24 ug/hr, and weight-based dose all were within the target range. The dose of 36 ug/hr reduced SBP outside the target safety range.

The phase 1 trial was not adequately powered to test efficacy endpoints such as glomerular filtration rate (GFR), creatinine, cystatin-C, or urine output. We note that previous phase 2 data with cenderitide was presented at the 60th annual Scientific Session of the American College of Cardiology (ACC). The poster presentation (board #256) demonstrates encouraging proof-of-concept in 77 patients with acute decompensated heart failure (ADHF), including dose-dependent reductions in mean eGFR and serum creatinine. This trial showed trends in the all-important improvement / preservation of renal function and reductions in blood pressure designed by to make cenderitide a blockbuster drug.

…Little Background Info…

Cenderitide is Nile’s novel chimeric natriuretic peptide. Natriuretic peptides are naturally occurring proteins produced in the heart and blood vessels that cause natriuresis (the removal of sodium and water from the blood). Cenderitide was rationally designed by scientists at the Mayo Clinic’s cardio-renal research labs to confer both arterial and venodilation activity. Cenderitide is a combination of two natriuretic peptides, CNP and DNP. The drug combines the n-terminus of the CNP molecule, preserving the favorable venodilating and hemodynamic properties, with the c-terminus of the DNP molecule, preserving the potent direct renal activity.

Preclinical data demonstrates the drug has both natriuretic and diuretic properties. Animal studies yielded very encouraging data with respect to improvement in GFR (improvement in renal function) and less risk of hypotension as compared to BNP. Preclinical data on the mechanism of action was published in the Journal of the American College of Cardiology.

…A Potential Blockbuster Indication…

We believe the post-acute heart failure indication could be a blockbuster opportunity for cenderitide. In the U.S., approximately 5 million people (~2% of the population) suffer from heart failure (HF). The incidence is even higher for patients above the age of 65, where approximately 6% to 10% of the population is at risk. There are an estimated 650,000 new cases diagnosed annually. Treatment of heart failure generates annual costs of approximately $35 billion, of which approximately $3 billion is spent on drugs and $19 billion is spent in the acute hospital setting.

On March 31, 2011, the U.S. FDA granted Nile “Fast Track” designation for cenderitide for reducing cardiovascular mortality and cardiovascular re-hospitalization in the post-acute period in patients with acute decompensated heart failure.