ANA773 HCV
investigational oral TLR7 agonist prodrug

ANA773 - HCV

ANA773 is our oral, small-molecule inducer of endogenous interferons that acts via the Toll like receptor 7, or TLR7, pathway. Both the prodrug and its active substance were discovered by Anadys scientists. Animal pharmacology studies have shown that ANA773 can elicit desired immune responses and that components of the response can be modulated by both dose and schedule of administration. We have also shown in our Phase I HCV clinical study that ANA773 can stimulate the immune system at a tolerated dose.

Because interferon-alfa is the foundation of the current standard of care for hepatitis C and the current approval strategies of direct-acting antivirals, or DAAs, are based on the addition of such DAAs to interferon-based regimens, we believe that an oral agent that stimulates interferon production with improved tolerability could potentially displace interferon from future regimens that contain DAAs. We believe that ANA773 may offer the opportunity to be such an oral interferon replacement.

In June 2009, in order to direct sufficient investment toward ANA598, we decided to suspend development of ANA773. Subsequent to that decision we received additional data from the last cohort enrolled in a monotherapy trial of ANA773 in HCV patients. The data from this last 2000 mg cohort suggests that the antiviral activity of ANA773 in HCV patients could be comparable to pegylated interferon over a similar timeframe. We also believe that recent developments in the HCV landscape, including clinical data indicating that it may be difficult to replace pegylated interferon entirely in the treatment of HCV, support the potential commercial value of an oral interferon replacement such as ANA773.

In the fall of 2010 we decided to resume clinical investigation of ANA773 in HCV. We are preparing to conduct a 28 day combination study of ANA773 with ribavirin. If supported by the data from the first cohorts utilizing ANA773 and ribavirin only, this study may also include additional cohorts in which ANA773 will be tested as a triple combination with ribavirin and a DAA, to parallel the likely future use of interferon. We intend to conduct this study in Europe and potentially other countries, and we expect that up to approximately 75 patients will participate in the trial, inclusive of the DAA cohorts. We expect to begin dosing in the second quarter of 2011 and expect to receive four week data from the first two cohorts of ANA773 plus ribavirin in this study during the fourth quarter of 2011.

Background to Phase IIa Study of ANA773

In August 2009, we announced that ANA773 had demonstrated a significant antiviral response in Hepatitis C patients in the final cohort of a Phase I clinical trial. In patients who received 2000 mg of ANA773 every other day (QOD) over 10 days, the mean (± SEM) maximal decline in viral load was 1.3 (± 0.4) log10, compared to a mean maximal decline of 0.3 (± 0.1) log10 in patients who received placebo (p=0.037). Five of the eight patients who received 2000 mg of ANA773 experienced a maximal decline of greater than 1 log, while none of the eight patients who received placebo experienced a decline of greater than 1 log (p<0.001 for the proportion of patients with maximal response greater than 1 log compared to placebo). The mean end-of-treatment decline was 0.6 log10 in patients who received 2000 mg of ANA773 compared to 0.1 log10 in patients who received placebo. ANA773 was well-tolerated in patients in the Phase I study and no serious adverse events were reported.

About ANA773 and TLR Pharmacology

Results from preclinical pharmacology studies have shown that ANA773 can elicit desired immune responses and that the profile of response can be modulated by both dose and schedule of administration. Results of completed 13-week GLP toxicology studies have shown that with every-other-day dosing of ANA773, immune stimulation of a magnitude believed to confer therapeutic potential can be achieved without adverse toxicology findings. The immune stimulation observed with every-other-day dosing of ANA773 in preclinical studies included induction of interferon-alpha and interferon dependent responses at levels that are sustained over 13 weeks of dosing. Furthermore, dose-dependent stimulation of innate immune response in healthy volunteers was observed in Part A of the Phase I clinical trial with ANA773.

Anadys has also investigated ANA773 in a separate Phase I trial for the treatment of patients with advanced cancer. Although we believe that ANA773 has potential utility in cancer, we do not have plans to continue the development of ANA773 for this indication at this time.

Last Updated 5/6/2011

This description contains certain forward-looking statements within the meaning of the Federal securities laws. Our results could vary, perhaps materially, from our projections or expectations. Please see our SEC filings, including our most recent 10-K, for a discussion of the risk factors that could affect our business.