FDA continues review of Salix’s Crofelemer new drug application

Napo Pharmaceuticals, Inc. ("Napo") was informed today that the Food and Drug Administration ("FDA") is continuing its review of the new drug application ("NDA") seeking approval of crofelemer for the treatment of chronic diarrhea in people living with HIV/AIDS on anti-retroviral therapy. Salix Pharmaceuticals, Inc. ("Salix") never informed Napo that Salix had filed the NDA for approval of crofelemer as a botanical drug. According to the FDA website, "botanical drug products are complex mixtures with a lack of a distinct active ingredient and substantial prior human use as a complex mixture. Fermentation products and highly purified or chemically modified botanical substances are not considered botanical drug products." The FDA has never previously approved an orally acting botanical drug.    

Crofelemer is a natural product isolated and purified from a tree found in the Amazon Basin, Croton lechleri. In contrast to the FDA definition of a "botanical drug product" - which indicates a "substantial prior human use as a complex mixture" - crofelemer has been developed since 1992 as a highly purified and characterized "new chemical entity" (or "NCE") under strict development and manufacturing guidelines that included 20 years of FDA-approved human clinical trials. (According to the FDA, "some 25% of all NCEs approved by the FDA between 1981 and 2006 were unaltered natural products [like crofelemer] or derived from natural products." This highly purified chemical entity is substantially different, safer, and more effective than the raw natural sap of Croton lechleri - known locally as dragon's blood. In substantial and documented communication with the FDA from 1991 through 2011, crofelemer was described and referred to by all parties - including Salix - as a NCE drug, not a botanical drug.

In late 2010, Napo and Salix - with rights licensed from Napo to develop and sell crofelemer - completed a Phase 3 clinical trial (know as the "ADVENT trial") that exceeded endpoints for efficacy and demonstrated the same safety/tolerance profile as the placebo. Salix stated in November 2010, after announcing top-line results of this study, "We are proceeding with efforts to submit a New Drug Application ("NDA") based on the results of this trial. We have requested a pre-NDA meeting with the FDA and believe that a meeting could be scheduled by mid-first quarter of 2011. The ADVENT trial was conducted under a 'fast track' status and has been part of a 'special protocol assessment' (SPA) agreement."

Following this successful trial, shareholders from both companies - and the 350,000 people living with HIV/AIDS in the US and ~30 million worldwide who would benefit from this drug - no doubt expected a timely filing by Salix with the FDA for approval of this fast-tracked drug. Nearly two years has passed and today's news means that the wait will continue until at least the end of the first quarter of 2013 - over two years after the successful trials were completed.

Since 2011, Salix has refused to share any information with Napo about its filing with the FDA or their claimed characterization of the product as a botanical, despite contractual obligations and Napo's ownership of this drug. Given this and other alleged breaches of the contract between Napo and Salix, Napo filed suit in May, 2011 to terminate the contract, which is proceeding in the New York State Supreme Court. During this period Salix - a $3 billion company - has been selling a product, rifaximin, that many analysts believe overlaps with a market indication for crofelemer.

Lisa Conte, Napo CEO, commented, "We are dismayed that Salix would take action that may negate and undermine almost two decades of work on crofelemer as a new chemical entity by proceeding with a regulatory filing as a botanical in light of the strong objections, regulatory precedents, and scientific integrity presented by Napo and Shaman. This recent development only strengthens Napo's resolve in its litigation with Salix as well as Napo's effort to serve patients globally who desperately need this drug. We are also ensuring we meet our obligation to Napo's shareholders."